
[Federal Register Volume 82, Number 129 (Friday, July 7, 2017)]
[Rules and Regulations]
[Pages 31476-31489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-14355]


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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 269

[Docket No. FRA-2016-0023; Notice No. 4]
RIN 2130-AC60


Competitive 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 implements a pilot program for competitive 
selection of eligible petitioners in lieu of Amtrak to operate not more 
than three long-distance routes operated by Amtrak. The final rule is 
required by statute.

DATES: This final rule is effective on September 5, 2017.

FOR FURTHER INFORMATION CONTACT: Brandon White, Office of Railroad 
Policy and Development, FRA, 1200 New Jersey Ave. SE., Washington, DC 
20590, (202) 493-1327, or Zeb Schorr, Office of Chief Counsel, FRA, 
1200 New Jersey Ave. SE., Mail Stop 10, Washington, DC 20590, (202) 
493-6072.

SUPPLEMENTARY INFORMATION: 

I. Background

a. Executive Summary of Final Rule

    This final rule implements a pilot program for competitive 
selection of eligible petitioners in lieu of Amtrak to operate not more 
than three long-distance routes (as defined in 49 U.S.C. 24102), and 
operated by Amtrak on the date of enactment of the Passenger Rail 
Reform and Investment Act of 2015 (title XI of the Fixing America's 
Surface Transportation (FAST) Act, Pub. L. 114-94, 129 Stat. 1312, 
1660-1664 (2015)). The final rule establishes a petition, notification, 
and bid process by which FRA will evaluate, and ultimately select, bids 
to provide passenger rail service over particular long-distance routes. 
The final rule also, among other things, addresses FRA's execution of a 
contract with the winning bidder awarding the right and obligation to 
provide intercity passenger rail service over the route, along with an 
operating subsidy, subject to the 49 U.S.C. 24405 grant conditions and 
such performance standards as the Secretary of Transportation 
(Secretary) may require.

b. Procedural History

    By notice of proposed rulemaking (NPRM) published on June 22, 2016 
(81 FR 40624), FRA proposed a competitive passenger rail service pilot 
program in response to a statutory mandate in section 11307 of the FAST 
Act. In response to a request for a public hearing, FRA held a public 
hearing on September 7, 2016. FRA also extended the comment period for 
the NPRM to October 7, 2016 to allow time for interested parties to 
submit written comments in response to information provided at the 
public hearing.
    FRA received comments from the American Association of Private 
Railroad Car Owners, the Association of Independent Passenger Rail 
Operators, the National Association of Railroad Passengers, Herzog 
Transit Services, Corridor Capital, Iowa Pacific Holdings, Florida East 
Coast Industries, Erie Lackawanna Railroad, the North Carolina 
Department of Transportation, the National Railroad Passenger 
Corporation (Amtrak), the Brotherhood of Maintenance of Way Employees 
Division/International Brotherhood of Teamsters, the Brotherhood of 
Railroad Signalmen, the International Association of Sheet Metal, Air, 
Rail, and Transportation Workers/Mechanical Division, the 
Transportation Trades Department of the American Federation of Labor-
Congress of Industrial Organizations, and one individual.
    Comments are addressed in the preamble. Some comments were 
generally supportive of the NPRM, and other comments were generally 
unsupportive of the NPRM.

c. Timelines Established by the Final Rule

    The final rule establishes deadlines for filing petitions, filing 
bids, and the execution of contract(s) with winning bidders.
    As to the filing of petitions, Sec.  269.7(b) of the final rule 
requires the filing of a petition with FRA no later than 180 days after 
the effective date of the final rule implementing the pilot program 
(petition window). In the NPRM, FRA proposed a 60 day petition window 
from the publication of the final rule. Several commenters stated the 
proposed 60 day petition window should be extended to 120 or 180 days. 
Other commenters stated the petition window should remain 60 days. 
Still other commenters stated the petition window should be eliminated 
and the pilot program should remain available indefinitely.
    After careful consideration of these comments, the final rule 
establishes a 180 day petition window, balancing the need for 
sufficient time to produce quality petitions and bids with the desire 
to encourage competition and efficiently use Federal and Amtrak 
resources. This extended time period will ensure an eligible petitioner 
has an adequate amount of time to file a petition. It is important to 
also note the final rule establishes the effective date of the final 
rule as the trigger for the 180 day period (rather than the date the 
final rule is published, as proposed in the NPRM). This change 
effectively gives eligible petitioners 60 more days (in addition to the 
180 days) to file a petition. The final rule does not adopt the 
suggestion of some commenters that the pilot program be ``evergreen.'' 
First, the FAST Act does not require the pilot program to remain 
available indefinitely. Second, an evergreen pilot program may unduly 
burden the FRA and Amtrak by imposing an indefinite regulatory burden 
to maintain program readiness. Finally, FRA believes competition is 
best fostered by a limited duration petition window allowing FRA to 
evaluate multiple bidders competing for the same route.
    When an eligible petitioner files a petition, under Sec.  269.9(a) 
of the final rule, FRA will notify the petitioner and Amtrak of receipt 
of the petition, and publish a notice of receipt in the Federal 
Register, not later than 30 days after receipt. See 49 U.S.C. 
24711(b)(1)(B)(i).
    Section 269.9(b) of the final rule addresses the filing of bids. 
This section requires both the bidder and Amtrak, if Amtrak so chooses, 
to submit complete bids to FRA not later than 120 days after

[[Page 31477]]

FRA publishes a notice of receipt in the Federal Register under Sec.  
269.9(a).
    As to the award and execution of contracts with winning bidders 
(who are not or do not include Amtrak), Sec.  269.11(b)(1) of the final 
rule first requires FRA to publish a notice for public comment for 30 
days in the Federal Register announcing the selection. Section 
269.13(a) then requires FRA to execute a contract with a winning bidder 
not later than 270 days after the Sec.  269.9(b) bid deadline.
    A commenter stated FRA should notify Amtrak of the date when the 
winning bidder's service will replace Amtrak's service on the affected 
route. The commenter recommended requiring a minimum 210-day notice 
period to allow Amtrak sufficient time to notify impacted employees, 
suppliers, and passengers. As discussed, Sec.  269.11(b)(1), consistent 
with the requirements of the FAST Act, requires FRA to publish a notice 
identifying the winning bidder and the route, among other things, for 
public comment for 30 days.
    In addition, the FAST Act, and this final rule, requires FRA to 
execute a contract with a winning bidder not later than 270 days after 
the bid deadline Sec.  269.9 establishes. The NPRM did not specifically 
address when a winning bidder would assume operation of a route. The 
precise timing of a new operation will depend upon the winning bidder's 
readiness to assume operations, the availability and amount of an 
operating subsidy, as well as the resolution of logistics associated 
with a change in operator. It may be most appropriate for the new 
operator to begin operations at the beginning of a new Federal fiscal 
year, which would facilitate both the payment of the operating subsidy, 
if one is requested and available, and FRA's efficient administration 
of the pilot program. FRA will work with the winning bidder and Amtrak 
to identify a safe, timely, and reasonable date on which the winning 
bidder will assume operations.

d. Operating Subsidy

    The FAST Act requires the Secretary to award an operating subsidy 
to a winning bidder that is not or does not include Amtrak (although a 
bidder may elect to not receive an operating subsidy). 49 U.S.C. 
24711(b)(1)(E)(ii). Specifically, the operating subsidy, as determined 
by the Secretary, is for the first year at a level that does not exceed 
90 percent of the level in effect for that specific route during the 
fiscal year preceding the fiscal year the petition was received, 
adjusted for inflation, and any subsequent years under the same 
calculation, adjusted for inflation.
    In addition, the FAST Act requires FRA to provide to Amtrak an 
appropriate portion of the applicable appropriations to cover any cost 
directly attributable to the termination of Amtrak service on the route 
and any indirect costs to Amtrak imposed on other Amtrak routes as a 
result of losing service on the route operated by the winning bidder. 
49 U.S.C. 24711(e)(2). Any amount FRA provides to Amtrak under the 
prior sentence would not be deducted from, or have any effect on, the 
operating subsidy 49 U.S.C. 24711(b)(1)(E)(ii) requires.
    Consistent with the requirements of the FAST Act, Sec.  
269.13(b)(1) of the NPRM required FRA to award to a winning bidder that 
is not or does not include Amtrak an operating subsidy ``as determined 
by FRA'' for the first year at a level that does not exceed 90 percent 
of the level in effect for that specific route during the fiscal year 
preceding the fiscal year in which the petition was received, adjusted 
for inflation.
    Commenters requested more clarity on FRA's determination of the 
operating subsidy amount. Because the operating portion of FRA's annual 
grant to Amtrak's National Network is the authorized source of funding 
for the operating subsidy, only cost categories associated with the 
operating portion of Amtrak's grant are eligible costs for the 
operating subsidy under this pilot program. Consequently, Sec.  
269.13(b)(1) of the final rule states the operating subsidy is based on 
Amtrak's publically-reported fully-allocated operating costs of the 
route for the prior fiscal year, excluding costs related to Other 
Postretirement Employee Benefits (OPEB's), Amtrak Performance Tracking 
System (APT) Asset Allocations, Project Related Costs, and Amtrak 
Office of Inspector General activities. This data is publicly available 
on Amtrak's Web site in a comprehensive Monthly Performance Report (the 
final audited September report contains information for the entire 
fiscal year). Amtrak also reports this data to Congress and the 
Secretary in the monthly National Railroad Passenger Corporation 
Progress Report.
    To avoid confusion, FRA will post, and update as necessary, the 
calculation and maximum subsidy amount available for each route based 
on the most recent full fiscal year data available on its Web site. For 
subsequent fiscal years, FRA will award the same operating subsidy, 
adjusted for inflation, again subject to the availability of 
Congressional appropriations. FRA will also provide the operating 
subsidy calculations for each long-distance route on the FRA Web site 
for reference by eligible petitioners.
    One commenter questioned the accuracy of Amtrak's fully-allocated 
route costs, favoring instead reporting of variable costs by route at a 
detailed account level. FRA disagrees. Fully allocated costs are a 
component of the cost accounting methodology formed by the creation of 
APT, a statutorily mandated system developed by FRA, in close 
collaboration with Amtrak. Amtrak has used APT effectively since 2009 
to assign costs at a route level. While an untested, non-public measure 
may provide different detail, the utility of publically available data 
that best aligns with Amtrak's grant is most appropriate here.
    Commenters stated FRA should ensure it is using consistent, 
accurate financial data and that bidders should have access to actual, 
fully-allocated route costs for the five most recent years Amtrak 
operated the service. Amtrak has included the publicly reported fully-
allocated operating costs in the Monthly Performance Report for at 
least the past five years, though reports are only posted for one year 
following publication. Using archived copies of these reports, FRA will 
post on its Web site Amtrak's fully allocated operating loss for each 
Long Distance route since FY2012.
    Commenters also stated FRA should provide more detail about the 
costs comprising the total operating subsidy, including route specific 
costs. Another commenter, on the other hand, objected to the disclosure 
of Amtrak's route specific information. FRA declines to provide the 
more detail requested. FRA notes that the summary financial results 
reported in Amtrak's Monthly Performance Reports list actual costs on a 
system-wide basis across various revenue and expense categories. In 
addition, FRA believes a bidder should base its costs on its own needs 
and business case, rather than Amtrak route specific information.
    Some commenters suggested FRA include interest and depreciation 
costs in the operating subsidy to account for equipment related 
expenses associated with operating the service. Another commenter 
stated the operating subsidy should exclude capital costs, 
depreciation, and other non-cash costs. The final rule does not include 
depreciation and interest costs in the formulation of the operating 
subsidy. This approach is consistent with the operating portions of 
FRA's annual grants to Amtrak for the Northeast Corridor and National 
Network accounts, which do not include Amtrak

