(1) Any railroad may apply to the Secretary, following October 19, 1976, and in accordance with regulations promulgated by the Secretary, for financial assistance for facilities rehabilitation and improvement financing and for such other financial assistance as may be approved by the Secretary. Any regulations promulgated by the Secretary pursuant to this section shall include specific and detailed standards in accordance with which the Secretary shall conduct the evaluations and make the determinations required in subsection (b)(2) of this section.
(2) An employee or employee-shipper group may apply to the Secretary for financial assistance pursuant to subsection (b)(3) of this section.
(3)(A) A financially responsible person may apply to the Secretary for financial assistance from funds made available pursuant to section 829(b)(2) 1 of this title.
(B) For purposes of this paragraph, the term “financially responsible person” means a person who (i) is capable of paying the constitutional minimum value of the railroad line proposed to be acquired, and (ii) is able to assure that adequate transportation will be provided over such line for a period of not less than 3 years. Such term includes a governmental authority but does not include a class I or class II rail carrier.
(1) Each application for facilities rehabilitation and improvement financing shall set forth—
(A) a description of the proposed facilities rehabilitation and improvement project for which such railroad is seeking financial assistance, and of the current physical condition of such facilities;
(B) the classification of each main and branch rail line included in such project, as determined in accordance with the final standards and designations under section 823(e) of this title;
(C) the track standard under which each such line has been and is being operated and the reasons therefor, and the safety standards and signal requirements necessary under such standard to prevent loss of life and serious accident or injury at grade crossings;
(D) the track standard necessary, in the judgment of such railroad, to provide reliable and competitive freight service (and passenger service, where applicable) over each such line, together with such railroad's recommendations as to (i) the most economical method of improving the physical condition of each such line to meet such track standard, (ii) the cost of providing adequate safety standards and signals, and (iii) an economic analysis of the cost of such improvements in condition and in safety standards and signals;
(E) such railroad's estimate as to the cost of labor and materials, and the date of completion, and its opinion as to the priority to be accorded such portions of the proposed project as are reasonably divisible;
(F) the amount and kind of Federal financial assistance required by such railroad in order to complete the proposed project; and
(G) such other information as the Secretary shall by regulation require to assist him in evaluating such application in accordance with this section or for carrying out the purposes of this subchapter.
(2) The Secretary shall act upon each such application within 6 months after the date on which all required information is received, except as otherwise provided in subsection (a)(2) of this section. The Secretary may approve any such application if he determines that providing the requested financial assistance is in the public interest. When making such a determination, the Secretary shall evaluate and consider in the following order of priority (A) the availability of funds from other sources at a cost which is reasonable under principles of prudent railroad financial management in light of the railroad's projected rate of return for the project to be financed and the railroad's rate of return on total capital (represented by the ratio which such carrier's net income, including interest on a long-term debt, bore to the sum of average shareholder's equity, long-term debt, and accumulated deferred income tax for fiscal year 1975) as determined in accordance with the uniform system of accounts promulgated by the Commission, (B) the interest of the public in supplementing such other funds as may be available in order to increase the total amount of funds available for railroad financing, and (C) the public benefits, including any significant railroad restructuring, to be realized from the project to be financed in relation to the public costs of such financing and whether the proposed project will return public benefits sufficient to justify such public costs. Except as provided in the last sentence of this paragraph, the Secretary, in determining the extent to which a project will provide public benefits, shall give the highest priority to projects which will enhance the ability of the applicant carrier or other carriers to provide essential freight services. With respect to funds appropriated for financial assistance under this section which were authorized pursuant to section 803(a) and (b) of the Powerplant and Industrial Fuel Use Act of 1978, applications for such funds for the purpose of coal transportation shall be deemed to be for the provision of essential freight services. The Secretary, in granting financial assistance to any applicant, shall assign the highest priority, among applications for assistance which would return equal public benefits, to applications for assistance for providing safety improvements and signals, including underpasses or overpasses at railroad crossings at which injury or loss of life has frequently occurred or is likely to occur. The Secretary shall assign the highest priorities (i) to those meritorious applications of carriers operating under section 77 of the Bankruptcy Act unable to generate such funds in the private sector and (ii) to those meritorious applications for funds to provide for the restructuring of rail freight facilities and systems which handle more than two million rail cars annually, which are located in more than one State, and which are separated by the Mississippi River.
