! ! ! AMTRAK REFORM COUNCIL ! ! !

JM-ARC, Room 7105 Phone: (202) 366-0591 

400 Seventh Street, SW Fax: (202) 493-2061 

Washington, DC 20590 

!

The ARC is an independent federal commission established under the Amtrak Reform and Accountability Act of 

1997 (P. L. 105-134) 

THE COUNCIL

Gilbert E. Carmichael 

 Chairman 

Paul M. Weyrich 

 Vice Chairman 

Bruce Chapman 

Nancy Rutledge Connery

James E. Coston 

Wendell Cox 

Christopher K. Gleason 

 

S. Lee Kling 

Charles Moneypenny 

Hon. John O. Norquist 

Hon. Rodney Slater 

Executive Director 

Thomas A. Till 

FOR PUBLIC INFORMATION AND DISCUSSION 

___________________________________________________ 

December 4, 2000 

A COUNCIL POLICY PAPER 

A SUMMARY OF CURRENT LEGISLATIVE 

PROVISIONS PRESCRIBING THE LEGAL 

AND REGULATORY FRAMEWORK 

GOVERNING THE NATIONAL RAILROAD 

PASSENGER CORPORATION (AMTRAK) 

This Council policy paper is intended as a building block in the Council’s program 

of research, education, and public policy development concerning Amtrak and rail 

passenger service in the United States. Its contents are designed to provide a 

summary of the legislative provisions that govern the structure and operations of the 

National Railroad Passenger Corporation, known as Amtrak. As such, the Council 

believes that it is important for this paper to be released for public information and 

discussion throughout the transportation community, both within and among 

governmental agencies at the federal and state levels, and in the private sector. 

Amtrak Reform Council
Table of Contents 

Executive Summary-------------------------------------------------------------------------i 

I. THE RAIL PASSENGER SERVICE ACT OF 1970 (RSPA)(49U.S.C. 24101 ET SEQ.) (AS 

SUBSEQUENTLY AMENDED AND RECODIFIED AND AS AMENDED BY THE 

AMTRAK REFORM AND ACCOUNTABILITY ACT OF 1997) ............................................... 1 

II. PROVISIONS OF THE AMTRAK REFORM AND ACCOUNTABILITY ACT OF 1997, P.L. 

105-134 (DECEMBER 2, 1997) APPLICABLE TO AMTRAK (PROVISIONS NOT 

AMENDING TITLE 49, U.S.C.)..................................................................................................... 19 

III. THE TAXPAYER RELIEF ACT OF 1997 (TRA) (SEC. 977 OF PUB. L. 105-34)................... 28 

IV. THE RAILROAD RETIREMENT ACT OF 1974 (45 U.S.C. 231 ET SEQ.)............................. 29 

V. THE RAILROAD UNEMPLOYMENT INSURANCE ACT (45 U.S.C. 351 ET SEQ.)............ 31 

VI. THE RAILWAY LABOR ACT (45 U.S.C. 151 ET SEQ.) ........................................................... 32 

VII. THE FEDERAL EMPLOYERS’ LIABILITY ACT (45 U.S.C. 51 ET SEQ.)........................... 34 

VIII. THE DISTRICT OF COLUMBIA BUSINESS CORPORATION ACT..................................... 35 

IX. SUBTITLE V, PART A, OF TITLE 49 U.S.C. (RAIL SAFETY) (49 U.S.C. 20101 ET SEQ.). 36 

X. SUBCHAPTER IV OF TITLE 11, UNITED STATES CODE (RAILROAD 

REORGANIZATION) (11 U.S.C. 101 ET SEQ.).......................................................................... 37 
EXECUTIVE SUMMARY OF LAWS 

AFFECTING AMTRAK 

I. THE RAIL PASSENGER SERVICE ACT OF 1970 (“RPSA”) (49 

U.S.C. 24101 ET SEQ.) (AS SUBSEQUENTLY AMENDED BY 

THE AMTRAK REFORM AND ACCOUNTABILITY ACT OF 

1997)(“ARAA”) 

A. The RPSA Prior to Enactment of the ARAA 

In 1970, the U.S. railroad industry was in a precarious financial condition. In 

response, Congress created the National Railroad Passenger Corporation (“Amtrak”) 

pursuant to the Rail Passenger Service Act of 1970 (Pub. L. 91-518 and subsequent 

amendments (“RPSA”)). Amtrak was created to relieve the freight railroads of the 

continued burden of deficit passenger operations and “to revitalize rail transportation 

service in the expectation that the rendering of such service along certain corridors can be 

made a profitable commercial undertaking . . ..” House Report No. 91-1580, reprinted in

1970 U.S. Code Cong. & Admin. News 4735, 4737, 4741. In creating Amtrak, Congress 

sought to establish a single, for-profit corporate entity that, with initial Federal assistance, 

and with infrastructure, financial and other contributions from the freight railroads, would 

be responsible for providing all intercity rail passenger service over a unified national 

system. Id. 

Amtrak was created by the RPSA as a private, for-profit, District of Columbia 

Corporation (as amended in 1978, the RPSA requires that Amtrak “shall be operated and 

managed as a for-profit corporation.”). RPSA, sec. 301. Amtrak’s status was further 

statutorily defined as a “mixed ownership Government corporation” under the 

Government Corporation Control Act and “not ... an agency or instrumentality of the 

United States Government.” RPSA, sec. 804. Under the RPSA (prior to the 

enactment of the Amtrak Reform and Accountability Act of 1997), the Amtrak 

Board consisted of 9 members (the Secretary of Transportation, the President of 

Amtrak, 5 members appointed by the President subject to Senate approval and 2 

members elected by the holders of preferred stock. RPSA, sec. 303, as amended. 

In return for contributions to Amtrak of cash and/or equipment equal to one-half of 

rail passenger deficits for 1969 (as well as the mandatory assumption of specified 

statutory obligations towards Amtrak), the RPSA relieved each participating freight rail 

carrier of its statutory obligation to continue to provide passenger service. Carriers that 

contributed to Amtrak were provided the option of receiving either Amtrak common 

stock or federal income tax credits. Over a short period, all freight carriers discontinued 

intercity passenger service under the RPSA. Currently, there are four holders of Amtrak 
ii

common stock (3 railroads and an insurance company, as successor to the Penn Central). 

The only preferred stockholder is the Secretary of Transportation (in the amount of 

approximately $10.6 billion), who received the shares in exchange for past capital and 

future capital and operating grants made to Amtrak pursuant to 1981 legislation. 

The RPSA granted Amtrak the right to use tracks, facilities and services of freight 

railroads in providing passenger services and to compensate the freight railroads at the 

incremental cost level. RPSA, sec.305. Amtrak was also granted preference over freight 

railroads in regard to track use. Except for 366 miles of track on the Northeast Corridor 

(NEC) and other small segments of track that Amtrak owns subject to a USG mortgage 

lien, Amtrak’s passenger operations are conducted over tracks owned by freight carriers. 

Until amended by the ARAA, the RPSA defined a “basic system” national route 

network over which Amtrak was required to provide passenger service. The service 

could only be discontinued (subject to Congressionally imposed moratoriums) if it met 

with certain Congressionally-approved criteria. RPSA, §§ 201, 202. The Act also made 

provision for Amtrak service beyond the “basic system” at state, local or regional request 

subject to minimum financial assistance requirements (“Section 403(b) service.”). The 

Act also provided for authority for Amtrak to provide mail and express and auto-train 

service on passenger trains and to operate commuter services under contract with state, 

local or regional authorities. See RPSA, § 305, 49 U.S.C. 24306. Until amended by the 

ARAA, the RPSA provided Amtrak a monopoly over intercity rail passenger 

transportation over any route over which Amtrak provided scheduled service pursuant to 

a contract with a freight railroad. See former 49 U.S.C.24701. 

Until amended by the ARAA, the RPSA provided that Amtrak employees who are 

discharged or displaced as a result of a route discontinuance or reduction of train 

frequency below three round trips per week were entitled to up to six years of full pay 

and benefits (“labor protection payments”). See RPSA, § 405; 49 U.S.C. §24706(c). The 

RPSA, until amended by the ARAA, also prohibited Amtrak from contracting out 

operations (except food service operations) where the result would be the layoff of an 

Amtrak employee. See RPSA § 405; former 49 U.S.C. 24312. 

Although the RPSA was amended numerous times since 1970 in an effort to improve 

Amtrak’s operations and financial status, Amtrak’s performance under the provisions of 

the RPSA did not meet with Congressional expectations. Instead of becoming 

commercially profitable or operationally self sufficient as Congress had hoped, Amtrak 

has required federal capital and operating subsidies totaling over $23 billion since 

inception of operations in 1971. As of 1997, Amtrak’s losses and capital needs were 

growing, and the prospect of an Amtrak bankruptcy in the absence of a massive infusion 

of Federal financial assistance was a strong probability. 

B. The RPSA as Amended by the ARAA 

Congress accordingly overhauled the provisions of the RPSA in 1997 by enactment 

of the ARAA. The ARAA: 
iii

1. Put in place a new Board of Directors, called the Amtrak Reform Board, to 

oversee the corporation’s operations. The Reform Board consists of seven voting 

members appointed by the President and confirmed by the Senate (except for the 

DOT Secretary); the President of Amtrak serves as an ex officio, non-voting 

member. 49 U.S.C. 24302. 

2. Required Amtrak, over the five fiscal years from FY1998 through FY2002, to 

wean itself from the need for federal operating grant funds and provided that after 

December 2, 2002 “Amtrak shall operate without Federal operating grant funds 

appropriated for its benefit”. Sec. 24101(d). 

3. Required Amtrak to redeem its outstanding common stock, owned by private 

shareholders, by the end of FY2002 at fair market value, and eliminated the 

liquidation preference and voting rights of the US-government-owned preferred 

stock. ARAA Sec. 415 (b) and (c). 

4. Ended Amtrak’s legal monopoly over intercity passenger service by rail, but 

retained Amtrak’s special statutory access to the track of the private railroads at 

incremental cost and with the historical passenger service operating priority. 

ARAA Sec.101(a). 

5. Repealed Amtrak’s obligation to provide rail passenger service within the “basic 

system” defined by statute and provided Amtrak with complete flexibility to 

determine its national system of routes and services in response to the 

marketplace. ARAA Sec. 101(a). 

6. Repealed the specific statutory requirements for labor protection payments and 

placed the disposition of this issue on the management-labor collective bargaining 

table. ARAA Secs. 141 and 142. (Amtrak and its unions opted to arbitrate the 

issue of labor protection. In a decision issued November 1999, the arbitration 

panel modified the previous labor protection requirements by, among other things, 

reducing the maximum duration of benefits from six years to five years and by 

adopting a sliding scale of service requirements before maximum benefits could 

be reached.) 

7. Repealed the statutory prohibition against contracting out and placed the 

disposition of this issue on the labor-management collective bargaining table no 

later than November 1, 1999. ARAA sec.121. Amtrak served notice on its 

employee representatives on June 12, 2000 placing the contracting out issue on 

the bargaining table. Under the Railway Labor Act, the pre-existing ban on 

contracting out (which was deemed incorporated in Amtrak collective bargaining 

agreements under the provisions of the ARAA) remains in force until changed by 

negotiation or self-help. 

8. Put in place limitations on rail passenger transportation liability and allowed 

Amtrak to enter into contracts with other railroads, states, and commuter 

authorities to allocate financial responsibility for claims. 49 U.S.C. 28103. 
iv

II. THE ARAA: PROVISIONS GOVERNING AMTRAK FISCAL 

ACCOUNTABILITY 

The ARAA not only amended the RPSA, but also adopted specific provisions 

governing Amtrak fiscal accountability and oversight. In addition to establishing the 

Reform Board, the ARAA: 

1. Required an independent assessment of Amtrak’s financial requirements through 

FY2002 under oversight of the DOT Inspector General. The first Report was 

submitted to Congress on November 23, 1998. Follow-up reports are required for 

any fiscal year in which Amtrak requests federal financial assistance. ARAA secs. 