[[Page 31478]]

rolling stock depreciation or interest-incurring debt.
    A commenter stated FRA should ensure any award to a winning bidder 
is consistent with the objective of reducing Federal funding 
requirements for long distance routes. FRA will make judicious 
operating subsidy determinations to ensure the efficient use of Federal 
funds.
    A commenter also stated FRA should address how it will reimburse 
costs that non-Amtrak service sponsors may incur. FRA is not authorized 
under the FAST Act to directly reimburse sponsors of Amtrak service. As 
discussed, the FAST Act directs the Secretary to provide Amtrak an 
appropriate portion of the applicable appropriations to cover any cost 
directly attributable to the termination of Amtrak service on the route 
and any indirect costs to Amtrak imposed on other Amtrak routes as a 
result of losing service on the route operated by the winning bidder. 
See 49 U.S.C. 24711(e)(2).
    A commenter sought clarity regarding the basis upon which FRA may 
not provide funding to a winning bidder. FRA is not authorized to 
provide funding in excess of appropriated levels. The FAST Act 
authorizes the Secretary to fund the operating subsidy by withholding 
such sums as are necessary from the amount appropriated to the 
Secretary for the use of Amtrak for activities associated with Amtrak's 
National Network. FAST Act sec. 11101(e). However, if Congress does not 
appropriate funds in a manner so as to allow the Secretary to pay an 
operating subsidy under this pilot program, then the Secretary cannot 
award an operating subsidy to a winning bidder. In other words, the 
award of any operating subsidy to a winning bidder is subject to the 
availability of funding. Accordingly, the Secretary's contract with a 
winning bidder will not award an operating subsidy unless the award is 
authorized by both the FAST Act and the applicable appropriations act. 
In addition, the Secretary will award the operating subsidy to the 
winning bidder annually and, again, only as authorized by the FAST Act 
and the applicable appropriations act (i.e., the Secretary will not 
award all four years of the operating subsidy at one time).
    A commenter expressed concern that, in the event Congress reduces 
Amtrak appropriations, a winning bidder may receive disproportionately 
less subsidy as compared to the services remaining with Amtrak. Subject 
to the availability of funding for long distance services, FRA will 
award an operating subsidy to a winning bidder that is the same amount, 
adjusted for inflation, throughout the term of the contract.

e. Agreements With Infrastructure Owners

    Under the FAST Act, an entity may only be an eligible petitioner 
for this pilot program if it owns the relevant rail infrastructure or 
has a ``written agreement'' with the relevant rail infrastructure owner 
(in addition to meeting the other eligible petitioner requirements 
discussed elsewhere in this preamble). 49 U.S.C. 24711(b)(3). The FAST 
Act also requires a winning bidder who does not own the relevant 
infrastructure to enter into a ``written agreement governing access 
issues'' with the owners of such infrastructure. 49 U.S.C. 24711(b)(5).
    Section 269.9(b)(2)(i) of the NPRM required a bid to include any 
applicable agreement(s) necessary for the operation of passenger 
service over right-of-way on the route that is not owned by the bidder. 
The NPRM did not address the nature of the ``written agreement'' 
necessary for an entity to submit a petition under Sec.  269.7(b).
    Because a ``written agreement'' is an eligibility requirement for 
many potential petitioners, Sec.  269.7(b)(4) of the final rule 
requires an eligible petitioner to include, in its petition, agreements 
with all entities that own or control infrastructure on the long-
distance route or routes over which the eligible petitioner wants to 
provide intercity passenger rail transportation. However, these written 
agreements are not required to completely address infrastructure 
access; rather, they must demonstrate the infrastructure owner's 
support for the petition.
    In addition, like the NPRM, Sec.  269.9(b)(2)(i) of the final rule 
then requires a bidder to submit, in its bid package, executed 
agreement(s) necessary for the operation of passenger service over 
right-of-way on the route that is not owned by the bidder.
    Several comments sought further clarity on the meaning of the term 
``written agreement.'' One commenter stated a petitioner should submit 
written agreements with each rail carrier that owns or controls any 
infrastructure along the route, with their petition filed under Sec.  
269.7(b), and such agreements should address the petitioner's ability 
to access the infrastructure necessary for the operation of the 
petitioned route. Other commenters stated that negotiating the detailed 
terms of such access agreements take a long time, and instead proposed 
that, when submitting a petition, a petitioner should only need to 
submit a written agreement in which the infrastructure owners express a 
willingness to enter into a good faith discussion with the bidder.
    FRA generally agrees with the latter commenters. Specifically, to 
ensure the efficient use of FRA and Amtrak resources, and recognizing 
the challenges executing agreements that completely address 
infrastructure access, as discussed, the final rule requires a petition 
to include agreements with all entities that own or control 
infrastructure on the long-distance route or routes over which the 
eligible petitioner wants to provide intercity passenger rail 
transportation. As described, these agreements are not required to 
completely address infrastructure access; rather, they must demonstrate 
the infrastructure owner's support for the petition. As noted, the 
final rule also requires an eligible petitioner to submit, as part of 
the bid package, executed agreement(s) necessary for the operation of 
passenger service over right-of-way on the route that is not owned by 
the eligible petitioner.
    Some commenters expressed concern Amtrak, as an owner of 
infrastructure on most of the long distance routes, could refuse to 
enter into access agreements with eligible petitioners. However, in the 
event of such a dispute, the statute and the final rule make clear the 
Surface Transportation Board (STB) may require Amtrak to provide access 
to Amtrak facilities if such access is necessary to operate the pilot 
route. 49 U.S.C. 24711(g). Access to Amtrak-owned facilities, among 
other things, is discussed elsewhere in this preamble.
    Lastly, several commenters stated an eligible petitioner could 
develop an operating plan that contracts with Amtrak to provide 
operating crews and uses Amtrak's existing access agreement, as long as 
the infrastructure owners agreed with the operating plan. FRA 
disagrees. First, private partnerships between Amtrak and third parties 
may of course occur outside of this pilot program, and, are, in fact 
encouraged by section 216 of PRIIA and 49 U.S.C. 24101. Second, the 
FAST Act does not authorize an eligible petitioner to use Amtrak's 
right to access infrastructure owned by a third party. See 49 U.S.C. 
11307(b)(5) (requiring a winning bidder to enter into a written 
agreement governing access with the relevant infrastructure owners); 49 
U.S.C. 11307(b)(3) (defining a petitioner as eligible where it owns the 
infrastructure or has a written agreement with a rail carrier that owns 
the infrastructure); and 49 U.S.C. 11307(j) (stating that nothing in 
section 11307 shall affect Amtrak's access rights to railroad rights-
of-way and facilities).

