Local Rail Service Reauthorizing Act
PL 101-213 (H.R.422), enacted 12/11/1989

PUBLIC LAW 101-213—DEC. 11, 1989 
103 STAT. 1843 
Public Law 101-
101st Congress 
•213 
An Act 
To amend the Department of Transportation Act to reauthorize local rail service 
assistance. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the 
Act". 
'Local Rail Service Reauthorizing 
SEC. 2. LOCAL RAIL FREIGHT ASSISTANCE. 
(a) 
AUTHORIZATION OF APPROPRIATIONS.—Section 
5(q) 
of 
the 
Department of Transportation Act (49 U.S.C. App. 1654(q)) is 
amended— 
(1) by striking "and not to exceed $8,000,000 for the fiscal year 
ending September 30, 1988" and inserting in lieu thereof "not to 
exceed $8,000,000 for the fiscal year ending September 30, 1988, 
not to exceed $10,000,000 for the fiscal year ending Septem-
ber 30, 1989, and not to exceed $15,000,000 for the fiscal year 
ending September 30, 1990"; and 
(2) by striking "after September 30, 1988" and inserting in 
lieu thereof "after September 30, 1990". 
(b) FISCAL YEAR 1990 FUNDS.—(1) With respect to funds appro-
priated for carrying out section 5(i) of the Department of Transpor-
tation Act for fiscal year 1990, each State must apply for such funds 
within 60 days after the date of enactment of legislation authorizing 
appropriations for that fiscal year. Upon receipt of an application 
under such subsection, the Secretary shall consider the application 
and notify the State submitting such an application as to its ap-
proval or disapproval within 60 days. Funds provided under this 
subsection shall rem.ain available to a State for obligation for the 
first 3 months after the end of the fiscal year for which such funds 
have been made available. Any funds which have not been timely 
applied for under this subsection, or which have remained unobli-
gated after the expiration of the period described in the previous 
sentence, shall be made available to the Secretary for rail freight 
assistance projects meeting the requirements of this section. 
(2) With respect to funds appropriated for carrying out section 5(h) 
of the Department of Transportation Act for fiscal year 1990, the 
Secretary shall establish such procedures as are necessary to ensure 
that funds available to the Secretary for use for rail service assist-
ance projects are distributed by April 1, 1990. If any funds are not 
distributed by that date, the Secretary shall report to the Committee 
on Energy and Commerce of the House of Representatives and the 
Committee on Commerce, Science, and Transportation of the Senate 
on the status of such funds and the reasons for the delay in 
distribution. 
(3) Section 4021(a)(2) of Public Law 99-509 is repealed. 
Dec. 11, 1989 
[H.R. 422] 
Local Rail 
Service 
Reauthorizing 
Act. 
49 u s e app. 
1651 note. 
Reports. 
45 u s e 1321. 
103 STAT. 1844 
PUBLIC LAW 101-213—DEC. 11, 1989 
(c) LOCAL RAIL FREIGHT ASSISTANCE PROGRAM,—Section 5 of the 
Department of Transportation Act (49 U.S.C. App. 1654) is amended 
to read as follows: 
"LOCAL RAIL FREIGHT ASSISTANCE 
"SEC. 5. (a) A State is eligible to receive rail freight assistance 
under this section i
f
— 
"(1) such State has established an adequate plan for rail 
services in such State, including a suitable process for updating, 
revising, and amending such plan; 
"(2) such State plan is administered or coordinated by a 
designated State agency and provides for the equitable distribu-
tion of resources; 
"(3) such State agency— 
"(A) has authority and administrative jurisdiction to 
develop, promote, supervise, and support safe, adequate, 
and efficient rail transportation services; 
"(B) employs or will employ, directly or indirectly, suffi-
. 
cient trained and qualified personnel; 
"(C) maintains or will maintain adequate programs of 
investigation, research, promotion, and development, with 
provisions for public participation; and 
"(D) is designated and directed solely, or in cooperation 
with other State agencies, to take all practicable steps to 
improve rail transportation safety and to reduce transpor-
tation-related energy utilization and pollution; 
"(4) such State provides satisfactory assurance that it has or 
will adopt and maintain adequate procedures for financial con-
trol, accounting, and performance evaluation in order to assure 
proper use of Federal funds; and 
"(5) such State complies with regulations of the Secretary 
issued under this section and the Secretary determines that 
such State meets or exceeds the requirements of paragraphs (1) 
through (4) of this subsection. 