202, 409. 

2. Established the Amtrak Reform Council (ARC) as an independent, bi-partisan 

commission of 11-members. The duties of ARC are to (A) evaluate Amtrak’s 

performance; (B) make recommendations to Amtrak for achieving further cost 

containment and productivity improvements and financial reforms; and (C) 

identify Amtrak routes which are candidates for closure or realignment. If, after 

January 1, 1997 Amtrak enters into an agreement involving work-rules intended 

to achieve savings with Amtrak employee labor unions, Amtrak must report 

quarterly to ARC the savings realized and how those savings are allocated. ARC 

must submit an annual report to Congress that includes an assessment of: (1) 

Amtrak’s progress on the resolution of productivity issues; (2) the status of those 

productivity issues; (3) Amtrak routes which are candidates for closure or 

realignment, and (4) recommendations for improvements and for any changes in 

law it believes necessary or appropriate. ARAA sec. 203. 

3. Provided for an Amtrak “sunset trigger.” If at any time more than two years after 

December 2, 1997 ARC finds that Amtrak’s business performance will prevent it 

from meeting the financial goals of the ARAA or that Amtrak will require 

operating grant funds after December 2, 2002, ARC shall immediately notify the 

President and Congress. In making such a finding, ARC shall take into account 

Amtrak’s performance; the findings of the independent assessment under sec. 

202; the level of Federal funds made available for carrying out the financial plan 

referred to in 49 U.S.C. 24101(d); and acts of God, national emergencies and 

events beyond the reasonable control of Amtrak. Within 90 days of making a 

finding, (1) ARC shall develop and submit to Congress an action plan for a 

restructured and rationalized national intercity rail passenger system; and (2) 

Amtrak shall submit a liquidation plan. The ARAA provides for Senate 

procedures for considering the ARC restructuring and Amtrak liquidation plans. 

ARAA secs. 204, 205. 

4. Required ARC to report quarterly to Congress on the use of amounts received by 

Amtrak under section 977 of the Taxpayer Relief Act of 1997 (TRA). See 

discussion below. 
v

III. THE TAXPAYER RELIEF ACT OF 1997 (TRA)

Under the TRA, Amtrak was treated as entitled to apply its tax carrybacks against the 

income tax paid by its railroad predecessors of approximately $2.3 billion and to claim 

the $2.3 billion as a tax refund. TRA funds can only be used by Amtrak for certain 

statutorily defined “qualified expenses” and payments to non-Amtrak states. ARAA sec. 

209. Congress requested the General Accounting Office to conduct an initial review of 

Amtrak’s TRA expenditures. The GAO Report was issued in February 2000.

IV. THE RAILROAD RETIREMENT ACT OF 1974 (“RRA”) 

(45 U.S.C. 231 ET SEQ.) 

Rail carriers who engage in the interstate transportation of freight or passengers, such 

as Amtrak, are covered under the provisions of the RRA, rather than the Social Security 

Act (“SSA”) for retirement benefits. Tax costs to railroad employers for an employee 

making the same wages in other industries is nearly three times higher than for employers 

under SSA. 

The RRA has two components with respect to benefits and taxes: a social security 

equivalent benefit component (Tier I) and a pension component (Tier II). The Railroad 

Retirement system is funded on an industry-wide “pay as you go” basis with employer 

and employee taxes pooled and used to fund the benefits payable to all eligible industry 

employees or retirees. The pooling system has given rise to special federal 

appropriations to Amtrak (“mandatory payments”) that by law have not been considered 

a “government subsidy of Amtrak.” See 49 U.S.C.§ 24104. These “mandatory 

payments” represent Railroad Retirement tax liabilities to Amtrak that are used to pay 

Tier II benefits of non-Amtrak beneficiaries (so-called “excess payments”). 

V. THE RAILROAD UNEMPLOYMENT INSURANCE ACT 

(“RUIA”) (45 U.S.C. 351 ET SEQ.) 

The railroad industry, including Amtrak, is subject to RUIA, rather than state 

unemployment insurance statutory regimes with respect to unemployment benefits and 

taxes. Because unemployment payments under RUIA are experience-based and vary by 

employer, the ARAA does not include RUIA taxes and benefits as an “excess payments” 

issue requiring federal funding. 

VI. THE RAILWAY LABOR ACT (“RLA”) (45 U.S.C. 151 ET SEQ.) 

Unlike other industries whose labor relations are governed by the National Labor 

Relations Act, the RLA governs labor relations in the railroad and airline industries. 

Amtrak is subject to the RLA pursuant to 49 U.S.C.§ 24301. The basic purposes of the 

RLA are: (1) to avoid any interruption to interstate commerce; (2) to ensure the right of 

railroad employees to join a labor organization; (3) to provide for the complete 

independence of carriers and employees with respect to self-organization; (4) to provide 
vi

for the prompt and orderly settlement of all disputes concerning rates of pay, rules or 

working conditions (“major disputes”); and (5) to provide for the prompt and orderly 

settlement of all disputes growing out of grievances or out of interpretation or application 

of agreements (“minor disputes”). Under the RLA, either side must provide 30 days’ 

written notice (“Section 6 notice”) of any intended change in an agreement. Minor 

disputes are handled by negotiation “on property” or by compulsory arbitration (by the 

standing National Railroad Adjustment Board or public law boards on local properties). 

Major disputes that cannot be resolved through collective bargaining procedures are 

submitted to mediation by a 3-member National Mediation Board (“NMB”). If the NMB 

is unsuccessful and finds the controversy threatens substantially to interrupt interstate 

commerce, the NMB is required to notify the President. The President is empowered to 

appoint a neutral Presidential Emergency Board (PEB) to investigate and submit a report. 

If the parties cannot agree 30 days after the PEB report and recommendations, either side 

is free to resort to self-help measures (e.g., a strike or lockout). The President may also 

request emergency legislation, or Congress may act on its own, to resolve the dispute. 

VII. THE FEDERAL EMPLOYERS LIABILITY ACT (“FELA”) 

(45 U.S.C. 51 ET SEQ.) 

Unlike most American workers, railroad workers are not covered by state 

no-fault workers’ compensation insurance systems when they are injured on the 

job. Instead, injured railroad employees, including Amtrak employees, are 

covered under FELA. FELA was enacted in 1908, at a time when railroads were 

the nation’s largest employer and rail work was especially hazardous. Under 

FELA, an injured employee negotiates a settlement with the railroad employer. If 

the negotiations fail, the employee may file a lawsuit alleging negligence by the 

employer to recover losses. FELA allows workers to seek recovery for economic 

and non-economic damage (such as pain and suffering). Workers’ compensation 

systems, which do not require a showing of negligence, typically limit recovery to 

economic losses. 

VIII. THE DISTRICT OF COLUMBIA BUSINESS CORPORATION 

ACT (“DCBCA”) (D.C. CODE § 29-301 ET SEQ.) 

Amtrak is subject to the DCBCA to the extent that it is consistent with the 

provisions of the RPSA. RPSA § 24301(e). In the absence of overriding federal 

legislation, the DCBCA contains requirements that Amtrak must comply with in 

order to amend its charter and take other corporate actions. 

IX. Subtitle V, PART A, of Title 49 U.S.C. (Rail Safety) (49 U.S.C. 

20101 et seq.) 

The Rail Safety provisions of Title 49, 49 U.S.C. 20101 et seq., are applicable 

to all railroad carriers, including Amtrak and commuter railroads. The Act 
vii

regulates all aspects of railroad safety, including equipment, facilities, rolling 

stock and operations. 

IX. SUBCHAPTER IV OF TITLE 11, UNITED STATES CODE 

(RAILROAD REORGANIZATION) (11 U.S.C. 101 ET SEQ.) 

Chapter 11 of the Bankruptcy Code, which generally sets out procedures for railroad 

reorganization, would govern an Amtrak bankruptcy. Chapter 11 seeks to protect the 

public interest in continued rail service as well as the interests of railroads, creditors and 

stockholders. Amtrak may initiate bankruptcy proceedings by filing a voluntary 

bankruptcy petition that is authorized by its Board of Directors. Three or more creditors 

whose unsecured claims totaled at least $10,000 could also file an involuntary petition. 

After a petition is filed, an appointed trustee, with court oversight, would make decisions 

about the railroad’s operations and financial commitments (rather than Amtrak’s Board 

of Directors). 

The trustee would be responsible for developing a plan of reorganization. Amtrak’s 

creditors and shareholders would vote on the plan. Because the United States is a 

shareholder and creditor of Amtrak, the Secretary of Treasury would accept or reject the 

plan on behalf of the United States. Additionally, the plan would have to be court 

approved. If a plan were not approved within five years, the court would have to order 

liquidation. The court could also order liquidation earlier if it determined liquidation to 

be in the public interest. Under such circumstances, the case would be handled as if the 

case were a liquidation case under Chapter 7 of the Bankruptcy Act. 
I. THE RAIL PASSENGER SERVICE ACT OF 1970 

(RSPA)(49U.S.C. 24101 ET SEQ.) (AS SUBSEQUENTLY 

AMENDED AND RECODIFIED AND AS AMENDED BY THE 

AMTRAK REFORM AND ACCOUNTABILITY ACT OF 1997) 

A. LEGISLATIVE BACKGROUND OF THE RPSA AND OVERVIEW OF 

GENERAL PROVISIONS OF THE RPSA PRIOR TO THE AMTRAK REFORM 

AND ACCOUNTABILITY ACT OF 1997 

 

In 1970, the U.S. railroad industry was in precarious financial condition with 

several major carriers in bankruptcy proceedings or on the verge of bankruptcy. 

See Railroad Regulation, Economic and Financial Impacts of the Staggers Rail 

Act of 1980 (GAO, May 1990) at 10-11). The precarious financial condition of 

the railroad industry was particularly felt with respect to rail passenger operations. 

The number of passenger trains operated was in radical decline and many of the 

existing passenger trains were either operating under heavy deficits or were in 

discontinuance proceedings before the Interstate Commerce Commission (the 

federal regulatory agency empowered to oversee and approve discontinuances of 

rail freight or passenger operations). See House Report No. 91-1580 to P.L. 91-

518, reprinted in 1970 U.S. Code Cong. & Admin. News 4735, 4736-4737. By 

1970, the rail carriers’ combined annual losses for passenger service exceeded 

$1.7 billion in today’s dollars. 1995 GAO Report to Congressional Committees, 

Intercity Passenger Rail, Financial and Operating Conditions Threaten Amtrak’s 

Long term Viability (February 1995) at 4. 

The National Railroad Passenger Corporation (Amtrak) was created by 

Congress pursuant to the Rail Passenger Service Act of 1970 (Pub. L. 91-518 

(RPSA)). Amtrak was created to relieve the freight railroads of the continued 

burden of deficit passenger operations and “to prevent the complete abandonment 

of intercity rail passenger service and to preserve a minimum of such service along 

specific corridors.” House Report No. 91-1580, reprinted in 1970 U.S. Code 

Cong.& Admin. News 4735. In creating Amtrak, Congress sought to establish a 

single, for-profit, corporate entity which, with initial direct Federal assistance of 

$40 million and loan guarantees of $100 million, and with infrastructure, financial, 

and other contributions from the freight railroads, would be responsible for 

providing all intercity rail passenger service over a unified National system. Id. at 

4735, 4737, 4741; RPSA sec. 601, 602. Amtrak was also “expected to revitalize 

rail transportation service in the expectation that the rendering of such service 

along certain corridors can be made a profitable commercial undertaking....” Id. at 

4735. 