(3) The Secretary may approve applications to provide financial assistance to any employee or employee-shipper ownership group formed pursuant to a plan for the purchase or rehabilitation of a line or lines of railroad or of rail facilities which are considered to be in the public interest. The Secretary shall not use more than 20 percent of the total funds available under this section for such financial assistance. In considering the allocation of available funds and priority of eligible projects under this subsection, the Secretary shall consider the availability of viable alternatives to the ownership or rehabilitation by the eligible employee-shipper group for the continuation of rail service. Projects with no such alternative shall receive highest priority.
Upon the approval of an application for financial assistance under this section, the Secretary shall promptly enter into an agreement with such railroad to provide financing in such amounts and at such times as is sufficient, in the judgment of the Secretary, to meet the reasonable cost, in whole or in part, of the facilities rehabilitation and improvement project which has been approved, in whole or in part. Each such agreement shall include such terms and conditions as are necessary or appropriate, in the judgment of the Secretary, to assure that the financing will be used only in the manner, and for the purposes, approved by the Secretary.
(1) In the case of a railroad other than a railroad in reorganization under section 77 of the Bankruptcy Act, financing pursuant to this section shall be in the form of purchase by the Secretary of redeemable preference shares at par. Such shares shall be specifically issued for such purpose in accordance with the terms and conditions set forth in section 826 of this title.
(2)(A) In the case of a railroad in reorganization under section 77 of the Bankruptcy Act, the Secretary, in order to provide financing pursuant to this section, may agree to purchase redeemable preference shares of such railroad at par as part of a plan of reorganization of such railroad approved by the court having jurisdiction over the reorganization of such railroad. Such shares shall be specifically issued in accordance with the terms and conditions set forth in section 826 of this title.
(B) The Secretary, in order to provide financing pursuant to this section, may also purchase certificates issued under section 77(c)(3) of the Bankruptcy Act by a trustee of a railroad in reorganization and approved by the reorganization court, under such terms and conditions as may be approved by the Secretary and the reorganization court. In purchasing such trustee certificates or at any time thereafter, the Secretary may agree with the trustee of such railroad in reorganization, subject to the approval of the reorganization court, to exchange such certificates for redeemable preference shares issued, in accordance with the terms and conditions set forth in section 826 of this title, in connection with a plan of reorganization approved by the reorganization court. Except as provided in subparagraph (C) of this paragraph, no certificate shall be purchased under this section unless and until the Secretary makes a finding in writing that—
(i) such certificates cannot otherwise be sold at a reasonable rate of interest;
(ii) the project to be financed can reasonably be expected to be maintained as part of a financially self-sustaining railroad system; and
(iii) the probable value of the assets of the railroad in the event of liquidation provides reasonable protection to the United States.
(C) The Secretary may purchase certificates under this section without making the finding referred to in clause (iii) of subparagraph (B) only if such certificates are senior in rights to all outstanding capital stock, common and preferred, of the debtor corporation, and all unsecured debt incurred before the date of commencement of railroad reorganization proceedings pursuant to section 77 of the Bankruptcy Act, but subordinate to all senior debt of the debtor corporation whenever such senior debt is incurred. As used in this subparagraph, the term “senior debt” means—
(i) all costs of administration, incurred or to be incurred by a trustee, and secured debt assumed by a trustee, in connection with the reorganization proceedings and the operation of a debtor's business by a trustee during the pendency of such proceedings; and
(ii) all secured debt incurred before the date of commencement of railroad reorganization proceedings pursuant to section 77 of the Bankruptcy Act and determined by the court to be a proper claim against the estate and an obligation of the debtor corporation.
