Passenger Rail Investment Reform Act

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1501 Introduced in Senate (IS)]

108th CONGRESS
1st Session
S. 1501

To amend title 49, United States Code, to provide for stable,
productive, and efficient passenger rail service in the United States,
and for other purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

July 30 (legislative day, July 21), 2003

Mr. McCain (by request) introduced the following bill; which was read
twice and referred to the Committee on Commerce, Science, and
Transportation

_______________________________________________________________________

A BILL

To amend title 49, United States Code, to provide for stable,
productive, and efficient passenger rail service in the United States,
and for other purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Passenger Rail
Investment Reform Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes; Definitions.
TITLE I--NATIONAL PASSENGER RAIL SERVICE RESTRUCTURING

Sec. 101. Board of directors of Amtrak.
Sec. 102. Passenger rail service restructuring.
Sec. 103. Northeast Corridor Compact.
Sec. 104. Assistance to address capital needs.
Sec. 105. Employee transition assistance; authorization.
Sec. 106. Limit on operating assistance for long-distance routes.
Sec. 107. Definitions.
Sec. 108. Repeal of obsolete and executed provisions of law; other.
TITLE II--FINANCIAL REFORM

Sec. 201. Limitations on availability of grants.
Sec. 202. Spending plans for capital backlog reduction.
Sec. 203. Redemption of common stock.
Sec. 204. Retirement of preferred stock; transfer of assets.
Sec. 205. Real estate and asset sales.
Sec. 206. Management and transfer of secured debt.
Sec. 207. Transition assistance.
TITLE III--GRANTS AND OTHER ASSISTANCE FOR INTERCITY PASSENGER RAIL
SERVICE

Sec. 301. Capital assistance for intercity passenger rail service.
Sec. 302. Final regulations on applications by States for corridor
development grants.
Sec. 303. Authority for interstate compacts for corridor development.

SEC. 2. PURPOSES; DEFINITIONS.

(a) Purposes.--The purposes of this Act are to--
(1) preserve an intercity passenger rail service system in
the United States that is driven by sound economics;
(2) provide a transition from the existing structure for
providing such service to a structure that is more aligned with
existing and emerging transportation needs;
(3) develop a system that provides high quality passenger
rail service at a reasonable cost;
(4) establish a long-term partnership among the states and
the Federal government to support intercity passenger rail
service; and
(5) create an effective public-private partnership, after a
reasonable transition, to manage the capital assets of the
Northeast Corridor.
(b) Definitions.--In this Act:
(1) Year 1.--The term ``year 1'' means the earlier of--
(A) the fiscal year in which this Act is enacted if
the fiscal year began less than 61 days before such
date; or
(B) the first fiscal year beginning after the date
of enactment of this Act.
(2) Years 2, 3, 4, 5, and 6.--The terms ``year 2'', ``year
3'', ``year 4'', ``year 5'', and ``year 6'', mean,
respectively, the first, second, third, fourth, and fifth
fiscal years following year 1.

TITLE I--NATIONAL PASSENGER RAIL SERVICE RESTRUCTURING

SEC. 101. BOARD OF DIRECTORS OF AMTRAK.

Section 24302 of title 49, United States Code, is amended to read
as follows:
``Sec. 24302. Board of directors
``(a) Membership.--
``(1) In general.--Until the board of directors provided
for in subsection (f) assumes operational responsibility and
control, the board of directors of Amtrak shall be the
transition board provided for by this subsection.
``(2) Transition board.--The transition board of directors
of Amtrak shall consist of 11 voting members, including--
``(A) the Secretary of Transportation, or an
officer of the United States within the Department of
Transportation compensated under the Executive Schedule
under title 5, who is designated by the Secretary; and
``(B) 10 other members appointed by the President,
by and with the advice and consent of the Senate.
``(3) President of amtrak.--The President of Amtrak shall
serve as an ex officio, nonvoting, member of the transition
board of directors.
``(b) Compensation.--Members of the transition board of directors
shall serve without pay, but shall receive travel expenses, including
per diem in lieu of subsistence, in accordance with sections 5702 and
5703 of title 5.
``(c) Term of Office.--Members serving un-expired terms on the date
of enactment of the Passenger Rail Investment Reform Act may continue
to serve until the earlier of the expiration of their terms or the date
on which the restructuring mandated under section 24310 of this title
is implemented. Members appointed by the President under subsection
(a)(1)(B) shall serve for a term that expires on the date the
restructuring mandated in section 24310 of this title is implemented.
At the expiration of their terms, members of the Board shall be
eligible to serve as members of the boards of successor corporations to
Amtrak.
``(d) Quorum.--At any time after the date of enactment of the
Passenger Rail Investment Reform Act, a majority of the transition
board members who have been lawfully appointed shall constitute a
quorum for purposes of conducting board meetings and making all
necessary decisions regarding the operations, structure, and business
affairs of Amtrak.
``(e) Asset Transition Committee.--
``(1) In general.--The transition board of directors shall
form an asset transition committee comprised of the Secretary
or the Secretary's designee, and 2 other members, or 1 other
member if 2 other members are not lawfully appointed.
``(2) Powers and duties.--In addition to other powers and
duties assigned by the board, the Asset Transition Committee
has the duty to ensure that the public interest is served in
board decisions and Amtrak management actions that change the
use of or status of--
``(A) the contractual right of access of Amtrak to
rail lines of other railroads;
``(B) Amtrak secured debt;
``(C) Northeast Corridor real property and assets;
and
``(D) rolling stock.
``(3) Approval required.--The board may not take an action
with regard to the assets or secured debt specified in
paragraph (2), or permit an Amtrak management action with
regard to those assets, that is not approved by the asset
transition committee.
``(f) Board after Restructuring Completed.--
``(1) In general.--Upon the commencement of operations of
the Passenger Rail Service Provider and the Passenger Rail
Infrastructure Manager established under section 24310 of this
title, the board of directors of Amtrak shall consist of--
``(A) the Secretary of Transportation;
``(B) the Federal Railroad Administrator or another
officer of the United States within the Department of
Transportation compensated under the Executive Schedule
under title 5, United States Code, who is designated by
the Secretary; and
``(C) the Federal Transit Administrator or another
officer of the United States within the Department of
Transportation compensated under the Executive Schedule
under title 5, who is designated by the Secretary.
``(2) Transition board directors shifted.--When the board
of directors provided for in paragraph (1) takes office, the
members of the transition board of directors, with the
exception of the Secretary of Transportation, shall--
``(A) cease to serve as appointees of the President
to the transition board of directors; and
``(B) become members of the board of directors of
the Passenger Rail Service Provider or the Passenger
Rail Infrastructure Manager established under section
24310 of this title.''.

SEC. 102. PASSENGER RAIL SERVICE RESTRUCTURING.

