Annotated Laws Relating to Conrail

Conrail (officially the Consolidated Rail Corporation) was a major railroad in the Northeast U.S. from 1976 to 1999. It was set up by the Federal Government to take over the bankrupt railroads in the Northeast, and eventually became profitable and was split between two competing systems (CSX Transportation and the Norfolk Southern Railway). Regional Rail Reorganization Act of 1973 Public Law 93-236 signed January 2, 1974 (a) Findings The Congress finds and declares that— Essential rail service in the midwest and northeast region of the United States is provided by railroads which are today insolvent and attempting to undergo reorganization under the Bankruptcy Act. This essential rail service is threatened with cessation or significant curtailment because of the inability of the trustees of such railroads to formulate acceptable plans for reorganization. This rail service is operated over rail properties which were acquired for a public use, but which have been permitted to deteriorate and now require extensive rehabilitation and modernization. The public convenience and necessity require adequate and efficient rail service in this region and throughout the Nation to meet the needs of commerce, the national defense, the environment, and the service requirements of passengers, United States mail, shippers, States and their political subdivisions, and consumers. Continuation and improvement of essential rail service in this region is also necessary to preserve and maintain adequate national rail services and an efficient national rail transportation system. Rail service and rail transportation offer economic and environmental advantages with respect to land use, air pollution, noise levels, energy efficiency and conservation, resource allocation, safety, and cost per ton-mile of movement to such extent that the preservation and maintenance of adequate and efficient rail service is in the national interest. These needs cannot be met without substantial action by the Federal Government.The rail system in the Northeast was dying. All the major railroads in the region, most notably Penn Central Transportation, had filed for bankruptcy, and it was likely that there would be no fix without the Federal Government playing a major role.(b) Purposes It is therefore declared to be the purpose of Congress in this chapter to provide for— the identification of a rail service system in the midwest and northeast region which is adequate to meet the needs and service requirements of this region and of the national rail transportation system; the reorganization of railroads in this region into an economically viable system capable of providing adequate and efficient rail service to the region; the establishment of the United States Railway Association, with enumerated powers and responsibilities; the establishment of the Consolidated Rail Corporation, with enumerated powers and responsibilities; assistance to States and local and regional transportation authorities for continuation of local rail services threatened with cessation; and necessary Federal financial assistance at the lowest possible cost to the general tax­payerThus the United States Railway Association and Conrail will be established.As used in this chapter, unless the context otherwise requires— "Association" means the United States Railway Association, established under section 711 of this title; "Commission" means the Interstate Commerce Commission; "Commuter authority" means any State, local, or regional authority, corporation, or other entity established for purposes of providing commuter service, and includes the Metropolitan Transportation Authority, the Connecticut Department of Transportation, the Maryland Department of Transportation, the Southeastern Pennsylvania Transportation Authority, the New Jersey Transit Corporation, the Massachusetts Bay Transportation Authority, the Port Authority Trans-Hudson Corporation, any successor agencies, and any entity created by one or more such agencies for the purpose of operating, or contracting for the operation of, commuter service; "Commuter service" means short-haul rail passenger service operated in metropolitan and suburban areas, whether within or across the geographical boundaries of a State, usually characterized by reduced fare, multiple-ride, and commutation tickets, and by morning and evening peak period operations; "Corporation" means the Consolidated Rail Corporation required to be established under section 741 of this title or its successor by merger, consolidation or other form of succession carried out under applicable law for the purpose of changing the State of its incorporation; "effective date of the final system plan" means the date on which the final system plan or any revised final system plan is deemed approved