[[Page 31479]]

Finally, the FAST Act states the requirement that the Secretary award 
an operating subsidy to a winning bidder ``shall not apply to a winning 
bidder that is or includes Amtrak.'' 49 U.S.C. 11307(b)(2). In other 
words, a bidder who is partnering with Amtrak to provide a service 
under the pilot program would not be entitled to an operating subsidy 
award under the pilot program.

f. Level of Service

    Section 269.9(b)(1) of the final rule, in part, requires a bidder 
to provide FRA with sufficient information to evaluate the level of 
service described in the bid. In addition, Sec.  269.13(b)(4) requires 
a winning bidder to provide intercity passenger rail transportation 
over the route that is no less frequent, nor over a shorter distance, 
than Amtrak provided on the route.
    One commenter stated the final rule should provide that, upon 
request, the Secretary would make available a detailed and specific 
definition of Amtrak's level of service for any route subject to the 
pilot program. FRA disagrees. As described, the final rule requires, at 
minimum, a winning bidder to provide a level of service that is no less 
frequent, nor over a shorter distance than Amtrak provided on the 
route. See 49 CFR 269.13(b)(4). The frequency and distance of Amtrak's 
long-distance routes is publically available. It is important to note, 
as described in Sec.  269.9(b)(1), beyond the frequency and distance 
requirements, FRA's bid evaluations will take into account all aspects 
of service described in the bid.
    Several commenters stated the final rule should allow a bidder to 
operate alternate service alignments between the endpoints of a route. 
Similarly, a commenter stated the final rule should allow a bidder to 
vary the schedule and services of the particular train. One other 
commenter, on the other hand, stated a winning bidder must serve all of 
the same stations Amtrak currently serves on the route. The final rule 
does not prohibit a bidder from proposing to operate an alternate 
alignment between the endpoints of a route. However, a bid proposing 
the relocation, elimination, or addition of a station at which the 
service will stop should be accompanied by evidence of significant 
support from the communities impacted by such changes so FRA may 
understand and evaluate the proposed service.
    A commenter stated FRA should favorably weight bids that maintain 
existing connections with other intercity passenger trains and buses to 
promote the national passenger train and connecting intercity bus 
network. A commenter also stated the final rule should encourage 
innovative ideas, including enhanced food and beverage service, and 
improved connectivity and amenities. As stated, FRA's bid evaluations 
will take into account all aspects of service described in the bid. 49 
CFR 269.9(b)(1).
    Finally, one commenter stated the final rule should expand the 
pilot program to discontinued Amtrak long distance routes. However, the 
FAST Act limits the pilot program to the long distance routes defined 
in 49 U.S.C. 24102 and operated by Amtrak on the date of enactment of 
the FAST Act. See 49 U.S.C. 24711(a).

g. Performance Standards

    The FAST Act requires a winning bidder to, at a minimum, meet the 
performance ``required of or achieved by Amtrak on the applicable route 
during the last fiscal year'' and subjects any award to a winning 
bidder ``to such performance standards.'' 49 U.S.C. 24711(b)(1)(E)(i) 
and (b)(4). In addition, the FAST Act authorizes the Secretary to 
require performance standards above that achieved by Amtrak. 49 U.S.C. 
24711(b)(1)(E)(i). The final rule requires bidders to describe how the 
passenger rail service would meet or exceed the performance required of 
or achieved by Amtrak on the applicable route during the last fiscal 
year, and states that, at a minimum, the description must include, for 
each Federal fiscal year fully or partially covered by the bid, a 
projection of the route's expected Passenger Miles per Train Mile, End-
Point and All Stations On-Time Performance, Host Railroad and Operator 
Responsible Delays per 10,000 train miles, Percentage of Passenger 
Trips to/from Underserved Communities, Service Interruptions per 10,000 
Train Miles due to Equipment-Related Problems, and customer service 
quality. 49 CFR 269.9(b)(9). Likewise, the final rule conditions the 
operating subsidy rights upon the winning bidder's compliance with 
performance standards FRA may require, but which, at a minimum, must 
meet or exceed the performance required of or achieved by Amtrak on the 
applicable route during the fiscal year immediately preceding the year 
the bid is submitted. 49 CFR 269.13(b)(5).
    Commenters sought additional clarity on the performance standards 
and, in particular, how FRA would evaluate the performance of a winning 
bidder. To determine whether a winning bidder has met or exceeded the 
performance achieved by Amtrak on the applicable route during the last 
fiscal year, as required by the FAST Act, FRA will require a winning 
bidder to report the performance standards discussed in the previous 
paragraph to FRA on a quarterly basis. These performance categories are 
available publically in the Quarterly Report on the Performance and 
Service Quality of Intercity Passenger Train Operations available on 
FRA's Web site. Additionally, a winning bidder must also provide a 
monthly ridership report to FRA. Finally, a bidder must explain in its 
bid submission how it will achieve and report on these performance 
standards.
    A commenter stated FRA should define, or otherwise make available, 
the Amtrak performance standards achieved on each long-distance route. 
This data is publicly available on FRA's Web site in the Quarterly 
Reports on the Performance and Service Quality of Intercity Passenger 
Train Operations.
    One commenter stated the final rule should impose performance 
standards on Amtrak if it submits a bid. Another commenter stated, on 
the other hand, FRA is not authorized to impose such standards on 
Amtrak. The FAST Act does not require the imposition of performance 
standards on Amtrak. However, if Amtrak submits a bid and is selected, 
then Amtrak should comply with the performance standards described in 
the bid.
    Lastly, a commenter stated the final rule should require Amtrak to 
identify future savings or new revenues if their counterbid is lower 
than Amtrak's current route costs. FRA does not believe the final rule 
needs to specifically require Amtrak to produce such information. 
Section 269.9(b) requires bidders and Amtrak to submit bids containing 
a financial plan, among other requirements, which enables FRA to fully 
evaluate the bids. Furthermore, if FRA does not receive sufficient 
information, FRA may request supplemental information from the bidder 
and/or Amtrak under Sec.  269.9(c).

h. Access

    Section 24711(c) of the FAST Act requires Amtrak, if necessary to 
carry out the purposes of the pilot program, to provide access to the 
``Amtrak-owned reservation system, stations, and facilities directly 
related to operations of the awarded routes to the eligible petitioner 
awarded a contract.'' Section 24711(g) further provides, in the event 
Amtrak and the winning bidder cannot agree upon the terms of such 
access, either party may petition the STB to determine ``whether access 
to Amtrak's facility or equipment, or the provisions of services by 
Amtrak is necessary . . . and whether the operation of Amtrak's other 
services will not be unreasonably

[[Page 31480]]

impaired by such access.'' Section 24711(g) goes on to provide, if the 
STB determines such access is necessary and Amtrak's other services 
will not be unreasonably impaired, then the STB must issue an order 
requiring Amtrak ``to provide the applicable facilities, equipment, and 
services . . . and determine[] reasonable compensation, liability, and 
other terms for the use of the facilities and equipment and the 
provision of the services.''
    The final rule provides, consistent with the FAST Act and the NPRM, 
if an award is made to a bidder other than Amtrak, Amtrak must provide 
access to the Amtrak-owned reservation system, stations, and facilities 
directly related to operations of the awarded route(s) to the bidder. 
49 CFR 269.15(a). For additional clarity, the final rule added a 
sentence stating that, if Amtrak and the eligible petitioner awarded a 
route cannot agree on the terms of access, then either party may 
petition the STB under 49 U.S.C. 24711(g). 49 CFR 269.15(a).
    Commenters sought clarity regarding the meaning of the term 
``facilities.'' One commenter stated ``facilities'' should include 
coach yards, repair shops, and Amtrak-owned track. FRA understands the 
term ``facilities'' to include Amtrak-owned coach yards, repair shops, 
and track. A commenter also stated the final rule should require Amtrak 
to provide access to ``Amtrak controlled'' track. However, the FAST Act 
only authorizes access for ``Amtrak-owned'' facilities. 49 U.S.C. 
24711(c)(1).
    Several commenters stated the final rule should require Amtrak to 
provide access to Amtrak-owned rolling stock. As stated, section 
24711(c)(1) of the FAST Act specifically requires Amtrak to provide 
access to the ``Amtrak-owned reservation system, stations, and 
facilities,'' but it does not reference rolling stock. However, section 
24711(g) states the STB may adjudicate disputes regarding whether 
Amtrak should be required to provide services or equipment. As such, 
either party may petition the STB for a determination about the 
necessity of access to Amtrak-owned equipment (to include rolling 
stock), among other things.
    At least one commenter stated Amtrak's statutory right to access 
track is a ``facility'' and, therefore, Amtrak should be required to 
provide its access rights to a winning bidder. Another commenter stated 
FRA should invoke Amtrak's statutory right to access track on behalf of 
a winning bidder. FRA disagrees with both comments. Amtrak's right to 
access track is not transferrable unless specifically authorized by 
law. See Application of Nat'l R. Passenger Corp. Under 49 U.S.C. 
24308(a)--Springfield Terminal R. Co., Boston & M. Corp. and Portland 
Terminal Co., 3 S.T.B. 157 (1998) (stating the ``access rights that the 
Act allows us to grant to Amtrak belong only to Amtrak and may not be 
transferred to a third party `successor or assign' unless the Act or 
some other provision of law specifically provides otherwise.''). Here, 
section 24711(j) of the FAST Act states nothing in the pilot program 
``shall affect Amtrak's access rights to railroad rights-of-way and 
facilities.''
    Similarly, a commenter stated the final rule should allow an 
eligible petitioner to use Amtrak train and engine crews to access 
track via the existing Amtrak access agreement with the host railroad. 
A commenter also stated Amtrak should be required to provide Amtrak 
train crews to a bidder, as it would constitute a ``provision of 
services'' allowed under section 24711(g)(1)(A) of the FAST Act. First, 
as discussed, Amtrak's right to access track may not be transferred 
under this pilot program. Further, a bidder who is partnering with 
Amtrak to provide a service under the pilot program would not be 
entitled to an operating subsidy award under the pilot program. The 
FAST Act makes clear that an operating subsidy is only available to a 
winning bidder who is not or does not include Amtrak. 49 U.S.C. 
24711(b)(2).
    A commenter stated Amtrak need only provide access if FRA 
determines the access is necessary. However, section 24711(g) of the 
FAST Act states the STB, not the FRA, is responsible for determining 
whether access is necessary.
    Some commenters stated the cost allocation policy developed under 
section 209 of the Passenger Rail Investment and Improvement Act of 
2008 should be used to calculate cost for the use of Amtrak's assets. 
Another commenter stated FRA, not other bidders, should request from 
Amtrak the cost of providing access to specific facilities and services 
a bidder wants Amtrak to provide. However, neither approach is required 
by the FAST Act. Rather, the parties must agree on cost and, if they 
cannot, either party may petition the STB for a determination. See 49 
U.S.C. 24711(g) (stating that, in the event of a dispute, the STB 
``determines reasonable compensation, liability, and other terms,'' 
among other things). It is the bidder's sole responsibility to initiate 
the request to Amtrak to provide the access, to carry out any resulting 
negotiations, and to determine impacts on the bid.
    A commenter stated the rule should require FRA to publish Amtrak's 
costs to provide access to its reservation system, stations, and 
facilities, and FRA should condition Amtrak's receipt of Federal 
operating funds on Amtrak's participation. Similarly, a commenter 
stated FRA should set forth minimum conditions of cooperation, along 
with reasonable ranges of costs for the joint use of facilities and 
services. Another commenter stated FRA should articulate clear 
definitions, prior to the submittal of any bids, of the costs for 
Amtrak to operate facilities or equipment. Lastly, a commenter 
suggested there should be a set rate for Amtrak equipment used by a 
winning bidder. FRA disagrees and does not believe these approaches are 
necessary or consistent with the FAST Act. As described above, section 
24711(g) provides, in the event Amtrak and the winning bidder cannot 
agree upon the terms of access, either party may petition the STB to 
resolve the dispute.
    A commenter stated that, if a dispute between Amtrak and a bidder 
is submitted to the STB for resolution, then a bidder may use the 
Amtrak-owned facilities during the period of time the dispute is with 
the STB. FRA disagrees. Indeed, the dispute may involve whether the 
bidder is in fact entitled to access the facilities at issue. Further, 
a bidder should not need to access the facilities because the terms of 
access would have to be resolved in advance of bidder operations.
    A commenter also stated the final rule should require Amtrak to 
provide access to its data relating to operations, costs, facilities, 
ridership and other information to enable a bidder to develop an 
informed business plan and proposal. The FAST Act does not authorize 
this approach. As discussed, the bidder is responsible for collecting 
the information necessary to prepare their business plan and proposal.