(3) In the case of a Government authority that applies for financial assistance from funds made available pursuant to section 829(b)(2)1 of this title for the purchase or rehabilitation of railroad lines purchased under section 10910 1 of title 49, financing pursuant to this section shall be in the form of purchase by the Secretary of bonds or other debt obligations issued for such purpose by such Government authority.
(4) The total par value of the redeemable preference shares and the amount of trustee certificates, bonds, and other debt obligations which the Secretary may purchase from the proceeds received from the issuance and sale of Fund anticipation notes shall not exceed $1,400,000,000.
The total par value of the redeemable preference shares which the Secretary may, after September 30, 1985, make commitments to purchase under this subchapter, shall be determined by the Congress following the receipt by the Congress of the Secretary's recommendations as to the scope and sources of funding of the Fund or any recommended alternative financing mechanism, as submitted pursuant to section 824 of this title, except that—
(1) the amount of the Secretary's investment in redeemable preference shares in any fiscal year (out of proceeds other than those derived through the issuance and sale of Fund anticipation notes) shall not, when added to the amount of his prior investment in such shares, exceed 200 percent of the aggregate principal amount of the Fund bonds which (A) have been issued by the Secretary prior to such fiscal year, and (B) are projected to be issued by the Secretary through the end of such fiscal year; and
(2) neither redemptions of Fund bonds nor their payment at scheduled maturity shall have any bearing on the limitation in paragraph (1) of this subsection.
(1) Notwithstanding subsections (a) through (e) of this section (other than subsection (d)(3) of this section), the Secretary shall immediately purchase redeemable preference shares or trustee certificates convertible to redeemable preference shares under this section as necessary to facilitate the rehabilitation and improvement of Milwaukee Railroad property that has been sold or transferred to another person or retained by the restructured Milwaukee Railroad and that will be used for common carrier rail service.
(2) The Secretary may not take any action under this subsection—
(A) prior to (i) the occurrence of an event described in section 920(b) of this title, or (ii) April 1, 1980, whichever first occurs; or
(B) after April 1, 1981.
(3) Funds received from purchases by the Secretary pursuant to this subsection may not be used for the rehabilitation and improvement of any line of railroad which carried less than an average of 3,000,000 gross tons of freight per mile per year during the previous three-year period.
Not more than 50 percent of the funds made available at any time for the purchase of redeemable preference shares and trustee certificates under this section may be used for the rehabilitation and improvement of the facilities of any single railroad undergoing restructuring.
(1) Notwithstanding subsections (a) through (g) of this section (other than subsections (b)(2) and (d)(3) of this section), the Secretary shall, upon application of a noncarrier entity—
(A) purchase, from funds available on May 1, 1980, not less than $38,000,000 in redeemable preference shares, bonds, or trustee certificates convertible to redeemable preference shares under this section as necessary for the purchase, lease, or rehabilitation of properties of the Rock Island Railroad by responsible noncarrier entities to be used for common carrier rail service; and
(B) purchase not more than $27,000,000 in redeemable preference shares or trustee certificates convertible to redeemable preference shares under this section as necessary for the purchase of properties of the Milwaukee Railroad by responsible noncarrier entities to be used for common carrier rail service, to the extent that the Secretary determines that funds are available.
(2) Preference shares, bonds, and trustee certificates purchased under this subsection shall be purchased under terms and conditions that insure that the applicant will be financially capable of making the requisite dividend or interest and redemption or principal payments without impairing its financial resources, and the Secretary shall insure that all assistance provided under this subsection is likely to be repaid or can be secured.
(3)(A)(i) For purposes of this subsection, a responsible noncarrier entity may include an association composed of representatives of national railway labor organizations, employee coalitions, shippers, or any combination thereof, and States or State organizations, which wish to acquire, lease, or rehabilitate properties of the Rock Island Railroad or the Milwaukee Railroad pursuant to a feasible employee, employee-shipper, or State ownership plan. A responsible noncarrier entity may also include any railroad that wishes to contribute any of its properties under common ownership with the property being acquired by the association.