In return for contributions to Amtrak of cash and/or equipment in an amount 

equal to one-half of its rail passenger deficit for 1969 (as well as the mandatory 
2

assumption of specified statutory obligations towards Amtrak, including providing 

Amtrak access to its track), the RPSA relieved each participating freight rail 

carrier of its statutory obligation to continue to provide rail passenger service over 

its routes without the necessity of first seeking regulatory approval from the ICC. 

RPSA, secs. 401, 402. (Aggregate payments to Amtrak from all railroads under 

this provision totaled $197 million over a 36-month period.) The RPSA also 

established a 5-year moratorium period before which carriers not contracting with 

Amtrak to provide service and making the required contributions could not 

discontinue passenger operations. RPSA, sec. 404. Carriers that contributed cash 

and/or equipment to Amtrak were provided the option of receiving either Amtrak 

common stock (at a par value of $10) or federal income tax credits in the amount 

contributed. RPSA, sec.401, 402. Over a short period of time, all of the freight 

carriers discontinued intercity passenger service pursuant to the provisions of the 

RPSA. 

Amtrak was created by the RPSA as a private, for-profit corporation subject to 

the provisions of the District of Columbia Business Corporation Act. Id. at 4739, 

4742; RPSA, sec. 301. Amtrak’s status was further statutorily defined as a “mixed 

ownership Government corporation” under the Government Corporation Control 

Act. RPSA, sec. 804. The RPSA further noted that Amtrak “would not be an 

agency or instrumentality of the United States Government.” Id. at 4739; RPSA, 

sec.301. 

The original provisions of the RPSA provided that a majority (8) of Amtrak’s 

original 15-member Board of Directors were to be appointed by the President 

(subject to Senate approval). The remaining seven Directors were to be elected by 

common and preferred shareholders. Id. at 4742; RPSA, sec. 303. 

The RPSA, however, was subsequently amended to provide that Amtrak shall 

be “operated and managed as” a for-profit corporation. RPSA, sec.301 (as 

amended 1978). The right of common shareholders to elect a portion of the 

members of the Board of Directors was also subsequently repealed (by sec.1175 of 

The Amtrak Improvement Act of 1981), and the Amtrak Board (prior to additional 

reforms enacted under the ARAA) was reduced to 9 members (the Secretary of 

Transportation, the President of Amtrak, 5 members selected by the President, and 

2 members elected by the holders of preferred stock). RPSA, sec.303. 

Currently there are four holders of Amtrak common stock (3 railroads and an 

insurance company, as a successor to the Penn Central). (Amtrak was authorized 

initially to issue common stock only to railroads. RPSA, sec. 304.) The only 

preferred stockholder is the Secretary of Transportation (in the amount of 

approximately $10.6 billion (March 1998 GAO Report, Intercity Passenger Rail, 

Issues Associated with a Possible Amtrak Liquidation, at 14)), who received 
3

preferred shares (par value $100) in exchange for past capital grants made to 

Amtrak by the Government through fiscal year 1981 and for future operating and 

capital grants pursuant to the provisions of Sec.1175 of the Amtrak Improvement 

Act of 1981, Pub. L. 97-35; RPSA sec.304 (as amended 1981). The requirement 

that Amtrak issue preferred shares to the Secretary of Transportation in exchange 

for federal assistance was repealed by the ARAA. 

The RPSA granted Amtrak the right (enforceable by the ICC) to use tracks, 

facilities, and services of freight railroads in providing passenger services and to 

compensate the freight railroads at the incremental cost level (plus incentive 

payments) for the use of their tracks, facilities, and services. RPSA, sec. 305 (as 

amended in 1973 and 1978); RPSA, sec. 402. Congress also provided that 

passenger trains operated by Amtrak must be accorded preference over freight 

trains operated by other railroads in the use of track. RPSA sec. 402 (as amended 

in 1973). Except for 366 miles of track on the Northeast Corridor, which Amtrak 

owns subject to a U.S Government mortgage lien (the NEC was transferred to 

Amtrak by Conrail under the provisions of Title VII of the Railroad Revitalization 

and Regulatory Reform Act of 1976, Pub. L. 94-210) and short segments of track 

in New York, Pennsylvania, and Michigan, all of Amtrak’s intercity passenger 

operations under the RPSA are conducted over tracks owned by freight carriers. 

The RPSA (as originally enacted and until amended by the ARAA in 1997) 

defined a “basic system” national route network over which Amtrak was required 

to provide passenger service. RPSA, sec. 201, 202. The Act (as amended) also 

made provision for Amtrak service beyond the “basic system”, including service 

that Amtrak would be required to provide at state, local or regional agency request 

subject to minimum state, local or regional agency financial assistance 

requirements (“Section 403(b) service”). RPSA, sec. 403 (as originally enacted 

and as amended 1974). Amtrak could discontinue service over the “basic system” 

(subject to Congressionally imposed moratoriums) only if the discontinuance met 

with certain Congressionally-approved criteria. RPSA sec. 404 (as amended 

1975); see former 49 U.S.C.24703. (Amtrak, although it added and discontinued 

various services since 1971, is currently operating over virtually the same route 

system it had at its inception.) The RPSA (as amended 1976) also provided 

Amtrak authority to operate commuter services under contract with regional, state 

or local authorities. The RPSA (as originally enacted and until amended by the 

ARAA) also granted Amtrak a monopoly over intercity rail passenger 

transportation over any route over which Amtrak provided scheduled service 

pursuant to a contract with a freight railroad. See former 49 U.S.C. 24701. 

Amtrak was also authorized to provide mail and express and auto-ferry (autotrain) service on passenger trains, and was directed to take all action necessary to 
4

increase revenues from mail and express services. See RPSA, sec.305, 49 U.S.C. 

24306. 

 

As originally enacted, the RPSA contemplated that Amtrak would contract 

with the freight railroads for the provision of rail passenger services and that such 

services would generally continue to be provided by freight railroad employees. 

See RPSA, sec. 305, 401-402; id. at 4742, 4744. The Act was amended shortly 

after to allow Amtrak to employ directly its own employees and to operate and 

control directly, to the extent practicable, all aspects of the service that it provides. 

RPSA, sec 305 (as amended in 1972); see 49 U.S.C. 24305(b). (The 1972 

amendments also initiated the provision of federal grants and loan guarantees to 

Amtrak in addition to that provided in the original 1970 legislation. See RPSA, sec 

601, 602 (as amended 1972).) 

Until amended by the ARAA, the RPSA provided that Amtrak employees who 

are discharged or displaced as a result of a route discontinuance or a reduction of 

train frequency below three round trips per week are entitled to up to six years of 

full pay and benefits (“labor protection payments”). See RPSA, sec. 405; 49 

U.S.C. 24706(c). The RPSA, until amended by the ARAA, also prohibited 

Amtrak from contracting out operations (except food service operations) where the 

result would be the layoff of an Amtrak employee. See RPSA, sec 405; former 49 

U.S.C.24312. 

Although the RPSA was amended numerous times since 1970 in an effort to 

improve Amtrak’s operations and financial status, Amtrak’s performance under 

the provisions of the RPSA did not meet with Congressional expectations. Instead 

of becoming commercially profitable or operationally self-sufficient as Congress 

had hoped in establishing Amtrak, Amtrak has required federal capital and 

operating subsidies totaling over $23 billion since inception of operations in 1971. 

Moreover, Congress has not funded Amtrak’s capital needs on an adequate, 

reliable basis, and Amtrak has deferred capital improvement requirements totaling 

billions of dollars in the Northeast Corridor. Further, as of 1997, Amtrak’s losses 

and capital needs were growing, and the prospect of an Amtrak bankruptcy in the 

absence of a massive infusion of financial assistance from the Federal Government 

was a strong probability. See GAO Report, Intercity Passenger Rail, Issues 

Associated With a Possible Amtrak Liquidation (March 1998).

It was this statutory and financial background that led Congress to overhaul the 

provisions of the RPSA in 1997 and adopt the reforms set forth in the ARAA. 

[N.B. As enacted in 1970, the RPSA was included in Title 45 of the United States 

Code and amended periodically. In 1994, the rail statutes, including those 

applicable to Amtrak, were recodified in Subtitle V of Title 49 of the Code; all 

subsequent revisions have been to the Title 49 provisions.] 
5

B. SUMMARY OF CURRENT PROVISIONS OF THE RPSA (CODIFIED AT 49 

U.S.C. 24101 ET SEQ.) APPLICABLE TO AMTRAK (AMENDMENTS MADE 

BY THE ARAA IN ITALICS) 

TITLE 49, UNITED STATES CODE 

SUBTITLE V, RAIL PROGRAMS 

PART C, PASSENGER TRANSPORTATION 

CHAPTER 241--GENERAL 

Sec. 24101. Findings, purpose and goals

(a) FINDINGS –Public convenience and necessity require that Amtrak, to the 

extent its budget allows, provide intercity rail passenger transportation 

between crowded urban areas and in other areas of the U.S.; Amtrak should 

be available to operate commuter rail passenger transportation under 

contract with commuter authorities that do not provide the transportation 

themselves; the Northeast Corridor (NEC) is a valuable resource of the U.S. 

(b) PURPOSE—By using innovative concepts, Amtrak shall provide rail 

passenger transportation that completely develops the potential of modern 

rail transportation to meet intercity and commuter passenger transportation 

needs of the U.S. 

(c) GOALS—Amtrak shall— 

(1) use its best business judgment in acting to minimize U.S. 

Government subsidies, including increasing fares; increasing 

revenue from mail and express; reducing management costs; and 

increasing employee productivity; 

(2) minimize government subsidies by encouraging State, regional and 

local governments and the private sector, separately or in 

combination, to share the cost of providing rail passenger 

transportation; 

(3) carry out strategies to achieve immediately maximum productivity 

consistent with safe operation; 

(4) operate Amtrak trains to all station stops within 15 minutes of time 

in published timetables; 

(5) develop transportation on rail corridors subsidized by States and 

private parties; 

(6) implement schedules based on a system-wide average speed of at 

least 60 m.p.h.; 

(7) encourage rail carriers to assist in improving intercity rail 

passenger transportation; 
6

(8) improve Amtrak performance through operational programs and 

employee incentives; 

(9) ensure equitable access to the NEC by intercity and commuter rail 

passenger transportation; 

(10) coordinate uses of NEC; and 

(11) maximize use of its resources, including the most cost-effective 

use of employees. 

(d) MINIMIZING GOVERNMENT SUBSIDIES—Amtrak shall prepare a 

financial plan to operate within the funding levels authorized by Section 

24104, including budgetary goals for fiscal years 1998 through 2002. 

Commencing no later than [December 2, 2002], Amtrak shall operate 

without Federal operating grant funds appropriated for its benefit.

Sec. 24102. Definitions

This section sets forth definitions of terms used in RPSA, including the 

“Northeast Corridor,” “basic system,” “intercity rail passenger transportation,” 

“commuter rail passenger transportation,” “auto-ferry transportation,” and “rail 

carrier,” which is newly defined as “a person, including a unit of state and local 

government, providing rail transportation for compensation.” 

 [N.B. The definition of “basic system” in Section 24102(2), which pre-existed 

enactment of ARAA, is no longer necessary. Under the ARAA amendments, 

Amtrak’s obligation to provide rail passenger service within the basic system was 

repealed. See former Section 24701 (Operation of basic system) repealed by 

ARAA Section 101(a). The ARAA also repealed a prior prohibition on other 

entities from operating intercity passenger service over an Amtrak route unless 

Amtrak gives consent. See ARAA Section 101(a), repealing former RPSA 

Section 24701(b). Accordingly, Amtrak is not precluded from discontinuing any 

service it considers unpromising or unprofitable, including over the “basic system” 

as previously defined.] 

