
[Federal Register Volume 76, Number 173 (Wednesday, September 7, 2011)]
[Proposed Rules]
[Pages 55335-55343]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22699]


-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 269

[Docket No. FRA-2009-0108; Notice No. 1]
RIN 2130-AC19


Alternate Passenger Rail Service Pilot Program

AGENCY: Federal Railroad Administration (FRA), Department of 
Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

-----------------------------------------------------------------------

SUMMARY: This NPRM is in response to a statutory mandate that FRA 
complete a rulemaking proceeding to develop a pilot program that 
permits a rail carrier or rail carriers that own infrastructure over 
which Amtrak operates certain passenger rail service routes to petition 
FRA to be considered as a passenger rail service provider over such a 
route in lieu of Amtrak for a period not to exceed five years after the 
date of enactment of the Passenger Rail Investment and Improvement Act 
of 2008. The proposed rule would develop this pilot program in 
conformance with the statutory directive.

DATES: Written Comments: Written comments on the proposed rule must be 
received by November 7, 2011. Comments received after that date will be 
considered to the extent possible without incurring additional expense 
or delay. FRA anticipates being able to determine these matters without 
a public hearing. However, if prior to October 7, 2011, FRA receives a 
specific request for a public hearing accompanied by a showing that the 
party is unable to adequately present his or her position by written 
statement, a hearing will be scheduled and FRA will publish a 
supplemental notice in the Federal Register to inform interested 
parties of the date, time, and location of any such hearing.

ADDRESSES: Comments: Comments related to Docket Number FRA-2009-0108, 
may be submitted by any of the following methods:
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave., SE., W12-140, Washington, DC 
20590.
     Hand Delivery: Room W12-140 on the Ground level of the 
West Building, 1200 New Jersey Ave., SE., Washington, DC between 9 a.m. 
and 5 p.m. Monday through Friday, except Federal Holidays.

[[Page 55336]]

     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Instructions: All submissions must include the agency name and 
docket number or Regulatory Identification Number (RIN) for this 
rulemaking. Note that all comments received will be posted without 
change to http://www.regulations.gov, including any personal 
information. Please see the Privacy Act heading later in this document 
for more Privacy Act information.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov at any time, or to 
room W12-140 on the Ground level of the West Building, 1200 New Jersey 
Ave., SE., Washington, DC between 9 a.m. and 5 p.m. Monday through 
Friday, except Federal Holidays.

FOR FURTHER INFORMATION CONTACT: Alexander Roth, Office of Railroad 
Policy and Development, FRA, 1200 New Jersey Ave., SE., Washington, DC 
20590 (Telephone 202-493-6109), or Zeb Schorr, Attorney-Advisor, Office 
of Chief Counsel, FRA, 1200 New Jersey Ave., SE., Mail Stop 10, 
Washington, DC 20590 (Telephone 202-493-6072).

SUPPLEMENTARY INFORMATION:

I. Notice of Proposed Rulemaking

A. Statutory Background

    The proposed rule is in response to a statutory mandate--
specifically, Sec.  214 of the Passenger Rail Investment and 
Improvement Act of 2008 (PRIIA), Public Law No. 110-432, Division B 
(Oct. 16, 2008)--that FRA complete a rulemaking proceeding to develop a 
pilot program that permits a rail carrier or rail carriers that own 
infrastructure over which Amtrak operates certain passenger rail 
service routes to petition FRA to be considered as a passenger rail 
service provider over such a route in lieu of Amtrak for a period not 
to exceed five years after the date of enactment of PRIIA. Section 214 
further provides that those routes described in 49 U.S.C. 24102(5)(B), 
(C), and (D) and in 49 U.S.C. 24702 are eligible for the pilot program, 
and that the program not be made available to more than two routes.
    Section 214 also provides for, among other things, the following: 
The establishment of a petition, notification, and bid process through 
which FRA would evaluate bids to provide passenger rail service over 
particular routes by interested rail carriers and Amtrak; FRA's 
selection of a winning bidder by, among other things, evaluating the 
bids against the financial and performance metrics developed under 
section 207 of PRIIA; FRA's execution of a contract with the winning 
bidder awarding the right and obligation to provide passenger rail 
service over the route, along with an operating subsidy, as well as 
requiring compliance with the minimum standards established under 
section 207 of PRIIA, among other things; that Amtrak must provide 
access to its reservation system, stations, and facilities to a winning 
bidder; that employees used in the operation of a route under the pilot 
program would be considered an employee of that rail carrier and would 
be subject to the applicable Federal laws and regulations governing 
similar crafts or classes of employees of Amtrak; that the winning 
bidder must provide hiring preference to displaced qualified Amtrak 
employees; that the winning bidder would be subject to the grant 
conditions under 49 U.S.C. 24405; and that, if a winning bidder ceases 
to operate the service or to otherwise fulfill their obligations, the 
FRA Administrator, in collaboration with the Surface Transportation 
Board, would take any necessary action to enforce the contract and to 
ensure the continued provision of service.

B. Adequate Resources Certification

    Section 214 provides that, before FRA may take any action allowed 
under 49 U.S.C. 24711, the Secretary of Transportation (Secretary) must 
certify that the FRA Administrator has sufficient resources that are 
adequate to undertake the pilot program. FRA understands this 
requirement to mean that FRA may not proceed with any action under a 
pilot program developed by this proposed rulemaking until the Secretary 
has issued such a certification.
    It should also be noted that section 214 requires FRA to award to a 
winning bidder, among other things, an operating subsidy. 49 U.S.C. 
24711(a)(5)(B). PRIIA did not authorize funds for FRA to use to pay for 
any such operating subsidy, or any other costs arising from the 
proposed pilot program; nor did Congress appropriate funds for the 
pilot program.
    This proposed rulemaking would incorporate the adequate resources 
certification requirement by providing, in Sec.  269.3(a), that the 
part would not be applicable to any railroad, unless and until the 
Secretary certifies that FRA has sufficient resources that are adequate 
to undertake the pilot program. Only upon such certification would the 
proposed pilot program become available. As described below, the time 
period within which petitions may be filed with FRA would be triggered 
by FRA providing notice of the Secretary's certification.