(a) In General.--Chapter 243 of title 49, United States Code, is
amended by inserting after section 24309 the following:
``Sec. 24310. Amtrak restructuring mandate
``(a) In General.--Within 6 months after year 1 begins, and
notwithstanding any other provision of this title, the transition board
of directors shall prepare a plan to restructure Amtrak management,
personnel, assets, operations, and other activities and relationships
to conform to the requirements of this section. The board shall
transmit the completed plan to the Committee on Commerce, Science, and
Transportation of the Senate, the Committee on Transportation and
Infrastructure of the House of Representatives, and the Committees on
Appropriations of the House of Representatives and Senate.
``(b) Minimum Requirements.--At a minimum, the restructuring plan
shall provide for the following:
``(1) Article of incorporation for 2 new entities.--The
filing of appropriate articles of incorporation under State law
for 2 business corporations that are entirely independent of
Amtrak, 1 of which shall be known as the `Passenger Rail
Service Provider' and the other of which shall be knows as the
`Passenger Rail Infrastructure Manager', and referred to
collectively as the `successor corporations'.
``(2) Trifurcation of amtrak.--The division of Amtrak into
3 functionally independent entities as follows:
``(A) A corporation, hereinafter referred to as
`Amtrak', that shall provide overall supervision of
Amtrak restructuring and subsequent management of
residual responsibilities, including succeeding to the
legal rights of the National Railroad Passenger
Corporation, and including specifically Amtrak's legal
right of access to other railroads, following transfer
of rail operations and infrastructure management to the
successor corporations established under paragraph (1).
``(B) A corporation that shall provide passenger
rail operating services nationwide, including operation
of the reservation centers and ownership and management
of existing rolling stock and its maintenance.
``(C) A corporation that shall provide passenger
rail infrastructure management.
``(3) Assignment of amtrak personnel.--The assignment of
all Amtrak personnel by name to one of the entities specified
in paragraph (2), with no loss of pay or benefits, including
seniority rights to employment within any entity, except that
an employee who elects employment with the corporation
described in paragraph (2)(A) shall become an employee of that
corporation, with only such rights regarding pay and benefits
as the corporation shall determine.
``(4) The division of accounting, finance, budget, assets, and
personnel to provide for the operation and funding of each entity
independently.
``(5) A transition schedule that provides for completion of the
restructuring not later than the last day of year 1.
``(c) Successor Corporations.--
``(1) Consistent with the business corporation law of the
State of incorporation of the successor corporations under
subsection (b)(1), each of the successor corporations shall be
qualified to undertake railroad activities of an operational or
infrastructure nature on a contractual basis with Amtrak or any
other entity.
``(2) The Passenger Rail Service Provider--
``(A) shall have the exclusive right, until the
last day of year 3, to continue to provide the
intercity passenger service that is being provided by
Amtrak on the date of enactment of the Passenger Rail
Investment Reform Act, but after the last day of year 1, may operate
such passenger rail service only under a contract; and
``(B) shall provide interline reservations services
to any other provider of intercity passenger rail
services on the same basis and rates as services are
provided to the operational entities that provide
service within Amtrak on the date of enactment of that
Act.
``(3) The Passenger Rail Infrastructure Manager--
``(A) shall have the exclusive right, until the
last day of year 6, to continue to provide the
dispatching, maintenance, and infrastructure services
that are being provided by Amtrak on the date of
enactment of the Passenger Rail Investment Reform Act,
but after the last day of year 1, may provide these
services only under a contract; and
``(B) shall carry out the multi-year infrastructure
plan prepared by Amtrak to the extent that funds are
made available.
``(4)(A) The successor corporations are not a department,
agency, or instrumentality of the United States Government nor
are they Government corporations (as defined in section 103 of
title 5).
``(B) Chapter 105 of this title does not apply to the
successor corporations, except that--
``(i) laws and regulations governing
safety, employee representation for collective
bargaining purposes, the handling of disputes
between carriers and employees, employee
retirement, annuity, and unemployment systems,
and other dealings with employees that apply to
a rail carrier providing transportation subject
to chapter 105 apply to the successor
corporations; and
``(ii) the employee retirement, annuity,
and unemployment systems that apply to a rail
carrier providing transportation subject to
chapter 105 apply to the corporation described
in subsection (b)(2)(A).
``(C) Subsections (c) through (l) of section 24301 of this
title shall apply to the successor corporations.
``(5) Subject to further action by the board of directors,
the president of Amtrak on the date of enactment of the
Passenger Rail Investment Reform Act shall be offered the
position of chief executive officer of the Passenger Rail
Service Provider.
``(6) The contractual rights of successor corporations to
provide services may not be extended beyond the dates set forth
in paragraphs (2) and (3), as applicable, without competitive
bid.
``(7) The Passenger Rail Service Provider shall provide to
the Secretary of Transportation not later than the end of year
2, recommendations on the feasibility, advantages, and
disadvantages of separation of the reservation centers into a
free-standing entity that can become an element of an
intermodal reservations service.
``(8) The corporation described in subsection (b)(2)(A)
shall retain all legal rights pertaining to the name `Amtrak',
and may, at its option, license or otherwise make the name
`Amtrak' commercially available in connection with intercity
passenger rail and related services.
``(d) Rolling Stock and Shops.--
``(1) With respect to any route on which intercity
passenger rail service is provided on the date of enactment of
the Passenger Rail Investment Reform Act, the Passenger Rail
Service Provider shall make available to any replacement
operator the legacy equipment that is associated with the
service on the route.
``(2) Such equipment and services shall be made available
on such terms as Amtrak determines are fair, reasonable, and in
the public interest.
``(e) Freight and Commuter Operations.--
``(1) Amtrak shall ensure that the implementation of the
restructuring prescribed in this section gives due
consideration to the needs of freight and commuter rail
operations that, as of the effective date of the Passenger Rail
Investment Reform Act, operate in the Northeast Corridor on
Amtrak right of way.
``(2) Notwithstanding paragraph (1), commuter services
headquartered in a State or Commonwealth that is not a member
of the Northeast Corridor Compact after the last day of year 2,
shall pay the fully allocated costs incurred by the successor
corporation or any successor entity for access to and use of
the Northeast Corridor for such services.
``(3) The right of access by Amtrak to rail lines owned by
other carriers is, as of the date of enactment of the Passenger
Rail Investment Reform Act, restricted as follows:
``(A) The terms and conditions for operation of an
intercity passenger rail route or frequency to be added
after that date shall be determined by negotiation and
mutual agreement between the host railroad and the
operator of the route or frequency sought to be added,
with no preferential right of access.
``(B) If not utilized by Amtrak, Amtrak's right of
access to any segment of rail line owned by another
rail carrier may be assigned to no more than 1
intercity passenger rail operator during the term of
the assignment, except by agreement among Amtrak, its
assignee, and the owner of the rail line.''.
(b) Conforming Amendment.--The chapter analysis for chapter 243 of
title 49, United States Code, is amended by inserting the following
after the item relating to section 24309:

``24310. Amtrak restructuring mandate.''.

SEC. 103. NORTHEAST CORRIDOR COMPACT.

