
[Federal Register Volume 76, Number 240 (Wednesday, December 14, 2011)]
[Rules and Regulations]
[Pages 77716-77726]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31990]


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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 269

[Docket No. FRA-2009-0108; Notice No. 2]
RIN 2130-AC19


Alternate Passenger Rail Service Pilot Program

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

ACTION: Final rule.

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SUMMARY: This final rule 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 final rule develops this pilot program in conformance with 
the statutory directive.

DATES: This final rule is effective on February 13, 2012.

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. Background

    By notice of proposed rulemaking (NPRM) published on September 7, 
2011 (76 FR 55335), FRA proposed an alternate passenger rail service 
pilot program 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). The 
comment period for the NPRM closed on November 7, 2011. FRA received 
written comments submitted by Ratp Development America, the 
Transportation Trades Department of the AFL-CIO, the American Short 
Line and Regional Railroad Association, the Association of Independent 
Passenger Rail Operators, Herzog Transit Services, Inc., First Transit, 
Veolia Transportation N.A., and two individuals.
    General comments are addressed in this section, and more specific 
comments are addressed in the relevant sections of the preamble below. 
Some comments were generally supportive of the NPRM, and other comments 
were generally unsupportive of the NPRM.
    A comment sought clarification regarding whether an eligible rail 
carrier under the pilot program could create a separate company to 
manage and operate the passenger operation, or whether it could enter 
into a private access rights agreement with an alternative rail 
passenger operator. This final rule develops 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. This final rule does not prohibit an eligible 
rail carrier from creating a separate company to manage and/or operate 
the passenger rail service, or from entering into an agreement with a 
third party to manage and/or operate the passenger rail service. 
However, a pilot program petition must be submitted by a rail carrier 
or rail carriers that own the infrastructure as described in Sec.  
269.7 of this final rule. In addition, such information regarding the 
management and/or operation of the service would be relevant to FRA's 
evaluation of the bid, and should be described in detail pursuant to 
Sec.  269.9 of this final rule.
    Several comments stated that the pilot program should allow a State 
to submit a petition (with the concurrence of the infrastructure 
owner), and/or that there should be a statutory role for States in the 
pilot program. Comments also stated that State involvement is 
particularly important to bidding on State-supported routes (which are 
eligible under the pilot program) as such routes are largely funded by 
States. A comment further stated that States should be able to 
participate in the pilot program process both out of a matter of 
fairness and to ensure that existing contracts between States and 
Amtrak would not be unconstitutionally impaired. As an initial matter, 
Sec.  214 of PRIIA only provides that a rail carrier or rail carriers 
that own infrastructure over which Amtrak operates certain passenger 
rail service routes may submit a petition. See 49 U.S.C. 24711(a)(1). 
Section 214 does not establish a statutory role for States in the pilot 
program petition process. In compliance with this statutory mandate, 
this final rule provides that only an eligible rail carrier may submit 
a petition. However, a State may participate in the pilot program 
process. Specifically, a

[[Page 77717]]

petitioning rail carrier may include, in its bid package, documentation 
of a State's approval of the bid for the particular State-supported 
route. Indeed, Sec.  269.9(b)(4) of this final rule requires, in part, 
that a bidder describe the sources of non-Federal funding, including 
any State operating subsidy and any other State payments. See also 49 
U.S.C. 24711(a)(3).
    Comments stated that the pilot program should include the right-of-
way owner as a full partner in the proposed service, and that the pilot 
program should recognize the importance of protecting the capacity 
required for freight operations. As an initial matter, FRA agrees that 
freight railroads (and commuter railroads, for that matter) are 
critical partners to the success of intercity passenger rail that makes 
use of their facilities. Furthermore, the pilot program recognizes that 
a bid submitted by an eligible rail carrier must describe how that rail 
carrier would operate over right-of-way on the route that it does not 
own. Specifically, Sec.  269.9 of this final rule requires a bidder to 
describe the operating agreement(s) necessary for the operation of 
passenger service over right-of-way on the route that is not owned by 
the bidder.
    A comment stated that FRA should solicit the opinion of States on 
how the pilot program, as applied to State-supported routes, could best 
be made to successfully work. As noted, FRA published the proposed rule 
in the Federal Register, but did not receive any comments from a State.
    Another comment contested the constitutionality of Sec.  201 of 
PRIIA, which defines the national railroad passenger transportation 
system, but did not relate the comment to the proposed rule.
    Lastly, one comment generally disagreed with the NPRM and stated 
that a better way to meet the requirements of PRIIA would be to convert 
Amtrak into a Sec.  501(c)(3) nonprofit corporation. FRA disagrees. As 
discussed above, the NPRM (and this final rule) was in response to a 
specific statutory mandate that FRA complete a rulemaking proceeding to 
develop an alternate passenger rail service pilot program.

