[House Report 107-96]
[From the U.S. Government Publishing Office]




107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     107-96

======================================================================



 
                RAILROAD TRACK MODERNIZATION ACT OF 2001

                                _______
                                

 June 12, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

     Mr. Young of Alaska, from the Committee on Transportation and 
                Infrastructure, submitted the following

                              R E P O R T

                        [To accompany H.R. 1020]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 1020) to authorize the Secretary of 
Transportation to establish a grant program for the 
rehabilitation, preservation, or improvement of railroad track, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION. 1. SHORT TITLE.

  This Act may be cited as the ``Railroad Track Modernization Act of 
2001''.

SEC. 2. CAPITAL GRANTS FOR RAILROAD TRACK.

  (a) Amendment.--Chapter 223 of title 49, United States Code, is 
amended to read as follows:

            ``CHAPTER 223--CAPITAL GRANTS FOR RAILROAD TRACK

``Sec.
``22301. Capital grants for railroad track.

``Sec. 22301. Capital grants for railroad track

  ``(a) Establishment of Program.--
          ``(1) Establishment.--The Secretary of Transportation shall 
        establish a program of capital grants for the rehabilitation, 
        preservation, or improvement of railroad track (including 
        roadbed, bridges, and related track structures) of class II and 
        class III railroads. Such grants shall be for rehabilitating, 
        preserving, or improving track used primarily for freight 
        transportation to a standard ensuring that the track can be 
        operated safely and efficiently, including grants for 
        rehabilitating, preserving, or improving track to handle 
        286,000 pound rail cars. Grants may be provided under this 
        chapter--
                  ``(A) directly to the class II or class III railroad; 
                or
                  ``(B) with the concurrence of the class II or class 
                III railroad, to a State or local government.
          ``(2) State cooperation.--Class II and class III railroad 
        applicants for a grant under this chapter are encouraged to 
        utilize the expertise and assistance of State transportation 
        agencies in applying for and administering such grants. State 
        transportation agencies are encouraged to provide such 
        expertise and assistance to such railroads.
          ``(3) Interim regulations.--Not later than December 31, 2001, 
        the Secretary shall issue temporary regulations to implement 
        the program under this section. Subchapter II of chapter 5 of 
        title 5 does not apply to a temporary regulation issued under 
        this paragraph or to an amendment to such a temporary 
        regulation.
          ``(4) Final regulations.--Not later than October 1, 2002, the 
        Secretary shall issue final regulations to implement the 
        program under this section.
  ``(b) Maximum Federal Share.--The maximum Federal share for carrying 
out a project under this section shall be 80 percent of the project 
cost. The non-Federal share may be provided by any non-Federal source 
in cash, equipment, or supplies. Other in-kind contributions may be 
approved by the Secretary on a case by case basis consistent with this 
chapter.
  ``(c) Project Eligibility.--For a project to be eligible for 
assistance under this section the track must have been operated or 
owned by a class II or class III railroad as of the date of the 
enactment of the Railroad Track Modernization Act of 2001.
  ``(d) Use of Funds.--Grants provided under this section shall be used 
to implement track capital projects as soon as possible. In no event 
shall grant funds be contractually obligated for a project later than 
the end of the third Federal fiscal year following the year in which 
the grant was awarded. Any funds not so obligated by the end of such 
fiscal year shall be returned to the Secretary for reallocation.
  ``(e) Additional Purpose.--In addition to making grants for projects 
as provided in subsection (a), the Secretary may also make grants to 
supplement direct loans or loan guarantees made under title V of the 
Railroad Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
822(d)), for projects described in the last sentence of section 502(d) 
of such title. Grants made under this subsection may be used, in whole 
or in part, for paying credit risk premiums, lowering rates of 
interest, or providing for a holiday on principal payments.
  ``(f) Employee Protection.--The Secretary shall require as a 
condition of any grant made under this section that the recipient 
railroad provide a fair arrangement at least as protective of the 
interests of employees who are affected by the project to be funded 
with the grant as the terms imposed under section 11326(a), as in 
effect on the date of the enactment of the Railroad Track Modernization 
Act of 2001.
  ``(g) Labor Standards.--
          ``(1) Prevailing wages.--The Secretary shall ensure that 
        laborers and mechanics employed by contractors and 
        subcontractors in construction work financed by a grant made 
        under this section will be paid wages not less than those 
        prevailing on similar construction in the locality, as 
        determined by the Secretary of Labor under the Act of March 3, 
        1931 (known as the Davis-Bacon Act; 40 U.S.C. 276a et seq.). 
        The Secretary shall make a grant under this section only after 
        being assured that required labor standards will be maintained 
        on the construction work.
          ``(2) Wage rates.--Wage rates in a collective bargaining 
        agreement negotiated under the Railway Labor Act (45 U.S.C. 151 
        et seq.) are deemed for purposes of this subsection to comply 
        with the Act of March 3, 1931 (known as the Davis-Bacon Act; 40 
        U.S.C. 276a et seq.).
  ``(h) Study.--The Secretary shall conduct a study of the projects 
carried out with grant assistance under this section to determine the 
public interest benefits associated with the light density railroad 
networks in the States and their contribution to a multimodal 
transportation system. Not later than March 31, 2003, the Secretary 
shall report to Congress any recommendations the Secretary considers 
appropriate regarding the eligibility of light density rail networks 
for Federal infrastructure financing.
  ``(i) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Transportation $350,000,000 for each 
of the fiscal years 2002 through 2004 for carrying out this section.''.
    (b) Conforming Amendment.--The item relating to chapter 223 in the 
table of chapters of subtitle V of title 49, United States Code, is 
amended to read as follows:

``223. CAPITAL GRANTS FOR RAILROAD TRACK....................   22301''.

                       Purpose of the Legislation

    H.R. 1020 is designed to assist smaller railroads in 
upgrading their tracks and roadbed. This assistance includes 
the purpose of accommodating newer, heavier freight cars along 
their lines. The bill authorizes $350 million to be 
appropriated from the general fund in each of the fiscal years, 
2002-2004, for capital grants to benefit class II and class III 
railroads.

       Summary and Section-by-Section Analysis of the Legislation

    The bill establishes a capital grant program for 
rehabilitation and improvement of tracks and related structures 
on the small (class II and class III) railroads, to bring the 
infrastructure up to a level permitting safe and efficient 
operation, including traffic containing the new heavier 
286,000-pound rail cars being adopted as an industry standard 
by the large railroads. The general fund authorization level is 
$350 million per year for FY 2002-2004.
    The maximum federal share for carrying out a project shall 
be 80 percent. The non-Federal contribution can be from any 
non-Federal source, and may be cash, equipment, supplies, or 
other contribution approved on a case-by-case basis by DOT. 
Track to be rehabilitated or improved must have been operated 
or owned as a class II or class III rail property on date of 
enactment.
    Grant funds must be contractually obligated within three 
full fiscal years after the award of a grant. Besides direct 
funding of track rehabilitation and improvement, grants may 
also be used to supplement TEA 21 rail loans, including paying 
credit risk premium for loans, lowering rate of interest, or 
providing principal payment holidays.
    Davis-Bacon standards applicable to Amtrak and transit 
apply to construction work financed by grants. Any rail 
employee adversely affected by a grant-funded project will 
receive standard New York Dock labor protection benefits, under 
current Surface Transportation Board standards. DOT is required 
to conduct a study of future needs of light-density rail lines 
for federal infrastructure funding, and report to Congress by 
March 31, 2003.

                          Sec. 1--SHORT TITLE

    The act is to be cited as the ``Railroad Track 
Modernization Act of 2001.''