by Congress, in accordance with section 718 of this title; "employee stock ownership plan" means a technique of corporate finance that uses a stock bonus trust or a company stock money purchase pension trust which qualifies under section 401 (a) of title 26 in connection with the financing of corporate improvements, transfers in the ownership of corporate assets, and other capital requirements of a corporation and which is designed to build beneficial equity ownership of shares in the employer corporation into its employees substantially in proportion to their relative incomes, without requiring any cash outlay, any reduction in pay or other employee benefits, or the surrender of any other rights on the part of such employees; "final system plan" means the plan of reorganization for the restructure, rehabilitation, and modernization of railroads in reorganization prepared pursuant to section 716 of this title and approved pursuant to section 718 of this title; "Finance Committee" means the Finance Committee of the Board of Directors of the Association established under section 711 (i) of this title; "includes" and variants thereof should be read as if the phrase "but is not limited to" were also set forth; "local or regional transportation authority" includes a political subdivision of a State. "Office" means the Rail Services Planning Office established under section 10361 of title 49; "profitable railroad" means a railroad which is not a railroad in reorganization. The term does not include the Corporation, the National Railroad Passenger Corporation, or a railroad leased, operated, or controlled by a railroad in reorganization in the region; "rail properties" means assets or rights owned, leased, or otherwise controlled by a railroad (or a person owned, leased, or otherwise controlled by a railroad) which are used or useful in rail transportation service; except that the term, when used in conjunction with the phrase "railroads leased, operated, or controlled by a railroad in reorganization", shall not include assets or rights owned, leased, or otherwise controlled by a Class I railroad which is not wholly owned, operated, or leased by a railroad in reorganization but is controlled by a railroad in reorganization; "railroad" means a rail carrier subject to part A of subtitle IV of title 49. The term includes the Corporation and the National Railroad Passenger Corporation; "railroad in reorganization" means a railroad which is subject to a bankruptcy proceeding and which has not been determined by a court to be reorganizable or not subject to reorganization pursuant to this chapter as prescribed in section 717 (b) of this title. A "bankruptcy proceeding" includes a proceeding pursuant to section 77 of the Bankruptcy Act and an equity receivership or equivalent proceeding; "Region" means the States of Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, West Virginia, Ohio, Indiana, Michigan, and Illinois; the District of Columbia; and those portions of contiguous States in which are located rail properties owned or operated by railroads doing business primarily in the aforementioned jurisdictions (as determined by the Commission by order); (A) "sale date" means the date on which the initial public offering of the securities of the Corporation is closed under the Conrail Privatization Act [45 U.S.C. 1301 et seq.]; "Secretary" means the Secretary of Transportation or the designated representative of the Secretary; "State" means any State or the District of Columbia; "subsidiary" means any corporation 100 percent of whose total combined voting shares are, directly or indirectly, owned or controlled by the Corporation; and "supplemental transaction" means any transaction set forth in a proposal under section 745 of this title under which the Corporation or a subsidiary thereof would (A) acquire rail properties not designated for transfer or conveyance to it under the final system plan, (B) convey rail properties to a profitable railroad, a subsidiary of the Corporation or, other than as designated in the final system plan, to the National Railroad Passenger Corporation or to a State or a local or regional transportation authority, or to any other responsible person for use in providing rail service, or (C) enter into contractual or other arrangements with any person for the joint use of rail properties or the coordination or separation of rail operations or services. Railroad Revitalization and Regulatory Reform Act of 1976 Northeast Rail Service Act of 1981 Pub. L. 97-35, 95 Stat. 644, Aug. 13, 1981. CHAPTER 20 - NORTHEAST RAIL SERVICE Sec. 1101. Congressional findings and declarations. 1102. Statement of purpose. 1103. Goals and objectives. 1104. Definitions. 1105. Judicial review. (a) Special court; exclusive jurisdiction for civil actions. (b) Appeal. (c) Scope of review of administrative actions. 