a. Summary of Final Rule

    This final rule 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 
October 16, 2008 (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 final rule 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.
    Comments stated that the pilot program should allow for the 
transfer of current and existing service subsidies made by FRA to 
Amtrak to operators selected under the pilot program. However, FRA does 
not have the authority to transfer any such existing subsidies. Other 
comments stated that there should be a mechanism for FRA to award an 
operating subsidy to pay for costs associated with the pilot program. 
As described above, no funds have been appropriated to the FRA to 
provide such financial assistance.
    A comment also stated that a mechanism needs to be created to 
clearly identify the route by route subsidy and the method of transfer, 
and that such information would be critical to a fair bidding process. 
The comment goes on to suggest that FRA analyze and rank all Amtrak 
routes (national and State-supported). In addition, the comment notes 
that the cost allocation methodology of Sec.  209 of PRIIA should be 
the basis for determining the appropriate subsidy amount for these 
routes. FRA notes that useful route-by-route Amtrak cost information is 
published in the Quarterly Report on the Performance and Service 
Quality on Intercity Passenger Train Operations (available at http://www.fra.dot.gov/rpd/passenger/2165.shtml). FRA also notes that 
avoidable cost outputs are not yet available, and that eight quarters 
of comparable fully allocated cost data has not yet been accumulated. 
However, waiting for this data, and for the States and Amtrak to arrive 
at a final consensus on the Sec.  209 methodology, could potentially 
delay publication of this final rule well beyond the expiration of the 
pilot program itself (October 16, 2013). Furthermore, in order to be 
competitive, prospective bidders will likely need to provide the 
service at cost levels below those of Amtrak's. It is the bidder's 
verifiable cost projections for their proposed service, rather than the 
historical Amtrak costs, that will be particularly important in the 
bidding process.
    This final rule incorporates the adequate resources certification 
requirement by providing, in Sec.  269.3(a), that part 269 is not 
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 does the pilot program 
become available. As described below,

[[Page 77718]]

the time period within which petitions may be filed with FRA is 
triggered by FRA providing notice of the Secretary's certification.
    A comment stated that the Secretary must quickly certify that FRA 
has adequate resources to undertake the program; the comment further 
provided that substantial FRA resources would not be required for the 
pilot program. The Secretary will issue this certification when 
appropriate. In addition, it must be noted that FRA will expend 
valuable resources in administering the pilot program, especially in 
the thorough evaluation of each of the petitions and bid packages that 
may be received.