C. Timeline Established by the Proposed Rule

    The proposed rule would establish deadlines for filing petitions, 
filing bids, and FRA's execution of contract(s) with any winning 
bidders. As to the filing of petitions, Sec.  269.7(b) of the proposed 
rule would require a petition to be filed with FRA no later than 45 
days after FRA provides notice of the Secretary's certification that 
the FRA Administrator has sufficient resources that are adequate to 
undertake the pilot program. This deadline is necessary in order to 
comply with the statutory mandate. Specifically, 49 U.S.C. 24711(a)(4) 
requires FRA to, as relevant here, ``give preference in awarding 
contracts to bidders seeking to operate routes that have been 
identified as one of the five worst performing Amtrak routes under 
section 24710'' of title 49 of the United States Code. In order to 
comply with this statutory directive to ``give preference'' to ``the 
five worst performing Amtrak routes,'' FRA must be able to evaluate all 
bids at the same time. Section 269.7(b)'s proposed petition deadline 
would enable FRA to evaluate all bids at the same time and to ``give 
preference'' where appropriate as directed by the statute.
    In addition, Sec. Sec.  269.3(c) and 269.7(d) of the proposal would 
also take into consideration the possibility that the period during 
which a railroad may provide passenger rail service under this proposed 
pilot program, which is currently set by statute to expire on October 
16, 2013, is extended by statute. In that event, the proposed rule 
would require petitions to be filed with FRA no later than 60 days 
after the enactment of such statutory authority and would require such 
petitions to otherwise comply with the requirements of this part.
    As to the filing of bids, proposed Sec.  269.9 would require the 
Petitioner and Amtrak to both file bids with FRA no later than 60 days 
after the petition deadline established by proposed Sec.  269.7(b). 
Proposed Sec.  269.9(b) articulates the bid requirements. The 60-day 
time period would give a bidder sufficient time to prepare a bid that 
satisfies the bid requirements, while also limiting the duration of the 
bid process.
    Lastly, as to the award and execution of contracts with winning 
bidders, proposed Sec.  269.13 would require FRA to execute a contract 
with the winning bidder(s) no later than 90 days after the bid deadline 
established by proposed Sec.  269.9. Section 214 of PRIIA requires

[[Page 55337]]

FRA to ``execute a contract within a specified, limited time.'' 49 
U.S.C. 24711(a)(5). The 90-day time period is a limited period for FRA 
and the winning bidder(s) to execute an agreement(s) that satisfies the 
proposed requirements of Sec.  269.13, including FRA's obligation of an 
operating subsidy in compliance with the statutory requirements.

II. Section-by-Section Analysis

Section 269.1 Purpose

    This section provides that the proposed rule would carry out the 
statutory mandate set forth in 49 U.S.C. 24711 that requires FRA to 
develop a pilot program that permits a rail carrier or rail carriers 
that own infrastructure over which Amtrak operates a passenger rail 
service route to petition FRA to be considered as a passenger rail 
service provider over that route in lieu of Amtrak.

Section 269.3 Application

    Paragraph (a) of this section provides that the proposed rule would 
not apply to any railroad, unless and until the Secretary certifies 
that FRA has sufficient resources that are adequate to undertake the 
pilot program. This section also states that, upon receipt, FRA will 
provide notice of the certification on the FRA public Web site. This 
proposed paragraph is based on the statutory directive in 49 U.S.C. 
24711(e). In addition, as discussed in Sec.  269.7(a) of the proposal, 
FRA's notice of the Secretary's certification will trigger the 45-day 
deadline by which an eligible railroad may petition FRA under the pilot 
program.
    Paragraph (b) of this section provides that the proposed pilot 
program would not be made available to more than two Amtrak intercity 
passenger rail routes. This proposed paragraph is based on the 
statutory directive contained in 49 U.S.C. 24711(b).
    Paragraph (c) of this section proposes that any rail carrier or 
rail carriers awarded a contract to provide passenger rail service 
under the pilot program would only be able to provide such service for 
a period not to exceed five years after October 16, 2008 (the date of 
PRIIA's enactment), or a later date authorized by statute. This 
proposed paragraph is based on the statutory directive contained in 49 
U.S.C. 24711(a)(1). In addition, this proposed section also takes into 
consideration the possibility that the 5-year limitation period 
established in PRIIA is extended by statute.

Section 269.5 Definitions

    This section contains the definitions that FRA proposes to employ 
in this rule. This section proposes definitions the following terms: 
Act; Administrator; Amtrak; File and filed; Financial plan; FRA; 
Operating plan; Passenger rail service route; Petitioner; Railroad, and 
Secretary. Among other definitions, this section proposes to define 
``passenger rail service route'' to mean those routes described in 49 
U.S.C. 24102(5)(B), (C), and (D) and in 49 U.S.C. 24702. This 
definition is based on the statutory directive contained in 49 U.S.C. 
24711(a)(1). In addition, this section proposes to define ``railroad'' 
to mean a rail carrier or rail carriers, as defined in 49 U.S.C. 
10102(5). This definition is based on the statutory directive contained 
in 49 U.S.C. 24711(a)(1) and (c)(3).
    This section also proposes to define ``financial plan'' to mean a 
plan that contains, for each Federal fiscal year fully or partially 
covered by the bid: An annual projection of the revenues, expenses, 
capital expenditure requirements, and cash flows (from operating 
activities, investing activities, and financing activities, showing 
sources and uses of funds) attributable to the route; and a statement 
of the assumptions underlying the financial plan's contents. In 
addition, this proposed section defines ``operating plan'' to mean a 
plan that contains, for each Federal fiscal year fully or partially 
covered by the bid: A complete description of the service planned to be 
offered, including the train schedules, frequencies, equipment 
consists, fare structures, and such amenities as sleeping cars and food 
service provisions; station locations; hours of operation; provisions 
for accommodating the traveling public, including proposed arrangements 
for stations shared with other routes; expected ridership; passenger-
miles; revenues by class of service between each city-pair proposed to 
be served; and a statement of the assumptions underlying the operating 
plan's contents. The proposed rule would require bidders to include a 
financial plan and an operating plan--as those terms are defined here--
in their bids. These proposed definitions would ensure that bids 
contain sufficient information to be evaluated.