"(b) The Secretary shall, in accordance with this section, provide 
financial assistance to States for rail freight assistance projects that 
are designed to cover— 
"(1) the cost of acquiring, by purchase, lease, or in such other 
manner as the State considers appropriate, a line of railroad or 
other rail properties, or any interest therein, to maintain exist-
ing or provide for future rail freight service, but only if the 
Interstate Commerce Commission has authorized, or has 
" 
exempted from the requirements of such authorization, the 
abandonment of, or the discontinuance of rail service on, the 
line of railroad related to the project; 
"(2) the cost of rehabilitating or improving rail properties on a 
line of railroad to the extent necessary to permit adequate and 
efficient rail freight service on such line, but only if the line of 
railroad related to the project is certified by the railroad as 
having carried 5 million gross ton miles of freight or less per 
mile during the prior year; and 
"(3) the cost of constructing rail or rail related facilities 
(including new connections between two or more existing lines 
of railroad, intermodal freight terminals, sidings, bridges, and 
relocation of existing lines) for the purpose of improving the 
quality and efficiency of rail freight service, but only if the line 
PUBLIC LAW 101-213—DEC. 11, 1989 
103 STAT. 1845 
Grants. 
Loans. 
of railroad related to the project is certified by the railroad as 
having carried 5 million gross ton miles of freight or less per 
mile during the prior year. 
"(c)(1) No project shall be provided rail freight assistance under 
this section unless the line of railroad related to the project is 
certified by the railroad £is having carried more than 20 carloads per 
mile during the most recent year of operation of service on such 
line. In a case where the railroad is no longer in existence, the 
applicant shall provide such information in the manner prescribed 
by the Secretary. The Secretary may waive the requirement of this 
paragraph upon a determination that the line of railroad is contrac-
tually guaranteed at least 40 carloads per mile for each of the first 2 
years of operation if the proposed project is carried out, and the 
Secretary finds that there is a reasonable expectation that such 
contractual guarantee will be fulfilled. 
"(2) No project shall be provided rail freight assistance under this 
section unless the ratio of benefits to costs for such project, cal-
culated in accordance with the methodology established by the 
Secretary under subsection (n), is greater than 1.0. 
"(d) A State shall use assistance provided under subsection (b) of 
this section as follows: 
"(1) The State may grant or loan funds to the owner of rail 
properties or operator of rail service related to the project. 
"(2) The State shall determine all financial terms and condi-
tions of a grant or loan, except that the timing of all advances 
with respect to grants under this subsection shall be in accord-
ance with Department of Treasury regulations. 
"(3) The State shall place the Federal share of repaid funds in 
an interest-bearing account or, with the approval of the Sec-
retary, permit any borrower to place such funds, for the benefit 
and use of the State, in a bank which has been designated by 
the Secretary of the Treasury in accordance with section 10 of 
the Act of June 11, 1942 (12 U.S.C. 265). The State shall use such 
funds and all accumulated interest to make further loans or 
grants under subsection (b) of this section in the same manner 
and under the same conditions as if they were originally 
granted to the State by the Secretary. The State may, at any 
time, pay to the Secretary the Federal share of any unused 
funds and accumulated interest. After the termination of a 
State's participation in the rail freight assistance program 
established by this section, such State shall pay the Federal 
share of any unused funds and accumulated interest to the 
Secretary. 
"(4) The State, to the maximum extent possible, shall encour-
age the participation of shippers, railroads, and local commu-
nities in providing the State share of rail freight assistance 
funds. 
"(e) The Federal share of the costs of any rail freight assistance 
project shall be 50 percent, except that in the case of assistance 
provided under subsection (b)(2), the Federal share shall be 70 
percent. The State share of the costs may be provided in cash or 
through any of the following benefits, to the extent that such 
benefits would not otherwise be provided: 
"(1) Forgiveness o^ taxes imposed on a railroad or on its Taxes, 
properties. 