(a) Consent to Compact.--
(1) In general.--The States and the District of Columbia
that constitute the Northeast Corridor, as defined in section
24102 of title 49, United States Code, may enter into a
multistate compact, not in conflict with any other law of the
United States, to be known as the Northeast Corridor Compact,
to provide passenger rail service and to conduct related activities in
the Northeast Corridor.
(2) Congressional approval required.--The Northeast
Corridor Compact shall be submitted to Congress for its
consent. It is the sense of the Congress that rapid consent to
the Compact is a priority matter for the Congress.
(b) Compact Commission.--
(1) In general.--There is hereby established a commission
to be known as the Northeast Corridor Compact Commission. The
Commission shall be composed of--
(A) 2 members (or their designees), to be selected
by the Secretary of Transportation;
(B) 2 members (or their designees), to be selected
by agreement of--
(i) the governors of Maryland, Delaware,
Pennsylvania, New Jersey, New York,
Connecticut, Rhode Island, and Massachusetts
(hereinafter referred to as the ``participating
States''); and
(ii) the mayor of the District of Columbia;
and
(C) 1 member to be selected by the 4 members
selected under subparagraphs (A) and (B).
(2) Administrative provisions.--
(A) Members of the Commission shall be appointed
for the life of the Commission.
(B) A vacancy in the Commission shall be filled in
the manner in which the original appointment was made.
(C) Members shall serve without pay but shall
receive travel expenses, including per diem in lieu of
subsistence, in accordance with sections 5702 and 5703
of title 5, United States Code.
(D) The Chairman of the Commission shall be elected
by the members.
(E) The Commission may appoint and fix the pay of
such personnel as it considers appropriate.
(F) Upon the request of the Commission, the head of
any department or agency of the United States may
detail, on a reimbursable basis, any of the personnel
of that department or agency to the Commission to
assist it in carrying out its duties under this
section.
(G) Upon the request of the Commission, the
Administrator of General Services shall provide to the
Commission, on a reimbursable basis, the administrative
support services necessary for the Commission to carry
out its responsibilities under this section.
(c) Functions.--
(1) The Commission shall prepare for the consideration of
and adoption by participating States, the District of Columbia,
and the Secretary of Transportation an interstate compact that
provides for--
(A) full authority for 99 years to succeed to the
responsibilities of the National Railroad Passenger
Corporation as operator of the Northeast Corridor,
subject to the provisions of a lease from the
Department of Transportation;
(B) execution of a lease of the Northeast Corridor
from the Department of Transportation, for a period of
99 years, subject to appropriate provisions protecting
the lessor's interests, including reversion of all
lease interests to the lessor in the event the lessee
fails to meet its financial obligations or otherwise
assume financial responsibility for Northeast Corridor
functions;
(C) responsibility for Corridor maintenance and
improvement;
(D) operation of intercity passenger rail service;
(E) arrangements for operation of freight railroad
operations and commuter operations;
(F) assumption of financial responsibility for
Northeast Corridor functions;
(G) authority to make use of the Corridor for non-
rail purposes; and
(H) participation by the Department of
Transportation, as the non-voting representative of the
United States.
(2) The compact terms shall, at a minimum, conform to the
requirements of subsections (e) through (i) of this section.
(d) Final Compact Proposal.--
(1) The Commission shall submit a final compact proposal to
participating States, the District of Columbia, and the Federal
Government not later than the last day of year 1.
(2) The Commission shall terminate on the 180th day
following the date of transmittal of the final compact proposal
under this subsection. All records and papers of the Commission shall
thereupon be delivered to the Administrator of General Services for
deposit in the National Archives.
(e) Governance and Funding Requirements for Compact.--
(1) The governance provisions of the compact shall provide
a mechanism to ensure voting representation for the
participating States and the District of Columbia and for non-
voting representation for the Secretary of Transportation as an
ex officio member participating in all Compact affairs.
(2) The provisions of the compact shall establish the
financial obligations of each compact member and shall provide
for its management of rail services in the Northeast Corridor.
(f) Employee Interest Requirements for Compact.--The employee
provisions of the compact shall, at a minimum, provide the following
with regard to employees in the Northeast Corridor if the Compact
chooses to replace the successor corporations for operation and
maintenance of the physical plant or operation of passenger trains, or
both:
(1) Payment of any labor protection payments owed and not
paid by the successor corporations established under section
24310(b) of title 49, United States Code.
(2) In the case of an employee who is employed by the
National Railroad Passenger Corporation on the date of
enactment of the Passenger Rail Investment Reform Act and who
accepts employment by a successor corporation, a right of first
refusal to accept a substantially similar position with the
replacement operator when the successor corporation is
replaced.
(g) Federal Interest Requirements for Compact.--The provisions of
the Compact shall hold the United States Government harmless as to the
actions of the Compact under the lease of rights to the Northeast
Corridor by the United States Government.
(h) Compact Borrowing Authority.--
(1) The borrowing authority provisions of the Compact may
authorize it to issue bonds or other debt instruments from time
to time at its discretion for purposes that include paying any
part of the cost of rail service improvements, construction,
and rehabilitation and the acquisition of real and personal
property, including operating equipment, except that debt
issued by the Compact may be secured only by revenues to the
Compact and may not be a debt of a participating State, the
District of Columbia, or the Federal Government.
(2) The debt authorized by this subsection shall under no
circumstances be backed by the full faith and credit of the
United States, and a grant made under the authority of this Act
or under the authority of part C of subtitle V of title 49,
United States Code, shall include an express acknowledgement by
the grantee that the debt does not constitute an obligation of
the United States.
(i) Adoption of Compact; Turnover.--
(1) The participating States and the District of Columbia
shall adopt a final compact agreement not later than the last
day of year 2, and the Compact shall thereafter assume
responsibility for all Northeast Corridor operations from the
successor corporations on a date that is not later than 8
months following adoption of the Compact.
(2) In the event that the participating States and the
District of Columbia do not adopt the final compact agreement
and make it operational under the schedule set forth in this
section, the Secretary of Transportation shall assume control
of the corporation described in section 24310(b)(2)(A) of title
49, United States Code, and shall make such legislative
recommendations as the President judges necessary and expedient
to Congress that address the monetary contributions by
Northeast Corridor states and the District of Columbia that
would be necessary to provide continued intercity passenger
rail service in the Northeast Corridor.
(j) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary of Transportation such sums as may be
necessary to carry out the purposes of this section.

SEC. 104. ASSISTANCE TO ADDRESS CAPITAL NEEDS.

(a) In General.--There are authorized to be appropriated to the
Secretary of Transportation, for capital expenditures in compliance
with capital spending plans developed under section 202 of this Act,
including the Secretary's expenses related thereto, the following
amounts:
(1) Such sums as may be necessary for year 3.
(2) Such sums as may be necessary for year 4.
(3) Such sums as may be necessary for year 5.
(4) Such sums as may be necessary for year 6.
(b) Obligation Options.--
(1) Subject to paragraph (2), the Secretary may obligate
the funds authorized by this section through grants to or
cooperative agreements with States, the Passenger Rail Service
Provider, the Northeast Corridor Compact or another qualified
Compact, or through contracts with private companies.
(2) Funds appropriated under this section shall not be
obligated and not be disbursed from the Treasury for the
Northeast Corridor Compact until it has been established and is
empowered and qualified to enter into contracts for the
expenditure of the funds.
(c) Eligibility of Expenditures.--
(1) The Federal share of expenditures for capital
improvements under this section may be not more than 100
percent and is solely authorized for the purpose of funding
deferred maintenance, safety, and security projects.
Expenditures for capacity expansion are not authorized by this
section.
(2) Funds appropriated under this section may be obligated
for an expenditure only if the Secretary has determined in
writing that the expenditure on any railroad infrastructure
investments is limited to a route or routes with a useful life
of at least 5 years.

SEC. 105. EMPLOYEE TRANSITION ASSISTANCE; AUTHORIZATION.

(a) Provision of Financial Incentives.--To facilitate the
restructuring required by this title, the Secretary is authorized to
develop a program under which the Secretary may, at the Secretary's
discretion, provide grants for financial incentives to be provided to
employees of the National Railroad Passenger Corporation who
voluntarily terminate their employment with the Corporation or the
successor corporations (as such term is used in section 24310(b)(1) of
title 49, United States Code) and relinquish any legal rights to
receive termination-related payments under any contractual agreement
with the Corporation or the successor corporations.
(b) Conditions for Financial Incentives.--As a condition for
receiving financial assistance grants under this section, the
Corporation or the successor corporations shall certify that--
(1) the financial assistance results in a net reduction in
the total number of employees equal to the number receiving
financial incentives;
(2) the financial assistance results in a net reduction in
total employment expense equivalent to the total employment
expenses associated with the employees receiving financial
incentives; and
(3) the total number of employees eligible for termination-
related payments will not be increased without the express
written consent of the Secretary.
(c) Amount of Financial Incentives.--The financial incentives
authorized under this section may not exceed $50,000 per employee.
(d) Authorization of Appropriations.--There are hereby authorized
to be appropriated to the Secretary such sums as may be necessary to
make grants to the National Railroad Passenger Corporation or the
successor corporations to fund termination-related payments to
employees under existing contractual agreements from the first day of
year 1 through the last day of year 4.