Section 269.7 Petitions

    Paragraph (a) of this section proposes that a railroad that owns 
infrastructure over which Amtrak operates a passenger rail service 
route may petition FRA to be considered as a passenger rail service 
provider over that route in lieu of Amtrak for a period of time 
consistent with the time limitations described in section 269.3(c). 
This proposed paragraph is based on the statutory directive contained 
in 49 U.S.C. 24711(a)(1). This paragraph would not require a railroad 
own all of the infrastructure over which Amtrak operates a passenger 
rail service route in order to file a petition.
    Paragraph (b) of this section proposes that a petition submitted to 
FRA under this rule must: Be filed with FRA no later than 45 days after 
FRA provides notice of the Secretary's certification pursuant to 
proposed Sec.  269.3(a); describe the petition as a ``Petition to 
Provide Passenger Rail Service under 49 CFR part 269''; and describe 
the route or routes over which the petitioner wants to provide 
passenger rail service and the Amtrak service that the petitioner wants 
to replace. This proposed paragraph is intended to ensure that a 
petition would provide clear notice to FRA.
    Paragraph (c) of this section proposes that, in the event that a 
later statute extends the time period under which a railroad may 
provide passenger rail service pursuant to the pilot program, petitions 
would have to be filed with FRA no later than 60 days after the later 
of the enactment of such statutory authority or the Secretary's 
issuance of the certification under Sec.  269.3(a), and that the 
petition must otherwise comply with the requirements of the pilot 
program. This proposed paragraph takes into consideration the 
possibility that the 5-year limitations period established in PRIIA is 
extended by statute.

Section 269.9 Bid Process

    Paragraph (a) of this section proposes that FRA would notify Amtrak 
of any eligible petition filed with FRA no later than 30 days after 
FRA's receipt of such petition. This proposed paragraph is based on the 
statutory directive contained in 49 U.S.C. 24711(a)(2).
    Paragraph (b) of this section describes the proposed bid 
requirements, including a requirement that such bids must be filed with 
FRA no later than 60 days after the petition deadline established by 
proposed Sec.  269.7. Paragraph (b) further proposes that such bids 
must: (1) Provide FRA with sufficient information to evaluate the level 
of service described in the proposal, and to evaluate the proposal's 
compliance with the requirements described in proposed Sec.  269.13(b); 
(2) describe how the bidder would operate the route (including an 
operating plan, a financial plan and, if applicable, any agreement(s) 
necessary for the operation of passenger service over right-of-way on 
the route that is not owned by the railroad), and, if the bidder 
intends to generate any revenues from ancillary activities (i.e., 
activities other than

[[Page 55338]]

passenger transportation, accommodations, and food service) as part of 
its proposed operation of the route, then the bidder must fully 
describe such ancillary activities and identify their incremental 
impact in all relevant sections of the operating plan and the financial 
plan, and on the route's performance under the financial and 
performance metrics developed pursuant to section 207 of the Act, 
together with the assumptions underlying the estimates of such 
incremental impacts; (3) describe what Amtrak passenger equipment would 
be needed, if any; (4) describe in detail, including amounts, timing, 
and intended purpose, what sources of Federal and non-Federal funding 
the bidder would use, including but not limited to any Federal or State 
operating subsidy and any other Federal or State payments; (5) contain 
a staffing plan describing the number of employees needed to operate 
the service, the job assignments and requirements, and the terms of 
work for prospective and current employees of the bidder for the 
service outlined in the bid; and (6) describe how the passenger rail 
service would comply with the financial and performance metrics 
developed pursuant to section 207 of the Act (at a minimum, this 
description must include, for each Federal fiscal year fully or 
partially covered by the bid: a projection of the route's expected on-
time performance and train delays according to the metrics developed 
pursuant to section 207 of the Act; and the net cash used in operating 
activities per passenger-mile attributable to the route). This proposed 
paragraph is based on the statutory directive contained in 49 U.S.C. 
24711(a)(3) and (a)(6).
    Paragraph (c) of this section proposes that FRA could request 
supplemental information from a petitioner and/or Amtrak where FRA 
determines such information is needed to evaluate a bid. In such a 
request, FRA would establish a deadline by which the supplemental 
information must be submitted to FRA. This proposed paragraph allows 
FRA to request additional information where the information provided in 
a bid prevents FRA from adequately evaluating the proposal.

Section 269.11 Evaluation

    This section proposes that FRA would select a winning bidder by 
evaluating the bids against the financial and performance metrics 
developed under section 207 of PRIIA and the requirements of this 
proposed part, and would give preference in awarding contracts to 
bidders seeking to operate routes that have been identified as one of 
the five worst performing Amtrak routes under 49 U.S.C. 24710. This 
proposed paragraph is based on the statutory directive contained in 49 
U.S.C. 24711(a)(4).