1106. Exemption from transfer taxes and fees; recordation. 1107. Repealed. 1108. Concerted economic action. (a) Strikes interfering with rail freight service of Conrail. (b) Strikes interfering with Amtrak Commuter's rail passenger service. (c) Railway Labor Act deemed violated. 1109. Effectuation of cost reductions. 1110, 1111. Repealed. 1112. Interstate Commerce Commission proceedings. (a) Final decisions involving railroads in bankruptcy. (b) Final decisions involving profitable railroads. (c) Interest of United States attaching in bankruptcy, liquidation, abandonment, etc. 1113. Intercity passenger service. (a) Responsibility of Conrail to provide crews terminated; negotiations for employee transfers. (b) Eligibility of employees for employee protection benefits. 1114. Repealed. 1115. Redemption of stock. 1116. Applicability of other laws. Sec. 1101. Congressional findings and declarations The Congress finds and declares that - (1) the processes set in motion by the Regional Rail Reorganization Act of 1973 [45 U.S.C. 701 et seq.] have failed to create a self-sustaining railroad system in the Northeast region of the United States and have cost United States taxpayers many billions of dollars over original estimates; (2) current arrangements for the provision of rail freight and commuter service in the Northeast and Midwest regions of the United States are inadequate to meet the transportation needs of the public and the needs of national security; (3) although the Federal Government has provided billions of dollars in assistance for Conrail and its employees, the Federal interest in ensuring the flow of interstate commerce through rail service in the private sector has not been achieved, and the protection of interstate commerce requires Federal intervention to preserve essential rail service in the private sector; (4) the provisions for protection of employees of bankrupt railroads contained in the Regional Rail Reorganization Act of 1973 [45 U.S.C. 701 et seq.] have resulted in the payment of benefits far in excess of levels anticipated at the time of enactment, have imposed an excessive fiscal burden on the Federal taxpayer, and are now an obstacle to the establishment of improved rail service and continued rail employment in the Northeast region of the United States; and (5) since holding Conrail liable for employee protection payments would destroy its prospects of becoming a profitable carrier and further injure its employees, an alternative employee protection system must be developed and funded. Sec. 1102. Statement of purpose It is therefore declared to be the purpose of the Congress in this subtitle to provide for - (1) the removal by a date certain of the Federal Government's obligation to subsidize the freight operations of Conrail; (2) transfer of Conrail commuter service responsibilities to one or more entities whose principal purpose is the provision of commuter service; and (3) an orderly return of Conrail freight service to the private sector. Sec. 1103. Goals and objectives It is the goal of this subtitle to provide Conrail the opportunity to become profitable through the achievement of the following objectives: (1) Nonagreement personnel (A) Employees who are not subject to collective bargaining agreements (hereafter in this section referred to as "nonagreement personnel") should forego wage increases and benefits in an amount proportionately equivalent to the amount foregone by agreement employees pursuant to paragraph (4) of this section, adjusted annually to reflect inflation. (B) After May 1, 1981, the number of nonagreement personnel should be reduced proportionately to any reduction in agreement employees (excluding reductions pursuant to the termination program under section 797a of this title). (2) Suppliers To facilitate the orderly movement of goods in interstate commerce, materials and services should continue to be available to Conrail, under normal business practices, including the provision of credit and normal financing arrangements. (3) Shippers Conrail should utilize the revenue opportunities available to it under the Staggers Rail Act of 1980 and subtitle IV of title 49. (4) Agreement employees (A) Conrail should enter into collective bargaining agreements with its employees which would reduce Conrail's costs in an amount equal to $200,000,000 a year, beginning April 1, 1981, adjusted annually to reflect inflation. (B) Agreements under this subparagraph may provide for reductions in wage increases and for changes in fringe benefits common to agreement employees, including vacations and holidays. (C) The cost reductions required under this subparagraph in the first year of the agreement may be deferred, but the aggregate cost reductions should be no less than an average of $200,000,000 per