SEC. 106. LIMIT ON OPERATING ASSISTANCE FOR LONG-DISTANCE ROUTES.

(a) In General.--Chapter 243 of title 49, United States Code, is
amended by adding at the end the following:
``Sec. 24316. Limit on operating assistance for long-distance routes
``(a) General Authority.--
``(1) Grant authority.--After the last day of year 1, the
Secretary of Transportation may make grants for operating
assistance under the authority of this section, and not under
any other provision of law, to reimburse operators of long-
distance routes and corridor feeder routes for the operating
expenses incurred in operating those routes to provide
intercity passenger rail transportation.
``(2) Conditions.--A grant under this section shall be
subject to the terms, conditions, requirements, and provisions
the Secretary decides are necessary or appropriate for the
purposes of this section, including limitations on what
operating expenses are eligible for reimbursement and
documentation of eligible operating losses on a quarterly
basis.
``(b) Federal Share of Operating Expenses.--
``(1) In general.--No funds appropriated to carry out this
section may be used to fund operating expenses of a long-
distance route after the last day of year 1, except as provided
in paragraph (2).
``(2) Reimbursable amount for years 2, 3, and 4.--The
Secretary may reimburse an operator of a long-distance route or
a corridor feeder route for operating expenses on that route
that do not exceed the operating losses on that route and are
not more than--
``(A) $0.40 per-passenger mile during year 2;
``(B) $0.20 per-passenger mile during year 3; or
``(C) $0.10 per-passenger mile during year 4.
``(3) Termination after year 4.--The Secretary may not
reimburse an operator of a long-distance route or a corridor
feeder route for operating expenses under this section after
year 4.
``(c) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary such sums as may be necessary to carry
out this section, including administrative costs.''.
(b) Conforming Amendments.--The chapter analysis for chapter 243 of
title 49, United States Code, is amended by adding at the end the
following:

``24316. Limit on operating assistance for long-distance routes.''.

SEC. 107. DEFINITIONS.

Section 24102 of title 49, United States Code, is amended--
(1) by redesignating paragraphs (5) through (9) as
paragraphs (6) through (10), respectively;
(2) by inserting after paragraph (4) the following:
``(5) `corridor feeder route' means a portion of a long
distance train or route that provides services between regional
corridors by connecting to endpoints of the corridors.'';
(3) by redesignating paragraphs (7) through (10), as
redesignated, as paragraphs (9) through (12), respectively;
(4) by inserting after paragraph (6), as redesignated, the
following:
``(7) `legacy equipment' means the rolling stock required
to provide intercity passenger rail service owned or leased by
the National Railroad Passenger Corporation on the date of
enactment of the Passenger Rail Investment Reform Act.
``(8) `long distance train' or `long distance route' means
all or a portion of the following trains or routes operated by
the National Railroad Passenger Corporation on the date of
enactment of the Passenger Rail Investment Reform Act:
``(A) The Silver Star.
``(B) The Three Rivers.
``(C) The Cardinal.
``(D) The Silver Meteor.
``(E) The Empire Builder.
``(F) The Capitol Limited.
``(G) The California Zephyr.
``(H) The Southwest Chief.
``(I) The City of New Orleans.
``(J) The Texas Eagle.
``(K) The Sunset Limited.
``(L) The Coast Starlight.
``(M) The Lake Shore Limited.
``(N) The Palmetto.
``(O) The Crescent.
``(P) The Pennsylvanian.
``(Q) The Auto Train.''; and
(5) by adding at the end the following:
``(13) `year 1' means the earlier of--
``(A) the fiscal year in which the Passenger Rail
Investment Reform Act is enacted if the fiscal year
began less than 61 days before such date; or
``(B) the first fiscal year beginning after the
date of enactment of that Act.
``(14) `year 2', `year 3', `year 4', `year 5', and `year
6', mean, respectively, the first, second, third, fourth, and
fifth fiscal years following year 1.''.

SEC. 108. REPEAL OF OBSOLETE AND EXECUTED PROVISIONS OF LAW.

(a) In General.--Title 49, United States Code, is amended by repeal
of the following sections:
(1) Section 24701.
(2) Section 24706.
(3) Section 24901.
(4) Section 24902.
(5) Section 24904.
(6) Section 24906.
(7) Section 24909.
(b) Amendment of Section 24305.--Section 24305 of title 49, United
States Code, is amended--
(1) by striking paragraph (2) of subsection (a) and
redesignating paragraph (3) as paragraph (2);
(2) by striking paragraph (4) of subsection (b) and
redesignating paragraphs (5) and (6) as paragraphs (4) and (5),
respectively; and
(3) by inserting ``With regard to items acquired with funds
provided by the Federal Government,'' before ``Amtrak'' in
subsection (f)(2).
(c) Conforming Amendments.--The chapter analyses for chapters 243,
247, and 249 or title 49, United States Code, are amended, as
appropriate, by striking the items relating to sections 24307, 24701,
24706, 24901, 24902, 24904, 24906, 24908, and 24909.
(d) Effective Date.--The amendments made by this section shall take
effect on the first day of year 1.

TITLE II--FINANCIAL REFORMS

SEC. 201. LIMITATIONS ON AVAILABILITY OF GRANTS.