Section 269.13 Award

    Paragraph (a) of this section proposes that FRA would execute a 
contract with the winning bidder(s) consistent with the requirements of 
proposed Sec.  269.13 and as FRA may otherwise require, no later than 
90 days after the bid deadline established by proposed Sec.  269.9(b). 
This paragraph also provides that FRA would provide timely notice of 
these selections to all petitioners and to Amtrak. This proposed 
paragraph is based on the statutory directive contained in 49 U.S.C. 
24711(a)(5).
    Paragraph (b) of this section proposes that, among other things, 
such a contract would: (1) Award to the winning bidder the right and 
obligation to provide passenger rail service over that route subject to 
such performance standards as FRA may require, consistent with the 
standards developed under section 207 of PRIIA; (2) award to the 
winning bidder an operating subsidy for the first year at a level not 
in excess of the level in effect during the fiscal year preceding the 
fiscal year in which the petition was received, adjusted for inflation, 
and for any subsequent years at such level, adjusted for inflation; (3) 
condition the operating and subsidy rights upon the winning bidder 
continuing to provide passenger rail service on the route that is no 
less frequent, nor over a shorter distance, than Amtrak provided on 
that route before the award; (4) condition the operating and subsidy 
rights upon the winning bidder's compliance with the minimum standards 
established under section 207 of PRIIA and such additional performance 
standards as FRA may establish; and (5) subject the winning bidder to 
the grant conditions established by 49 U.S.C. 24405. This proposed 
paragraph is based on the statutory directive contained in 49 U.S.C. 
24711(a)(5), (c)(1), and (c)(4).
    Paragraph (c) of this section proposes that the winning bidder 
would make their staffing plan, submitted as required by proposed Sec.  
269.9(b)(4), available to the public after the bid award. This proposed 
paragraph is based on the statutory directive contained in 49 U.S.C. 
24711(a)(6).

Section 269.15 Access to Facilities; Employees

    Paragraph (a) of this section proposes that, if an award under 
proposed Sec.  269.13 is made to a rail carrier other than Amtrak, 
Amtrak must provide access to its reservation system, stations, and 
facilities directly related to operations to the winning bidder awarded 
a contract, in accordance with section 217 of PRIIA, necessary to carry 
out the purposes of the proposed rule. This proposed paragraph is based 
on the statutory directive contained in 49 U.S.C. 24711(c)(2).
    Paragraph (b) of this section proposes that the employees of any 
person used by a rail carrier in the operation of a route under the 
proposed rule would be considered an employee of that carrier and 
subject to the applicable Federal laws and regulations governing 
similar crafts or classes of employees of Amtrak, including provisions 
under Sec.  121 of the Amtrak Reform and Accountability Act of 1997 
relating to employees that provide food and beverage service. This 
proposed paragraph is based on the statutory directive contained in 49 
U.S.C. 24711(c)(3).
    Paragraph (c) of this section proposes that a winning bidder would 
provide hiring preference to qualified Amtrak employees displaced by 
the award of the bid, consistent with the staffing plan submitted by 
the winning bidder. This proposed paragraph is based on the statutory 
directive contained in 49 U.S.C. 24711(c)(4).

Section 269.17 Cessation of Service

    This section proposes that, if a rail carrier awarded a route under 
this rule ceases to operate the service or fails to fulfill its 
obligations under the contract required under proposed Sec.  269.13, 
the Administrator, in collaboration with the Surface Transportation 
Board, will take any necessary action consistent with title 49 of the 
United States Code to enforce the contract and ensure the continued 
provision of service, including the installment of an interim service 
provider and re-bidding the contract to operate the service. This 
section further proposes that the entity providing service would either 
be Amtrak or a rail carrier eligible for the pilot program under 
proposed Sec.  269.7. This proposed paragraph is based on the statutory 
directive contained in 49 U.S.C. 24711(d).

III. Regulatory Impact and Notices

1. Executive Orders 12866 and 13563 and DOT Regulatory Policies and 
Procedures

    This proposed rule has been evaluated in accordance with existing 
policies and procedures and determined to be non-significant under 
Executive Order 12866, Executive Order 13563, and DOT policies and 
procedures. See 44 FR 11034; February 26, 1979. FRA

[[Page 55339]]

has prepared and placed in the docket a regulatory impact analysis 
(RIA) addressing the economic impact of this proposed rule. Document 
inspection and copying facilities are available at the DOT Central 
Docket Management Facility located in Room W12-140 on the Ground level 
of the West Building, 1200 New Jersey Avenue, SE., Washington, DC 
20590. Docket material is also available for inspection electronically 
through the Federal eRulemaking Portal at http://www.regulations.gov. 
Photocopies may also be obtained by submitting a written request to the 
FRA Docket Clerk at the Office of Chief Counsel, RCC-10, Mail Stop 10, 
Federal Railroad Administration, 1200 New Jersey Avenue, SE., 
Washington, DC 20590; please refer to Docket No. FRA-2009-0108.
    As part of the regulatory impact analysis, FRA has generally 
assessed quantitative measurements of the cost and benefit streams 
expected to result from the adoption of a proposed rule. However, in 
this case, due to the limited number of routes that would be awarded 
under the pilot program (only two routes could be awarded), and the 
short timeframe in which this pilot program would operate (until 2013), 
it is not feasible to perform an analysis for an extended period.
    There are no alternate service provider railroad regulatory costs 
because the program is voluntary with respect to such rail carriers. 
Regulatory costs would be triggered for Amtrak should one or more 
alternative service providers bid on routes. For informational 
purposes, FRA has included in Appendices of the RIA the estimated 
average costs for both a railroad and Amtrak to participate in the 
pilot program. FRA estimates the average cost for each individual 
railroad to participate in the program and to submit the required bid 
proposal (the majority of the cost) at about $300,000 per route, and 
the average cost for Amtrak at about $150,000 per route (regardless of 
how many individual railroads bid on the individual Amtrak route). 
Railroads that participate voluntarily would do so because they 
consider the benefits to exceed the costs. Thus, any participation 
would be cost beneficial with respect to the voluntary participant. Any 
potential costs to Amtrak are regulatory costs that would not be 
incurred in absence of this proposed rule or the costs associated with 
developing bids for up to two routes.
    Given that this pilot program is voluntary for potential alternate 
service providers and is not currently funded by Congress, FRA 
estimates that this proposed regulation would not result in any 
benefits or costs.