i. Employee Protections

    The FAST Act subjects winning bidders to the grant conditions in 49 
U.S.C. 24405. See 49 U.S.C. 24711(c)(3) (``If the Secretary awards the 
right and obligation to provide intercity rail passenger transportation 
over a route described in this section to an eligible petitioner . . . 
the winning bidder . . . shall be subject to the grant conditions under 
section 24405.'').
    The NPRM and this final rule likewise subject winning bidders to 
these grant conditions. See 49 CFR 269.13(b)(6) (``[T]he contract 
between FRA and a winning bidder that is not or does not include Amtrak 
must . . . [s]ubject the winning bidder to the grant conditions 
established by 49 U.S.C. 24405.''). Section 24405(c), among other 
things, states the Secretary shall require, and

[[Page 31481]]

``the applicant agrees to comply with . . . the protective arrangements 
that are equivalent to the protective arrangements established under 
section 504 of the Railroad Revitalization and Regulatory Reform Act of 
1976'' (4R Act). 49 U.S.C. 24405(c)(2)(B). The protective arrangements 
established under the 4R Act are set forth in a Secretary of Labor 
letter and appendix dated July 6, 1976.
    Several commenters sought clarification about the 49 U.S.C. 24405 
grant condition concerning employee protections. One commenter stated 
the 4R Act employee protections should not apply to this pilot program. 
FRA disagrees. The FAST Act subjects a winning bidder to the grant 
conditions of section 24405, which include the 4R Act equivalent 
employee protections. See 49 U.S.C. 24711(c)(3).
    Several commenters stated the FRA should adopt employee protections 
equivalent to those established under the 4R Act but adjusted to fit 
the pilot program, and should issue guidance on the adjusted 
protections. FRA declines to use this rulemaking to adopt employee 
protections equivalent to the almost forty-year old 4R Act employee 
protections set forth by the Secretary of Labor for the purpose of 
resolving imprecisions in the application of those protections to this 
pilot program. The FAST Act subjects winning bidders, some of whom may 
not be railroads, to the grant conditions under section 24405. In so 
doing, the FAST Act recognizes the possibility that a non-railroad 
winning bidder may directly provide the 4R Act equivalent employee 
protections.
    A commenter also stated FRA should issue guidance on a winning 
bidder's responsibility to employees under the FAST Act, while also 
stating such employee costs should be included in any petition filed 
with FRA under the pilot program. If needed, FRA may issue pilot 
program guidance. However, FRA disagrees with the suggestion to include 
employee costs in the petition. The petition requirements under Sec.  
269.7 require basic information from eligible petitioners; it is 
premature to require detailed cost information in the petition. It is 
in the bid where an eligible petitioner provides FRA with the 
information necessary to evaluate a bid, including the submission of a 
required staffing plan that addresses the terms of work for prospective 
and current employees for the proposed service, among other things. See 
Sec.  269.9(b)(5).
    Commenters also stated the NPRM did not indicate how FRA would 
apply the employee protections. FRA disagrees. Consistent with the FAST 
Act requirement, the NPRM and the final rule require compliance with 
section 24405 in the contract between FRA and a winning bidder. See 49 
CFR 269.13(b)(6). FRA declines to adopt the suggestion of some 
commenters to require a winning bidder to directly provide the 4R Act 
equivalent employee protections. As discussed, a winning bidder must 
comply with section 24405, which includes the 4R Act equivalent 
employee protections. However, the FAST Act does not require this 
obligation to take the form of an agreement directly between the 
winning bidder and the relevant union. Although that approach is 
certainly permissible, a winning bidder may also by agreement bestow 
the obligation to provide the employee protections on another 
appropriate entity (such as the applicable railroad). In other words, a 
winning bidder may comply with the 4R Act equivalent employee 
protections requirement of section 24405 directly or by agreement.
    Lastly, one commenter suggested costs associated with providing the 
4R Act equivalent employee protections should not be deducted from the 
operating subsidy awarded to a winning bidder. The 4R Act equivalent 
employee protection costs are the responsibility of a winning bidder 
that is not or does not include Amtrak and do not impact the 
calculation of the operating subsidy.

II. Section-by-Section Analysis

Section 269.1 Purpose

    This section provides that the final rule carries out the statutory 
mandate in 49 U.S.C. 24711 requiring FRA, on behalf of the Secretary, 
to implement a pilot program to competitively select eligible 
petitioners in lieu of Amtrak to operate not more than three long-
distance routes, as defined in 49 U.S.C. 24102, and operated by Amtrak 
on the date of enactment of the FAST Act.
    A commenter stated an eligible petitioner should be able to decide 
the route(s) on which they bid and should be able to bid on inactive 
routes. The pilot program does not apply to inactive routes. The FAST 
Act limits the pilot program to the long-distance routes, as defined in 
49 U.S.C. 24102, operated by Amtrak on the date of enactment of the 
FAST Act. 49 U.S.C. 24711(a).
    A commenter also stated FRA should take primary responsibility in 
any contract with a winning bidder to ``launch'' the service. FRA 
disagrees. The FAST Act directs FRA to implement the pilot program for 
the competitive selection of eligible petitioners in lieu of Amtrak to 
operate not more than three-long distance routes. The FAST Act does not 
require the FRA to take primary responsibility for a winning bidder's 
execution of the service.

Section 269.3 Application

    Paragraph (a) of this section provides the pilot program is not 
available to more than three Amtrak long-distance routes, as defined in 
49 U.S.C. 24102. This paragraph is based on the statutory directive in 
49 U.S.C. 24711(a).
    Paragraph (b) of this section provides that any eligible petitioner 
awarded a contract to provide passenger rail service under the pilot 
program can only provide such service for a period not to exceed four 
years from the date the winning bidder commenced service and, at FRA's 
discretion on behalf of the Secretary, FRA may renew such service for 
one additional operation period of four years. This paragraph is based 
on the statutory directive in 49 U.S.C. 24711(b)(1)(A).
    A commenter stated FRA should address the transition of service 
from a successful winning bidder back to Amtrak. Although there may be 
challenges that arise in such a situation, the FAST Act does not 
require FRA to address this issue in the rulemaking, nor is it prudent 
in this rulemaking to attempt to address possible outcomes that may 
occur many years from now.
    Commenters also stated the length of the contract should be longer 
than four years, for various reasons. However, the FAST Act requires 
one four year term, and allows for one four year renewal term at the 
discretion of the Secretary.

Section 269.5 Definitions

    This section contains the definitions for the final rule. This 
section defines the following terms: Act; Administrator; Amtrak; 
Eligible petitioner; File and Filed; Financial plan; FRA; Operating 
plan; and Long-distance route.
    This section defines ``eligible petitioner'' to mean: A rail 
carrier or rail carriers that own the infrastructure over which Amtrak 
operates a long-distance route, or another rail carrier that has a 
written agreement with a rail carrier or rail carriers that own such 
infrastructure; a State, group of States, or State-supported joint 
powers authority or other sub-State governance entity responsible for 
providing intercity rail passenger transportation with a written 
agreement with the rail carrier or rail carriers that own the 
infrastructure over which Amtrak operates a long-distance route and 
that host or would host the intercity rail passenger transportation; or 
a State, group of States, or State-supported joint powers authority or 
other sub-State

[[Page 31482]]

governance entity responsible for providing intercity rail passenger 
transportation and a rail carrier with a written agreement with another 
rail carrier or rail carriers that own the infrastructure over which 
Amtrak operates a long-distance route and that host or would host the 
intercity rail passenger transportation.
    A commenter stated the final rule should amend the definition of 
the term ``eligible petitioner'' to make clear it is not necessary for 
a petitioner to obtain a written agreement with Amtrak for Amtrak-owned 
infrastructure prior to submitting a petition. However, the definition 
used in the final rule is taken directly from the FAST Act. 49 U.S.C. 
24711(b)(3). With that said, Amtrak is required to provide access to 
Amtrak-owned facilities, among other things. 49 U.S.C. 24711(c)(1). As 
such, FRA will take both of these FAST Act directives into account when 
reviewing petitions received under this program.
    This section 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, including the operating subsidy amount) 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; connectivity with other intercity transportation services; 
compliance with applicable Service Outcome Agreements, and a statement 
of the assumptions underlying the operating plan's contents. The final 
rule added ``connectivity with other intercity transportation 
services'' and ``compliance with applicable Service Outcome 
Agreements'' in response to comments. 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 ensure that bids contain 
sufficient information for evaluation.
    A commenter stated the final rule should specifically state that, 
for purposes of the operating plan, a bidder may assume access to 
Amtrak facilities and stations. This revision is not necessary. The 
final rule requires a bidder to describe the assumptions underlying the 
operating plan's contents. And, as discussed elsewhere in this 
preamble, the final rule states that Amtrak must provide access to the 
Amtrak-owned reservation system, stations, and facilities directly 
related to operations of the awarded route(s) to the bidder.
    This section also defines ``long-distance route'' to mean those 
routes described in 49 U.S.C. 24102(5) and operated by Amtrak on the 
date the FAST Act was enacted. This definition is based on the 
statutory directive in 49 U.S.C. 24711(a).