(a) In General.--Chapter 43 of title 49, United States Code, is
amended by inserting after section 24313 the following:
``Sec. 24314. Transitional limitations on availability of grants
``(a) Requirements Prior to Restructuring.--A grant made to the
National Railroad Passenger Corporation under the authority of this
part between the first day of year 1, and the establishment and
commencement of operations by the successor corporations under section
24310 of this title may only be made subject to the following
limitations:
``(1) The Secretary of Transportation shall not disburse
funding to cover operating losses on a long-distance train
route without first receiving and approving a grant request for
that specific train route.
``(2) Each such grant request shall be accompanied by a
detailed financial analysis and revenue projection justifying
the Federal support to the Secretary's satisfaction.
``(3) The Secretary of Transportation and the board of
directors of the Corporation shall ensure that, of the amount
made available by appropriations for capital and operating
assistance to the Corporation in a fiscal year, sufficient sums
are reserved to satisfy the contractual obligations of the
Corporation to provide commuter and intrastate passenger rail
service.
``(4) Not later than December 31 prior to each fiscal year
in which grants are made to the Corporation, the Corporation
shall transmit to the Secretary of Transportation, the
Committee on Commerce, Science, and Transportation of the
Senate, the Committee on Transportation and Infrastructure of
the House of Representatives, and the House of Representatives
and Senate Committees on Appropriations a business plan for
operating and capital improvements to be funded in the fiscal
year under section 24104(a) of this title 49.
``(5) The business plan shall include a description of the
work to be funded, along with cost estimates and an estimated
timetable for completion of the projects covered by the
business plan.
``(6) Each month of each fiscal year in which grants are
made to the Corporation, the Corporation shall submit to the
Secretary of Transportation, the Committee on Commerce,
Science, and Transportation of the Senate, the Committee on
Transportation and Infrastructure of the House of
Representatives, and the House of Representatives and Senate
Committees on Appropriations a supplemental report regarding
the business plan, which shall describe the work completed to
date, any changes to the business plan, and the reasons for
such changes.
``(7) A grant that is not approved by the Secretary of
Transportation and an element of the Corporation's current
fiscal year business plan may not be used for operating
expenses or capital projects, and may not be obligated or
expended unless the Corporation certifies, as part of the grant
agreement, that it has complied with and will abide by the
following requirements:
``(A) The Corporation's management will maintain
financial controls and accounting transparency to the
satisfaction of the Secretary, including developing or
enhancing any existing capacity separately to report--
``(i) all revenue and expenses associated
with rail operations by route; and
``(ii) budgeted and actual expenditures for
all capital investments.
``(B) The Corporation's management will provide a
monthly performance report to the board of directors,
the Secretary of Transportation, and the committees of Congress
described paragraph (6). The Corporation shall also make available to
the Secretary the same details and reports on its financial performance
that it makes available to Amtrak management, at the same time that it
provides those reports and details to Amtrak management.
``(C) The Corporation shall expend funds only for
the continuation of existing plants and services. With
the exception of expenditures for which it obtains
written approval from the Secretary of Transportation,
the Corporation will not use of any of its funds for
expansion or planning for expansion of rail service,
including high speed rail service.
``(D) The Corporation has negotiated with its
employees substantial operating cost reductions needed
to make its operations competitive with private-sector
service providers.
``(b) Requirements Following Restructuring.--Any grant made
directly to a successor corporation (as such term is used in section
24310(b)(1)) under the authority of this part may only be made subject
to the following limitations:
``(1) The Secretary of Transportation shall not disburse
funding to cover operating losses on a long-distance train
route without first receiving and approving a grant request for
that specific train route.
``(2) Each such grant request shall be accompanied by a
detailed financial analysis and revenue projection justifying
the Federal support to the Secretary's satisfaction.
``(3) The Secretary shall ensure that, of the amount made
available by appropriations for capital and operating
assistance in a fiscal year, sufficient sums are reserved to
satisfy the successor corporation's contractual obligations, if
any, with respect to commuter and intrastate passenger rail
service.
``(4) Not later than December 31 prior to each fiscal year
in which grants are made, the successor corporations shall each
transmit to the Secretary of Transportation a business plan for
operating and capital improvements to be funded in the fiscal
year.
``(5) The business plan shall include a description of the
work to be funded, along with cost estimates and an estimated
timetable for completion of the projects covered by the
business plan.
``(6) Each month of each fiscal year in which grants are
made, the successor corporations shall each submit to the
Secretary a supplemental report regarding the business plan,
which shall describe the work completed to date, any changes to
the business plan, and the reasons for such changes.
``(7) A grant that is not approved by the Secretary of
Transportation and an element of the Corporation's current
fiscal year business plan may not be used for operating
expenses or capital projects, and may not be obligated or
expended unless the Corporation certifies, as part of the grant
agreement, that it has complied with and will abide by the
following requirements:
``(A) Management will maintain financial controls
and accounting transparency to the satisfaction of the
Secretary, including developing or enhancing any
existing capacity separately to report--
``(i) all revenue and expenses associated
with rail operations by route; and
``(ii) budgeted and actual expenditures for
all capital investments.
``(B) Management of each successor corporation
shall make available to the Secretary the same details
and reports on its financial performance that it makes
available internally, at the same time that it provides
those reports and details internally.
``(C) Funds will be spent only on existing plants
and services.''.
(b) Conforming Amendment.--The chapter analysis for chapter 243 of
title 49, United States Code, is amended by inserting after the item
relating to section 24313 the following:

``24314. Transitional limitations on availability of grants.''.

SEC. 202. SPENDING PLANS FOR CAPITAL BACKLOG REDUCTION.

(a) In General.--Within 6 months after year 1 begins, and as a
condition of grants to the National Railroad Passenger Corporation
between that date and the implementation of the restructuring required
under section 24310 of title 49, United States Code, the Corporation
shall prepare a capital spending plan that addresses capital needs,
consistent with the funding levels authorized to be provided for year 1
and each fiscal year thereafter through year 6, for--
(1) Northeast Corridor capital assets;
(2) capital assets on long-distance routes other than on
the Northeast Corridor; and
(3) capital assets on short-distance routes other than the
NortheastCorridor.
(b) Approval by the Secretary and the Compact.--
(1) In general.--The Corporation shall submit the capital
spending plan prepared under subsection (a) to the Secretary of
Transportation for review and approval. The plan shall be
implemented only after approval by the Secretary, and with any
modifications specified by the Secretary.
(2) Annual updates.--The plan shall be updated and
resubmitted at least annually.
(3) No plan no grant.--After creation of Northeast Corridor
Compact, the Secretary may not make a grant to the Compact for
capital investments except in accordance with a capital
spending plan prepared by the Compact and approved by both the
Compact and the Secretary. The same requirements shall apply to
grants made to States and other Compacts under this section.

SEC. 203. REDEMPTION OF COMMON STOCK.

(a) Valuation.--The Secretary of Transportation shall arrange, at
the National Railroad Passenger Corporation's expense, for a valuation
of all assets and liabilities of the Corporation to be performed by the
Secretary of the Treasury, or by a contractor selected by the Secretary
of the Treasury. The valuation shall be conducted in accordance with
criteria and requirements to be determined by the Secretary in the
Secretary's discretion and shall be completed within 6 months after
year 1 begins.
(b) Redemption.--
(1) Prior to the transfer of assets to the Secretary
directed by section 204 of this Act, and within 9 months after
year 1 begins, the Corporation shall redeem all common stock in
the Corporation issued prior to the date of enactment of this
Act at the value of such stock, based on the valuation
performed under subsection (a).
(2) No provision of this Act, or amendments made by this
Act, provide to the owners of the common stock a priority over
holders of indebtedness or other stock of the Corporation.
(c) Acquisition Through Eminent Domain.--In the event that the
Corporation and the owners of its common stock have not completed the
redemption of such stock by a date that is within 9 months after year 1
begins, the Corporation shall exercise its right of eminent domain
under section 24311 of title 49, United States Code, to acquire that
stock. The valuation performed under subsection (a) shall be deemed to
constitute just compensation except to the extent that the owners of
the common stock demonstrate that the valuation is less than the
constitutional minimum value of the stock.
(d) Amendment of Section 24311.--Section 24311(a)(1) of title 49,
United States Code, is amended--
(1) by striking ``or'' at the end of subparagraph (A);
(2) by striking ``Amtrak.'' in subparagraph (B) and
inserting ``Amtrak; or''; and
(3) by adding at the end the following:
``(C) necessary to redeem the Corporation's common
stock from any holder thereof, including a rail
carrier.''.
(e) Conversion of Preferred Stock to Common.--
(1) Subsequent to the redemption of the common stock in the
corporation issued prior to the date of enactment of this Act,
the Secretary of Transportation shall convert the one share of
the preferred stock of the Corporation retained under section
204 of this Act for 10 shares of common stock in the
Corporation.
(2) The Corporation shall not issue any other common stock
without the express written consent of the Secretary.

SEC. 204. RETIREMENT OF PREFERRED STOCK; TRANSFER OF ASSETS.