c. Timeline Established by the Final Rule

    The final rule establishes 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 final rule requires 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 
petition deadline enables 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 final rule 
also take into consideration the possibility that the period during 
which a railroad may provide passenger rail service under this pilot 
program, which is currently set by statute to expire on October 16, 
2013, is extended by statute. In that event, the final rule requires 
petitions to be filed with FRA no later than 60 days after the 
enactment of such statutory authority and requires such petitions to 
otherwise comply with the requirements of this part.
    A comment stated that the ``worst performing routes'' criteria must 
be modified to assure that other routes, including State-supported 
routes, be eligible for the pilot program. Another comment sought 
clarification regarding whether petitions for routes which were not one 
of the worst performing routes would be permitted to compete against 
one of the worst performing routes. Section 214 of PRIIA mandates which 
routes are eligible for the pilot program, as follows: Those routes 
described in 49 U.S.C. 24102(5)(B), (C), or (D) and 49 U.S.C. 24702. 
See 49 U.S.C. 24711(a)(1). As such, Amtrak State-supported routes under 
49 U.S.C. 24702 are eligible for the pilot program. In addition, the 
worst performing routes preference is required by statute, and simply 
provides that FRA shall give preference in awarding contracts to 
bidders who are seeking to operate such routes. See 49 U.S.C. 
24711(a)(4). FRA is not required to select such routes; instead, the 
worst performing routes preference is one factor in FRA's evaluation of 
the bids submitted.
    As to the filing of bids, Sec.  269.9 requires the Petitioner and 
Amtrak to both file bids with FRA no later than 60 days after the 
petition deadline established by Sec.  269.7(b). Section 269.9(b) 
articulates the bid requirements. The 60-day time period gives a bidder 
sufficient time to prepare a bid that satisfies the bid requirements, 
while also limiting the duration of the bid process.
    One comment stated that a petitioner's failure to submit a bid 
within the timeline established by this final rule should result in an 
automatic disqualification of that party from bidding on the route at 
issue. The comment stated that late bids would defeat what is already a 
short-duration program, and would allow a party to game the process. 
The final rule is clear that under Sec.  269.9 both the petitioner and 
Amtrak must file bids with FRA no later than 60 days after the petition 
deadline established by Sec.  269.7(b). No allowance is made for 
exceptions to this deadline. Furthermore, Sec.  269.13 requires FRA to 
execute a contract with the winning bidder(s) no later than 90 days 
after the bid deadline established by Sec.  269.9.
    Lastly, as to the award and execution of contracts with winning 
bidders, Sec.  269.13 requires FRA to execute a contract with the 
winning bidder(s) no later than 90 days after the bid deadline 
established by Sec.  269.9. Section 214 of PRIIA requires 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 
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 final rule carries 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.
    A comment sought clarification regarding the meaning of the term 
``own'' as it is used in this section (and as it is used in Sec.  
269.7(a) of this final rule). The comment further stated that the party 
responsible for maintenance of such infrastructure under 49 CFR part 
213 should be considered an owner for purposes of this section. 
However, Sec.  214 of PRIIA is clear in that only a rail carrier or 
rail carriers that own such infrastructure may submit a petition under 
the pilot program. See 49 U.S.C. 24711(a)(1). The statute does not 
authorize FRA to expand this statutory directive by allowing a party 
responsible for maintenance of such infrastructure to submit a 
petition. Furthermore, and as noted above, this final rule does not 
prohibit an eligible rail carrier from entering into an agreement with 
a third party (such as an entity that maintains the infrastructure) to 
manage and/or operate the passenger rail service.

Section 269.3 Application

    Paragraph (a) of this section provides that the final rule does 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 paragraph 
is based on the statutory directive in 49 U.S.C. 24711(e). In addition, 
as discussed in Sec.  269.7(a), 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 pilot program will 
not be made available to more than two Amtrak intercity passenger rail 
routes. This paragraph is based on the statutory directive contained in 
49 U.S.C. 24711(b).
    Paragraph (c) of this section provides that any rail carrier or 
rail carriers awarded a contract to provide passenger

[[Page 77719]]

rail service under the pilot program may 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 paragraph is based on the statutory directive contained in 49 
U.S.C. 24711(a)(1). In addition, this paragraph also takes into 
consideration the possibility that the 5-year limitation period 
established in PRIIA is extended by statute.
    Several comments stated that the pilot program should be extended 
to allow for a longer program period (e.g., extending the program to 
five years from the time an award is made), which the comments stated 
would allow pilot program operators to function more efficiently, and 
would be a more appropriate period of time considering the work 
necessary to operate a route. However, as discussed, Sec.  214 of PRIIA 
requires that the pilot program not exceed five years after the date of 
PRIIA's enactment (October 16, 2008). In addition, the final rule does 
take into consideration the possibility that the period established in 
PRIIA may be extended by statute.

Section 269.5 Definitions

    This section contains the definitions for the final rule. This 
section defines 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 defines ``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 defines 
``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 defines ``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 
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 final rule requires bidders to include a financial plan and an 
operating plan--as those terms are defined here--in their bids. These 
definitions will ensure that bids contain sufficient information to be 
evaluated.