Section 269.7 Petitions

    Paragraph (a) of this section provides an eligible petitioner may 
petition FRA to provide intercity passenger rail transportation over a 
long-distance route in lieu of Amtrak for a period of time consistent 
with the time limitations described in Sec.  269.3(c). This paragraph 
is based on the statutory directive in 49 U.S.C. 24711(b)(1)(A).
    Paragraph (b) of this section provides a petition submitted to FRA 
under this rule must: Be filed with FRA no later than 180 days after 
the effective date of the competitive passenger rail service pilot 
program final rule; describe the petition as a ``Petition to Provide 
Passenger Rail Service under 49 CFR part 269''; describe the long-
distance route or routes over which the petitioner wants to provide 
intercity passenger rail transportation and the Amtrak service the 
petitioner wants to replace; and, if applicable, provide an executed 
copy of all written agreements with all entities that own 
infrastructure on the long-distance route or routes over which the 
eligible petitioner wants to provide intercity passenger rail 
transportation. This paragraph is intended to ensure a petition 
provides clear notice to FRA and the petitioner is statutorily eligible 
to participate in the program.

Section 269.9 Bid Process

    Paragraph (a) of this section provides that FRA would notify the 
eligible petitioner and Amtrak of receipt of a petition filed with FRA 
by publishing a notice of receipt in the Federal Register not later 
than 30 days after FRA receives a petition. This paragraph is based on 
the statutory directive in 49 U.S.C. 24711(b)(1)(B)(i).
    Paragraph (b) of this section describes the bid requirements, 
including that a bid must be filed with FRA no later than 120 days 
after FRA publishes the notice of receipt in the Federal Register under 
Sec.  269.9(a). Paragraph (b) further provides the detailed information 
such bids must include. This paragraph is based on the statutory 
directive in 49 U.S.C. 24711(b)(1)(C).
    A commenter stated a bidder should not be constrained due to their 
prior experience with passenger rail service. The final rule's bid 
requirements apply to all bidders and Amtrak, regardless of experience 
in passenger rail service.
    A commenter also stated the final rule should require a bidder to 
provide written documentation that any state(s) providing funding for a 
route concur with a bid to provide service over the route. Another 
commenter, on the other hand, disagreed and stated FRA should be 
responsible for obtaining concurrence from a state providing funding 
for a route. For routes receiving funding from a state or states, 
section 24711(b)(1)(D) of the FAST Act requires for each bid received, 
``the Secretary have the concurrence of the State of States that 
provide funding for that route.'' FRA understands this requirement to 
be the obligation of the bidder, not FRA. The bidder is in the best 
position to obtain such concurrence, and, of course, the support of the 
state or states is critically important to the bidder's ability to 
operate the service. The final rule incorporates this requirement in 
Sec.  269.9(b)(12).
    A commenter stated the description of the capital needs for the 
planned service under Sec.  269.9(b)(6) should include projected 
capital expenditures for each Federal fiscal year fully or partially 
covered by the bid. FRA agrees, and the final rule, like the NPRM, 
requires this information. Specifically, Sec.  269.9(b)(2)(i) requires 
a bid to include a financial plan, and Sec.  269.5 defines the term 
``financial plan'' as a plan that contains, for each Federal fiscal 
year fully or partially covered by the bid, an annual projection of the 
capital expenditure requirements attributable to the route, among other 
things.
    A commenter also stated a bid should include a breakdown of the 
projected capital expenditures required to comply with the Americans 
with Disabilities Act, applicable FRA safety regulations, and other 
applicable laws and regulations. In response to this comment, FRA 
amended: (1) Sec.  269.9(b)(11) of the final rule to require an 
eligible petitioner to describe its compliance with all applicable 
Federal, state, and local laws; and (2)

[[Page 31483]]

Sec.  269.9(b)(6) of the final rule to make clear that an eligible 
petitioner's description of the capital needs for the passenger rail 
service include in detail any costs associated with compliance with 
Federal law and regulations. These revisions will help FRA evaluate the 
bid and whether the bid credibly assesses the capital expenditures 
required to lawfully operate service on the route.
    Lastly, a commenter stated the final rule should specify the 
documentation requirements and procedures applicable to bidders who are 
new passenger rail service operators to ensure compliance with all 
applicable safety requirements. Section 269.9(b)(7) of the final rule 
requires an eligible petitioner in its bid package to describe in 
detail the bidder's plans for meeting all FRA safety requirements. It 
is not necessary for this rulemaking to fully describe the regulatory 
process a new operator will use to initiate service.
    Paragraph (c) of this section provides FRA may request supplemental 
information from a bidder and/or Amtrak if FRA determines it needs such 
information to adequately evaluate a bid. Such a request may seek 
information about the costs related to the service Amtrak would still 
incur following the cessation of service, including the increased costs 
for other services. FRA will establish a deadline by which the bidder 
and/or Amtrak must submit the supplemental information to FRA.
    A commenter stated this section should require FRA to seek such 
information from Amtrak, including information from Amtrak about the 
feasibility of the proposed service, the potential impairment to 
Amtrak's other services, or the cost of providing access to Amtrak's 
facilities or equipment. FRA agrees that, when evaluating a bid, 
additional information may be needed, and FRA may request supplemental 
information under Sec.  269.9(c). However, requiring FRA to request 
supplemental information is not necessary, and would overly burden FRA 
when it does not need supplemental information to evaluate a bid.

Section 269.11 Evaluation

    Paragraph (a) of this section provides that FRA will select a 
winning bidder by evaluating the bids based on the requirements of part 
269.
    A commenter stated the evaluation criteria should include the 
impact of an award on the Federal funding requirements for intercity 
passenger rail. Another commenter, on the other hand, stated that any 
claimed increase in Amtrak's cost, or other negative financial 
performance impacts, should not be evaluated under Sec.  269.11 (and 
referenced 49 U.S.C. 24711(e)(2)). As stated above, FRA will evaluate 
the bids based on the requirements of part 269, and Sec.  269.9(b)(10) 
of the final rule requires a bidder, as part of the bid package, to 
analyze the reasonably foreseeable effects, both positive and negative, 
of the passenger rail service on other intercity passenger rail 
services. Section 24711(e)(2) of the FAST Act is not relevant to the 
evaluation of bids. Rather, section 24711(e)(2) concerns the 
calculation of attributable costs that may be provided to Amtrak if 
there is a winning bidder other than Amtrak (and states these 
attributable costs ``shall not be deducted from'' the operating subsidy 
awarded to the winning bidder).
    Commenters also stated low cost, or high cost, should not drive the 
evaluation, but rather overall bid quality should be the basis for 
selection. FRA will evaluate all aspects of a bid in making its 
determination.
    A commenter stated DOT/FRA may have a conflict of interest in 
administering the pilot program because the Secretary is a member of 
the Amtrak Board of Directors. The Secretary's roles administering the 
pilot program and as a member of the Amtrak Board of Directors are 
mandated by statute. With that said, FRA will administer the pilot 
program fairly, in good faith, and consistent with the FAST Act.
    Paragraph (b) of this section provides that, upon selecting a 
winning bidder, FRA will publish a notice in the Federal Register 
identifying the winning bidder, the long-distance route the bidder 
would operate, a detailed justification of the reasons why FRA selected 
the bid, and any other information the Secretary determines 
appropriate. FRA will request public comment for 30 days after the date 
FRA selects the bid. This paragraph is based on the statutory directive 
in 49 U.S.C. 24711(b)(1)(B)(iii).