2. Regulatory Flexibility Act

    To ensure potential impacts of rules on small entities are properly 
considered, FRA developed this proposed rule in accordance with 
Executive Order 13272 (``Proper Consideration of Small Entities in 
Agency Rulemaking'') and DOT's procedures and policies to promote 
compliance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
The Regulatory Flexibility Act requires an agency to review regulations 
to assess their impact on small entities. An agency must conduct a 
regulatory flexibility analysis unless it determines and certifies that 
a rule is not expected to have a significant impact on a substantial 
number of small entities.
Purpose
    As noted earlier in this NPRM, the purpose of this proposed 
rulemaking is to respond to a statutory mandate to develop a pilot 
program that permits a rail carrier or rail carriers that own 
infrastructure over which Amtrak operates certain passenger rail 
service routes to petition FRA to be considered as a passenger rail 
service provider over such a route in lieu of Amtrak for a period not 
to exceed five years after the date of enactment of PRIIA. The proposed 
rule would develop this pilot program in conformance with the statutory 
directive.
    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) 
requires a review of proposed and final rules to assess their impact on 
small entities, unless the Secretary certifies that the rule would not 
have a significant economic impact on a substantial number of small 
entities. Pursuant to Sec.  312 of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (Pub. L. 104-121), FRA has issued a 
final policy that formally establishes ``small entities'' as including 
railroads that meet the line-haulage revenue requirements of a Class 
III railroad. 49 CFR part 209, App. C. For other entities, the same 
dollar limit in revenues governs whether a railroad, contractor, or 
other respondent is a small entity. Id. Additionally, section 601(5) 
defines as ``small entities'' governments of cities, counties, towns, 
townships, villages, school districts, or special districts with 
populations less than 50,000. Such governments would not be directly 
impacted by this proposal.
Rationale for Choosing Regulatory Action and Legal Authority
    FRA is initiating this NPRM in response to a statutory mandate set 
forth in section 214 of PRIIA. Section 214 requires FRA to complete a 
rulemaking proceeding to develop a pilot program that permits a rail 
carrier or rail carriers that own infrastructure over which Amtrak 
operates certain passenger rail service routes to petition FRA to be 
considered as a passenger rail service provider over such a route in 
lieu of Amtrak for a period not to exceed five years after the date of 
enactment of PRIIA. This proposed rule develops this pilot program in 
conformance with the statutory directive.
Description of Regulated Entities and Impacts
    This proposed rule would be applicable to railroads that own 
infrastructure upon which Amtrak operates those routes described in 49 
U.S.C. 24102(5)(B), (C), and (D) and in 49 U.S.C. 24702, which may 
include small railroads. ``Small entity'' is defined in 5 U.S.C. 601 as 
including a small business concern that is independently owned and 
operated, and is not dominant in its field of operation. The U.S. Small 
Business Administration (SBA) has authority to regulate issues related 
to small businesses, and stipulates in its size standards that a 
``small entity'' in the railroad industry is a for profit ``line-haul 
railroad'' that has fewer than 1,500 employees, a ``short line 
railroad'' with fewer than 500 employees, or a ``commuter rail system'' 
with annual receipts of less than seven million dollars. See ``Size 
Eligibility Provisions and Standards,'' 13 CFR part 121 subpart A.
    Federal agencies may adopt their own size standards for small 
entities in consultation with SBA and in conjunction with public 
comment. Pursuant to that authority FRA has published a final statement 
of agency policy that formally establishes ``small entities'' or 
``small businesses'' as being railroads, contractors and hazardous 
materials shippers that meet the revenue requirements of a Class III 
railroad as set forth in 49 CFR 1201.1-1, which is $20 million or less 
in inflation-adjusted annual revenues, and commuter railroads or small 
governmental jurisdictions that serve populations of 50,000 or less. 
See 68 FR 24891 (May 9, 2003) (codified at Appendix C to 49 CFR part 
209). The $20 million limit is based on the Surface Transportation 
Board's revenue threshold for a Class III railroad carrier. Railroad 
revenue is adjusted for inflation by applying a revenue deflator

[[Page 55340]]

formula in accordance with 49 CFR 1201.1-1. FRA is using this 
definition for the proposed rule.
Minimum Requirements for Pilot Program Applications
    Small railroads face the same requirements for entry in the pilot 
program as other railroads. The railroad must own infrastructure upon 
which Amtrak operates those routes described in 49 U.S.C. 24102(5)(B), 
(C), and (D) and in 49 U.S.C. 24702.
Disclosure of Assumptions
    The purpose of this economic analysis is to provide pertinent 
information on the effects of the proposed regulation, part 269, 
``Alternate Passenger Rail Service Pilot Program.'' FRA believes that 
the proposed regulation will not have any effect on small railroads 
since participation in the pilot program is voluntary, only two routes 
are available for award, the program expires in 2013, and it is 
unlikely that federal funding that is not currently available will be 
available for the program. FRA does not anticipate that any small 
railroads would be interested in taking over such an existing, eligible 
Amtrak route.
Criteria for Substantial Number
    This proposed regulation is voluntary for all rail carriers, except 
Amtrak, which would be impacted only if another carrier petitions to 
participate in the pilot program. Therefore, there are no mandates 
placed on large or small railroads. Consequently, this proposed 
regulation would not affect a substantial number of small entities, and 
most likely will not impact any small entities.
Criteria for ``Significant Economic Impacts''
    The factual basis for the certification that this proposed rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities is that the proposed pilot program 
is voluntary for all rail carriers except Amtrak; and no small entities 
are anticipated to apply. Therefore, this proposed regulation would 
have no economic impact on small entities.
    FRA notes that this proposed regulation does not disproportionately 
place any small railroads that are small entities at a significant 
competitive disadvantage. Small railroads are not excluded from 
participation, so long as they are eligible. This proposed regulation 
and the underlying statute are aimed at railroads taking over an entire 
route. If Amtrak uses 30 miles of a small railroad's infrastructure in 
a route that is 750 miles long, the small railroad could not apply to 
take over just its own segment, but would have to apply to take over 
the whole route. Thus, the ability to bid on a route is not constrained 
by a railroad's size.
Request for Comments
    FRA invites comments from all interested parties on this 
certification. FRA also requests comments on the threshold economic 
analysis and its underlying assumptions. FRA particularly encourages 
small entities that could potentially be impacted by the proposed 
amendments to participate in the public comment process by submitting 
comments on this assessment or this rulemaking to the official U.S. 
Department of Transportation (DOT) docket.
Certification
    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA 
certifies that this proposed rule would not have a significant impact 
on a substantial number of small entities. The proposed rule does not 
require, or otherwise impose, any requirements upon any small entities. 
Instead, this proposal develops a pilot program under which an eligible 
small entity may voluntarily elect to participate. Furthermore, the 
proposed rule would establish a very limited pilot program that would 
apply to no more than two Amtrak routes. FRA invites all interested 
parties to submit data and information regarding the potential economic 
impact that would result from adoption of the proposals in this NPRM. 
FRA will consider all comments received in the public comment process 
when making a final determination for certification of the final rule.