Section 269.7 Petitions

    Paragraph (a) of this section provides 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 paragraph is based on the statutory directive contained in 49 
U.S.C. 24711(a)(1). This paragraph does not require that a railroad own 
all of the infrastructure over which Amtrak operates a passenger rail 
service route in order to file a petition.
    Comments sought clarification regarding the routes that are 
eligible under the pilot program (one comment sought confirmation that 
all current non-Northeast Corridor Amtrak-operated routes are eligible 
for the pilot program, whether part of Amtrak's national system or 
State-supported, and regardless of the length of the route). A related 
comment sought clarification regarding the eligibility of routes which 
connected with or utilized Northeast Corridor or other Amtrak-owned 
infrastructure. As discussed above, PRIIA and this final rule provide 
that all of the routes described in 49 U.S.C. 24102(5)(B), (C), and (D) 
and in 49 U.S.C. 24702 are eligible. See 49 U.S.C. 24711(a)(1). 
Amtrak's Northeast Corridor is not eligible for the pilot program. See 
49 U.S.C. 24711(a)(1) (statute does not include 49 U.S.C. 24102(5)(A) 
in the description of eligible Amtrak routes). As noted, FRA will 
examine any agreement(s) necessary for the operation of the proposed 
passenger service over right-of-way on the route that is not owned by 
the petitioning railroad, as described in Sec.  269.9(b)(2) of this 
final rule. This analysis would include any Amtrak-owned infrastructure 
on the route at issue (whether voluntary or pursuant to a Surface 
Transportation Board order under Sec.  217 of PRIIA).
    Another comment asked whether the proposed rule ``exercise[s] any 
jurisdiction'' over the process in which a State enters into a contract 
with a party other than Amtrak to operate a State-supported intercity 
passenger route (or whether such a situation more appropriately falls 
under Sec.  217 of PRIIA). Section 214 of PRIIA does not address this 
issue, nor does this final rule.
    In seeking clarification regarding the meaning of the term 
``passenger rail service route'' as used in Paragraph (a) of this 
section, a comment questioned whether the Chicago-Milwaukee route 21 
Hiawatha is included as part of the route 25 Empire Builder because it 
uses the same trackage, and whether route 25, which has two 
destinations, Seattle and Portland, is one route or two. Determination 
of these site-specific details can only be made in response to specific 
petitions. For this final rule to address every such situation--of 
which the national rail network could present more than one--would add 
needless complexity and would delay the rulemaking process.
    A comment questioned FRA's authority to permit a rail carrier that 
does not own all of the infrastructure on a particular eligible route 
to access that portion of the infrastructure owned by another party. 
This comment misconstrues the proposed rule. Under the NPRM and this 
final rule, a railroad that owns infrastructure over which Amtrak 
operates certain passenger rail service routes may petition FRA. As 
noted, a railroad does not have to own all of the infrastructure over 
which Amtrak operates in order to file a petition. However, in that 
event, FRA would expect the railroad to describe in its bid the 
agreement(s) necessary to operate over right-of-way that is not owned 
by the bidding railroad, in compliance with Sec.  269.9(b) of this 
final rule.
    A comment also stated that a railroad should be able to offer 
service over a shorter route (as compared to the Amtrak route) if the 
omitted section of the route would continue to be provided with service 
by another passenger train. However, Sec.  214 of PRIIA and this final 
rule require that a railroad selected to provide rail passenger service 
over a route under the pilot program must continue 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. See 49 
U.S.C. 24711(c)(1)(A).

[[Page 77720]]