Section 269.13 Award

    Paragraph (a) of this section provides that FRA will execute a 
contract with a winning bidder that is not or does not include Amtrak, 
consistent with the requirements of Sec.  269.13, and as FRA may 
otherwise require, not later than 270 days after the bid deadline Sec.  
269.9(b) establishes. This paragraph is based on the statutory 
directive in 49 U.S.C. 24711(b)(1)(E).
    Paragraph (b) of this section discusses required elements of the 
contract between FRA and the winning bidder that is not or does not 
include Amtrak. This paragraph is based on the statutory directives in 
49 U.S.C. 24711(b)(1)(E), (b)(4), and (c)(3).
    Commenters stated FRA must ensure that any construction work 
contractors of a winning bidder perform complies with Davis-Bacon 
prevailing wage requirements. Section 269.13(b)(6) subjects winning 
bidders to the section 24405 grant conditions, including section 
24405(c)(2)(A), which addresses prevailing wage requirements. 
Commenters similarly stated FRA must ensure a winning bidder complies 
with the applicable Buy America requirement. Likewise, Sec.  
269.13(b)(6) subjects winning bidders to the section 24405 grant 
conditions, including section 24405(a), which addresses the Buy America 
requirement.
    A commenter also stated the NPRM did not address how FRA will 
ensure winning bidders comply with the requirement of the FAST Act 
subjecting winning bidders to the grant conditions in section 24405. 
FRA disagrees. Section 269.13(b)(6) of the NPRM and the final rule 
provides that any contract between FRA and a winning bidder that is not 
or does not include Amtrak must subject the winning bidder to these 
grant conditions. And, Sec.  269.17(a) of the final rule states the FRA 
Administrator shall take any necessary action consistent with title 49 
of the United States Code to enforce the contract where a winning 
bidder fails to fulfill its obligations under the contract required 
under Sec.  269.13. See 49 U.S.C. 24711(d).
    A commenter stated the contract should require the winning bidder 
to comply with all statutory and other legal requirements that apply to 
Amtrak's use of the appropriated funds. FRA agrees. For purposes of 
clarity, FRA added another element to the final rule stating a contract 
between FRA and a winning bidder must make the winning bidder subject 
to the requirements of the appropriations act(s) funding the contract. 
See 49 CFR 269.13(b)(7).
    A commenter stated the award of the contract must also be 
conditioned on the bidder's demonstration, prior to the initiation of 
service, of compliance with all applicable Federal and state laws and 
regulations as well as the maintenance of adequate liability coverage 
for claims through insurance and self-insurance required by 49 U.S.C. 
28103(c). First, as stated above, Sec.  269.9(b)(11) of the final rule 
requires a bid to describe the bidder's compliance with all applicable 
Federal, state, and local laws. Furthermore, Sec.  269.13(a) makes 
clear FRA has the discretion to not award a contract if the winning 
bidder is not in compliance with the law. Second, as to mandatory 
insurance, 49 U.S.C. 28103(c) applies to Amtrak; it does not apply to 
other

[[Page 31484]]

railroads. Nor does the FAST Act impose mandatory insurance beyond that 
required by 49 U.S.C. 28103. Consequently, the final rule does not 
impose mandatory insurance beyond what is already required by law. FRA 
also notes that 49 U.S.C. 28103(a)(2) establishes a rail passenger 
transportation liability cap, which is currently set at $294,278,983. 
See 81 FR 1289 (Jan. 11, 2016).
    A commenter also stated the contract should be conditioned on the 
winning bidder's payment of penalties, specified in its contract with 
FRA, should the winning bidder fail to meet performance standards. FRA 
did not intend for the final rule to fully address all aspects of the 
contract between FRA and a winning bidder. As such, contract details 
concerning penalty payments are not addressed in this final rule and, 
instead, may be addressed at the time a winning bidder is selected.
    A commenter stated that a winning bidder would be subject to the 
requirement in 49 U.S.C. 24321 prohibiting the use of Federal funds to 
cover any operating loss associated with providing food and beverage 
service on a route. The requirements of section 24321 apply to a 
winning bidder under this pilot program. See 49 U.S.C. 24321(d).
    Lastly, a commenter stated any non-Amtrak winning bidders should be 
required to deal with private rail car owners in a positive manner. FRA 
disagrees. The FAST Act imposes no such requirement, and FRA declines 
to regulate how a non-Amtrak winning bidder addresses contracting with 
private rail car owners.
    Paragraph (c) of this section provides that the winning bidder 
would make their bid available to the public after the bid award with 
any appropriate confidential or proprietary information redactions. 
This paragraph is based on the statutory directive in 49 U.S.C. 
24711(b)(1)(C)(ii).

Section 269.15 Access to Facilities; Employees

    Paragraph (a)(1) of this section provides, if an award under Sec.  
269.13 is made to a bidder other than Amtrak, Amtrak must provide 
access to the Amtrak-owned reservation system, stations, and facilities 
directly related to operations of the awarded route(s) to the bidder. 
For additional clarity, the final rule added a new paragraph (a)(2) 
stating that, if Amtrak and the eligible petitioner awarded a route 
cannot agree on the terms of access, then either party may petition the 
STB under 49 U.S.C. 24711(g). This paragraph is based on the statutory 
directive in 49 U.S.C. 24711(c) and (g).
    Paragraph (b) of this section implements 49 U.S.C. 24711(c)(2), 
which states that an employee of any person, except as provided in a 
collective bargaining agreement, used by such eligible petitioner in 
the operation of a route under this section shall be considered an 
employee of that eligible petitioner and subject to the applicable 
Federal laws and regulations governing similar crafts or classes of 
employees of Amtrak.
    A commenter stated the final rule should specifically subject a 
winning bidder to the same rail laws as Amtrak. Section 269.15(b) of 
the final rule clearly provides, as stated above, that employees are 
subject to the applicable Federal laws and regulations governing 
similar crafts or classes of employees of Amtrak. Moreover, a winning 
bidder is subject to the section 24405 grant conditions. That includes 
the section 24405(b) provision that a person conducting rail operations 
shall be considered a rail carrier under section 10102(5). A commenter 
also stated the final rule should allow an eligible petitioner to 
contract with Amtrak for Amtrak to provide train and engine personnel. 
As noted above, the FAST Act limits the availability of the pilot 
program to a winning bidder that is not or does not include Amtrak. 
Furthermore, the FAST Act does not require Amtrak to provide personnel 
services to an eligible petitioner.
    Paragraph (c) of this section states a winning bidder must provide 
hiring preference to qualified Amtrak employees displaced by the award 
of the bid, consistent with the staffing plan the winning bidder 
submits and the grant conditions 49 U.S.C. 24405 establish. This 
paragraph is based on the statutory directive in 49 U.S.C. 24711(c)(3).
    Some commenters stated FRA should incorporate the FAST Act's hiring 
preference requirements in 49 U.S.C. 24711(c)(3) and 24405(d) into the 
final rule. To alert eligible petitioners of these related requirements 
of the FAST Act, FRA revised Sec.  269.15(c) of the final rule to 
reference the section 24405 grant conditions. In addition, Sec.  
269.13(b)(6) of the NPRM and final rule incorporate the section 24405 
requirements. A commenter also stated FRA must ensure that winning 
bidders comply with these hiring preference requirements. Section 
269.13(b)(6) of the final rule provides that any contract between FRA 
and a winning bidder that is not or does not include Amtrak must 
subject the winning bidder to the section 24405 grant conditions. And, 
Sec.  269.17(a) of the final rule states the FRA Administrator shall 
take any necessary action consistent with title 49 of the United States 
Code to enforce the contract where a winning bidder fails to fulfill 
its obligations under the contract required under Sec.  269.13.

Section 269.17 Cessation of Service

    This section provides under paragraph (a) that, if a bidder awarded 
a route under this rule 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 STB, would 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 installing an interim service rail carrier, providing to the 
interim rail carrier an operating subsidy necessary to provide service, 
and re-bidding the contract to operate the service. This section 
further provides under paragraph (b) that the entity providing interim 
service would either be Amtrak or an eligible petitioner under Sec.  
269.5. This section is based on the statutory directive in 49 U.S.C. 
24711(d).

III. Regulatory Impact and Notices

1. Executive Orders 12866 and 13563 and DOT Regulatory Policies and 
Procedures
    FRA evaluated this final rule consistent with Executive Orders 
12866 and 13563 and DOT policies and procedures. See 44 FR 11034 (Feb. 
26, 1979). FRA prepared and placed in the docket a regulatory impact 
analysis addressing the economic impact of the final rule.
    FRA does not expect any regulatory costs because this final rule is 
voluntary and does not require an eligible petitioner to take any 
action. In addition, the final rule is limited to not more than three 
long-distance routes as defined in 49 U.S.C. 24102 and operated by 
Amtrak on the date the FAST Act was enacted. Furthermore, the current 
market conditions and the investment necessary to operate a long-
distance service may further serve to limit the number of eligible 
petitioners submitting petitions under the pilot program. Of course, if 
no eligible petitioners participate in the pilot program, then no costs 
or benefits would be incurred because of the final rule. However, FRA 
is estimating the costs and benefits generated when three eligible 
petitioners submit bids to operate long-distance rail service.
    As discussed above, FRA assumed three entities will submit bids to

[[Page 31485]]

estimate costs for the bidding scenario. The costs are solely due to 
preparing and filing a bid to operate service. Amtrak may submit a bid 
only if another entity submitted a petition to bid on a route. To 
estimate the cost for preparing and submitting a bid, FRA estimated the 
time and cost for FRA to review each bid. FRA estimates its review cost 
would be approximately $49,834 per bid. Based on the costs of 
collecting and analyzing data, drafting a bid, and gaining approval 
within the organization, FRA estimates a railroad or other entity that 
bids on a route would incur a cost of approximately three times as much 
as FRA's review cost--approximately $149,503 per bid. If an entity bids 
on a route, for this analysis, we assumed Amtrak would also submit a 
bid for the same route. Amtrak should have some of the data necessary 
to prepare the bid available. Therefore, their cost should be lower 
than another entity. Based on the costs of analyzing data, drafting a 
bid, and gaining approval within the organization, FRA estimated 
Amtrak's cost to prepare and submit a bid would be twice FRA's review 
cost --approximately $99,669. All bid costs would be incurred during 
the first year. The table below shows the estimated cost for an entity 
and Amtrak to bid on one long-distance route.