3. Paperwork Reduction Act

    According to the Paperwork Reduction Act of 1995 and OMB's 
Implementing Guidance at 5 CFR 1320.3(c), ``collection of information 
means, except as provided in section 1320.4, the obtaining, causing to 
be obtained, soliciting, or requiring the disclosure to an agency, 
third parties or the public of information by or for an agency by means 
of identical questions posed to, or identical reporting, recordkeeping, 
or disclosure requirements imposed on, ten or more persons, whether 
such collection of information is mandatory, voluntary, or required to 
obtain or retain a benefit.'' FRA expects that the requirements of this 
proposed rule will affect less than 10 railroads or ``persons'' as 
defined in 5 CFR 1320.(c)(4). Consequently, no information collection 
submission is necessary, and no approval is being sought from the 
Office of Management and Budget (OMB) at this time.

4. Environmental Impact

    FRA has evaluated this NPRM in accordance with its ``Procedures for 
Considering Environmental Impacts'' (FRA's Procedures) (64 FR 28545, 
May 26, 1999) as required by the National Environmental Policy Act (42 
U.S.C. 4321 et seq.), other environmental statutes, Executive Orders, 
and related regulatory requirements. FRA has determined that this 
document is not a major FRA action (requiring the preparation of an 
environmental impact statement or environmental assessment) because the 
proposed rulemaking would not result in a change in current passenger 
service; instead, the program would only potentially result in a change 
in the operator of such service. In accordance with section 4(c) and 
(e) of FRA's Procedures, the agency has further concluded that no 
extraordinary circumstances exist with respect to this NPRM that might 
trigger the need for a more detailed environmental review. As a result, 
FRA finds that this NPRM is not a major Federal action significantly 
affecting the quality of the human environment.

5. Federalism Implications

    Executive Order 13132, ``Federalism'' (64 FR 43255, Aug. 4, 1999), 
requires FRA to develop an accountable process to ensure ``meaningful 
and timely input by State and local officials in the development of 
regulatory policies that have federalism implications.'' ``Policies 
that have federalism implications'' are defined in the Executive Order 
to include regulations that have ``substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.'' Under Executive Order 13132, the agency 
may not issue a regulation with federalism implications that imposes 
substantial direct compliance costs and that is not required by 
statute, unless the Federal government provides the funds necessary to 
pay the direct compliance costs incurred by State and local 
governments, or the agency consults with State and local government 
officials early in the process of developing the regulation. Where a 
regulation has federalism implications and preempts State law, the 
agency seeks to consult with State and local officials in the process 
of developing the regulation.
    FRA has analyzed this NPRM in accordance with the principles and

[[Page 55341]]

criteria contained in Executive Order 13132. This NPRM complies with a 
statutory mandate, and FRA believes it is in compliance with Executive 
Order 13132.
    This NPRM will not have a substantial effect on the States, on the 
relationship between the Federal government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. In addition, this NPRM will not have any federalism 
implications that impose substantial direct compliance costs on State 
and local governments.

6. Unfunded Mandates Reform Act of 1995

    Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency ``shall, unless 
otherwise prohibited by law, assess the effects of Federal regulatory 
actions on State, local, and tribal governments, and the private sector 
(other than to the extent that such regulations incorporate 
requirements specifically set forth in law).'' Section 202 of the Act 
(2 U.S.C. 1532) further requires that ``before promulgating any general 
notice of proposed rulemaking that is likely to result in the 
promulgation of any rule that includes any Federal mandate that may 
result in expenditure by State, local, and tribal governments, in the 
aggregate, or by the private sector, of $100,000,000 or more (adjusted 
annually for inflation) in any 1 year, and before promulgating any 
final rule for which a general notice of proposed rulemaking was 
published, the agency shall prepare a written statement'' detailing the 
effect on State, local, and tribal governments and the private sector. 
This monetary amount of $100,000,000 has been adjusted to $140,800,000 
to account for inflation. This proposed rule would not result in the 
expenditure of more than $140,800,000 by the public sector in any one 
year, and thus preparation of such a statement is not required.