    Paragraph (b) of this section provides 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 paragraph is intended to ensure that a petition 
provides clear notice to FRA.
    Paragraph (c) of this section provides 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 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 provides that FRA will notify Amtrak 
of any eligible petition filed with FRA no later than 30 days after 
FRA's receipt of such petition. This paragraph is based on the 
statutory directive contained in 49 U.S.C. 24711(a)(2).
    A comment stated that Amtrak should be required to provide any 
bidder under the pilot program with route performance information for 
the previous five years (including ridership, passenger-miles, and 
revenues by class of service between each city-pair). However, such a 
requirement is beyond the authority created by Sec.  214 of PRIIA.
    A comment also stated that FRA and Amtrak should work with bidders 
under the pilot program to develop a proposal that is mutually 
beneficial to all parties (e.g., a proposal in which Amtrak continues 
to provide some of its services for the route at issue). The statutory 
mandate sets forth a competitive process in which a railroad and Amtrak 
bid for a route. The statute does not authorize a requirement that 
Amtrak work on a collaborative bid with a railroad that is seeking to 
replace Amtrak.
    A comment sought clarification regarding whether Amtrak is 
restricted to bidding its current fully-allocated financial performance 
under the route profitability system, or whether Amtrak could be 
allowed to propose anything materially different from its current 
performance. That comment went on to state that Amtrak should not be 
able to make a bid materially different from its current fully-
allocated financial and performance metrics and that Amtrak should not 
be able to make a bid based on incremental costs because its overhead 
is devoted to servicing these passenger routes. However, Sec.  214 of 
PRIIA and this final rule are intended to foster improved and more 
competitive passenger rail service. The comment's proposed restrictions 
would stifle innovation and work against that very purpose. Moreover, 
all bidders have an inherent interest in minimizing the cash losses of 
the service in question: Amtrak, because it operates under a limited 
Federal operating grant; and the competing bidder(s), which would need 
to minimize both the subsidy requirement and the cash drain on their 
corporate finances (so as to both win the bid and safeguard their 
profitability). FRA believes that these inherent factors will prohibit 
bids that do not cover their full costs, and in any event, FRA will be 
carefully evaluating all bids for their viability.
    Paragraph (b) of this section describes the bid requirements, 
including a requirement that such bids must be filed with FRA no later 
than 60 days after the petition deadline established by Sec.  269.7. 
Paragraph (b) further provides 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 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 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 PRIIA (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 PRIIA; and the net cash used 
in operating activities per passenger-mile attributable to the route, 
both before and after the application of any expected public 
subsidies). This paragraph is based on the statutory directive 
contained in 49 U.S.C. 24711(a)(3) and (a)(6).
    FRA is making one technical change to the rule text in Paragraph 
(b)(6) in order to permit FRA to better compare and evaluate bids. 
Paragraph (b)(6) provides that a bid must describe how the passenger 
rail service would comply with the financial and performance metrics 
developed pursuant to Sec.  207 of PRIIA, and then proceeds to list 
what that description must include. The last item in that list is the 
net cash used in operating activities per passenger-mile. FRA is making 
one technical change here by further stating that the net cash must be 
both before and after the application of any expected public subsidies. 
This clarification is consistent with the statutory mandate and the 
metrics developed pursuant to Sec.  207 of PRIIA, and allows for FRA to 
be able to compare the net cash numbers provided by Amtrak and a rail 
carrier. See 49 U.S.C. 24711(a)(4).
    Paragraph (c) of this section provides that 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 submitted to FRA. This 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 provides that FRA will select a winning bidder by 
evaluating the bids against the financial and

[[Page 77721]]