"(2) The provision by the State or by any person on behalf of Real property, 
such State, for use in its rail freight assistance program, of real 
Loans. 
Grants. 
103 STAT. 1846 
PUBLIC LAW 101-213—DEC. 11, 1989 
property or tangible personal property of the kind necessary for 
the safe and efficient operation of rail freight service. 
"(3) Trackage rights secured by the State for a railroad. 
"(4) The cash equivalent of State salaries for State public 
employees working in the State rail freight assistance program, 
but not including overhead and general administrative costs. 
A State may provide more than its required percentage share of the 
cost of its rail freight assistance program. If a State, or any person 
on behalf of a State, provides more than such State's percentage 
share of the cost of its rail freight assistance program during any 
fiscal year, the amount in excess of such share shall be applied 
toward such State's share of the costs of its program for subsequent 
fiscal years. 
"(f) A State seeking financial assistance for rail freight assistance 
projects described in subsection (h) shall apply, in the form required 
by the Secretary, for such assistance by January 1 of the fiscal year 
for which the funds have been appropriated, except in fiscal years in 
which authorizations of appropriations have not been enacted as of 
the first day of the fiscal year, in which case application must be 
made within 90 days after the date of enactment of legislation 
authorizing appropriations for that fiscal year. In considering ap-
plications for rail freight assistance projects under subsection (b), the 
Secretary shall consider the following: 
"(1) The percentage of lines identified to the Interstate Com-
merce Commission by rail carriers for abandonment or poten-
tial abandonment within a State. 
"(2) The likelihood of future abandonments within a State. 
"(3) The ratio of benefits to costs for a proposed project 
calculated in accordance with the methodology established by 
the Secretary under subsection (n). 
"(4) The likelihood that the line will continue operating with 
rail freight assistance. 
"(5) The impact of rail bankruptcies, rail restructuring, and 
rail mergers on the State applying for assistance. 
"(g) On the first day of the fiscal year, each State shall be entitled 
to $36,000 of the funds available for expenditure pursuant to subsec-
tion (q) of this section during the fiscal year to meet the cost of 
establishing, implementing, revising, and updating the State rail 
plan required by subsection (a) of this section, or to carry out 
projects described in subsection (b) (1), (2), or (3), as designated by the 
State, if such projects meet the requirements of subsection (c)(2). 
Each State must apply for such funds on or before the first day of 
the fiscal year, except in fiscal years in which authorizations of 
appropriations have not been enacted as of the first day of the fiscal 
year, in which CEise application must be made within 60 days after 
the date of enactment of legislation authorizing appropriations for 
that fiscal year. Upon receipt of an application under this subsec-
tion, the Secretary shall consider the application and notify the 
State submitting such an application as to its approval or dis-
approval within 60 days. Funds provided under this subsection shall 
remain available to a State for obligation for the first 3 months after 
the end of the fiscal year for which such funds have been made 
available. Any funds which have not been timely applied for under 
this subsection, or which have remained unobligated after the 
expiration of the period described in the previous sentence, shall be 
made available to the Secretary for rail freight assistance projects 
meeting the requirements of this section. 
PUBLIC LAW 101-213—DEC. 11, 1989 
103 STAT. 1847 
"(h) The Secretary shall establish such procedures as are nec-
essary to ensure that funds available to the Secretary for use for rail 
freight assistance projects under subsection (b) are distributed by 
April 1 of the fiscal year for which such funds are appropriated. If Reports, 
any funds are not distributed by that date, the Secretary shall 
report to the Committee on Energy and Commerce of the House of 
Representatives and the Committee on Commerce, Science, and 
Transportation of the Senate on the status of such funds and the 
reasons for the delay in distribution. 
"(i) Each State shall retain a contingent interest (redeemable 
preference shares) for the Federal share of funds in any line receiv-
ing rail freight assistance under this section and may exercise the 
right to collect its share of the funds used for a such a line, if an 
application for abandonment of such line is filed under chapter 109 
of title 49, United States Code, or if such line is abandoned, discon-
tinued, sold, or disposed of in any way after it has received Federal 
assistance. 