               Sec. 2--CAPITAL GRANTS FOR RAILROAD TRACK

    Section 2 redesignates chapter 223 of title 49 U.S.C. as 
``CAPITAL GRANTS FOR RAILROAD TRACK,'' and assigns section 
22301 the same name.
    New subsection 22301(a) directs the Secretary of 
Transportation to establish a program of capital grants for the 
rehabilitation, preservation, or improvement of railroad track, 
roadbed, and bridges of class II and class III railroads. 
Grants are to be used to improve track that primarily carries 
freight, and to a standard that ensures safe and efficient 
operation along the rail line. Purposes of the grants include 
rehabilitating, preserving or improving track to handle 
286,000-pound rail cars.
    Grants under this section are to be provided either 
directly to a class II or class III railroad, or to a State or 
local government once the class II or class III rail carrier 
has concurred. In addition, class II and class III applicants 
for these grants are encouraged to utilize the expertise and 
assistance of State transportation agencies in applying for and 
administering the grants. Correlatively, State transportation 
agencies are encouraged to provide this assistance.
    To assure timely implementation of this section, the 
Secretary of Transportation is directed to issue temporary 
regulations by December 31, 2001. These regulations are exempt 
from the standard notice and comment procedures under the 
Administrative Procedure Act. Subsequently, the Secretary is 
directed to issue final regulations, subject to the normal 
rulemaking process, by October 1, 2002. The expedited issuance 
of temporary regulations is intended to ensure that any 
appropriated funds will be put to use immediately.
    New subsection 22301(b) establishes the maximum Federal 
share for carrying out a project under this section at 80 
percent. The non-Federal share may come from any non-Federal 
source in cash, equipment or supplies. The Secretary of 
Transportation has the authority to approve other in-kind 
contributions on a case-by-case basis.
    New subsection 22301(c) provides that only projects 
conducted on track owned or operated by a class II or class III 
railroad as of the date of enactment of this Act are eligible 
for grants under this section.
    New subsection 22301(d) requires that grant recipients 
under this section obligate their grant money within three 
fiscal years of receiving the grant. Funds held beyond three 
years will be returned to the Secretary of Transportation for 
redistribution.
    New subsection 22301(e) allows the Secretary of 
Transportation to use the funds authorized in this Act to make 
grants to supplement direct loans or loan guarantees made under 
Title V of the Railroad Revitalization and Regulatory Reform 
Act of 1976 (also known as the Railroad Infrastructure Loan 
Program) for projects that primarily benefit class II and class 
III railroads. Such grants may be used for paying credit risk 
premiums, lowering interest rates, or providing for a holiday 
on principal payments.
    New subsection 22301(f) extends employee protection under 
section 11326(a) of Title 49, commonly known as New York Dock 
labor protection, to employees adversely affected by projects 
funded with grants under this section.
    New subsection 22301(g) extends prevailing wage protections 
established in the Davis-Bacon Act for laborers and mechanics 
employed in construction work financed by a grant made under 
this section.
    New subsection 22301(h) directs the Secretary of 
Transportation to conduct a study of the projects carried out 
with grant assistance under this section to determine the 
public interest benefits associated with the shortline rail 
network. The Secretary is directed to report to Congress no 
later than March 31, 2003.
    New subsection 22301(i) authorizes general fund 
appropriations of $350 million for each of the fiscal years 
2002 through 2004 for grants under this section.

                     Background on the Legislation

    Smaller railroads are generally labeled class II or class 
III rail carriers, using Surface Transportation Board (formerly 
Interstate Commerce Commission (ICC)) size thresholds based on 
total annual revenues. Class III carriers each have $20.8 
million or less in annual revenues, while the limit for class 
II carriers is $259.4 million. Although some smaller railroads 
have existed for decades, hundreds of new short-line and 
regional railroads were created following the enactment of the 
Staggers Rail Act of 1980.
    Prior to the Staggers Act reforms that permitted large 
(class I) railroads to abandon unproductive lines more easily, 
deterioration of the rail network, especially on light-density 
lines serving smaller towns and rural areas, was widespread. 
The generally higher operating costs of the class I carriers, 
combined with low traffic levels, made most light-density lines 
money-losing enterprises for the large railroads. Prior to 
1980, most such lines were shed by class I carriers (which the 
ICC regulatory process permitted) through outright 
abandonment--removing the lines permanently from the rail 
network.
    After 1980, ICC policies and regulations were revised to 
permit easier sale or lease of marginal lines by class I 
railroads to start-up operations. This led to a boom in the 
formation of class II and class III railroads, which include 
both union and non-union carriers. At the Subcommittee's April 
25, 2001 railroad infrastructure policy hearing, both labor and 
management witnesses agreed that, the larger and more 
prosperous the smaller railroads become, the more extensive the 
degree of union representation.
    Some smaller railroads have succeeded financially, while 
others have not. In the vast majority of cases, the track, 
roadbed, and other infrastructure acquired by the new smaller 
operators was already severely deteriorated by class I 
standards, but still sufficiently sound to allow low-density 
(and often low-speed) freight operations. Besides attracting 
sufficient revenue, a secondary struggle by the smaller freight 
railroads involved acquiring sufficient capital to maintain and 
possibly upgrade the quality of the infrastructure inherited 
from the former owners of these lines.
    In the last several years, a new burden to the marginal 
infrastructure of smaller railroads has appeared. Class I 
railroads have begun to add large numbers of more efficient, 
but far heavier, 286,000-pound cars to their fleets. The 
heavier fleets increase the operating stresses and wear and 
tear on smaller railroads' track systems, and depending on the 
level of deterioration, could entirely prevent operation of 
``286'' cars on certain light-density lines. If such physical 
embargos were to become widespread, it could result in a non-
interoperable rail network; i.e., a rail system where the same 
fleet of cars cannot operate in all locations on the system. 
Smaller railroads provide approximately 10 percent of the 
freight traffic of the major class I carriers. A recent study 
funded in part by the Federal Railroad Administration which was 
conducted under contract to the American Short Line and 
Regional Railroad Association and discussed at the 
Subcommittee's April 25 hearing, concluded that the entire 
class II/class III rail network would require about $6.8 
billion in infrastructure upgrades to deal with the heavier 
rail cars.