performance metrics developed under section 207 of PRIIA 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. This 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 provides that FRA will execute a 
contract with the winning bidder(s) consistent with the requirements of 
Sec.  269.13 and as FRA may otherwise require, no later than 90 days 
after the bid deadline established by Sec.  269.9(b). This paragraph 
also provides that FRA will provide timely notice of these selections 
to all petitioners and to Amtrak. This paragraph is based on the 
statutory directive contained in 49 U.S.C. 24711(a)(5).
    Paragraph (b) of this section provides that, among other things, 
such a contract will: (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 paragraph is 
based on the statutory directive contained in 49 U.S.C. 24711(a)(5), 
(c)(1), and (c)(4).
    A comment stated that FRA should mandate contractual provisions for 
liability and insurance that are consistent for all parties. However, 
the statutory mandate does not authorize such a requirement. It should 
be noted that Sec.  214 and this final rule do require that a winning 
bidder under the pilot program shall be subject to the grant conditions 
under 49 U.S.C. 24405. See 49 U.S.C. 24711(c)(4). One requirement under 
49 U.S.C. 24405(c)(1)(D) is compliance with the liability requirements 
consistent with 49 U.S.C. 28103, which among other things limits rail 
passenger transportation liability.
    Paragraph (c) of this section provides that the winning bidder will 
make their staffing plan, submitted as required by Sec.  269.9(b)(4), 
available to the public after the bid award. This 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 provides that, if an award under 
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 Sec.  217 of PRIIA, necessary to carry out 
the purposes of the final rule. This paragraph is based on the 
statutory directive contained in 49 U.S.C. 24711(c)(2).
    A comment stated that the rolling stock, stations, and reservation 
systems that Amtrak uses need to be available to pilot program 
operators at no cost. As discussed, Sec.  214 of PRIIA requires that 
Amtrak provide access to its reservation system, stations, and 
facilities. See 49 U.S.C. 24711(c)(2). However, Sec.  214 does not 
authorize FRA to require Amtrak to provide such access at no cost.
    A comment sought clarification regarding how FRA would establish an 
equitable cost basis for third party access to Amtrak's reservation 
system, stations, and facilities in a timely manner. As required by 
statute and this final rule, Amtrak is required to provide such access 
in accordance with Sec.  217 of PRIIA, which provides a process by 
which a cost is agreed upon by the parties. See 49 U.S.C. 24711(c)(2).
    A comment also sought clarification as to whether such access 
includes access to services provided by Amtrak employees, including 
reservation agents, redcaps, gate agents, Qualified Maintenance Persons 
or Qualified Persons. The statute and this final rule only provide that 
Amtrak shall be required to provide access to its reservation system, 
stations, and facilities; the statute does not authorize access to 
services performed by Amtrak employees.
    A comment stated that Amtrak should not be able to prevent 
operation of a route by a private rail carrier by withholding services 
directly related to Amtrak's control of its facilities, stations, or 
reservation systems. FRA agrees that Amtrak must comply with the 
requirements of the statute and this final rule. In providing access to 
its reservation system, stations, and facilities, Amtrak would need to 
allow the third-party to successfully use the reservation system, 
stations and facilities.
    A comment sought clarification regarding whether the term 
``facilities'' as used in paragraph (a) of this section encompasses 
Amtrak's contracted right to use facilities it does not own and 
provided the hypothetical example of whether a bidder for the Vermonter 
route would have access to the portion of the Northeast Corridor 
between New Haven and New York City owned by Metro North. That comment 
went on to state that the definition should be broad and should 
encompass all facilities to which Amtrak has access through ownership, 
lease or contract. Section 214 of PRIIA does not authorize such a broad 
definition. Putting aside circumstances in which Amtrak owns the 
infrastructure and Sec.  217 of PRIIA may apply, neither the statute 
nor this final rule require that owners of right-of-way not owned by a 
bidding railroad must provide access to their infrastructure. As 
described above, pursuant to the statutory mandate, the pilot program 
developed by this final rule only permits a rail carrier or rail 
carriers that own infrastructure to petition FRA. In the event that a 
bidder does not own all of the infrastructure on the route, the bid 
must describe the operating agreements necessary for operation on the 
right-of-way not owned by the railroad.
    Paragraph (b) of this section provides that the employees of any 
person used by a rail carrier in the operation of a route under the 
final rule will 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 paragraph is 
based on the statutory directive contained in 49 U.S.C. 24711(c)(3).
    Paragraph (c) of this section provides that a winning bidder will 
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 paragraph is based on the statutory directive 
contained in 49 U.S.C. 24711(c)(4).

Section 269.17 Cessation of Service

    This section provides that, if a rail carrier awarded a route under 
this rule ceases to operate the service or fails to

[[Page 77722]]

fulfill its obligations under the contract required under 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 provides that the entity providing service would either 
be Amtrak or a rail carrier eligible for the pilot program under Sec.  
269.7. This 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 final rule has been evaluated in accordance with existing 
policies and procedures and determined to be non-significant under 
Executive Orders 12866 and 13563, and U.S. Department of Transportation 
(DOT) policies and procedures. See 44 FR 11034; February 26, 1979. FRA 
has prepared and placed in the docket a regulatory impact analysis 
(RIA) addressing the economic impact of this final 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 a RIA, FRA generally assesses quantitative measurements 
of the cost and benefit streams expected to result from the adoption of 
a rule. However, in this case, due to the limited number of routes that 
can be awarded under the pilot program (only two routes can be 
awarded), and the short timeframe in which this pilot program will 
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 will be triggered for Amtrak if one or 
more alternative service providers bid on a route(s). For informational 
purposes, FRA included in the RIA appendices detailing 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). Non-
Amtrak railroads that participate voluntarily will do so because they 
consider the benefits to exceed the costs. Thus, any participation will 
be net-beneficial with respect to the voluntary participant. Any costs 
to Amtrak are regulatory costs incurred solely due to the requirements 
of this final rule, and will primarily be associated with costs 
associated with developing bids.
    Given that this pilot program is voluntary for alternate service 
providers and is not currently funded by Congress, FRA estimates that 
this regulation will 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 final 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 final rule, the purpose of this 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 5 years after the 
date of enactment of the Passenger Rail Investment and Improvement Act 
of 2008 (PRIIA). The final rule develops 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 of Transportation certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Pursuant to Section 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. Title 49 Code of Federal Regulations CFR Part 
209, Appendix 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 will not be directly impacted by this final rule.
Rationale for Choosing Regulatory Action and Legal Authority
    FRA is initiating this final rule in response to a statutory 
mandate set forth in Section 214 of the 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 5 years after the 
date of enactment of the PRIIA. This final rule develops this pilot 
program in conformance with the statutory directive.
Description of Regulated Entities and Impacts
    This final rule is 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