year for each of the first three one-year periods beginning April 1, 1981. (D) The amount of cost reductions provided under this paragraph shall be calculated by subtracting the cost of an agreement entered into under this paragraph from (i) the cost that would otherwise result from the application of the national agreement reached by railroad industry and its employees, or (ii) until such national agreement is reached, the cost which the United States Railway Association estimates would result from the application of such a national agreement. Sec. 1104. Definitions As used in this subtitle, unless the context otherwise requires, the term: (1) "Amtrak" means the National Railroad Passenger Corporation created under chapter 243 of title 49. (2) "Commission" means the Interstate Commerce Commission. (3) "Commuter authority" means any State, local, or regional authority, corporation, or other entity established for purposes of providing commuter service, and includes the Metropolitan Transportation Authority, the Connecticut Department of Transportation, the Maryland Department of Transportation, the Southeastern Pennsylvania Transportation Authority, the New Jersey Transit Corporation, the Massachusetts Bay Transportation Authority, the Port Authority Trans-Hudson Corporation, any successor agencies, and any entity created by one or more such agencies for the purpose of operating, or contracting for the operation of, commuter service. (4) "Commuter service" means short-haul rail passenger service operated in metropolitan and suburban areas, whether within or across the geographical boundaries of a State, usually characterized by reduced fare, multiple-ride, and commutation tickets, and by morning and evening peak period operations. (5) "Conrail" means the Consolidated Rail Corporation created under title III of the Regional Rail Reorganization Act of 1973 (45 U.S.C. 741 et seq.). (6) "Rail carrier" means a common carrier engaged in interstate or foreign commerce by rail subject to subtitle IV of title 49. (7) "Secretary" means the Secretary of Transportation. (8) "Special court" means the judicial panel established under section 209(b)(1) of the Regional Rail Reorganization Act of 1973 (45 U.S.C. 719(b)(1)) or, with respect to any proceedings that arise or continue after the panel is abolished pursuant to section 209(b)(2) of such Act [45 U.S.C. 719(b)(2)], the United States District Court for the District of Columbia. Sec. 1105. Judicial review (a) Special court; exclusive jurisdiction for civil actions Notwithstanding any other provision of law, the special court shall have original and exclusive jurisdiction over any civil action - (1) for injunctive, declaratory, or other relief relating to the enforcement, operation, execution, or interpretation of any provision of or amendment made by this subtitle or part 2 of the Conrail Privatization Act [45 U.S.C. 1311 et seq.], or administrative action taken thereunder to the extent such action is subject to judicial review; (2) challenging the constitutionality of any provision of or amendment made by this subtitle or part 2 of the Conrail Privatization Act [45 U.S.C. 1311 et seq.]; (3) to obtain, inspect, copy, or review any document in the possession or control of the Secretary, Conrail, the United States Railway Association, or Amtrak that would be discoverable in litigation under any provision of or amendment made by this subtitle or part 2 of the Conrail Privatization Act [45 U.S.C. 1311 et seq.]; or (4) seeking judgment upon any claim against the United States founded upon the Constitution and resulting from the operation of any provision of or amendment made by this subtitle or part 2 of the Conrail Privatization Act [45 U.S.C. 1311 et seq.]. (b) Appeal An order or judgment of the United States District Court for the District of Columbia in any action referred to in this section shall be reviewable in accordance with sections 1291, 1292, and 1294 of title 28. (c) Scope of review of administrative actions Administrative action under the provisions of or amendments made by this subtitle or part 2 of the Conrail Privatization Act [45 U.S.C. 1311 et seq.] which is subject to review shall be upheld unless such action is found to be unlawful under standards established for review of informal agency action under paragraphs (2)(A), (B), (C), and (D) of section 706 of title 5. The requirements of this subtitle or part 2 of the Conrail Privatization Act [45 U.S.C. 1311 et seq.], as the case may be, shall constitute the exclusive procedures required by law for such administrative action. Sec. 1106. Exemption from transfer taxes and fees; recordation (a)(1) All transfers or conveyances of any interest in rail property (whether real, personal, or mixed) which are made under any provision of or amendment made by this subtitle