Sec.24103. Enforcement

Except as provided in paragraph (2) only the Attorney General may bring an 

action against Amtrak or a rail carrier to enforce provisions of the RPSA. 

Paragraph (2) allows a rail employee or employee representative to bring an action 

if the conduct complained of involves a labor agreement; only the Attorney 

General can bring an action to review a discontinuance of a route or train or 

transportation or reduction in frequency of transportation. 
7

Sec. 24104. Authorization of Appropriations 

Specified sums are authorized to be appropriated to the Secretary of 

Transportation for the benefit of Amtrak for Fiscal Years 1998-2002 for capital 

expenditures, operating expenses, and Internal Revenue Code (IRC) tax liabilities 

under the Railroad Retirement Tax Act and Railroad Unemployment Insurance 

Act that are more than the amounts needed for Amtrak beneficiaries (“mandatory 

payments”). Commencing [December 2, 2002], no funds authorized for Amtrak 

shall be used for operating expenses other than those prescribed for tax liabilities 

under Section 3221 of the IRC that are more than the amount needed for benefits 

of individuals who retire from Amtrak and for their beneficiaries (“mandatory 

payments”), amounts appropriated for mandatory payments described as not a 

U.S. Government subsidy of Amtrak. Amounts appropriated shall be paid to 

Amtrak as follows: 50 percent on October 1; 25 percent on January 1; 25 percent 

on April 1. Amounts appropriated may not be used to subsidize operating losses of 

commuter rail passenger or rail freight transportation. [N.B. The annual DOT 

Appropriation Acts have altered this payment schedule in recent years by making 

a certain percentage available on the first day of the then current fiscal year and 

the rest available on the first day of the following fiscal year.] 

CHAPTER 243—AMTRAK 

Sec. 24301. Status and applicable laws

(a) STATUS—Amtrak— 

(1) is a railroad carrier under Section 20102(2)[safety] and Chapters 261 

[high-speed rail assistance] and 281[law enforcement] of Title 49; 

(2) shall be operated and managed as a for-profit corporation; and 

(3) is not a department, agency, or instrumentality of the United States 

Government. 

(b) PRINCIPAL OFFICE AND PLACE OF BUSINESS—District of 

Columbia 

(c) APPLICATION OF TITLE IV—Subtitle IV [economic regulation 

provisions administered by Surface Transportation Board as successor to 

the ICC] do not apply to Amtrak except for Sections 11301 (access to 

terminal facilities); 11322(a) (pooling agreements); 11502 (protection 

against double income taxation of employees) and 11706 (liability 

standards for shipments damaged in transit). Amtrak shall continue to be 

considered an employer under the Railroad Retirement Act of 1974, the 

Railroad Unemployment Insurance Act, and the Railroad Retirement Tax 

Act. 
8

(d) APPLICATION OF SAFETY AND EMPLOYEE RELATIONS LAWS—

safety and employee relations laws [e.g., the Railway Labor Act] that apply 

to rail carriers apply to Amtrak. 

(e) APPLICATION OF CERTAIN ADDITIONAL LAWS.---5 U.S.C. 552 

(Freedom of Information Act (FOIA provisions) and, to extent consistent 

with the provisions of the RPSA, the District of Columbia Business 

Corporations Act, apply to Amtrak; 5 U.S.C. 552 applies to Amtrak for any 

fiscal year in which Amtrak receives a federal subsidy.

(f)-(n) Sets forth certain miscellaneous provisions including exemptions for 

Amtrak from state laws relating to rates, routes and service, and exemption 

from certain state taxes on personal property, real estate, and Amtrak 

services. 

Sec. 24302. Board of Directors

(a) REFORM BOARD.— 

(1) ESTABLISHMENT AND DUTIES— The Reform Board assumes the 

responsibilities of Amtrak’s former Board of Directors by March 31, 

1998 or as soon thereafter as at least 4 members are appointed; the 

Board appointed under prior law shall be abolished. 

(2) MEMBERSHIP— The Reform Board shall consist of 7 voting 

members appointed by the President and confirmed by Senate 

(except for the DOT Secretary); Reform Board members have a 5 

year term; the President of Amtrak serves as an ex officio, nonvoting member; 

(b) BOARD OF DIRECTORS—Alternative procedures are established for 

selection of the Board of Directors after 5 years, depending on whether 

Amtrak has received federal assistance during the then current fiscal year. 

(c) AUTHORITY TO RECOMMEND PLAN—The Reform Board shall have the 

authority to recommend to Congress a plan to implement the 

recommendations of the 1997 Working Group on Intercity Rail regarding 

the transfer of Amtrak’s infrastructure assets and responsibilities to a new 

separately governed corporation. 

Sec. 24303. Officers

Provides for the appointment and terms, pay, and bars on conflicts of interest 

of Amtrak officers. 

Sec. 24304. Employee stock ownership plans

In issuing stock pursuant to applicable corporate law, Amtrak is encouraged to 

include employee stock ownership plans. 
9

[N.B. The ARAA repealed former 49 U.S.C. 24302 (Board of Directors) and 

49 U.S.C. 24304 (Capitalization) of the RPSA (as recodified in Title 49) and 

replaced those sections entirely with the current provisions. See ARAA Sections 

411 and 415. Old Sections 24302 and 24304 provided for the issuance by Amtrak 

of two classes of stock: common and preferred. Common stock could only 

initially be issued to a railroad; preferred stock could only be issued to a nonrailroad. Both common and preferred stock had voting rights under the former 

provisions of the RPSA. See former RPSA Section 303(c)(1970), formerly 

codified at 49 U.S.C. 24302(b) (1997) (“The articles of incorporation of Amtrak 

shall provide for cumulative voting for all stockholders”). Currently, Amtrak 

common stock is held by three railroads and an insurance company (as a successor 

to the Penn Central). The Secretary of Transportation is the only holder of 

preferred stock (in an amount of approximately $10.6 billion (March 1998 GAO 

Report, at 14)). The common stockholders right to elect a portion of the Board of 

Directors was repealed by sec. 1175 of the Amtrak Improvement Act of 1981. 

The right of preferred shareholders to elect 2 members of the former Board of 

Directors was repealed by the ARAA; preferred stock was also made non-voting. 

See ARAA sec.415(c). There is no specific provision in the RPSA providing for 

voting by common stockholders. However, Amtrak’s articles of incorporation 

provide for cumulative voting by common stockholders as required under the 

former provisions of the RPSA. 

Sec. 24305. General Authority

(a) ACQUISITION AND OPERATION OF EQUIPMENT AND 

FACILITIES—(1) Amtrak may acquire, operate, maintain and make 

contracts for the operation and maintenance of equipment and facilities 

necessary for intercity and commuter rail passenger transportation, mail and 

express, and auto-ferry. 

(2) Amtrak shall operate and control directly, to the extent practicable, all 

aspects of the rail passenger transportation it provides. 

(3) Amtrak may enter into contracts with unsubsidized motor carriers of 

passengers for the intercity transportation of passengers. 

(b) MAINTENANCE AND REHABILITATION—Amtrak may maintain and 

rehabilitate rail passenger equipment and shall maintain a regional 

maintenance plan that includes, inter alia, a systematic preventive 

maintenance program. 

(c) MISCELLANEOUS AUTHORITY. Amtrak may transport mail and 

express and shall use all feasible methods to obtain the bulk mail business 

of the U.S. Postal service. 
10

(d) THROUGH ROUTES AND JOINT FARES—Amtrak may establish 

through routes and joint fares with any domestic or international motor 

carrier, air carrier, or water carrier. 

(e) RAIL POLICE—Amtrak may employ rail police. 

(f) DOMESTIC BUYING PREFERENCES—Amtrak is required to employ 

domestic buying preferences for purchases of $1 million or more. The 

Secretary of Transportation may waive the requirement on application of 

Amtrak where, inter alia, goods are not manufactured in the U.S. in 

reasonably available or satisfactory commercial quantities or where rolling 

stock or power train equipment cannot be delivered in the U.S. in a 

reasonable time. 

Sec. 24306. Mail, express, and auto-ferry transportation

Amtrak shall take necessary action to increase its revenues from mail and 

express; state and local laws shall not prevent Amtrak (and other rail carriers) 

from providing auto-ferry service. 

Sec. 24307. Special transportation

Amtrak shall maintain a reduced fare program for persons 65 and older, the 

impaired and for active or retired rail carrier employees eligible for free or reduced 

fares on April 30, 1971. 

Sec.24308. Use of facilities and providing service to Amtrak

(a) GENERAL AUTHORITY—(1) Amtrak may make an agreement with a 

rail carrier or regional transportation authority to use facilities of, and have 

services provided by, the carrier or regional authority on agreed terms. The 

terms shall include a penalty for untimely performance. 

(2) If the parties cannot agree, the Interstate Commerce Commission 

[Surface Transportation Board] may order that facilities and services be 

provided to Amtrak and may prescribe reasonable terms and 

compensation. When prescribing reasonable compensation, the ICC 

shall consider quality of service when determining whether, and the 

extent to which, compensation shall be greater than the incremental 

costs of using the facilities and providing the services. The ICC shall 

decide the dispute within 90 days. Amtrak’s right to facilities and 

services is conditioned on payment of the compensation. 

(b) OPERATING DURING EMERGENCIES— The ICC shall require a rail 

carrier to provide facilities immediately during an emergency. 
11

(c) PREFERENCE OVER FREIGHT TRANSPORTATION—Except in an 

emergency, intercity and commuter rail passenger transportation provided 

by or for Amtrak has preference over freight transportation unless the 

Secretary of Transportation orders otherwise. 

(d) ACCELERATED SPEEDS—If a rail carrier refuses to allow accelerated 

speeds on trains operated by or for Amtrak, Amtrak may apply to the 

Secretary of Transportation for an order requiring accelerated speeds. 

(e) ADDITIONAL TRAINS—When a rail carrier does not agree to provide, or 

allow Amtrak to provide, for the operation of additional trains over a line of 

the carrier, Amtrak may apply to the Secretary for an order requiring the 

operation of additional trains. If the parties cannot agree on compensation, 

the ICC shall decide the dispute under subsection (a). 

Sec. 24309. Retaining and maintaining facilities

A facility of a rail carrier or regional authority that Amtrak used to provide rail 

passenger transportation on February 1, 1979, or on January 1, 1997, may be 

downgraded or disposed of only after approval of the Secretary of Transportation. 

[Sec. 24310. (Assistance for upgrading facilities) repealed by sec 403 of ARAA]

Sec. 24311. Acquiring interests in property by eminent domain

Amtrak may acquire by eminent domain interests in property necessary for 

intercity rail passenger transportation, except property of a rail carrier, a State, a 

political division of a state, or a governmental authority. If Amtrak and a rail 

carrier cannot agree on a sale to Amtrak of an interest in property of a rail carrier 

necessary for intercity rail passenger transportation, Amtrak may apply to the ICC 

for an order requiring the carrier to convey the interest on reasonable terms, 

including just compensation. Amtrak may subsequently convey to a third party an 

interest conveyed to Amtrak under this subsection. 

Sec. 24312. Labor standards

Amtrak shall ensure that laborers and mechanics employed by contractors and 

subcontractors in construction work financed under an agreement made under 

Section 24308 will be paid wages that comply with the wage requirements in the 

Davis-Bacon Act (40 U.S.C. 276a—276a-5). Wage rates in a collective 

bargaining agreement negotiated under the Railway Labor Act are deemed to 

comply with the Davis-Bacon Act. 
12

Sec. 24313. Rail safety system program

Amtrak shall maintain a rail safety system program in consultation with rail 

labor organizations. 