----------------------------------------------------------------------------------------------------------------
                                                                                  Railroad/other
                                                                    FRA review     entity bidder    Amtrak cost
                                                                       cost       cost (FRA cost  (FRA cost * 2)
                                                                                       * 3)
----------------------------------------------------------------------------------------------------------------
Total Cost per Bid..............................................         $49,834        $149,503         $99,669
----------------------------------------------------------------------------------------------------------------

    As stated above, FRA's total burden estimate assumes three bids are 
submitted for long-distance routes. The total cost to entities other 
than Amtrak would be approximately $448,509. The total cost to Amtrak 
would be approximately $299,007. The sum of these two costs is 
$747,516. Since all petitions and bids would occur during the first 
year, the total cost would be approximately $747,516 over the four-year 
period (which could become 8 years if the Secretary renews a contract).
    Some benefits are possible from this final rule. FRA cannot 
quantify the benefits but discussed them qualitatively in the 
regulatory impact analysis. If no eligible petitioners submit a bid for 
operating service, Amtrak would continue to operate service as it 
currently does. Therefore, no benefits would occur because of this 
final rule. However, if other entities are awarded contracts, those 
entities may be able to operate the service in a manner that would be 
beneficial to passengers.
    Possible benefits include better service and lower cost. The 
introduction of competition in the bidding process may increase 
passenger rail efficiency and generate public benefits by lowering the 
operational subsidy, and possibly leading to better service and/or 
lower operating costs to society. FRA expects no change to railroad 
safety due to this regulation.
2. Regulatory Flexibility Act
    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) and 
Executive Order 13272 (67 FR 53461, Aug. 16, 2002) require agency 
review of proposed and final rules to assess their impacts on small 
entities. An agency must prepare a Final Regulatory Flexibility 
Analysis (FRFA) unless it determines and certifies that a rule, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities. FRA is certifying this final rule 
will not have a significant economic impact on a substantial number of 
small entities.
    FRA published an Initial Regulatory Flexibility Analysis (IRFA) in 
the NPRM to discuss the potential small business impacts of the 
requirements in this final rule. FRA requested comments from interested 
parties regarding the potential economic impact on small entities that 
would result from the adoption of the proposals in this regulation. FRA 
received no comments to the NPRM on the economic impact on small 
entities.
Statement of the Need for and Objective of the Rule
    FRA is revising 49 CFR part 269 to comply with a statutory mandate 
requiring the Secretary to promulgate a rule to implement a pilot 
program for competitive selection of eligible petitioners in lieu of 
Amtrak to operate not more than three long-distance routes. The 
objective of this final rule is to implement the statutory mandate in 
FAST Act section 11307.
A Description and Estimate of the Number of Small Entities to Which the 
Final Rule Will Apply
    As stated above, the Regulatory Flexibility Act requires a review 
of proposed and final rules to assess their impact on small entities, 
unless the Secretary certifies the rule would not have a significant 
economic impact on a substantial number of small entities. ``Small 
entity'' is defined in 5 U.S.C. 601 as 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 the SBA and in conjunction with public 
comment. Under that authority, FRA has published a final statement of 
agency policy that formally establishes ``small entities'' or ``small 
businesses'' as railroads, contractors, and hazardous materials 
shippers that meet the revenue requirements of a Class III railroad 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 STB's revenue threshold for a 
Class III railroad carrier. Railroad revenue is adjusted for inflation 
by applying a revenue deflator formula under 49 CFR 1201.1-1. FRA is 
using this definition for the final rule. For other entities, the same 
dollar limit in revenues governs whether a railroad, contractor, or 
other respondent is a small entity.
    This final rule applies to the following eligible petitioners: (1) 
A rail carrier or rail carriers that own the infrastructure over which 
Amtrak operates a long-distance route, or another rail carrier that has 
a written agreement with a rail carrier or rail carriers that own such 
infrastructure; (2) a State, group of States, or State-supported joint 
powers authority or other sub-State governance entity

[[Page 31486]]

responsible for provision of intercity rail passenger transportation 
with a written agreement with the rail carrier or rail carriers that 
own the infrastructure over which Amtrak operates a long-distance route 
and that host or would host the intercity rail passenger 
transportation; or (3) a State, group of States, or State-supported 
joint powers authority or other sub-State governance entity responsible 
for provision of intercity rail passenger transportation and a rail 
carrier with a written agreement with another rail carrier or rail 
carriers that own the infrastructure over which Amtrak operates a long-
distance route and that host or would host the intercity rail passenger 
transportation. The only petitioners that may be considered a small 
entity would be small railroads.
    This final rule is voluntary for all eligible petitioners. 
Therefore, there are no mandates placed on large or small railroads. In 
addition, the final rule is limited to not more than three long-
distance routes operated by Amtrak. Consequently, this final rule is 
not likely to affect a substantial number of small entities, and most 
likely will not impact any small entities. FRA requested comments on 
this and received none.
    Small railroads face the same requirements for entry in the pilot 
program as other railroads. The railroad must own the infrastructure 
over which Amtrak operates those long-distance routes described in 49 
U.S.C. 24102. Any small entity would likely only bid on a route if it 
was in its financial interest to do so. Accordingly, any impact on 
small entities would be positive. The pilot program will allow small 
railroads to enter a market which currently has substantial barriers.
    FRA notes this final rule does not disproportionately place any 
small railroads that are small entities at a significant competitive 
disadvantage. Small railroads are not excluded from participation if 
they are statutorily eligible. This final rule and the underlying 
statute concern the potential selection of eligible petitioners to 
operate an entire long-distance route. If Amtrak uses 30 miles of a 
small railroad's infrastructure on a route that is 750 miles long, that 
small railroad could not apply under this final rule to operate service 
only over the 30 mile segment it owns (the small railroad would have to 
apply to operate service over the whole route). Thus, the ability to 
bid on a route is not constrained by a railroad's size.
    This final rule allows small railroads to participate in the pilot 
program, but does not require them to take any action. If small 
entities do not believe it would be beneficial to participate in the 
pilot program, they are not required to take any action. Therefore, 
there is no significant economic impact on any small entities as a 
result of this final rule.
    Under the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA 
certifies this final rule does not have a significant economic impact 
on a substantial number of small entities.
3. Paperwork Reduction Act
    Under the Paperwork Reduction Act of 1995 and the Office of 
Management and Budget's (OMB) Implementing Guidance at 5 CFR 1320.3(c), 
collection of information means, except as provided in Sec.  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 the requirements of this final rule will affect less 
than 10 ``persons'' as defined in 5 CFR 1320.3(c)(4). Consequently, no 
information collection submission is necessary, and no approval is 
being sought from OMB at this time.
4. Environmental Impact
    FRA evaluated this final rule consistent 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 determined this final rule 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. Under section 4(c) and (e) of FRA's Procedures, FRA 
concludes no extraordinary circumstances exist for this final rule that 
might trigger the need for a more detailed environmental review. As a 
result, FRA finds 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 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 consistent with the principles and 
criteria in Executive Order 13132. This final rule complies with a 
statutory mandate, and, thus, is in compliance with Executive Order 
13132.
    In addition, this final rule 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 final rule will not 
have any federalism implications that impose substantial direct 
compliance costs on State and local governments. 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
    Under Section 201 of the Unfunded Mandates Reform (UMR) 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 UMR 
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

[[Page 31487]]

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].
    The $100,000,000 has been adjusted to $155,000,000 to account for 
inflation. This final rule will not result in expenditure of more than 
$155,000,000 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 any 
notice of inquiry, advance notice of proposed rulemaking, and notice 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) the Administrator of the OMB Office of 
Information and Regulatory Affairs designates as a significant energy 
action. FRA evaluated this final rule consistent with Executive Order 
13211. FRA determined this final rule will not have a significant 
adverse effect on the supply, distribution, or use of energy. 
Consequently, FRA concludes this regulatory action is not a 
``significant energy action'' under Executive Order 13211.
    Executive Order 13783 requires Federal agencies to review 
regulations to determine whether they potentially burden the 
development or use of domestically produced energy resources, with 
particular attention to oil, natural gas, coal, and nuclear energy 
resources. Executive Order 13783 defines ``burden'' to mean 
unnecessarily obstruct, delay, curtail, or otherwise impose significant 
costs on the siting, permitting, production, utilization, transmission, 
or delivery of energy resources. FRA determined this final rule will 
not potentially burden the development or use of domestically produced 
energy resources.
8. Privacy Act Information
    Interested parties should be aware that anyone can 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 
Apr. 11, 2000, 65 FR 19477, or you may visit http://www.dot.gov/privacy.html. Under 5 U.S.C. 553(c), DOT solicits comments from the 
public to better inform its rulemaking process. DOT posts these 
comments, without edit, including any personal information the 
commenter provides, to www.regulations.gov, as described in the system 
of records notice (DOT/ALL-14 FDMS), which can be reviewed at 
www.dot.gov/privacy.

List of Subjects in 49 CFR Part 269

    Railroad employees, Railroads.

The Rule

    For the reasons discussed in the preamble, FRA revises part 269 of 
chapter II, subtitle B, title 49 of the Code of Federal Regulations to 
read as follows:

PART 269--COMPETITIVE PASSENGER RAIL SERVICE PILOT PROGRAM

Sec.
269.1 Purpose.
269.3 Limitations.
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. 11307, Pub. L. 114-94; 49 U.S.C. 24711; and 49 
CFR 1.89.


Sec.  269.1  Purpose.

    The purpose of this part is to carry out the statutory mandate in 
49 U.S.C. 24711 requiring the Secretary to implement a pilot program 
for competitive selection of eligible petitioners in lieu of Amtrak to 
operate not more than three long-distance routes.


Sec.  269.3  Limitations.

    (a) Route limitations. The pilot program this part implements is 
available for not more than three Amtrak long-distance routes.
    (b) Time limitations. An eligible petitioner awarded a contract to 
provide passenger rail service under the pilot program this part 
implements shall only provide such service for a period not to exceed 
four years from the date of commencement of service. The Administrator 
has the discretion to renew such service for one additional operation 
period of four years.