shall be exempt from any taxes, imposts, or levies now or hereby imposed, by the United States or by any State or any political subdivision of a State, on or in connection with such transfers or conveyances or on the recording of deeds, bills of sale, liens, encumbrances, easements, or other instruments evidencing, effectuating, or incident to any such transfers or conveyances, whether imposed on the transferor or on the transferee. Such transferors and transferees shall be entitled to record any such deeds, bills of sale, liens, encumberances,(!1) easements, or other instruments, and to record the release or removal of any preexisting liens or encumbrances of record with respect to properties so transferred or conveyed, upon payment of any appropriate and generally applicable charges to compensate for the cost of the service performed. (2) This section shall not apply to Federal income tax laws. (b) Transfer of designated real property (including any interest in real property) authorized by the amendments made by part 2 of this subtitle shall have the same effect for purposes of rights and priorities with respect to such property as recordation on the transfer date of appropriate deeds, or other appropriate instruments, in offices appointed under State law for such recordation, except that acquiring rail carriers and other entities shall proffer such deeds or other instruments for recordation within 36 months after the transfer date as a condition of preserving such rights and priorities beyond the expiration of that period. Conrail shall cooperate in effecting the timely preparation, execution, and proffering for recordation of such deeds and other instruments. Sec. 1107. Repealed. Pub. L. 99-509, title IV, Sec. 4033(c)(1)(C)(i)(I), Oct. 21, 1986, 100 Stat. 1908 Sec. 1108. Concerted economic action (a) Strikes interfering with rail freight service of Conrail Any person engaging in concerted economic action over disputes with Amtrak Commuter or any commuter authority shall not be entitled to engage in any strike against, or otherwise to induce any employee of, Conrail, where an effect thereof is to interfere with rail freight service provided by Conrail. (b) Strikes interfering with Amtrak Commuter's rail passenger service Any person engaging in concerted economic action over disputes arising out of freight operations provided by Conrail shall not be entitled to engage in any strike against, or otherwise to induce any employee of, Amtrak Commuter or any commuter authority, where an effect thereof is to interfere with rail passenger service. (c) Railway Labor Act deemed violated Any concerted action in violation of this section shall be deemed to be a violation of the Railway Labor Act [45 U.S.C. 151 et seq.]. Sec. 1109. Effectuation of cost reductions Any cost reductions resulting from the provisions of or the amendments made by this subtitle shall not be used to limit the maximum level of any rate charged by Conrail for the provision of rail service, to limit the amount of any increase in any such rate (including rates maintained jointly by Conrail and other rail carriers), or to limit a surcharge or cancellation otherwise lawful under chapter 107 (!1) of title 49. Sec. 1110. Repealed. Pub. L. 99-509, title IV, Sec. 4033(c)(1)(C)(i)(II), Oct. 21, 1986, 100 Stat. 1908 Sec. 1111. Repealed. Pub. L. 105-134, title IV, Sec. 408, Dec. 2, 1997, 111 Stat. 2586 Sec. 1112. Interstate Commerce Commission proceedings (a) Final decisions involving railroads in bankruptcy Notwithstanding any other provision of subtitle IV of title 49, in any proceeding before the Commission under section 11324 or 11325 of title 49 involving a railroad in the Region, as defined in section 702 of this title, which was in a bankruptcy proceeding under section 77 of the Bankruptcy Act on November 4, 1979, the Commission shall, with or without a hearing, issue a final decision within a period not to exceed 180 days after receipt of an application under either such section. (b) Final decisions involving profitable railroads Notwithstanding any other provision of subtitle IV of title 49, in any proceeding before the Commission under section 11324 or 11325 of title 49 involving a profitable railroad in the Region, as defined in section 702 of this title, which received a loan under section 721(a) of this title, the Commission shall, with or without a hearing, issue a final decision within a period not to exceed 180 days after receipt of an application under either such section. (c) Interest of United States attaching in bankruptcy, liquidation, abandonment, etc. (1) If the Secretary determines under subsection (b) of this section that there is an agreement between a profitable railroad in the Region (as defined in section 702 of this title) which received a loan under section 721(a) of this title and