(ii) Any ownership plan described in clause (i) of this subparagraph shall be submitted to the Secretary no later than August 20, 1980, or such later date as the Secretary considers appropriate.
(B) For purposes of this subsection, the return on redeemable preference shares shall be the minimum established pursuant to section 826(a)(3) of this title.
(4) This subsection shall apply to (A) purchase offers submitted to the Trustee of the Rock Island Railroad Estate and filed with the Commission prior to September 15, 1980 (or such other time as the Secretary considers appropriate), and (B) purchase applications filed with the Commission prior to September 15, 1980 (or such other time as the Secretary considers appropriate) and approved by the court having jurisdiction over the reorganization of the Rock Island Railroad or the Milwaukee Railroad, as the case may be, and by the Commission.
(5) Financial assistance made available under paragraph (1)(B) of this subsection may be used to purchase, for purposes of rail banking, properties of the Milwaukee Railroad located in the State of Montana with respect to which an interest in future rail common carrier operations has been evidenced.
(6) Applications for rail banking shall be treated equally with other applications for transaction assistance.
(Pub. L. 94–210, title V, §505, Feb. 5, 1976, 90 Stat. 71; Pub. L. 94–555, title II, §§212, 216(a), Oct. 19, 1976, 90 Stat. 2624, 2626; Pub. L. 95–565, §5, Nov. 1, 1978, 92 Stat. 2400; Pub. L. 95–607, title III, §§301(a), 302, Nov. 8, 1978, 92 Stat. 3066; Pub. L. 95–620, title VIII, §803(c)(5), (6), Nov. 9, 1978, 92 Stat. 3347, 3348; Pub. L. 96–73, title IV, §401, Sept. 29, 1979, 93 Stat. 557; Pub. L. 96–101, §§16, 24(a), Nov. 4, 1979, 93 Stat. 744, 747; Pub. L. 96–254, title I, §112, May 30, 1980, 94 Stat. 404; Pub. L. 96–448, title IV, §§404, 405(a)(1), (c)(1), (2), (4), (5), 406, title VII, §701(d), Oct. 14, 1980, 94 Stat. 1945–1947, 1961; Pub. L. 97–35, title XI, §1162(a), (c), (d), Aug. 13, 1981, 95 Stat. 683, 684; Pub. L. 97–468, title IV, §§401, 403(b), Jan. 14, 1983, 96 Stat. 2550, 2551; Pub. L. 99–509, title IV, §4033(c)(3), Oct. 21, 1986, 100 Stat. 1908; Pub. L. 104–88, title III, §330(2), Dec. 29, 1995, 109 Stat. 953.)
Section 829(b)(2) of this title, referred to in subsecs. (a)(3)(A) and (d)(3), was repealed by Pub. L. 104–88, title III, §330(3), Dec. 29, 1995, 109 Stat. 953.
Section 803(a) and (b) of the Powerplant and Industrial Fuel Use Act of 1978, referred to in subsec. (b)(2), is section 803(a) and (b) of Pub. L. 95–620, Nov. 9, 1978, 92 Stat. 3347, which is set out as a note under section 822 of this title.
Section 77 of the Bankruptcy Act, referred to in subsecs. (b)(2) and (d)(1), (2), was classified to section 205 of former Title 11, Bankruptcy. The Bankruptcy Act (act July 1, 1898, ch. 541, 30 Stat. 544, as amended) was repealed effective Oct. 1, 1979, by Pub. L. 95–598, §§401(a), 402(a), Nov. 6, 1978, 92 Stat. 2682, section 101 of which enacted revised Title 11. For current provisions relating to railroad reorganization, see subchapter IV (§1161 et seq.) of chapter 11 of Title 11.
Section 10910 of title 49, referred to in subsec. (d)(3), was omitted in the general amendment of subtitle IV of Title 49, Transportation, by Pub. L. 104–88, title I, §102(a), Dec. 29, 1995, 109 Stat. 804. Provisions similar to those in section 10910 are contained in section 10907 of Title 49.