       Hearings, Legislative History and Committee Consideration

    H.R. 1020 was discussed extensively at the Subcommittee's 
April 25, 2001 hearing on railroad infrastructure policies. 
Among those testifying in support of the bill were the 
Association of American Railroads, the American Short Line and 
Regional Railroad Association, the Brotherhood of Maintenance 
of Way Employees, and the United Transportation Union.
    On March 14, 2001, Chairman Quinn introduced H.R. 1020, 
with the original cosponsorship of Subcommittee Ranking Member 
Clement and Mr. Bachus, a Subcommittee Member. On May 9, 2001, 
the Subcommittee on Railroads met in open session and favorably 
reported H.R. 1020 as amended. On May 16, 2001, the Committee 
on Transportation and Infrastructure met in open session and 
favorably reported H.R. 1020 as amended.

                             Rollcall Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires each committee report to include the 
total number of votes cast for and against on each rollcall 
vote on a motion to report and on any amendment offered to the 
measure or matter, and the names of those members voting for 
and against. There were no rollcall votes on this legislation.

                      Committee Oversight Findings

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in this report.

                          Cost of Legislation

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives does not apply where a cost estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974 has been timely submitted prior to the filing of the 
report and is included in the report. Such a cost estimate is 
included in this report.

                    Compliance With House Rule XIII

    With respect to the requirement of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives, and 308(a) 
of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included below.
          1. With respect to the requirement of clause 3(c)(2) 
        of rule XIII of the Rules of the House of 
        Representatives, and 308(a) of the Congressional Budget 
        Act of 1974, the Committee references the report of the 
        Congressional Budget Office included below.
          2. With respect to the requirement of clause 3(c)(4) 
        of rule XIII of the Rules of the House of 
        Representatives, the performance goals and objectives 
        of this legislation are to assist smaller railroads in 
        upgrading their marginal tracks and roadbed in order to 
        promote interoperability on our national rail network.
          3. With respect to the requirement of clause 3(c)(3) 
        of rule XIII of the Rules of the House of 
        Representatives and section 402 of the Congressional 
        Budget Act of 1974, the Committee has received the 
        following cost estimate for H.R. 1020 from the Director 
        of the Congressional Budget Office.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 6, 2001.
Hon. Don Young,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1020, Railroad 
Track Modernization Act of 2001.
    If you wish further details on this estimate, we will be 
placed to provide them. The CBO staff contact is Rachel 
Milberg.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               Congressional Budget Office Cost Estimate


H.R. 1020--Railroad Track Modernization Act of 2001

    Summary: H.R. 1020 authorizes the Secretary of 
Transportation to provide grants to states and to class II and 
class III railroads for improving railroad track. These grants 
also could be used to pay the credit risk premium, lower 
interest rates, and cover principal payments for loans provided 
under the Railroad Rehabilitation and Improvement Financing 
(RRIF) program. (Under the RRIF program the Secretary of 
Transportation is authorized to provide direct loans and loan 
guarantees to railroads for capital improvements. Borrowers may 
pay a credit risk premium to cover the subsidy cost of the 
loans or loan guarantees in lieu of federal appropriations.)
    H.R. 1020 would authorize the appropriation of $350 million 
each year over the 2002-2004 period. CBO estimates that 
implementing H.R. 1020 would cost $840 million over the 2002-
2006 period, and another $210 million after 2006. H.R. 1020 
would not affect direct spending or receipts; therefore, pay-
as-you-go procedures would not apply.
    H.R. 1020 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
Any costs to state or local governments that receive grants 
under this bill would be incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1020 is shown in the following table. 
The costs of this legislation fall within budget function 400 
(transportation).