[[Page 77723]]

receipts of less than $7 million. 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 formula in accordance with 49 CFR 
1201.1-1. FRA is using this definition for the final 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 regulation, 49 CFR Part 269, 
Alternate Passenger Rail Service Pilot Program. FRA believes that the 
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 not currently available will be available for the 
program. FRA does not anticipate that any small railroads will be 
interested in taking over such an existing, eligible Amtrak route.
Criteria for Substantial Number
    This regulation is voluntary for all rail carriers, except Amtrak, 
which will 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 regulation will 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 final rule will 
not have a significant economic impact on a substantial number of small 
entities is that the pilot program is voluntary for all rail carriers 
except Amtrak; and no small entities are anticipated to apply. 
Therefore, this regulation is not expected to have a significant 
economic impact on a substantial number of small entities.
    FRA notes that this 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 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 will 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 invited comments from all interested parties on this 
certification. FRA also requested comments on the regulatory impact 
analysis and its underlying assumptions. FRA particularly encouraged 
small entities that could potentially be impacted by the proposed 
regulation to participate in the public comment process by submitting 
comments on this assessment or this rulemaking to the official DOT 
docket. Although FRA received comments on the proposed rule, none were 
related to either economic analysis.
Certification
    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA 
certifies that this final rule will not have a significant economic 
impact on a substantial number of small entities. The final rule does 
not require, or otherwise impose, any requirements upon any small 
entities. Instead, this final rule develops a pilot program under which 
an eligible small entity may voluntarily elect to participate. 
Furthermore, the final rule establishes a very limited pilot program 
that applies to no more than two Amtrak routes.

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 
final 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 final rule 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 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 final rule that might trigger the need for a more detailed 
environmental review. As a result, FRA finds that this final rule 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

[[Page 77724]]

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 final rule in accordance with the principles 
and criteria contained in Executive Order 13132. This final rule will 
not have a substantial direct 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 final rule will not impose substantial direct 
compliance costs on State and local governments. Therefore, the 
consultation and funding requirements of Executive Order 13132 do not 
apply. As explained, FRA has determined that this final rule has no 
federalism implications. Accordingly, FRA has determined that 
preparation of a federalism summary impact statement for this final 
rule is not required.

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 one 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 final rule will 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 final rule in accordance with Executive Order 
13211. FRA has determined that this final rule is not likely to have a 
significant adverse effect on the supply, distribution, or use of 
energy. Consequently, FRA has determined that this final rule 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 Rule

    For the reasons discussed in the preamble, FRA amends chapter II, 
subtitle B of title 49, Code of Federal Regulations, by adding 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. 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 emailed 
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

[[Page 77725]]

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 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) of this part.
    (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) of 
this part using the following method: email 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 of this part using the following method: 
email 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) of this 
part;
    (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 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 (both before and after 
the application of any expected public subsidies) 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 section 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) of this part. 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 section 207 of the Act, for a duration consistent with Sec.  
269.3(c) of this part;
    (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,

[[Page 77726]]

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 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) of this part 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 of this 
part 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 section 217 of the Act, necessary to 
carry out the purposes of this part.
    (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 section 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 of this part, 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 
of this part.

    Issued in Washington, DC, on December 7, 2011.
Joseph C. Szabo,
Administrator, Federal Railroad Administration.
[FR Doc. 2011-31990 Filed 12-13-11; 8:45 am]
BILLING CODE 4910-06-P