7. Energy Impact

    Executive Order 13211 requires Federal agencies to prepare a 
Statement of Energy Effects for any ``significant energy action.'' 66 
FR 28355 (May 22, 2001). Under the Executive Order, a ``significant 
energy action'' is defined as any action by an agency (normally 
published in the Federal Register) that promulgates or is expected to 
lead to the promulgation of a final rule or regulation, including 
notices of inquiry, advance notices of proposed rulemaking, and notices 
of proposed rulemaking that: (1)(i) Is a significant regulatory action 
under Executive Order 12866 or any successor order, and (ii) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (2) is designated by the Administrator of the Office 
of Information and Regulatory Affairs as a significant energy action. 
FRA has evaluated this NPRM in accordance with Executive Order 13211. 
FRA has determined that this NPRM will not have a significant adverse 
effect on the supply, distribution, or use of energy. Consequently, FRA 
has determined that this regulatory action is not a ``significant 
energy action'' within the meaning of Executive Order 13211.

8. Privacy Act Information

    Interested parties should be aware that anyone is able to search 
the electronic form of all written communications and comments received 
into any agency docket by the name of the individual submitting the 
document (or signing the document, if submitted on behalf of an 
association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477), or you may visit http://www.dot.gov/privacy.html.

List of Subjects in 49 CFR Part 269

    Railroads; Railroad employees.

The Proposed Rule

    For the reasons discussed in the preamble, FRA proposes to amend 
chapter II, subtitle B of title 49, Code of Federal Regulations, as 
follows:
    1. Add a new part 269 to read as follows:

PART 269--ALTERNATE PASSENGER RAIL SERVICE PILOT PROGRAM

Sec.
269.1 Purpose.
269.3 Application.
269.5 Definitions.
269.7 Petitions.
269.9 Bid Process.
269.11 Evaluation.
269.13 Award.
269.15 Access to facilities; employees.
269.17 Cessation of service.

    Authority: Sec. 214, Div. B, Pub. L. No. 110-432; 49 U.S.C. 
24711; and 49 CFR 1.49.


Sec.  269.1  Purpose.

    The purpose of this part is to carry out the statutory mandate set 
forth in 49 U.S.C. 24711 requiring FRA to develop a pilot program that 
permits a railroad that owns infrastructure over which Amtrak operates 
a passenger rail service route to petition FRA to be considered as a 
passenger rail service provider over that route in lieu of Amtrak.


Sec.  269.3  Application.

    (a) Certification. This part will not be applicable to any 
railroad, unless and until, the Secretary certifies that FRA has 
sufficient resources that are adequate to undertake the pilot program 
developed by this part. FRA will provide notice of the certification on 
the FRA public Web site upon receipt.
    (b) Route Limitations. The pilot program developed by this part 
will not be made available to more than two Amtrak intercity passenger 
rail routes.
    (c) Time Limitations. Any railroad awarded a contract to provide 
passenger rail service under the pilot program developed by this part 
shall only provide such service for a period not to exceed either five 
years after October 16, 2008, or a later date authorized by statute.


Sec.  269.5  Definitions.

    As used in this part--
    Act means the Passenger Rail Investment and Improvement Act of 2008 
(Pub. L. 110-432, Division B (Oct. 16, 2008)).
    Administrator means the Federal Railroad Administrator, or the 
Federal Railroad Administrator's delegate.
    Amtrak means the National Railroad Passenger Corporation.
    File and Filed mean submission of a document under this part on the 
date the document was postmarked, or the date the document was e-mailed 
to FRA.
    Financial plan means a plan that contains, for each Federal fiscal 
year fully or partially covered by the bid: an annual projection of the 
revenues, expenses, capital expenditure requirements, and cash flows 
(from operating activities, investing activities, and financing 
activities, showing sources and uses of funds) attributable to the 
route; and a statement of the assumptions underlying the financial 
plan's contents.
    FRA means the Federal Railroad Administration.
    Operating plan means a plan that contains, for each Federal fiscal 
year fully or partially covered by the bid: a complete description of 
the service planned to be offered, including the train schedules, 
frequencies, equipment consists, fare structures, and such amenities as 
sleeping cars and food service provisions; station locations; hours of 
operation; provisions for accommodating the traveling public, including 
proposed arrangements for stations shared with other routes; expected 
ridership; passenger-miles; revenues by class of service between

[[Page 55342]]

each city-pair proposed to be served; and a statement of the 
assumptions underlying the operating plan's contents.
    Passenger rail service route means those routes described in 49 
U.S.C. 24102(5)(B), (C), and (D) or in 49 U.S.C. 24702.
    Petitioner means a railroad, other than Amtrak, that has submitted 
a petition to FRA under section 269.7 of this part.
    Railroad means a rail carrier or rail carriers, as defined in 49 
U.S.C. 10102(5).
    Secretary means the Secretary of the U.S. Department of 
Transportation.


Sec.  269.7  Petitions.

    (a) In General. A railroad that owns infrastructure over which 
Amtrak operates a passenger rail service route may petition FRA to be 
considered as a passenger rail service provider over that route in lieu 
of Amtrak for a period of time consistent with the time limitations 
described in Sec.  269.3(c).
    (b) Petition Requirements. Each petition shall:
    (1) Be filed with FRA no later than 45 days after FRA provides 
notice of the Secretary's certification pursuant to Sec.  269.3(a) 
using the following method: e-mail to Priia214@dot.gov.;
    (2) Describe the petition as a ``Petition to Provide Passenger Rail 
Service under 49 CFR part 269''; and
    (3) Describe the route or routes over which the petitioner wants to 
provide passenger rail service and the Amtrak service that the 
petitioner wants to replace.
    (c) Future Petitions. In the event that a statute extends the time 
period under which a railroad may provide passenger rail service 
pursuant to the pilot program developed by this part, petitions under 
this section shall be filed with FRA no later than 60 days after the 
later of the enactment of such statutory authority or the Secretary's 
issuance of the certification under Sec.  269.3(a), and shall otherwise 
comply with the requirements of this part.


Sec.  269.9  Bid Process.