[Sec. 24314 (Demonstration of new technology) repealed by Section 404 of 

ARAA] 

Sec. 24315. Reports and audits

(a) AMTRAK ANNUAL OPERATIONS REPORT—By February 15 of each 

year Amtrak shall submit to Congress a report that provides specified 

information (e.g., ridership, passenger miles, revenue-to-cost ratios, and 

subsidies) for each route on which Amtrak provided intercity rail passenger 

transportation. 

(b) AMTRAK GENERAL AND LEGISLATIVE ANNUAL REPORT—By 

February 15, Amtrak shall submit to the President and Congress a complete 

report of its operations, activities and accomplishments. 

(c) SECRETARY’S REPORT ON EFFECTIVENESS OF THIS PART—The 

Secretary of Transportation shall include in his annual report a report on the 

effectiveness of this part in meeting the requirements for a balanced 

transportation system in the U.S. 

(d) INDEPENDENT AUDITS—An independent CPA shall audit the financial 

statements of Amtrak each year. 

(e) COMPTROLLER GENERAL AUDITS—The Comptroller General may 

conduct performance audits of the activities and transactions of Amtrak. 

(f) AVAILABILITY OF RECORDS AND PROPERTY OF AMTRAK AND 

RAIL CARRIERS—Amtrak and rail carriers with which Amtrak has a 

contract shall make available all records and property necessary for an audit 

under subsections (d) and (e). 

(g) COMPTROLLER GENERAL’S REPORT TO CONGRESS—The 

Comptroller General shall submit to Congress a report on each audit, giving 

comments, information and recommendations and specifying any financial 

transaction or undertaking he considers is carried out without authority of 

law. 

(h) ACCESS TO RECORDS AND ACCOUNTS—A State shall have access to 

any records used to determine the amount of any payment to Amtrak by the 

State.

[Chapter 245 (Amtrak Commuter) repealed by Section 106(a) of ARAA. N.B. 

The Amtrak Commuter provisions, as adopted in 1981, authorized Amtrak to 

establish a separate subsidiary to conduct commuter operations. The Amtrak 

Commuter provisions were never used.] 
13

 CHAPTER 247—AMTRAK ROUTE SYSTEM

24701. National rail passenger transportation system

Amtrak shall operate a national rail passenger system which ties together 

existing and emergent regional rail passenger service and other intermodal 

passenger service. [N.B. Amtrak notes that Public Law No. 97-102 (the 

Department of Transportation and Related Agencies Appropriation Act, 1982) 

provided that “notwithstanding any other provision of law, [Amtrak] shall provide 

through rail passenger service between Washington, D.C. and Chicago, via 

Cincinnati.” Amtrak further notes that this provision has not been specifically 

repealed.] 

[Section 24702. (Improving rail passenger transportation) repealed by Section 

101(b) of ARAA]

[Section 24703. (Route and service criteria) repealed by Section 103 of ARAA]

[Section 24704. (Transportation requested by States, authorities, and other 

persons) repealed by Section 105(a) of ARAA. 

(N.B. Section 24704 codified the section of the RPSA, formerly known as 

403(b), that defined a minimum cost-sharing arrangement between Amtrak and 

state or local governments that requested passenger services that were 

supplemental to those provided by Amtrak as part of the basic system. Under the 

ARAA, Amtrak is free to negotiate any form of cost-sharing arrangements it 

wishes, and in fact has been doing for some time; see Summary Report, Office Of 

Inspector General, U.S. DOT (November 23, 1998) at 17, n11)] 

[Section 24705. (Additional qualifying routes) repealed by Section 104 of ARAA]

Sec. 24706. Discontinuance

Amtrak shall give notice at least 180 days before a discontinuance under 

Section 24704 [repealed, see above] or discontinuing service over a route. [N.B. 

The former provision required 90 days’ notice.] The notice shall be given in the 

way Amtrak decides will give a State, a regional or local authority, or another 

person the opportunity to agree to share or assume the cost of any part of the train, 

route, or service to be discontinued. Amtrak may discontinue service during the 

first month of any fiscal year if appropriations are not enacted at least 90 days 

before the beginning of the fiscal year and the 30 days following enactment of an 

appropriation or rescission of an appropriation. 
14

[Section 24707. (Cost and performance review) repealed by Section 101(d) of 

ARAA]

[Sec. 24708. (Special commuter transportation) repealed by Section 101(e) of 

ARAA 

(N.B. Sec. 24708 provided for an obligation of Amtrak to operate what were 

formerly known as “ Section 403(d) “ trains, which were certain Northeast 

Corridor trains (“Clocker Service”)) 

Sec. 24709. International transportation

Amtrak may develop and operate international intercity rail passenger 

transportation between the U.S. and Canada and Mexico. The Secretary of the 

Treasury and Attorney General, in cooperation with Amtrak, shall maintain en 

route customs inspection and immigration procedures. 

CHAPTER 249 – NORTHEAST CORRIDOR IMPROVEMENT 

PROGRAM 

Sec. 24902. Goals and requirements

(a) MANAGING COSTS AND REVENUES—Amtrak shall operate with the 

goal of having revenues derived each year from providing intercity 

passenger service over the NEC route between the District of Columbia and 

Boston equal at least the operating costs for the service. 

(b) PRIORITIES IN SELECTING AND SCHEDULING PROJECTS—

provides a list of priorities (e.g., safety-related items first) that Amtrak 

should apply for projects over the NEC. 

(c) COMPATIBILITY WITH FUTURE IMPROVEMENTS AND 

PRODUCTION OF MAXIMUM LABOR BENEFITS— Improvements 

under this section shall be compatible with future improvements in 

transportation. 

(d) AUTOMATIC TRAIN CONTROL SYSTEMS—A train operating on the 

NEC main line or between the main line and Atlantic City shall be 

equipped with an automatic train control system designed to slow or stop 

the train in response to an external signal. 

(e) HIGH-SPEED TRANSPORTATION—If practicable, Amtrak shall 

establish intercity rail transportation in the NEC that carries out Section 

703(1)(E) of 4-R Act of 1976. [N.B. Section 703(1) (E) established certain 

“required goals” of the NEC improvement project, including trip times 

between Boston-New York of 3 hours and 40 minutes and between New 
15

York-Washington, D.C. of 2 hours and 40 minutes. That section also 

required a report on the feasibility of a 3 hour Boston-New York schedule 

and a 2 1⁄2 hour New York-Washington schedule.] 

(f) EQUIPMENT DEVELOPMENT—Amtrak shall develop economical and 

reliable equipment suitable for the NEC. 

(g) AGREEMENTS FOR OFF-CORRIDOR ROUTING OF RAIL FREIGHT 

TRANSPORTATION--- Amtrak may make agreements with a rail freight 

carrier or regional transportation authority under which the carrier will 

carry out an alternative off-corridor routing of freight traffic between the 

District of Columbia and New York metropolitan areas. Amtrak shall apply 

to the ICC for approval of the agreement. If an agreement is not made, 

Amtrak, with the consent of the other parties, may apply to the ICC to 

decide the terms of the agreement. 

(h) COORDINATION—The Secretary of Transportation shall coordinate 

transportation programs related to the NEC and amounts from the 

Government to achieve urban redevelopment in the vicinity of urban rail 

stations on NEC. 

(i) COMPLETION—Amtrak shall give highest priority to completing the 

program. 

(j) APPLICABLE PROCEDURES— No State or local building, zoning, or 

similar or related law shall apply to any improvement or mortgage of 

improvement made by or for the benefit of Amtrak. This subsection shall 

not apply to any improvement or related land unless Amtrak receives a 

federal operating subsidy in the fiscal year in which the improvement is 

initiated. 

[Section 24903. (Program master plan for Boston-New York main line) repealed 

by Section 405(a) of ARAA]

Sec. 24904. General authority

(a) GENERAL—to carry out this chapter and the Regional Rail 

Reorganization Act of 1973, Amtrak may acquire and dispose of property; 

acquire property by condemnation; provide for rail freight, intercity rail 

passenger and commuter operations over property acquired; make 

improvements to rights of way over the NEC; and make agreements with 

other carriers and commuter authorities to grant, acquire or make 

arrangements for rail freight and commuter operations over the NEC. 

(b) COMPENSATORY AGREEMENTS—Rail freight and commuter 

agreements must be compensatory. 

(c) COMPENSATION FOR TRANSPORTATION OVER CERTAIN 

RIGHTS OF WAY AND FACILITIES—An agreement with freight 

carriers and commuter authorities under subsection (a) shall provide for 
16

reasonable reimbursement of costs but may not cross-subsidize intercity rail 

passenger, commuter rail passenger, and rail freight transportation. If the 

parties do not agree, the ICC shall order that transportation continues over 

facilities acquired under the 3R and 4R Acts (the NEC) and shall establish 

reasonable compensation. The ICC shall assign to a rail freight carrier the 

costs Amtrak incurs only for the benefit of the carrier, plus a proportionate 

share of all other costs incurred for the common benefit of Amtrak and the 

carrier. 

Sec. 24905. Coordination board and safety committee

Establishes a Northeast Corridor Coordination Board (composed of 

representatives of commuter authorities, Amtrak and Conrail) and a Safety 

Committee (composed of representatives of DOT, Amtrak, freight carriers, 

commuter agencies, rail passengers and rail labor) to ensure equitable access to the 

NEC and recommend safety improvements to the NEC. 

Sec. 24906. Eliminating highway at-grade crossings

In consultation with States on the main line of the NEC, the Secretary of 

Transportation shall develop a plan not later than September 30, 1993, to 

eliminate, as far as practical and necessary, all highway at- grade crossings on the 

main line by December 31, 1997. Amtrak shall pay 20 percent of the costs of 

eliminating each highway at-grade crossing under the plan. 

Sec. 24907. Note and mortgage

To secure amounts expended by the U.S. Government to acquire and improve 

property in the NEC, the Secretary of Transportation may obtain a note of 

indebtedness from, and may make a mortgage agreement with, Amtrak to establish 

a mortgage lien on the property for the Government. [N.B. The U.S. Government 

currently holds a note from Amtrak for about $3.8 billion in debt, which matures 

on December 31, 2975, and is secured by a mortgage on Amtrak’s real property, 

primarily on the NEC and in the Midwest. (The USG also holds a second note 

from Amtrak in the amount of about $1.1 billion, which is secured by a lien on 

Amtrak’s rolling stock; this lien was subsequently subordinated to the security 

interests of Amtrak’s equipment creditors.) See March 1998 GAO Report, 

Intercity Passenger Rail. Issues Associated With a Possible Amtrak Liquidation 

at 14.] 
17

Sec. 24908. Transfer taxes and levies and recording charges

A transfer of interest of property under this chapter is exempt from Federal, 

state, or local taxes. 

Sec. 24909. Authorization of appropriations

Contains various provisions pre-dating the ARAA providing authorization of 

appropriations for Amtrak and specifying specific projects (e.g., “automate the 

Bush River Drawbridge at milepost 72.14”) that the amounts authorized are to be 

used for. 

CHAPTER 261—HIGH-SPEED RAIL ASSISTANCE 

Sec. 26101. Corridor Planning

Provides that the Secretary of Transportation may provide up to 50 percent of 

financial assistance to public agencies for high-speed rail corridor planning. No 

less than 20 percent of the publicly financed costs shall come from state and local 

sources. The section contains specific criteria for determining financial assistance, 

including the extent to which the proposed planning focuses on systems which will 

achieve sustained speeds of 125 mph or more, the integration of the corridor into 

metropolitan area and statewide transportation planning, the potential 

interconnection of the corridor with other parts of the Nation’s transportation 

system, and estimated level of ridership and capital cost of corridor improvements. 

Sec. 26104. Authorization of appropriations

Provides for appropriation authorizations through Fiscal Year 2001 for 

carrying out Sec. 26101. 