Sec.  269.5  Definitions.

    As used in this part--
    Act means the Fixing America's Surface Transportation Act (Pub. L. 
114-94 (Dec. 4, 2015)).
    Administrator means the Federal Railroad Administrator, or the 
Federal Railroad Administrator's delegate.
    Amtrak means the National Railroad Passenger Corporation.
    Eligible petitioner means one of the following entities, other than 
Amtrak, that has submitted a petition to FRA under Sec.  269.7:
    (1) A rail carrier or rail carriers that own the infrastructure 
over which Amtrak operates a long-distance route, or another rail 
carrier that has a written agreement with a rail carrier or rail 
carriers that own such infrastructure;
    (2) A State, group of States, or State-supported joint powers 
authority or other sub-State governance entity responsible for 
providing intercity rail passenger transportation with a written 
agreement with the rail carrier or rail carriers that own the 
infrastructure over which Amtrak operates a long-distance route and 
that host or would host the intercity rail passenger transportation; or
    (3) A State, group of States, or State-supported joint powers 
authority or other sub-State governance entity responsible for 
providing intercity rail passenger transportation and a rail carrier 
with a written agreement with another rail carrier or rail carriers 
that own the infrastructure over which Amtrak operates a long-distance 
route and that host or would host the intercity rail passenger 
transportation.
    File and filed mean submission of a document under this part to FRA 
at PassengerRail.Liaison@dot.gov on 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:
    (1) 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, including the operating subsidy amount) attributable to 
the route; and
    (2) A statement of the assumptions underlying the financial plan's 
contents.
    FRA means the Federal Railroad Administration.

[[Page 31488]]

    Operating plan means a plan that contains, for each Federal fiscal 
year fully or partially covered by the bid:
    (1) 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; connectivity with other intercity transportation services; and 
compliance with applicable Service Outcome Agreements; and
    (2) A statement of the assumptions underlying the operating plan's 
contents.
    Long-distance route means those routes described in 49 U.S.C. 
24102(5) and operated by Amtrak on the date of enactment of the Act.


Sec.  269.7  Petitions.

    (a) In general. An eligible petitioner may petition FRA to provide 
intercity passenger rail transportation over a long-distance route in 
lieu of Amtrak for a period of time consistent with the time 
limitations described in Sec.  269.3(b).
    (b) Petition requirements. Eligible petitioners must:
    (1) File the petition with FRA no later than 180 days after 
September 5, 2017;
    (2) Describe the petition as a ``Petition to Provide Passenger Rail 
Service under 49 CFR part 269'';
    (3) Describe the long-distance route or routes over which the 
eligible petitioner wants to provide intercity passenger rail 
transportation and the Amtrak service that the eligible petitioner 
wants to replace; and
    (4) If applicable, provide an executed copy of all written 
agreements with all entities that own infrastructure on the long-
distance route or routes over which the eligible petitioner wants to 
provide intercity passenger rail transportation. The written 
agreement(s) must demonstrate the infrastructure owner's support for 
the petition.


Sec.  269.9  Bid process.

    (a) Notification. FRA will notify the eligible petitioner and 
Amtrak of receipt of a petition filed with FRA and will publish a 
notice of receipt in the Federal Register not later than 30 days after 
FRA's receipt of such petition.
    (b) Bid requirements. An eligible petitioner that has filed a 
timely petition under Sec.  269.7 and Amtrak, if Amtrak desires, may 
file a bid with FRA not later than 120 days after FRA publishes the 
notice of receipt in the Federal Register under paragraph (a) of this 
section. 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 in Sec.  269.13(b);
    (2) Describe how the bidder would operate the route;
    (i) This description must include, but is not limited to, an 
operating plan, a financial plan and, if applicable, any executed 
agreement(s) necessary for the operation of passenger service over 
right-of-way on the route that is not owned by the bidder.
    (ii) 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, together with the assumptions underlying the 
estimates of such incremental impacts.
    (3) Describe what passenger equipment the bidder would need, 
including how it would be procured;
    (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 the 
bidder needs 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;
    (6) Describe the capital needs for the passenger rail service 
including in detail any costs associated with compliance with Federal 
law and regulations;
    (7) Describe in detail the bidder's plans for meeting all FRA 
safety requirements, including equipment, employee, and passenger 
parameters;
    (8) Describe, for each Federal fiscal year fully or partially 
covered by the bid, a projection of the passenger rail service route's 
total revenue, total costs, total contribution/loss, and net cash used 
in operating activities per passenger-mile attributable to the route;
    (9) Describe how the passenger rail service would meet or exceed 
the performance required of or achieved by Amtrak on the applicable 
route during the last fiscal year, and how the bidder would report on 
the performance standards. 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 Passenger Miles per Train Mile, End-
Point and All Stations On-Time Performance, Host Railroad and Operator 
Responsible Delays per 10,000 Train Miles, Percentage of Passenger 
Trips to/from Underserved Communities, Service Interruptions per 10,000 
Train Miles due to Equipment-Related Problems, and customer service 
quality;
    (10) Analyze the reasonably foreseeable effects, both positive and 
negative, of the passenger rail service on other intercity passenger 
rail services;
    (11) Describe the bidder's compliance with all applicable Federal, 
state, and local laws; and
    (12) Provide State or States written concurrence of the bid for a 
route that receives funding from a State or States.
    (c) Supplemental information. (1) FRA may request supplemental 
information from a bidder and/or Amtrak if FRA determines it needs such 
information to evaluate a bid.
    (2) FRA's request may seek information about the costs related to 
the service that Amtrak would still incur following the cessation of 
service, including the increased costs for other services.
    (3) FRA will establish a deadline by which the bidder and/or Amtrak 
must file the supplemental information with FRA.


Sec.  269.11  Evaluation.

    (a) Evaluation. FRA will select a winning bidder by evaluating the 
bids based on the requirements of this part.
    (b) Notification. (1) Upon selecting a winning bidder, FRA will 
publish a notice in the Federal Register describing the identity of the 
winning bidder, the long-distance route the bidder will operate, a 
detailed justification explaining why FRA selected the bid, and any 
other information the Administrator determines appropriate.
    (2) The notice under this paragraph (b) will be open for public 
comment for 30 days after the date FRA selects the bid.


Sec.  269.13  Award.

    (a) Award. FRA will execute a contract with a winning bidder that 
is not or does not include Amtrak, consistent with the requirements of 
this section and as FRA may otherwise require, not later than 270 days 
after the bid deadline established by Sec.  269.9(b).
    (b) Contract requirements. Among other things, the contract between 
FRA

[[Page 31489]]

and a winning bidder that is not or does not include Amtrak must:
    (1) Award to the winning bidder the right and obligation to provide 
intercity passenger rail transportation over that route subject to such 
performance standards as FRA may require for a duration consistent with 
Sec.  269.3(b);
    (2) Award to the winning bidder an operating subsidy, as determined 
by FRA and based on Amtrak's final audited publically-reported fully-
allocated operating costs of the route for the prior fiscal year, 
excluding costs related to Other Postretirement Employee Benefits, 
Amtrak Performance Tracking System Asset Allocations, Project Related 
Costs, and Amtrak Office of Inspector General activities, subject to 
the availability of funding, for the first year at a level that does 
not exceed 90 percent of the level in effect for that specific route 
during the fiscal year preceding the fiscal year in which the petition 
was received, adjusted for inflation;
    (3) State that any award of an operating subsidy is made annually, 
is subject to the availability of funding, and is based on the amount 
calculated under paragraph (b)(2) of this section, adjusted for 
inflation;
    (4) Condition the operating and subsidy rights upon the winning 
bidder providing intercity passenger rail transportation over the route 
that is no less frequent, nor over a shorter distance, than Amtrak 
provided on that route before the award;
    (5) Condition the operating and subsidy rights upon the winning 
bidder's compliance with performance standards FRA may require, but 
which, at a minimum, must meet or exceed the performance required of or 
achieved by Amtrak on the applicable route during the fiscal year 
immediately preceding the year the bid is submitted;
    (6) Subject the winning bidder to the grant conditions established 
by 49 U.S.C. 24405; and
    (7) Subject the winning bidder to the requirements of the 
appropriations act(s) funding the contract.
    (c) Publication. The winning bidder shall make their bid available 
to the public after the bid award with any appropriate redactions for 
confidential or proprietary information.


Sec.  269.15  Access to facilities; employees.

    (a) Access to facilities. (1) If the award under Sec.  269.13 is 
made to an eligible petitioner, Amtrak must provide that eligible 
petitioner access to the Amtrak-owned reservation system, stations, and 
facilities directly related to operations of the awarded route(s).
    (2) If Amtrak and the eligible petitioner awarded a route cannot 
agree on the terms of access, either party may petition the Surface 
Transportation Board under 49 U.S.C. 24711(g).
    (b) Employees. The employees of any person, except as provided in a 
collective bargaining agreement, an eligible petitioner uses in the 
operation of a route under this part shall be considered an employee of 
that eligible petitioner and subject to the applicable Federal laws and 
regulations governing similar crafts or classes of employees of Amtrak.
    (c) Hiring preference. The winning bidder must provide hiring 
preference to qualified Amtrak employees displaced by the award of the 
bid, consistent with the staffing plan the winning bidder submits and 
the grant conditions established by 49 U.S.C. 24405.


Sec.  269.17  Cessation of service.

    (a) If an eligible petitioner 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 and re-bidding the 
contract to operate the service.
    (b) In re-bidding the contract, the entity providing service must 
either be Amtrak or an eligible petitioner.

    Issued in Washington, DC, on July 3, 2017.
Patrick Warren,
Executive Director.
[FR Doc. 2017-14355 Filed 7-5-17; 4:15 pm]
 BILLING CODE 4910-06-P