----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2001      2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for Railroad Capital
 Improvement Grants:
    Budget Authority................................         0         0         0         0         0         0
    Estimated Outlays \1\...........................         2         0         0         0         0         0
Proposed Changes:
    Authorization Level.............................         0       350       350       350         0         0
    Estimated Outlays...............................         0        35       175       210       210       210
Spending Under H.R. 1020:
    Authorization Level.............................         0       350       350       350         0         0
    Estimated Outlays \1\...........................         2        35       175       210       210       210
----------------------------------------------------------------------------------------------------------------
\1\ Outlays in 2001 are from prior appropriations for railroad capital improvement grants.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
1020 will be enacted in fiscal year 2001 and that the 
authorized amounts will be appropriated for each year. 
Estimates of spending are based on information from the Federal 
Railroad Administration and historical spending patters of 
similar programs.
    H.R. 1020 would repeal the authority of the Secretary of 
Transportation to provide grants to states for capital 
improvements to railroads. No appropriations have been made for 
these grants since 1995. Instead the bill would authorize the 
Secretary to make improvement grants directly to certain 
railroads to states or local governments under certain 
conditions, provided that 20 percent of the cost of any 
projects funded with these grants come from nonfederal 
contributions.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 1020 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. States and railroads that receive funds under 
this program would be required to contribute 20 percent of the 
project's total cost. Any costs to state or local governments 
as a result of enacting this bill would be incurred 
voluntarily.
    Estimate prepared by: Federal costs: Rachel Milberg; Impact 
and State, local, and tribal governments: Susan Sieg Tompkins; 
Impact on the private sector. Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause (3)(d)(1) of rule XIII of the Rules of 
the House of Representatives, committee reports on a bill or 
joint resolution of a public character shall include a 
statement citing the specific powers granted to the Congress in 
the Constitution to enact the measure. The Committee on 
Transportation and Infrastructure finds that Congress has the 
authority to enact this measure pursuant to its powers granted 
under article I, section 8 of the Constitution.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act. (Public Law 104-4.)

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act. (Public Law 
104-1.)

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 49, UNITED STATES CODE

           *       *       *       *       *       *       *



SUBTITLE V--RAIL PROGRAMS

           *       *       *       *       *       *       *


                           PART B--ASSISTANCE

      LOCAL RAIL FREIGHT ASSISTANCE................................22101
      LIGHT DENSITY RAIL LINE PILOT PROJECTS......................22301]
22301APITAL GRANTS FOR RAILROAD TRACK.................................

           *       *       *       *       *       *       *


          [CHAPTER 223--LIGHT DENSITY RAIL LINE PILOT PROJECTS

[Sec.
[22301. Light density rail line pilot projects.

[Sec. 22301. Light density rail line pilot projects

  [(a) Grants.--The Secretary of Transportation may make grants 
to States that have State rail plans described in section 22102 
(1) and (2), to fund pilot projects that demonstrate the 
relationship of light density railroad services to the 
statutory responsibilities of the Secretary, including those 
under title 23.
  [(b) Limitations.--Grants under this section may be made only 
for pilot projects for making capital improvements to, and 
rehabilitating, publicly and privately owned rail line 
structures, and may not be used for providing operating 
assistance.
  [(c) Private Owner Contributions.--Grants made under this 
section for projects on privately owned rail line structures 
shall include contributions by the owner of the rail line 
structures, based on the benefit to those structures, as 
determined by the Secretary.
  [(d) Study.--The Secretary shall conduct a study of the pilot 
projects carried out with grant assistance under this section 
to determine the public interest benefits associated with the 
light density railroad networks in the States and their 
contribution to a multimodal transportation system. Not later 
than March 31, 2003, the Secretary shall report to Congress any 
recommendations the Secretary considers appropriate regarding 
the eligibility of light density rail networks for Federal 
infrastructure financing.
  [(e) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out this section 
$17,500,000 for each of the fiscal years 1998, 1999, 2000, 
2001, 2002, and 2003. Such funds shall remain available until 
expended.]

             CHAPTER 223--CAPITAL GRANTS FOR RAILROAD TRACK

Sec.
22301. Capital grants for railroad track.