CHAPTER 281—LAW ENFORCEMENT 

Sec. 28102. Limit on certain accident or incident liability

When a publicly financed Virginia commuter authority makes a contract to 

indemnify Amtrak for liability for operations conducted by or for the authority or 

to indemnify a rail carrier over whose tracks the operations are conducted, liability 

against Amtrak, the carrier or authority for all claims (including punitive damages) 

arising from an accident or incident in the District of Columbia may not be more 

than the limits of the liability coverage (minimum of $200,000,000) the authority 
18

maintains to indemnify Amtrak or the carrier. The section is effective only after 

Amtrak or a rail carrier makes an operating agreement with the Virginia commuter 

transportation authority to provide access to its property. 

Sec. 28103. Limitations on rail passenger transportation liability

In a claim for personal injury or death of a passenger, or for damage to 

property of a passenger arising in connection with the provision of rail passenger 

transportation over right of way or facilities, owned leased or maintained by any 

high-speed railroad authority or operator, any commuter authority or operator, 

any rail carrier or any State, punitive damages, to the extent permitted by state 

law, may be awarded only if the plaintiff establishes that the harm was the result 

of conduct carried out by the defendant with a conscious, flagrant indifference to 

the rights or safety of others. This paragraph shall not apply in a case involving 

death if the applicable law provides only for punitive damages. The aggregate 

allowable awards to all rail passengers, against all defendants, for all claims, 

including claims for punitive damages, shall not exceed $200,000,000. A provider 

of rail passenger transportation may enter into contracts that allocate financial 

responsibility for claims. Amtrak shall maintain a total minimum liability 

coverage through insurance or self-insurance of at least $200,000,000 per 

accident or incident. 
19

II. PROVISIONS OF THE AMTRAK REFORM AND 

ACCOUNTABILITY ACT OF 1997, P.L. 105-134 (DECEMBER 

2, 1997) APPLICABLE TO AMTRAK (PROVISIONS NOT 

AMENDING TITLE 49, U.S.C.) 

A. SECTION 2. FINDINGS

This section sets forth eleven findings reflecting, among other items, the 

importance of intercity rail passenger transportation to a national intermodal 

passenger transportation system; Amtrak’s financial crisis; the need for immediate 

action if Amtrak is to survive; Amtrak’s need for additional flexibility to operate 

in a businesslike manner; the need for Amtrak and its employees to modify 

collective bargaining agreements to make more efficient use of manpower and to 

realize cost savings; that Amtrak’s Strategic Business Plan calls for the 

establishment of a dedicated source of capital funding; and that Federal financial 

assistance to cover operating losses should be eliminated by the year 2002. 

TITLE I—REFORMS 

SUBTITLE A—OPERATIONAL REFORMS 

Sec. 106. Amtrak Commuter

(c) The subsection provides that the repeal of chapter 245 (Amtrak Commuter) 

by subsection 106(a) of the ARAA is without prejudice to the retention of trackage 

rights by Amtrak or Conrail over property owned or leased by commuter 

authorities. 

SEC. 108. Rail And Motor Carrier Passenger Service

Amtrak and motor carriers of passengers are authorized to combine or package 

their services and coordinate schedules and ticketing. The authority is subject to 

review by the STB and can be modified or revoked by the STB in the public 

interest.

SEC. 109. Passenger Choice

Federal employees are authorized to travel on Amtrak for official business 

where travel cost is competitive. 
20

SEC. 110. Application Of Certain Laws

(b) This subsection provides that Section 303B(m) of the Federal Property and 

Administrative Services Act of 1949 (41 U.S.C. 253b(m)) (prohibition on release 

of contractor proposals seeking to do business with a federal entity) applies to a 

proposal in the possession or control of Amtrak. 

SEC. 121. Contracting Out

(a) REPEAL ON BAN ON CONTRACTING OUT.-- —This subsection 

repealed the statutory ban on Amtrak contracting out non-food services set 

forth in former 49 U.S.C. 24312 where any loss of employment to Amtrak 

employees would result. 

(b) AMENDMENT OF EXISTING COLLECTIVE BARGAINING 

AGREEMENT— 

(1) CONTRACTING OUT.-- Section 121(b) provides that any collective 

bargaining agreement between Amtrak and its employees entered into 

before December 2, 1997 is deemed amended to include the statutory 

language of the contracting out ban as it existed before repealed by the 

ARAA. The amendment is binding on all parties and has the same effect as 

if arrived at by agreement under the Railway Labor Act. 

(c) CONTRACTING-OUT ISSUES TO BE INCLUDED IN 

NEGOTIATIONS—This subsection provides that proposals on the subject 

matter of contracting out work, other than food or beverage service— 

(1) shall be included in negotiations under Section 6 of the RLA 

between Amtrak and an organization representing Amtrak 

employees, which shall be commenced by: (A) the date on which 

labor agreements under negotiation on December 2, 1997 may be 

reopened; or (B) November 1, 1999, whichever is earlier; 

(2) may by mutual agreement be included in any negotiations in 

progress on December 2, 1997; 

(3) may not be included in any negotiation in progress on December 2, 

1997 unless both Amtrak and the organization representing Amtrak 

employees agree to include it. 

No contract that is under negotiation on December 2,1997 may 

contain a moratorium that extends more than five years from the date 

of expiration of the last moratorium. 

(d) The repeal of the contracting out provision is without prejudice to the 

power of Amtrak to contract out the provision of food and beverage 

services on board Amtrak trains or to contract out work not resulting in the 

layoff of Amtrak employees. 
21

[N.B. Under the RLA, collective bargaining agreement provisions, such as 

the ban on contracting out (except for food and beverage services) inserted 

in Amtrak collective bargaining agreements pursuant to subsection 

121(b)(1), continue in force until modified by subsequent collective 

bargaining agreements (or through resort to self-help measures (e.g. strikes, 

lockouts) after the parties’ collective bargaining responsibilities under the 

RLA have been fully exhausted.) Amtrak served written Section 6 notices 

on Amtrak union representatives under the RLA to commence negotiations 

on contracting out proposals on June 12, 2000. Subsection 121(c) contains 

no requirement that Amtrak and union representatives make any specific 

substantive changes in the ban on contracting out, nor does it contain any 

deadlines as to when negotiations on contracting-out proposals must be 

concluded. The ban on contracting out (except for food and beverage 

services) thus continues to be a part of Amtrak’s collective bargaining 

agreements until changed by the parties under the provisions of the RLA 

and can remain in effect indefinitely under the current provisions of 

subsection 121(c).] 

SUBTITLE C---EMPLOYEE PROTECTION REFORMS 

SEC. 141. Railway Labor Act Procedures

(a) NOTICES—This subsection provides that notwithstanding any 

arrangement in effect prior to December 2, 1997, notices under Section 6 of 

the RLA with respect to all issues relating to employee protective 

arrangements and severance benefits which are applicable to Amtrak 

employees (including the Appendix C-2 provisions to the National Railroad 

Passenger Corporation Agreement signed July 4, 1973 [which provisions 

provide for up to six years of income protection for Amtrak employees who 

are dismissed or displaced as a result of Amtrak route discontinuances or 

closure or transfer of shop-work]) shall be deemed served and effective 45 

days from December 2, 1997. Amtrak and affected labor organizations 

shall promptly supply proposals with respect to each notice. 

(b) NATIONAL MEDIATION BOARD EFFORTS—Except as provided in 

subsection (c), the NMB shall complete all efforts with respect to the 

dispute described in subsection (a) within 120 days of December 2, 1997. 

(c) RAILWAY LABOR ACT ARBITRATION—The parties may agree to 

submit the dispute to arbitration under Section 7 of the RLA not later than 

120 days after December 2, 1997. 

(d) DISPUTE RESOLUTION—A dispute which is unresolved 120 days after 

December 2, 1997 and which is not submitted to arbitration under 

subsection (c) shall be submitted to the NMB for recommendations for 
22

contract terms. If the parties fail to reach agreement, no change shall be 

made by the parties in the conditions out of which the dispute arose for 30 

days. The provisions of Section 10 of the RLA pertaining to appointment 

of a Presidential Emergency Board shall not apply to a dispute described in 

subsection (a); the parties may employ self-help measures (e.g., strikes or 

lockouts) to resolve the dispute. 

SEC. 142. Service Discontinuance

(a) REPEAL—This subsection repealed the statutory employee protection 

provisions in former Section 24706(c) of the RPSA. These provisions 

(which incorporated the Appendix C-2 conditions) provided up to six years 

of income protection and other benefits to Amtrak employees who lose 

their jobs or are otherwise adversely affected by a discontinuance or 

reduction in frequency below 3 round-trips per week of intercity passenger 

rail service over a route or to shop employees who are adversely affected by 

a shop closure or transfer of shop work. 

(b) EXISTING CONTRACTS— Subsection (b) provides that any provision of 

a contract entered into before December 2, 1997 between Amtrak and a 

labor organization representing Amtrak employees relating to employee 

protective arrangements and severance benefits is extinguished, including 

provisions of Appendix C-2 (which specified the employee protective 

arrangements applicable to Amtrak employees). 

(c) SPECIAL EFFECTIVE DATE—Subsections (a) and (b) shall take effect 

180 days from December 2, 1997 [(June 1, 1998]. 

(d) NONAPPLICATION OF BANKRUPTCY LAW PROVISION—Section 

1172(c) of title 11 of the U.S.C. (requiring the STB, in approving an 

application under a proposed plan of reorganization of a rail carrier under 

the bankruptcy law, to require employee protective arrangements as 

provided under 49 U.S.C. 11347) shall not apply to Amtrak employees. 

[N.B. This section of the ARAA (effective as of June 1, 1998) removed all 

statutory employee protection provisions covering Amtrak employees and 

also removed all Amtrak employee protection provisions from existing 

collective bargaining agreements. Instead, the ARAA (Section 141) 

required Amtrak and its employees to either negotiate new provisions in 

collective bargaining agreements or to submit the issue of employee 

protective provisions to binding arbitration (which award would be 

retroactive to April 1, 1998). Amtrak and Amtrak unions opted to submit 

labor protection issues to binding arbitration. 

 
23

In a decision issued November 1, 1999, the 3-member arbitration board 

selected by the parties modified the pre-existing employee protective 

provisions. 

The “triggers” for the imposition of employee protective benefits for 

affected employees remained the same: (1) discontinuance of intercity rail 

passenger service on a route or a reduction in frequency below 3 round trips 

per week; or, as affects shop employees, (2) closure of a maintenance shop 

facility or transfer of work from the facility to another facility more than 30 

miles away. 

The amount of employee protection provided to affected employees was 

modified (as regards major aspects) as follows: 

(1) Under pre-existing law, any affected Amtrak employee was entitled to 

wage and benefit protection for a period equal to the amount of service, 

not to exceed 6 years; under the arbitration award, an Amtrak employee 

must have two years of service with Amtrak to be awarded protection. 

(2) The maximum duration of employee protective benefits was reduced 

from 6 years to 5 years, and employees must have greater years of 

service on a sliding scale to reach maximum benefits. For example, an 

employee with 3-5 years of service would receive 12 months’ benefits; 

an employee with 10-15 years of service would receive 24 months’ 

benefits; an employee with 20-25 years of service would receive 48 

months’ benefits; and an employee with 25 or more years of service 

would receive the maximum 5 years’ benefits. (According to Amtrak, 

approximately 20 percent of current Amtrak employees eligible for 

labor protection have more than 20 years of service and would be 

entitled to 4-5 years of income protection for a “trigger occurrence” if 

unable to exercise seniority.) 

(3) No labor protection would be required for the first two years of any new 

service commenced after the arbitration. The arbitration panel found 

that labor protection did not apply to commuter contracts. 