a prospective purchaser for the sale of such railroad, the Secretary shall limit the interest of the United States in any debt of such a railroad to an interest which attaches to such debt in the event of bankruptcy or substantial sale or liquidation of the assets of the railroad. The Secretary may substitute for the evidence of such debt contingency notes payable solely from the railroad operating assets then securing such debt, including reinvestments thereof, or such other contingency notes as the Secretary deems appropriate and which conform to the terms set forth in this subsection. (2) If the interest of the United States is limited under paragraph (1), any new debt issued by such a railroad subsequent to the issuance of the debt described in paragraph (1) may have such higher priority in the event of bankruptcy, liquidation, or abandonment of the assets of such a railroad than the debt described in such paragraph as the Secretary and the railroad may agree. (3) In carrying out the duties under this subsection, the Secretary may (A) enter into such agreements, (B) in accordance with any such agreements, cancel or cause to be cancelled or amend or cause to be amended any notes or securities currently held by agencies or instrumentalities of the United States, and (C) accept in exchange as substitution therefor such instruments evidencing the indebtedness owed to such agencies or instrumentalities as, in the Secretary's judgment, will effectuate the purposes of this subsection. Sec. 1113. Intercity passenger service (a) Responsibility of Conrail to provide crews terminated; negotiations for employee transfers After January 1, 1983, Conrail shall be relieved of the responsibility to provide crews for intercity passenger service on the Northeast Corridor. Amtrak, Amtrak Commuter, and Conrail, and the employees with seniority in both freight and passenger service shall commence negotiations not later than 120 days after August 13, 1981, for the right of such employees to move from one service to the other once each six-month period. Such agreement shall ensure that Conrail, Amtrak, and Amtrak Commuter have the right to furlough one employee in the same class or craft for each employee who returns through the exercise of seniority rights. If agreement is not reached within 360 days, such matter shall be submitted to binding arbitration. (b) Eligibility of employees for employee protection benefits Conrail employees who are deprived of employment by an assumption or discontinuance of intercity passenger service by Amtrak shall be eligible for employee protection benefits under section 797 (!1) of this title, notwithstanding any other provision of law, agreement, or arrangement, and notwithstanding the inability of such employees otherwise to meet the eligibility requirements of such section. Such protection shall be the exclusive protection applicable to Conrail employees deprived of employment or adversely affected by any such assumption or discontinuance. Sec. 1114. Repealed. Pub. L. 99-509, title IV, Sec. 4033(c)(1)(C)(i)(III), Oct. 21, 1986, 100 Stat. 1908 Sec. 1115. Redemption of stock For the purpose of computing the amount for which certificates of value shall be redeemable under section 746 of this title, the series B preferred stock and the common stock conveyed to the Secretary under section 1107 (!1) of this title shall be deemed to be without fair market value unless in a proceeding brought under section 1105(a)(4) of this title the special court shall have determined that such securities had a value and shall have entered a judgment against the United States for that value. In such an event, the securities shall for purposes of section 746 of this title be deemed to have that value found by the special court. Sec. 1116. Applicability of other laws (a) The provisions of chapters 5 and 7 of title 5 (popularly known as the Administrative Procedure Act and including provisions popularly known as the Government in the Sunshine Act), the Federal Advisory Committee Act, section 102(2)(C) of the National Environmental Policy Act of 1969 [42 U.S.C. 4332(2)(C)], the National Historic Preservation Act of 1966 [16 U.S.C. 470 et seq.], and section 303 of title 49 are inapplicable to actions taken in negotiating, approving, or implementing service transfers under title IV of the Regional Rail Reorganization Act of 1973 [45 U.S.C. 761 et seq.] (!1) and to the implementation of the sale of the interest of the United States in Conrail under the Conrail Privatization Act [45 U.S.C. 1301 et seq.]. (b) The operation of trains by Conrail shall not be subject to the requirement of any State or local law which specifies the minimum number of crew members who must be employed in connection with the operation of such trains. 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