1995—Subsec. (a)(3). Pub. L. 104–88 designated existing provisions as subpar. (A), substituted “A financially responsible person” for “A financially responsible person (as defined in section 10910(a)(1) of title 49)”, and added subpar. (B).
1986—Subsec. (a)(1). Pub. L. 99–509, §4033(c)(3)(A), struck out “(or any financially responsible person, as defined in section 10910(a)(1) of title 49, who acquires from the Corporation for common carrier rail service any rail line owned by the Corporation on August 13, 1981)” after “Any railroad”.
Subsec. (b)(2)(C). Pub. L. 99–509, §4033(c)(3)(B), struck out “or, where the application relates to a rail line owned or operated by the Corporation immediately prior to its acquisition by a railroad or financially responsible person (as defined in section 10910(a)(1) of title 49) for common carrier rail service, whether the financial assistance applied for under this section will further the public interest in transferring rail lines from the Corporation to the private sector, and avoid the need for any further Federal subsidy” after “to justify such public costs”.
1983—Subsec. (b)(2). Pub. L. 97–468, §403(b), inserted “(i)” after “priorities” and “(ii)” after “in the private sector and”.
Subsec. (e). Pub. L. 97–468, §401, substituted “September 30, 1985” for “September 30, 1982”.
1981—Subsec. (a)(1). Pub. L. 97–35, §1162(c), inserted provisions respecting any financially responsible person.
Subsec. (b)(2). Pub. L. 97–35, §1162(a), (d), inserted provisions respecting priority for meritorious carrier applications, and substituted provisions setting forth order of priority for making of determination by Secretary for provisions relating to evaluations and considerations by Secretary in making determinations.
1980—Subsec. (a). Pub. L. 96–448, §405(c)(1), designated existing provision as par. (1) and added pars. (2) and (3).
Subsec. (b)(3). Pub. L. 96–448, §405(c)(2), added par. (3).
Subsec. (d)(3). Pub. L. 96–448, §405(c)(4), added par. (3) and redesignated former par. (3) as (4).
Subsec. (d)(4). Pub. L. 96–448, §405(a)(1), (c)(4), (5), redesignated former par. (3) as (4), inserted “, bonds, and other debt obligations” after “trustee certificates”, and substituted “$1,400,000,000” for “$700,000,000”.
Subsec. (e). Pub. L. 96–448, §404, substituted “September 30, 1982” for “September 30, 1980”.
Subsec. (h)(1)(A). Pub. L. 96–448, §701(d)(1), substituted “$38,000,000” for “$25,000,000”.
Subsec. (h)(1)(B). Pub. L. 96–448, §701(d)(2), substituted “$27,000,000” for “$18,000,000”.
Subsec. (h)(4). Pub. L. 96–448, §701(d)(3), inserted provision making this subsection applicable to purchase offers submitted to the Trustee of the Rock Island Railroad Estate and filed with the Commission prior to Sept. 15, 1980, or at such other time as the Secretary considers appropriate, as well as purchase applications filed with the Commission prior to Sept. 15, 1980, or at such other time as the Secretary considers appropriate.
Subsec. (h)(5), (6). Pub. L. 96–448, §406, added pars. (5) and (6).
Subsec. (h). Pub. L. 96–254 added subsec. (h).
1979—Subsec. (b)(2). Pub. L. 96–101, §24(a), inserted “except that if the Secretary determines, pursuant to clause (C) of this paragraph, that significant railroad restructuring will result from the project, the Secretary shall not consider the availability of funds from other sources but instead shall consider whether such restructuring benefits would be likely to be achieved if assistance were not provided,” in cl. (A) and “, including any significant railroad restructuring,” in cl. (C).
Subsec. (e). Pub. L. 96–73 substituted “1980” for “1979”.
Subsecs. (f), (g). Pub. L. 96–101, §16, added subsecs. (f) and (g).