The issue of whether labor protection would apply to the termination of 

Amtrak contracts for local or state (non-commuter) service was not decided by 

the arbitration panel. The issue was remanded for further negotiation and resubmission to arbitration if there is no agreement. 

The parties are free to negotiate amendments to the arbitration award 

commencing January 1, 2000.] 
24

TITLE II—FISCAL ACCOUNTABILITY 

Sec. 202. Independent Assessment

This section provides for independent assessment of Amtrak’s financial 

requirements through fiscal year 2002 under oversight of the DOT Inspector 

General. The Report was submitted to Congress on November 23, 1998. 

Sec. 203. Amtrak Reform Council

This section provides for establishment of the Amtrak Reform Council (ARC) 

as an independent commission of 11 members. The duties of the ARC are to (A) 

evaluate Amtrak’s performance; (B) make recommendations to Amtrak for 

achieving further cost containment and productivity improvements and financial 

reforms; and (C) identify Amtrak routes which are candidates for closure or 

realignment, based on performance ranking developed by Amtrak [(N.B. 

Requirement (C) was added by Section 349 of the Fiscal Year 1999 Omnibus 

Appropriations Act and continued in Sec. 331 of the Fiscal Year 2000 Omnibus 

Appropriations Act]. If after January 1, 1997 Amtrak enters into an agreement 

involving work-rules intended to achieve savings with an organization 

representing Amtrak employees, Amtrak shall report quarterly to the ARC: (A) the 

saving realized as a result of the agreement; and (B) how the savings are allocated. 

Each year before December 2, 2002, ARC shall submit a report to Congress that 

includes an assessment of: (1) Amtrak’s progress on the resolution of productivity 

issues; (2) the status of those productivity issues; (3) Amtrak routes which are 

candidates for closure or realignment; and (4) recommendations for improvements 

and for any changes in the law it believes to be necessary or appropriate. 

Sec. 204. Sunset Trigger

If at any time more than two years after December 2, 1997, and 

implementation of the financial plan referred to in Section 24101(d), ARC finds 

that: (1) Amtrak’s business performance will prevent it from meeting the financial 

goals set forth in Section 24101(d); or (2) Amtrak will require operating grant 

funds after December 2, 2002, ARC shall immediately notify the President and 

Congress. In making such a finding, ARC shall take into account (1) Amtrak’s 

performance; (2) the findings of the independent assessment conducted under 

section 202; (3) the level of Federal funds made available for carrying out the 

financial plan referred to in 49 U.S.C. 24101(d); and (4) acts of God, national 

emergencies and other events beyond the reasonable control of Amtrak. Within 

90 days after ARC makes a finding: (1) it shall develop and submit to Congress an 

action plan for a restructured and rationalized national intercity rail passenger 
25

system; and (2) Amtrak shall submit a plan for the complete liquidation of 

Amtrak. 

Sec 205. Senate Procedure for Consideration of Restructuring and Liquidation 

Plans

This section provides for Senate procedures for considering a restructuring 

proposal or liquidation disapproval resolution relating to Amtrak. 

Sec. 209. Limitation on Use of Tax Refund

Amtrak may not use any amount received under Section 977 of the Taxpayer 

Relief Act (TRA) of 1997: (1) for any purpose other than making payments to 

non-Amtrak States (pursuant to Sec. 977(c)), or the financing of qualified 

expenses (as defined by Sec. 977(e)(1)); or (2) to offset other amounts used for 

any purpose other than the financing of such expenses. ARC shall report quarterly 

to Congress on the use of amounts received by Amtrak under Section 977. 

[N.B. Under the TRA, Amtrak was treated as entitled to apply its tax 

carrybacks against the income tax paid by its railroad predecessors of 

approximately $2.3 billion and to claim the $2.3 billion amount as a tax refund. 

The TRA defines the term “qualified expenses” as expenses incurred for “(i) the 

acquisition of equipment, rolling stock, and other capital improvements, the 

upgrading of maintenance facilities, and the maintenance of existing equipment, in 

intercity passenger service and (ii) the payment of interest and principal on 

obligations incurred for such acquisition, upgrading, and maintenance.”] 

Sec. 301(b). Amtrak Reform Legislation

This section provides that the ARAA constitutes Amtrak reform legislation 

within the meaning of Section 977 of TRA (release of funds under the TRA was 

made contingent on passage of Amtrak reform legislation). 

Sec. 406(a). Americans with Disabilities (ADA)

Specifies certain applications of the ADA to Amtrak. 

Sec. 408. Northeast Corridor Cost Dispute

This section provides that Section 1163 of the Northeast Rail Service Act of 

1981 (NERSA) (45 U.S.C. 1111) is repealed. (Section 1111 provided that the ICC 

would determine an appropriate costing methodology for compensation to Amtrak 

for right-of-way related costs for the operation of commuter rail passenger service 
26

on the NEC unless Conrail, Amtrak, and affected commuter authorities otherwise 

agree on a methodology. The repeal was not intended to affect the basis currently 

used by Amtrak, commuter authorities and freight railroads for future negotiation 

of cost-sharing agreements on the NEC.) 

Sec. 409. Inspector General Act of 1978 Amendment 

This section provides that Amtrak shall not be considered a Federal entity for 

purposes of the Inspector General Act for any fiscal year in which Amtrak 

receives no Federal subsidy. In any fiscal year in which Amtrak requests Federal 

assistance, the DOT Inspector General shall review Amtrak’s operations and 

conduct an assessment similar to the assessment required by Section 202(a) of 

ARAA. The results of the assessment shall be submitted to Amtrak and Congress. 

Sec. 410. Interstate Rail Compacts

Pursuant to this section Congress grants advance consent to States to enter into 

interstate compacts for intercity passenger rail service, including (1) retaining an 

existing service or commencing a new service; (2) assembling rights of way; and 

(3) performing capital improvements. The interstate compacts may also provide 

for means of financing the carrying-out of the compact. 

Sec. 412. Educational Participation

This section provides that Amtrak shall participate in educational efforts to 

inform students on advantages of rail travel and need for rail safety. 

Sec. 413. Report to Congress on Amtrak Bankruptcy

This section requires that, by April 1, 1998, the Comptroller General shall 

submit a report identifying financial and other issues associated with Amtrak 

bankruptcy to Congress. The report shall include an analysis of the implications 

of such a bankruptcy on the Federal Government, Amtrak’s creditors, and the 

Railroad Retirement System. (The report was submitted by GAO in March 1998). 

Sec. 414. Amtrak to Notify Congress of Lobbying Relationships

This section provided that if at any time during a fiscal year in which Amtrak 

receives Federal assistance it enters into a consulting contract or contract for 

lobbying with a lobbying firm or with a lobbyist, Amtrak must disclose to 

Congress the name of the party, the purpose of the contract, and Amtrak’s 

financial obligation under the contract. 
27

Sec. 415(b). Redemption of Common Stock

This section provides that Amtrak shall, before October 1, 2002, redeem all 

common stock previously issued, for fair market value. 

Sec. 415(c). Elimination of Liquidation Preference and Voting Rights of Preferred 

Stock

This section provides that the preferred stock held by the Secretary of 

Transportation shall confer no liquidation preference and shall confer no voting 

rights. [N.B. Under prior law, the preferred stock conferred a liquidation 

preference, and until the changes made in the Board of Director provisions by the 

ARAA, had voting rights in electing a specified number of members of the 

Amtrak Board of Directors.] 

Sec. 415(d). Status and Applicable Laws

This section provides that Section 9101(2) of title 31 of the United States 

Code, relating to Government Corporations, is amended by striking Amtrak from 

the list of mixed ownership Government corporations. (Amtrak was made not 

subject to Title 31.) 
28

III. THE TAXPAYER RELIEF ACT OF 1997 (TRA) (SEC. 977 OF 

PUB. L. 105-34) 

Under the Taxpayer Relief Act of 1997, Amtrak was treated as entitled to 

apply its tax carrybacks against the income tax paid by its railroad predecessors of 

approximately $2.3 billion, which it was allowed to claim as a tax refund. The 

TRA funds were made contingent on the passage of “Amtrak reform legislation.” 

Sec. 977(f)(1). The ARAA (sec. 301(b)) expressly provides that it is to be 

considered Amtrak reform legislation within the meaning of the TRA. 

Amtrak may use funds provided under the TRA only for “qualified expenses.” 

Qualified expenses include “the acquisition of equipment, rolling stock, and other 

capital improvements, the upgrading of maintenance facilities, and the 

maintenance of existing equipment, in intercity passenger rail service” and “the 

payment of interest and principal on obligations incurred for such acquisition, 

upgrading, and maintenance” after September 30, 1997. Amtrak must also use 

TRA funds to make certain payments to non-Amtrak states, which the states may 

use for defined expenses related to intercity rail passenger or bus service. Sec. 

977(e)(1). The net funds made available to Amtrak under the TRA after payments 

to non-Amtrak states totaled approximately $2.184 billion. 

Under the ARAA (Sec. 209(b)), the ARC is responsible for monitoring 

Amtrak’s use of TRA funds and must report quarterly to the Congress on 

Amtrak’s use of such funds. Congress also requested the General Accounting 

Office to conduct a review of Amtrak’s TRA expenditures. The GAO’s report 

was issued in February 2000. 
29

IV. THE RAILROAD RETIREMENT ACT OF 1974 (45 U.S.C. 231 

ET SEQ.) 

Unlike all other industries in the United States, rail carriers who engage in the 

interstate transportation of freight or passengers are covered under the provisions 

of the Railroad Retirement Act rather than the Social Security Act with respect to 

retirement benefits payable to their employees. The Social Security Act (also 

originally enacted in 1935), 42 U.S.C. 1301 et seq., is not as generous in its 

benefits as the Railroad Retirement Act or as costly to employers (and employees) 

with respect to taxes necessary to fund the system. Employer retirement tax costs 

under the Railroad Retirement System for the average employee of a major (Class 

I) railroad (average wage approximately $56,000) are approximately three times 

higher ($13,300 v. $4,284) than for employers covered under social security with 

respect to an employee earning the same wage (1999 figures used). See also, 1992 

GAO Report, Railroad Competitiveness (GAO/RCED-92-16) at 15-16 (railroad 

employer retirement tax costs approximately three times higher than other private 

industries). The Railroad Retirement System is administered by the Railroad 

Retirement Board, not the Social Security Administration. 

Amtrak, as an interstate carrier of passengers, has been subject to the Railroad 

Retirement Act since its inception. 49 U.S.C. 24301, as amended by the ARAA, 

specifically provides that “Amtrak shall continue to be considered an employer 

under the Railroad Retirement Act...” 

The Railroad Retirement System is funded on an industry-wide “pay-as-yougo” basis through payroll taxes levied on all employers and employees who are 

covered under the system. The taxes recovered under the system are pooled and 

used to fund the benefits payable to all industry employees who have retired or 

will retire and are eligible for benefits under the system. 

The Railroad Retirement System has two components with respect to benefits 

and taxes: a social security equivalent benefit component (Tier I) and a pension 

component (Tier II). (The Railroad Retirement System also provides other 

benefits to railroad employees that are not available under social security; e.g., 

different eligibility requirements, an earlier retirement age and other payments.) 

The Tier I component is equal to the benefit that would be payable to the 

beneficiary if the employee had been covered under the Social Security Act. Tier 

I benefits are funded by payroll taxes levied on employers and employees in the 

same amount as under the Social Security Act. The employer and employee each 

pay 6.2 percent on wages up to $76,200 and 1.45 percent on all wages, with no 

cap. 
30

Tier II benefits have no counterpart under the Social Security Act and are 

essentially a form of private pension system. Tier II benefits are financed through 

payroll taxes levied on employers (16.1 percent on wages up to a $56,700 limit) 

and employees (4.9 percent on wages up to the same limit) in addition to the taxes 

imposed for Tier I benefits. 