(a) Transfer.-- Not later than 30 days after the redemption or
acquisition of stock under section 203 of this Act, the Corporation
shall, in return for the consideration specified in subsection (c),
transfer to the Secretary of Transportation title to the following
assets:
(1) The portions of the Northeast Corridor currently owned
or leased by the Corporation as well as any improvements made
to these assets, including the rail right-of-way, stations,
track, signal equipment, electric traction facilities, bridges,
tunnels and all other improvements owned by Amtrak between
Boston, Massachusetts, and Washington, District of Columbia
(including the route through Springfield, Massachusetts, and
the routes to Harrisburg, Pennsylvania, and Albany, New York,
from the Northeast Corridor mainline).
(2) Chicago Union Station and rail-related assets in the
Chicago metropolitan area.
(3) All other track and right-of-way, stations, repair
facilities, and other real property owned or leased by the
Corporation.
(b) Existing Encumbrances.--(1) With regard to any assets described
in subsection (a) that the Corporation has provided as security or
collateral for a debt entered into prior to the date of enactment of
this Act, the Corporation shall transfer its underlying legal interest
in such asset to the Secretary, but the Corporation shall remain liable
for the debt secured by the asset.
(2) The obligation of the National Railroad Passenger Corporation
to repay in full any indebtedness to the United States incurred since
January 1, 1990, is not affected by this Act or an amendment made by
this Act.
(c) Consideration.--In consideration for the assets transferred to
the United States under subsection (b), the Secretary shall--
(1) deliver to the Corporation all but 1 share of the
preferred stock of the Corporation held by the Secretary and
forgive the Corporation's legal obligation to pay any
dividends, including accrued but unpaid dividends as of the
date of transfer, evidenced by the preferred stock
certificates; and
(2) release the Corporation from all mortgages and liens
held by the Secretary that were in existence on January 1,
1990.
(d) Agreement.--Prior to accepting title to the assets transferred
under this section, the Secretary shall enter into an agreement with
the Corporation under which the Corporation will exercise on behalf of
the Secretary care, custody, and control of the assets to be
transferred. The agreement shall identify in detail the specific
functions of the Corporation's employees and equipment, and the
specific numbers and locations of the employees and equipment
associated with each function, that would be needed for continuation of
commuter and freight rail service in the event that the Corporation
were to cease operation, and identify those actions that would be
required to ensure that such functions can be continued on an interim
basis to avoid any interruption in commuter or freight rail service on
the Northeast Corridor.
(e) Further Transfers.--
(1) The Secretary may, for appropriate consideration,
transfer title to all or part of Chicago Union Station and
rail-related assets in the Chicago metropolitan area acquired
under this section to a regional public transportation agency
that has significant operations in Chicago Union Station on the
date of enactment of this Act.
(2) The Secretary may, for appropriate consideration,
transfer to the underlying States title to real estate
properties owned by the Corporation between Boston,
Massachusetts, and Washington, District of Columbia, that
constitute the route through Springfield, Massachusetts, and
the routes to Harrisburg, Pennsylvania, and Albany, New York,
from the Northeast Corridor mainline.
(3) The Secretary may, for appropriate consideration,
transfer title to all or part of the assets acquired under
subsection (a)(3) to a State, a public agency, a railroad, or
other entity deemed appropriate by the Secretary.
(4) All financial consideration determined by the Secretary
to be appropriate consideration for the transfer of the assets
described in paragraphs (1) through (3) shall be used
exclusively to reduce the Corporation's long-term debt that
exists on the date of enactment.

SEC. 205. REAL ESTATE AND ASSET SALES; OTHER.

(a) In General.--The Amtrak board of directors shall undertake and
complete not later than the last day of year 3, the disposition of all
stations, track, and other facilities outside the Northeast Corridor
mainline, including property conveyed to the Secretary of
Transportation under section 204 of this Act.
(b) Proceeds of Liquidation.--Notwithstanding section 3302 of title
31, United States Code, any proceeds from the liquidation of assets
under this section shall--
(1) be credited as an offsetting collection to the account
that finances grants for debt and interest payments under
section 206 of this Act to the Passenger Rail Service Provider
established under section 24310 of title 49, United States
Code; and
(2) remain available until expended.

SEC. 206. MANAGEMENT AND TRANSFER OF SECURED DEBT.

(a) New Debt Prohibition.--Except as approved by the Secretary of
Transportation to refinance existing secured debt, the Corporation
shall not enter into any obligation secured by assets of the
Corporation after the date of enactment of this Act. This section does
not prohibit unsecured lines of credit used by the Corporation or any
subsidiary for working capital purposes.
(b) Secured Debt Transfer.--
(1) Upon establishment of the Passenger Rail Service
Provider established under section 24310 of title 49, United
States Code, and the transfer of ownership of the existing
rolling stock, all debt secured by the rolling stock shall be
transferred to and become a liability solely of, the Passenger
Rail Service Provider.
(2) Upon establishment of the Northeast Corridor Compact
under section 103 of this Act, the secured debt associated with
fixed assets in the Northeast Corridor shall be transferred to,
and become a liability solely of, the Northeast Corridor
Compact.
(c) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated to
the Secretary of Transportation for grants to the Passenger
Rail Service Provider established under section 24310 of title
49, United States Code, to pay principal and interest payments
on secured debt existing on the date of enactment of this Act
the following amounts:
(A) Such sums as may be necessary in year 2.
(B) Such sums as may be necessary in year 3.
(C) Such sums as may be necessary in year 4.
(D) Such sums as may be necessary in year 5.
(E) Such sums as may be necessary in year 6.
(2) Legal effect of payments under this section.--The
payment of principal and interest secured debt with the
proceeds of grants under paragraph (1) on funding authorized by
this section shall not--
(A) modify the extent or nature of any indebtedness
of the National Railroad Passenger Corporation to the
United States in existence of the date of enactment of
this Act;
(B) change the private nature of Amtrak's or its
successors' liabilities; or
(C) imply any Federal guarantee or commitment to
amortize Amtrak's outstanding indebtedness.

SEC. 207. TRANSITION ASSISTANCE.

(a) Year 1 Assistance.--There are authorized to be appropriated to
the Secretary of Transportation for grants to the National Railroad
Passenger Corporation for operating and capital expenses such sums as
may be necessary in year 1.
(b) Year 2 Successor Corporation Operating Assistance.--There are
authorized to be appropriated to the Secretary such sums as may be
necessary for grants to--
(1) the Passenger Rail Service Provider established under
section 24310 of title 49, United States Code, for operating
expenses of all services except long-distance trains and routes
in year 2; and
(2) the Passenger Rail Infrastructure Manager established
under that section for capital expenses in year 2.
(c) Administrative Expenses of Compacts.--There are authorized to
be appropriated to the Secretary such sums as may be necessary for
grants for the administrative expenses of interstate compacts in years
1 through 3.
(d) Expenses of Amtrak.-- There are authorized to be appropriated
to the Secretary such sums as may be necessary for grants for the
administrative expenses of Amtrak in years 2 through 6.
(e) Grants Made After Year 2.--After the last day of year 2, the
Secretary may not enter into a grant agreement under this Act, other
than section 206(c), or part C of title V of title 49, United States
Code, unless each other party to the grant agreement is a State,
regional compact, or other public entity.

TITLE III--GRANTS AND OTHER ASSISTANCE FOR INTERCITY PASSENGER RAIL
SERVICE

SEC. 301. CAPITAL ASSISTANCE FOR INTERCITY PASSENGER RAIL SERVICE.