1978—Subsec. (b)(2). Pub. L. 95–620, §803(c)(5), inserted provision that with respect to funds appropriated for financial assistance under this section as authorized by section 803(a) and (b) of the Powerplant and Industrial Fuel Use Act of 1978, application for such funds for coal transportation be deemed to be for the provision of essential freight.
Subsec. (d)(2). Pub. L. 95–607, §302, inserted “Except as provided in subparagraph (C) of this paragraph” in subpar. (B), last sentence, and added subpar. (C).
Subsec. (d)(3). Pub. L. 95–620, §803(c)(6), substituted “$700,000,000” for “$600,000,000” and “$150,000,000” for “$100,000,000”.
Pub. L. 95–607, §301(a)(1), struck out limitation that not more than $100,000,000 of the proceeds be used to purchase trustee certificates.
Pub. L. 95–565, §5(a), struck out sentence providing that not more than $100,000,000 could be used to purchase trustee certificates.
Subsec. (e). Pub. L. 95–607, §301(a)(2), substituted “, after September 30, 1979, make commitments to purchase under this subchapter” for “purchase under this subchapter after September 30, 1978”.
Pub. L. 95–565, §5(b), substituted “after September 30, 1979, make commitments to purchase under this subchapter” for “purchase under this subchapter after September 30, 1978”.
1976—Subsec. (a). Pub. L. 94–555, §212, substituted “October 19, 1976” for “February 5, 1976” and substituted provision requiring specific and detailed standards with which the Secretary shall conduct evaluations and make determinations to be included in regulations promulgated by Secretary for provision that Secretary may not finally act on applications until final standards and designations are published.
Subsec. (b)(2). Pub. L. 94–555, §216(a), inserted “evaluate and” after “the Secretary shall”, inserted provision in cl. (A) relating to consideration by Secretary in approving application of railroads the rate of return on total capital, including interest on long-term debt and accumulated deferred income tax, and inserted in cl. (C) provision giving priority to projects which, in the determination of Secretary, will provide public benefits by enhancing the ability of carriers to provide essential freight services.
Amendment by Pub. L. 104–88 effective Jan. 1, 1996, see section 2 of Pub. L. 104–88, set out as an Effective Date note under section 701 of Title 49, Transportation.
Amendment by Pub. L. 97–35 effective Aug. 13, 1981, see section 1169 of Pub. L. 97–35, set out as an Effective Date note under section 1101 of this title.
Amendment by sections 404 to 406 of Pub. L. 96–448 effective Oct. 1, 1980, and amendment by section 701(d) of Pub. L. 96–448 effective Oct. 14, 1980, see section 710(a), (d) of Pub. L. 96–448, set out as a note under section 1170 of Title 11, Bankruptcy.
Amendment by Pub. L. 96–73 effective Oct. 1, 1979, see section 501(a) of Pub. L. 96–73.
Amendment by Pub. L. 95–620 effective 180 days after Nov. 9, 1978, see section 901 of Pub. L. 95–620, set out as an Effective Date note under section 8301 of Title 42, The Public Health and Welfare.
Amendment by Pub. L. 94–555 effective Oct. 1, 1976, see section 303 of Pub. L. 94–555, set out as a note under section 702 of this title.
Interstate Commerce Commission abolished and functions of Commission transferred, except as otherwise provided in Pub. L. 104–88, to Surface Transportation Board effective Jan. 1, 1996, by section 702 of Title 49, Transportation, and section 101 of Pub. L. 104–88, set out as a note under section 701 of Title 49. References to Interstate Commerce Commission deemed to refer to Surface Transportation Board, a member or employee of the Board, or Secretary of Transportation, as appropriate, see section 205 of Pub. L. 104–88, set out as a note under section 701 of Title 49.
Section 303 of Pub. L. 95–607 provided that: “The Federal Railroad Administration shall promptly review the condition of the Chicago, Milwaukee, and Saint Paul Railroad and consider assisting such railroad with loans for roadbed and track improvement.”
This section is referred to in sections 822, 823, 826, 829, 838, 913 of this title.