The fact that the Railroad Retirement System is a pooled system has given rise 

to special federal appropriations to Amtrak (“mandatory payments”) that by law 

have not been considered a “United States Government subsidy of Amtrak.” See 

RPSA, sec 24104. These “mandatory payments” represent Railroad Retirement 

tax liabilities to Amtrak under Sec. 3221 of the Internal Revenue Code that are 

used to pay the Tier II benefits of non-Amtrak beneficiaries – so-called “excess” 

payments. Amtrak has successfully argued in seeking federal assistance that it 

should not be held accountable for these “excess” payments for subsidy purposes 

because they are beyond what Amtrak would owe to its own present and future 

retirees and represent amounts that would go to retirees of other railroads, as well 

as to people who retired from railroads that went bankrupt in the past. Because of 

the large downsizing of the freight industry over the last decades, these “excess 

payments” are considerable ($ 142 million in FY1998 as calculated by Amtrak). 

[N.B. In calculating its estimated “mandatory payments” for budget purposes, 

Amtrak includes not only the employer but also the employee portions of Tier II 

Railroad Retirement tax contributions as “excess” payments by Amtrak that 

should be federally funded without being called an operating subsidy to Amtrak. 

Amtrak also omits to include certain Tier II Railroad Retirement benefits payable 

to Amtrak beneficiaries in its calculations. Amtrak, however, contends that it 

calculates the amount of “mandatory payments” using a consistent methodology 

that is in accord with Congressional direction. Congress has not taken issue with 

Amtrak’s methodology.] 
31

V. THE RAILROAD UNEMPLOYMENT INSURANCE ACT (45 

U.S.C. 351 ET SEQ.) 

Unlike other industries in the United States, the railroad industry is subject to 

the Railroad Unemployment Insurance Act (RUIA), rather than state 

unemployment insurance statutory regimes with respect to unemployment benefits 

and taxes. Under the RPSA, Amtrak is considered an employer under RUIA. The 

benefits payable under RUIA are calculated differently than under the varying 

state laws. Because unemployment payments under RUIA are experience-based 

and vary by employer, the ARAA does not include RUIA taxes and benefits as an 

“excess payments” issue requiring federal funding. 
32

VI. THE RAILWAY LABOR ACT (45 U.S.C. 151 ET SEQ.) 

The Railway Labor Act (RLA) governs labor relations in the railroad and 

airline industries. Labor relations in other industries are generally governed by the 

provisions of the National Labor Relations Act (NLRA). Amtrak is subject to the 

RLA pursuant to 49 U.S.C.24301. 

The basic purposes of the RLA are: (1) to avoid any interruption to interstate 

commerce; (2) to ensure the right of railroad employees to join a labor 

organization; (3) to provide for the complete independence of carriers and 

employees with respect to self-organization; (4) to provide for the prompt and 

orderly settlement of all disputes concerning rates of pay, rules, or working 

conditions (“major disputes”); and (5) to provide for the prompt and orderly 

settlement of all disputes growing out of grievances or out of the interpretation or 

application of agreements (“minor disputes”). 

Under the RLA, either side must provide 30 days’ written notice (“Section 6 

notice”) of any intended change in an agreement. No carrier may change the rates 

of pay, rules, or working conditions in existing agreements except as provided in 

existing agreements or pursuant to Section 6 notice procedures. Within 10 days of 

the receipt of Section 6 notice, both sides must agree on a time and place for 

negotiation. Terms of agreements remain in force until changed in accordance 

with RLA procedures. 

Under the RLA, minor disputes that cannot be resolved by negotiation or 

through “on property” grievance procedures are resolved through compulsory 

arbitration (by the standing National Railroad Adjustment Board or public law 

boards on local properties). There is no right to self-help (e.g., resort to strikes or 

lockouts) to resolve minor disputes. 

The RLA contains elaborate and time-consuming procedures to resolve major 

disputes, with the main emphasis on avoiding interruptions to interstate commerce 

as a result of self-help measures. For major disputes that cannot be resolved 

through collective bargaining, the RLA created a 3-member National Mediation 

Board to mediate disputes by request of either party or on the Board’s own 

motion. If the NMB fails to get the parties to agree (there is no time limit on the 

mediation procedure) and declares an impasse, it must proffer voluntary 

arbitration. If the parties do not agree to arbitration, and in the opinion of the 

NMB the controversy threatens substantially to interrupt interstate commerce, the 

NMB is required to notify the President. The President is empowered to appoint a 

neutral Presidential Emergency Board (PEB) to make an investigation and submit 

a report within 30 days. 
33

After the PEB has issued its report and recommendations, the parties are 

required to maintain the status quo for a period of 30 days. If no agreement is 

reached within 30 days, either side is free to resort to self-help measures (e.g., a 

strike by unions or unilateral imposition of management proposals or a lockout) to 

resolve the dispute. The President may also request emergency legislation, or 

Congress may act on its own, to resolve the dispute. 
34

VII. THE FEDERAL EMPLOYERS’ LIABILITY ACT (45 U.S.C. 51 

ET SEQ.) 

Unlike most American workers, railroad workers are not covered by state nofault workers’ compensation insurance systems when they are injured on the job. 

Instead, railroad workers must recover their losses under the provisions of the 

Federal Employers’ Liability Act (FELA). FELA was enacted in 1908 (prior to 

adoption of states workers’ compensation laws), at a time when railroads were the 

nation’s largest employer and rail work was especially hazardous. 

Under FELA, an injured worker negotiates a settlement with the railroad 

employer. If the negotiations fail, the worker may file a lawsuit alleging 

negligence by the employer to recover losses. No-fault systems do not require that 

the employee demonstrate negligence. FELA allows workers to seek recovery for 

economic damage (such as lost wages) and noneconomic damages (such as pain 

and suffering). Workers’ compensation systems typically limit recovery to 

economic losses. 

FELA has been criticized because, among other things, the need to 

demonstrate negligence creates an adversarial relationship between management 

and labor. FELA can also promote excessive and costly litigation, with a 

significant percentage of the recovery going to the employees’ lawyers. It can also 

result in no recovery for the worker. See, generally, GAO Report, Federal 

Employers’ Liability Act, Issues Associated With Changing How Railroad WorkRelated Injuries Are Compensated (August 1996). 

FELA is applicable to Amtrak pursuant to 49 U.S.C. 24301. 
35

VIII. THE DISTRICT OF COLUMBIA BUSINESS CORPORATION 

ACT 

Amtrak is subject to the District of Columbia Business Corporation Act (D.C. 

Code Sec. 29-301 et seq.) to the extent consistent with the provisions of the RPSA. 

49 U.S.C. 24301(e). The D.C Corporation Act contains certain requirements 

applicable to Amtrak’s capital structure and other corporate functions. The D.C. 

Corporation Act also contains requirements that Amtrak must comply with in 

order to amend its Charter (in the absence of overriding federal legislation). 

Amtrak’s principal office and place of business must be located in the District of 

Columbia. 49 U.S.C. 24301(b). 

Under Section 415(b) of the ARAA, Amtrak is required to redeem its 

outstanding common stock at fair market value by October 1, 2002. Under 

Amtrak’s corporate Charter (Articles of Incorporation), Amtrak is required to pay 

all accrued and unpaid dividends on outstanding preferred stock before it may 

redeem its common stock. (There is currently approximately $6 billion in accrued 

preferred dividends outstanding.) Under provisions of the FY 1999 Transportation 

Appropriations Act, DOT is authorized to sell the preferred stock back to Amtrak 

for such consideration, as the DOT Secretary deems appropriate. DOT also has the 

current right under Amtrak’s Charter to convert the preferred shares to common 

stock. (According to Amtrak, DOT could obtain only 614,000 common shares, 

which is the only portion of the 10 million authorized common shares not already 

outstanding.) Amtrak also has various options under provisions of the D.C. 

Corporation Act to redeem the common stock, including through amending its 

Charter (which in the absence of overriding federal legislation would require 

approval of Amtrak common shareholders). 

The D.C. Corporation Act provides less protection with respect to 

indemnification of directors and officers than the law of other jurisdictions. (D.C. 

law does not allow a corporation to indemnify officers and directors who have 

been adjudged in a lawsuit or other proceeding liable for negligence or misconduct 

in the performance of duty. D.C. Corporation Act, Section 29-304. Delaware law 

and the laws of many other states provide a higher level of protection.) Amtrak 

purchases directors’ and officers’ liability insurance (currently in the amount of 

$50 million) to cover shortfalls in protection under D.C. law. (D.C. law also 

prohibits a D.C. corporation from operating a railroad. The provisions of the 

RPSA override D.C. law with respect to Amtrak.) 
36

IX. SUBTITLE V, PART A, OF TITLE 49 U.S.C. (RAIL SAFETY) 

(49 U.S.C. 20101 ET SEQ.) 

The Rail Safety provisions of Title 49, 49 U.S.C. 20101 et seq., are applicable 

to all railroad carriers, including Amtrak and commuter railroads. The Act 

regulates all aspects of railroad safety, including equipment, facilities, rolling 

stock and operations. 
37

X. SUBCHAPTER IV OF TITLE 11, UNITED STATES CODE 

(RAILROAD REORGANIZATION) (11 U.S.C. 101 ET SEQ.) 

Chapter 11 of the Bankruptcy Code, which generally sets out procedures for 

railroad reorganization, would govern an Amtrak bankruptcy. Because of the 

historical importance of railroads to the economy and the public, bankruptcy law 

seeks, among other things; to protect the public interest in continued rail service. 

The bankruptcy court and an appointed trustee of Amtrak’s estate would be 

required to consider the public interest as well as the interests of Amtrak, its 

creditors, and its stockholders. 

Amtrak could initiate a bankruptcy proceeding by filing a voluntary petition 

for bankruptcy when authorized by its Board of Directors. In addition, three or 

more of Amtrak’s creditors whose unsecured claims totaled at least $10,000 could 

file an involuntary petition. After a petition is filed, a trustee would be appointed. 

The trustee, with court oversight, rather than Amtrak’s Board of directors, would 

make decisions about the railroad’s operations and financial commitments. 

The trustee would be responsible for developing a plan of reorganization. 

Amtrak’s creditors and shareholders would vote on the plan of reorganization. 

Because the United States is a creditor and stockholder of Amtrak, the Secretary of 

the Treasury would accept or reject the plan on behalf of the United States. A plan 

of reorganization would also have to be approved by the court. The court would 

have to find, among other things, that Amtrak’s prospective earnings would 

adequately cover any fixed charges and that the plan is consistent with the public 

interest. If an Amtrak reorganization plan is not confirmed within 5 years of the 

bankruptcy petition the court would have to order liquidation. The court could 

also order liquidation earlier upon the request of a party in interest if it determined 

liquidation to be in the public interest. Under such circumstances, the court would 

distribute the assets of the estate under a statutory distribution scheme as though 

the case was a liquidation under Chapter 7 of the Bankruptcy Act. 

The Surface Transportation Board would have a right to be heard in any 

Amtrak bankruptcy proceeding. 11 U.S.C. 1164. If a plan of reorganization 

proposed a transfer of, or operation over, any of Amtrak’s rail lines to or by an 

entity other than Amtrak, and the transaction would otherwise be subject to 

regulatory approval of the STB, the proponent of the plan would first have to seek 

and obtain the approval of the STB (which decision must be rendered no later than 

180 days after an application is filed). An action of the STB approving, 

modifying, conditioning or disapproving an application is appealable under the 

provisions of the Administrative Procedures Act. 11 U.S.C. 1172. The STB may 

not impose employee protective conditions applicable to Amtrak employees as a 

condition of granting an application. ARA, sec. 142(d).