    (a) Amtrak Notification. FRA will notify Amtrak of any eligible 
petition filed with FRA no later than 30 days after FRA's receipt of 
such petition.
    (b) Bid Requirements. A petitioner and Amtrak must both file a bid 
with FRA to provide passenger rail service over the route to which the 
petition relates no later than 60 days after the petition deadline 
established by Sec.  269.7 using the following method: e-mail to 
Priia214@dot.gov. Each such bid must:
    (1) Provide FRA with sufficient information to evaluate the level 
of service described in the proposal, and to evaluate the proposal's 
compliance with the requirements described in Sec.  269.13(b);
    (2) Describe how the bidder would operate the route. This 
description must include, but is not limited to, an operating plan, a 
financial plan and, if applicable, any agreement(s) necessary for the 
operation of passenger service over right-of-way on the route that is 
not owned by the railroad. In addition, if the bidder intends to 
generate any revenues from ancillary activities (i.e., activities other 
than passenger transportation, accommodations, and food service) as 
part of its proposed operation of the route, then the bidder must fully 
describe such ancillary activities and identify their incremental 
impact in all relevant sections of the operating plan and the financial 
plan, and on the route's performance under the financial and 
performance metrics developed pursuant to Sec.  207 of the Act, 
together with the assumptions underlying the estimates of such 
incremental impacts;
    (3) Describe what Amtrak passenger equipment would be needed, if 
any;
    (4) Describe in detail, including amounts, timing, and intended 
purpose, what sources of Federal and non-Federal funding the bidder 
would use, including but not limited to any Federal or State operating 
subsidy and any other Federal or State payments;
    (5) Contain a staffing plan describing the number of employees 
needed to operate the service, the job assignments and requirements, 
and the terms of work for prospective and current employees of the 
bidder for the service outlined in the bid; and
    (6) Describe how the passenger rail service would comply with the 
financial and performance metrics developed pursuant to Sec.  207 of 
the Act. At a minimum, this description must include, for each Federal 
fiscal year fully or partially covered by the bid: a projection of the 
route's expected on-time performance and train delays according to the 
metrics developed pursuant to Sec.  207 of the Act; and the net cash 
used in operating activities per passenger-mile attributable to the 
route.
    (c) Supplemental Information. FRA may request supplemental 
information from a petitioner and/or Amtrak where FRA determines such 
information is needed to evaluate a bid. In such a request, FRA will 
establish a deadline by which the supplemental information must be 
filed with FRA.


Sec.  269.11  Evaluation.

    FRA will select a winning bidder by evaluating the bids against the 
financial and performance metrics developed under Sec.  207 of the Act 
and the requirements of this part, and will give preference in awarding 
contracts to bidders seeking to operate routes that have been 
identified as one of the five worst performing Amtrak routes under 49 
U.S.C. 24710.


Sec.  269.13  Award.

    (a) Award. FRA will execute a contract with the winning bidder(s), 
consistent with the requirements of this section and as FRA may 
otherwise require, no later than 90 days after the bid deadline 
established by Sec.  269.9(b). FRA will provide timely notice of these 
selections to all petitioners and Amtrak.
    (b) Contract Requirements. Among other things, the contract between 
FRA and a winning bidder shall:
    (1) Award to the winning bidder the right and obligation to provide 
passenger rail service over that route subject to such performance 
standards as FRA may require, consistent with the standards developed 
under Sec.  207 of the Act, for a duration consistent with Sec.  
269.3(c);
    (2) Award to the winning bidder an operating subsidy for the first 
year at a level not in excess of the level in effect during the fiscal 
year preceding the fiscal year in which the petition was received, 
adjusted for inflation, and for any subsequent years at such level, 
adjusted for inflation;
    (3) Condition the operating and subsidy rights upon the winning 
bidder continuing to provide passenger rail service on the route that 
is no less frequent, nor over a shorter distance, than Amtrak provided 
on that route before the award;
    (4) Condition the operating and subsidy rights upon the winning 
bidder's compliance with the minimum standards established under Sec.  
207 of the Act and such additional performance standards as FRA may 
establish; and
    (5) Subject the winning bidder to the grant conditions established 
by 49 U.S.C. 24405.
    (c) Staffing Plan Publication. The winning bidder shall make their 
staffing plan required by Sec.  269.9(b)(4) available to the public 
after the bid award.


Sec.  269.15  Access to facilities; employees.

    (a) Access to Facilities. If the award under Sec.  269.13 is made 
to a railroad other than Amtrak, Amtrak must provide access to its 
reservation system, stations, and facilities directly related to 
operations to the winning bidder awarded a contract under this part, in 
accordance with Sec.  217 of the Act, necessary to carry out the 
purposes of this part.

[[Page 55343]]

    (b) Employees. The employees of any person used by a railroad in 
the operation of a route under this part shall be considered an 
employee of that railroad and subject to the applicable Federal laws 
and regulations governing similar crafts or classes of employees of 
Amtrak, including provisions under Sec.  121 of the Amtrak Reform and 
Accountability Act of 1997 relating to employees who provide food and 
beverage service.
    (c) Hiring Preference. The winning bidder shall provide hiring 
preference to qualified Amtrak employees displaced by the award of the 
bid, consistent with the staffing plan submitted by the winning bidder.


Sec.  269.17  Cessation of service.

    If a railroad awarded a route under this part ceases to operate the 
service or fails to fulfill its obligations under the contract required 
under Sec.  269.13, the Administrator, in collaboration with the 
Surface Transportation Board, shall take any necessary action 
consistent with title 49 of the United States Code to enforce the 
contract and ensure the continued provision of service, including the 
installment of an interim service provider and re-bidding the contract 
to operate the service. The entity providing service shall either be 
Amtrak or a railroad eligible for this pilot program under Sec.  269.7.

    Issued in Washington DC on August 29, 2011.
Karen J. Rae,
Deputy Administrator, Federal Railroad Administration.
[FR Doc. 2011-22699 Filed 9-6-11; 8:45 am]
BILLING CODE 4910-06-P