(a) In General.--Part C of subtitle V of title 49, United States
Code, is amended by inserting after chapter 243 the following:

``CHAPTER 244--INTERCITY PASSENGER RAIL SERVICE CORRIDOR CAPITAL
ASSISTANCE

``Sec.
``24401. Definitions; effective date.
``24402. Capital investment grants to support intercity passenger rail
service.
``24403. Project management oversight.
``24404. Use of capital grants to finance first-dollar liability of
grant project.
``24405. Authorization of appropriations.
``Sec. 24401. Definitions; effective date.
``(a) Definitions.--In this chapter:
``(1) Applicant.--The term `applicant' means a State, an
Interstate Compact (including the Northeast Corridor Compact as
specified in section 103 of the Passenger Rail Investment
Reform Act), or a public agency established by one or more
States and having responsibility for providing intercity
passenger rail service.
``(2) Capital project.--The term `capital project' means a
project within a corridor plan or program for--
``(A) acquiring, constructing, supervising or
inspecting equipment or a facility for use in intercity
passenger rail service, expenses incidental to the
acquisition or construction (including designing,
engineering, location surveying, mapping, environmental
studies, and acquiring rights-of-way), payments for the
capital portions of rail trackage rights agreements,
passenger rail-related intelligent transportation
systems, highway-rail grade crossing improvements on
routes used for intercity passenger rail service,
relocation assistance, acquiring replacement housing
sites, and acquiring, constructing, relocating, and
rehabilitating replacement housing;
``(B) rehabilitating, remanufacturing or
overhauling rail rolling stock and facilities used
primarily in intercity passenger rail service; or
``(C) the first-dollar liability costs for
insurance related to the provision of intercity
passenger rail service.
``(3) Intercity passenger rail service.--The term
`intercity passenger rail service' means transportation
services with the primary purpose of passenger transportation
between towns, cities, and metropolitan areas by rail,
including high-speed rail.
``(b) Effective Date.--This chapter is effective on the first day
of year 2.
``Sec. 24402. Capital investment grants to support intercity passenger
rail service
``(a) General Authority.--
``(1) Grants.--The Secretary of Transportation may make
grants under this section to an applicant to assist in
financing the capital costs of facilities and equipment
necessary to provide intercity passenger rail transportation.
``(2) Terms and conditions.--The Secretary shall require
that a grant under this section be subject to the terms,
conditions, requirements, and provisions the Secretary decides
are necessary or appropriate for the purposes of this section,
including requirements for the disposition of net increases in
value of real property resulting from the project assisted
under this section.
``(3) Limitation.--A grant under this section may not be
made for a project or program of projects that qualifies for
financial assistance under chapter 53 of this title.
``(b) Project as Part of Approved Program.--
``(1) In general.--The Secretary may not approve a grant
for a project under this section unless the Secretary finds
that the project is part of an approved corridor plan and
program developed under section 5303 of this title and that the
applicant or recipient has or will have the legal, financial,
and technical capacity to carry out the project (including
safety and security aspects of the project), satisfactory
continuing control over the use of the equipment or facilities,
and the capability and willingness to maintain the equipment or
facilities.
``(2) Eligibility information.--An applicant shall provide
sufficient information upon which the Secretary can make the
findings required by this subsection.
``(3) Proposed operator justification.--If an applicant has
not selected the proposed operator of its service
competitively, the applicant shall provide written
justification to the Secretary showing why the proposed
operator is the best, taking into account price and other
factors, and that use of the proposed operator will not
increase the capital cost of the project.
``(4) Rail agreement.--An applicant shall demonstrate that
it has agreed with the railroad over which the intercity
passenger rail service will operate concerning the applicant's
operating and capital plans.
``(c) Letters of Intent, Full Funding Grant Agreements, and Early
Systems Work Agreements.--
``(1) Letter of intent.--
``(A) The Secretary may issue a letter of intent to
an applicant announcing an intention to obligate, for a
major capital project under this section, an amount
from future available budget authority specified in law
that is not more than the amount stipulated as the
financial participation of the Secretary in the
project.
``(B) At least 30 days before issuing a letter
under subparagraph (A) of this paragraph or entering
into a full funding grant agreement, the Secretary
shall notify in writing the Committee on Transportation
and Infrastructure of the House of Representatives and
the Committee on Commerce, Science, and Transportation
of the Senate and the House of Representatives and
Senate Committees on Appropriations of the proposed
letter or agreement. The Secretary shall include with
the notification a copy of the proposed letter or
agreement as well as the evaluations and ratings for
the project.
``(C) The issuance of a letter is deemed not to be
an obligation under sections 1108(c) and (d), 1501, and
1502(a) of title 31, or an administrative commitment.
``(D) An obligation or administrative commitment
may be made only when amounts are appropriated.
``(2) Full funding agreement.--
``(A) The Secretary may make a full funding grant
agreement with an applicant. The agreement shall--
``(i) establish the terms of participation
by the United States Government in a project
under this section;
``(ii) establish the maximum amount of
Government financial assistance for the
project;
``(iii) cover the period of time for
completing the project, including a period
extending beyond the period of an
authorization; and
``(iv) make timely and efficient management
of the project easier according to the law of
the United States.
``(B) An agreement under this paragraph obligates
an amount of available budget authority specified in
law and may include a commitment, contingent on amounts
to be specified in law in advance for commitments under
this paragraph, to obligate an additional amount from
future available budget authority specified in law. The
agreement shall state that the contingent commitment is
not an obligation of the Government and is subject to
subject to the availability of appropriations made by
Federal law and to Federal laws in force on or enacted
after the date of the contingent commitment. Interest
and other financing costs of efficiently carrying out a
part of the project within a reasonable time are a cost
of carrying out the project under a full funding grant
agreement, except that eligible costs may not be more
than the cost of the most favorable financing terms
reasonably available for the project at the time of
borrowing. The applicant shall certify, in a way
satisfactory to the Secretary, that the applicant has
shown reasonable diligence in seeking the most
favorable financing terms.
``(3) Early systems work agreement.--
``(A) The Secretary may make an early systems work
agreement with an applicant if a record of decision
under the National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.) has been issued on the project and
the Secretary finds there is reason to believe--
``(i) a full funding grant agreement for
the project will be made; and
``(ii) the terms of the work agreement will
promote ultimate completion of the project more
rapidly and at less cost.
``(B) A work agreement under this paragraph
obligates an amount of available budget authority
specified in law and shall provide for reimbursement of
preliminary costs of carrying out the project,
including land acquisition, timely procurement of
system elements for which specifications are decided,
and other activities the Secretary decides are
appropriate to make efficient, long-term project
management easier. A work agreement shall cover the
period of time the Secretary considers appropriate. The
period may extend beyond the period of current
authorization. Interest and other financing costs of
efficiently carrying out the work agreement within a
reasonable time are a cost of carrying out the
agreement, except that eligible costs may not be more
than the cost of the most favorable financing terms
reasonably available for the project at the time of
borrowing. The applicant shall certify, in a way
satisfactory to the Secretary, that the applicant has
shown reasonable diligence in seeking the most
favorable financing terms. If an applicant does not
carry out the project for reasons within the control of
the applicant, the applicant shall repay all Government
payments made under the work agreement plus reasonable
interest and penalty charges the Secretary establishes
in the agreement.
``(4) Limit on total obligations and commitments.--The
total estimated amount of future obligations of the Government
and contingent commitments to incur obligations covered by all
outstanding letters of intent, full funding grant agreements,
and early systems work agreements may be not more than the
amount authorized under section 24405 of this title, less an
amount the Secretary reasonably estimates is necessary for
grants under this section not covered by a letter. The total
amount covered by new letters and contingent commitments
included in full funding grant agreements and early systems
work agreements may be not more than a limitation specified in
law.
``(d) Federal Share of Net Project Cost.--
``(1) In general.--
``(A) Based on engineering studies, studies of
economic feasibility, and information on the expected
use of equipment or facilities, the Secretary shall
estimate the net project cost.
``(B) A grant for the project shall not exceed the
specified percentage of the project net capital cost
established for the year the grant is approved, as
follows:
``(i) 100 percent in the case of approval
for year 2.
``(ii) 80 percent in the case of approval
for year 3.
``(iii) 60 percent in the case of approval
for year 4.
``(iv) 50 percent in the case of approval
for year 5, and thereafter.
``(C) The Secretary shall give priority in
allocating future obligations and contingent
commitments to incur obligations to grant requests
seeking a lower federal share of the project net
capital cost.
``(2) Additional funding.--Up to an additional 30 percent
of project net capital cost may be funded from amounts
appropriated to or made available to a department or agency of
the Federal Government that are eligible to be expended for
transportation.
``(e) Undertaking Projects in Advance.--
``(1) In general.--The Secretary may pay the Federal share
of the net capital project cost to an applicant that carries
out any part of a project described in this section according
to all applicable procedures and requirements if--
``(A) the applicant applies for the payment;
``(B) the Secretary approves the payment; and
``(C) before carrying out a part of the project,
the Secretary approves the plans and specifications for
the part in the same way as other projects under this
section.
``(2) Interest costs.--The cost of carrying out part of a
project includes the amount of interest earned and payable on
bonds issued by the applicant to the extent proceeds of the
bonds are expended in carrying out the part. The amount of
interest includable as cost under this paragraph may not be
more than the most favorable interest terms reasonably
available for the project at the time of borrowing. The
applicant shall certify, in a manner satisfactory to the
Secretary, that the applicant has shown reasonable diligence in
seeking the most favorable financial terms.
``(3) Use of cost indices.--The Secretary shall consider
changes in capital project cost indices when determining the
estimated cost under paragraph (2) of this subsection.
``Sec. 24403. Project management oversight
``(a) Project Management Plan Requirements.--To receive Federal
financial assistance for a major capital project under this chapter, an
applicant shall prepare and carry out a project management plan
approved by the Secretary of Transportation. The plan shall provide
for--
``(1) adequate recipient staff organization with well-
defined reporting relationships, statements of functional
responsibilities, job descriptions, and job qualifications;
``(2) a budget covering the project management
organization, appropriate consultants, property acquisition,
utility relocation, systems demonstration staff, audits, and
miscellaneous payments the recipient may be prepared to
justify;
``(3) a construction schedule for the project;
``(4) a document control procedure and recordkeeping
system;
``(5) a change order procedure that includes a documented,
systematic approach to handling the construction change orders;
``(6) organizational structures, management skills, and
staffing levels required throughout the construction phase;
``(7) quality control and quality assurance functions,
procedures, and responsibilities for construction, system
installation, and integration of system components;
``(8) material testing policies and procedures;
``(9) internal plan implementation and reporting
requirements;
``(10) criteria and procedures to be used for testing the
operational system or its major components;
``(11) periodic updates of the plan, especially related to
project budget and project schedule, financing, and ridership
estimates; and
``(12) the recipient's commitment to submit a project
budget and project schedule to the Secretary each month.
``(b) Secretarial Oversight.--
``(1) In general.--The Secretary may use no more than 0.5
percent of amounts made available in a fiscal year for capital
projects under this chapter to enter into contracts to oversee
the construction of such projects.
``(2) Use of funds.--The Secretary may use amounts
available under paragraph (1) of this subsection to make
contracts for safety, procurement, management, and financial
compliance reviews and audits of a recipient of amounts under
paragraph (1).
``(3) Federal share.--The Federal Government shall pay the
entire cost of carrying out a contract under this subsection.
``(c) Access to Sites and Records.--Each recipient of assistance
under this chapter shall provide the Secretary and a contractor the
Secretary chooses under subsection (b) of this section with access to
the construction sites and records of the recipient when reasonably
necessary.
``(d) Regulations.--The Secretary shall prescribe regulations
necessary to carry out this section. The regulations shall include--
``(1) a definition of `major capital project' for this
section;
``(2) a requirement that oversight begin during the
preliminary engineering stage of a project, unless the
Secretary finds it more appropriate to begin oversight during
another stage of a project, to maximize the transportation
benefits and cost savings associated with project management
oversight;
``(3) a deadline by which all grant applications for a
fiscal year shall be submitted that is early enough to permit
the Secretary to evaluate all timely applications thoroughly
before making grants;
``(4) a formula based on population, track miles of
railroad, and passenger miles traveled in the prior fiscal year
by which one-half of the funds appropriated for capital grants
for each fiscal year are to be allocated among the States;
``(5) a requirement that, if a State does not timely apply
for its share of formula grant funds under paragraph (4) of
this subsection, those funds will be made available to other
States under paragraph (6) of this subsection; and
``(6) criteria by which the Secretary will allocate one-
half of the funds appropriated for capital grants for each
fiscal year, including at least projected ridership, passenger
rail and intermodal connections, congestion and air quality
mitigation, underserved communities, and the effect of the
grant on whether existing service will continue.
``Sec. 24404. Use of capital grants to finance first-dollar liability
of grant project
``Notwithstanding the requirements of section 24402 of this title,
the Secretary of Transportation may approve the use of capital
assistance under this chapter to fund self-insured retention of risk
for the first tier of liability insurance coverage for rail passenger
service associated with the capital assistance grant, but the coverage
may not exceed $20,000,000 per occurrence or $20,000,000 in aggregate
per year.
``Sec. 24405. Authorization of appropriations
``There are authorized to be appropriated to the Secretary of
Transportation to make capital financial assistance grants under this
chapter, including administrative expenses, the following amounts:
``(1) Such sums as may be necessary in year 2.
``(2) Such sums as may be necessary in year 3.
``(3) Such sums as may be necessary in year 4.
``(4) Such sums as may be necessary in year 5.
``(5) Such sums as may be necessary in year 6.''.
(b) Conforming Amendments.--
(1) The table of chapters for title 49, United States Code,
is amended by inserting the following after the item relating
to chapter 243:

``244. INTERCITY PASSENGER RAIL SERVICE CAPITAL ASSISTANCE..   24401''.
(2) The chapter analysis for subtitle V of title 49, United
States Code, is amended by inserting the following after the
item relating to chapter 243:

``244. Intercity Passenger Rail Service Capital Assistance..   24401''.

SEC. 302. FINAL REGULATIONS ON APPLICATIONS BY STATES FOR DEVELOPMENT
GRANTS.

Not later than June 1 of year 1, the Administrator of the Federal
Railroad Administration shall issue final regulations setting forth
procedures for application and minimum requirements for the award of
grants on and after the first day of year 2, under chapter 244 of title
49, United States Code.

SEC. 303. AUTHORITY FOR INTERSTATE COMPACTS FOR CORRIDOR DEVELOPMENT.

(a) Consent to Compacts.--
(1) 2 or more States with an interest in a specific form,
route, or corridor of intercity passenger rail service
(including high speed rail service) may enter into interstate
compacts to implement the service, including--
(A) retaining an existing service or commencing a
new service;
(B) assembling rights-of-way; and
(C) performing capital improvements, including--
(i) the construction and rehabilitation of
maintenance facilities;
(ii) the purchase of rolling stock; and
(iii) operational improvements, including
communications, signals, and other systems.
(2) A compact entered into under the authority of this
section shall be submitted to Congress for its consent. It is
the sense of Congress that rapid consent to the Compact is a
priority for the Congress.
(b) Financing.--
(1) An interstate compact established by States under
subsection (a) may provide that, in order to carry out the
compact, the States may--
(A) accept contributions from a unit of State or
local government or a person;
(B) use any Federal or State funds made available
for intercity passenger rail service (except funds made
available for Amtrak);
(C) on such terms and conditions as the States
consider advisable--
(i) borrow money on a short-term basis and
issue notes for the borrowing; and
(ii) issue bonds; and
(D) obtain financing by other means permitted under
Federal or State law.
(2) Bonds and other indebtedness incurred under the
authority of this subsection shall under no circumstances be
backed by the full faith and credit of the United States.
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