"(j) Two or more States which are eligible to receive rail freight 
assistance under this section may, where not in violation of State 
law, enter into an agreement to combine any portion of such assist-
ance for purposes of conducting any project which is eligible for 
assistance under this section and which will benefit each State 
which is a party to such agreement. 
"(k)(l) Each recipient of funds provided under this section. Records, 
whether in the form of grants, subgrants, contracts, subcontracts, or 
other arrangements, shall keep such records as the Secretary shall 
prescribe, including records which fully disclose the amount and 
disposition by such recipient of such funds, the total cost of the 
project or undertaking in connection with which such funds were 
provided or used, the amount of that portion of the cost of the 
project which was supplied by other sources, and such other records 
as will facilitate an effective audit. Such records shall be maintained 
for 3 years after the completion of such a project or undertaking. 
"(2) The Secretary and the Comptroller General of the United 
States, or any of their duly authorized representatives, shall have 
access, for the purpose of audit and examination, to any books, 
documents, papers, and records of receipts which, in the opinion of 
the Secretary or of the Comptroller (general, may be related or 
pertinent to the grants, contracts, or other arrangements referred to 
in paragraph (1) of this subsection. 
"(3) The Secretary and the Comptroller General shall regularly 
conduct, or cause to be conducted— 
"(A) a financial audit, in accordance with generally accepted 
auditing standards; and 
"(B) a performance audit of the activities and transactions 
assisted under this section, in accordance with generally 
accepted management principles. 
Such audits may be conducted by independent certified or licensed 
public accountants and management consultants approved by the 
Secretary and the Comptroller General, and they shall be conducted 
in accordance with such rules and regulations as may be prescribed 
by the Comptroller General. 
"(1) The Interstate (Dommerce Commission shall provide the Sec-
retary with such information as the Secretary requests to assist in 
administering the program authorized by this section. The Commis-
sion shall provide the requested information within 30 days after 
receipt of any such request. 
103 STAT. 1848 
PUBLIC LAW 101-213—DEC. 11, 1989 
"(m) On or before August 1 of each year, each rail carrier provid-
ing transportation subject to the jurisdiction of the Interstate Com-
merce Commission under chapter 105 of title 49, United States Code, 
shall prepare, update, and submit to the Secretary a listing of those 
rail lines of such carrier which, based on level of usage, carried 5 
million gross ton miles of freight or less per mile during the prior 
year. 
"(n) The Secretary, no later than July 1, 1990, shall establish a 
methodology for calculating the ratio of benefits to costs of projects 
proposed under subsection (b), taking into consideration the need for 
equitable treatment of different regions of the United States and 
different commodities transported by rail. The establishment of 
such methodology shall be a matter committed to the Secretary's 
discretion. 
"(o) No more than 15 percent of the funds provided under subsec-
tion (b) in any fiscal year shall be provided to any one State. No 
more than 20 percent of the funds provided under subsection Qa) in 
any fiscal year shall be provided for any one project. 
"(p) As used in this section, the term 'State' means any State in 
which a rail carrier providing transportation subject to the jurisdic-
tion of the Interstate Commerce Commission under chapter 105 of 
title 49, United States Code, maintains any line of railroad. 
Appropriation 
"(q) There are authorized to be appropriated to the Secretary for 
authorization. 
^^^ purposes of this section not to exceed $15,000,000 for fiscal year 
1991. Such sums as are appropriated are authorized to remain 
available until expended. No funds are authorized to be appro-
priated under this subsection for any period after September 30, 
1991.". 
49 use app. 
(d) EFFECTIVE DATE.—The amendment made by subsection (c) shall 
1654 note. 
take effect October 1,1990. 
Approved December 11, 1989. 
LEGISLATIVE HISTORY—H.R. 422: 
CONGRESSIONAL RECORD, Vol. 135 (1989): 
Nov. 17, considered and passed House. 
Nov. 19, considered and passed Senate.