Sec. 22301. Capital grants for railroad track

  (a) Establishment of Program.--
          (1) Establishment.--The Secretary of Transportation 
        shall establish a program of capital grants for the 
        rehabilitation, preservation, or improvement of 
        railroad track (including roadbed, bridges, and related 
        track structures) of class II and class III railroads. 
        Such grants shall be for rehabilitating, preserving, or 
        improving track used primarily for freight 
        transportation to a standard ensuring that the track 
        can be operated safely and efficiently, including 
        grants for rehabilitating, preserving, or improving 
        track to handle 286,000 pound rail cars. Grants may be 
        provided under this chapter--
                  (A) directly to the class II or class III 
                railroad; or
                  (B) with the concurrence of the class II or 
                class III railroad, to a State or local 
                government.
          (2) State cooperation.--Class II and class III 
        railroad applicants for a grant under this chapter are 
        encouraged to utilize the expertise and assistance of 
        State transportation agencies in applying for and 
        administering such grants. State transportation 
        agencies are encouraged to provide such expertise and 
        assistance to such railroads.
          (3) Interim regulations.--Not later than December 31, 
        2001, the Secretary shall issue temporary regulations 
        to implement the program under this section. Subchapter 
        II of chapter 5 of title 5 does not apply to a 
        temporary regulation issued under this paragraph or to 
        an amendment to such a temporary regulation.
          (4) Final regulations.--Not later than October 1, 
        2002, the Secretary shall issue final regulations to 
        implement the program under this section.
  (b) Maximum Federal Share.--The maximum Federal share for 
carrying out a project under this section shall be 80 percent 
of the project cost. The non-Federal share may be provided by 
any non-Federal source in cash, equipment, or supplies. Other 
in-kind contributions may be approved by the Secretary on a 
case by case basis consistent with this chapter.
  (c) Project Eligibility.--For a project to be eligible for 
assistance under this section the track must have been operated 
or owned by a class II or class III railroad as of the date of 
the enactment of the Railroad Track Modernization Act of 2001.
  (d) Use of Funds.--Grants provided under this section shall 
be used to implement track capital projects as soon as 
possible. In no event shall grant funds be contractually 
obligated for a project later than the end of the third Federal 
fiscal year following the year in which the grant was awarded. 
Any funds not so obligated by the end of such fiscal year shall 
be returned to the Secretary for reallocation.
  (e) Additional Purpose.--In addition to making grants for 
projects as provided in subsection (a), the Secretary may also 
make grants to supplement direct loans or loan guarantees made 
under title V of the Railroad Revitalization and Regulatory 
Reform Act of 1976 (45 U.S.C. 822(d)), for projects described 
in the last sentence of section 502(d) of such title. Grants 
made under this subsection may be used, in whole or in part, 
for paying credit risk premiums, lowering rates of interest, or 
providing for a holiday on principal payments.
  (f) Employee Protection.--The Secretary shall require as a 
condition of any grant made under this section that the 
recipient railroad provide a fair arrangement at least as 
protective of the interests of employees who are affected by 
the project to be funded with the grant as the terms imposed 
under section 11326(a), as in effect on the date of the 
enactment of the Railroad Track Modernization Act of 2001.
  (g) Labor Standards.--
          (1) Prevailing wages.--The Secretary shall ensure 
        that laborers and mechanics employed by contractors and 
        subcontractors in construction work financed by a grant 
        made under this section will be paid wages not less 
        than those prevailing on similar construction in the 
        locality, as determined by the Secretary of Labor under 
        the Act of March 3, 1931 (known as the Davis-Bacon Act; 
        40 U.S.C. 276a et seq.). The Secretary shall make a 
        grant under this section only after being assured that 
        required labor standards will be maintained on the 
        construction work.
          (2) Wage rates.--Wage rates in a collective 
        bargaining agreement negotiated under the Railway Labor 
        Act (45 U.S.C. 151 et seq.) are deemed for purposes of 
        this subsection to comply with the Act of March 3, 1931 
        (known as the Davis-Bacon Act; 40 U.S.C. 276a et seq.).
  (h) Study.--The Secretary shall conduct a study of the 
projects carried out with grant assistance under this section 
to determine the public interest benefits associated with the 
light density railroad networks in the States and their 
contribution to a multimodal transportation system. Not later 
than March 31, 2003, the Secretary shall report to Congress any 
recommendations the Secretary considers appropriate regarding 
the eligibility of light density rail networks for Federal 
infrastructure financing.
  (i) Authorization of Appropriations.--There are authorized to 
be appropriated to the Secretary of Transportation $350,000,000 
for each of the fiscal years 2002 through 2004 for carrying out 
this section.

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