[Federal Register Volume 81, Number 120 (Wednesday, June 22, 2016)]
[Proposed Rules]
[Pages 40624-40631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14698]


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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 269

[Docket No. FRA-2016-0023; Notice No. 1]
RIN 2130-AC60


Competitive Passenger Rail Service Pilot Program

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

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: FRA proposes regulations to implement 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 proposed rule would develop this pilot program as required by a 
statutory mandate.

DATES: Written Comments: Written comments on the proposed rule must be 
received by August 22, 2016. FRA will consider comments received after 
that date if practicable.
    Hearing Request: FRA anticipates resolving this rulemaking without 
a public, oral hearing. However, if FRA receives a specific request for 
a public, oral hearing prior to July 22, 2016, then FRA will schedule 
such a hearing and FRA will publish a supplemental notice in the 
Federal Register to inform interested parties of the date, time, and 
location of any such hearing.

ADDRESSES: Comments: Comments related to Docket Number FRA-2016-0023 
may be submitted by any of the following methods:
     Online: Comments should be filed at the Federal 
eRulemaking Portal, http://www.regulations.gov. Follow the online 
instructions for submitting comments.
     Mail: Docket Management Facility, U.S. Department of 
Transportation, 1200 New Jersey Ave. SE., W12-140, Washington, DC 
20590.
     Hand Delivery: Room W12-140 on the Ground level of the 
West Building,

[[Page 40625]]

1200 New Jersey Ave. SE., Washington, DC between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal Holidays.
     Fax: 202-493-2251.
    Instructions: All submissions must include the agency name, docket 
name and docket number or Regulatory Identification Number (RIN) for 
this rulemaking (RIN 2130-AC60). Note that FRA will post all comments 
received without change to http://www.regulations.gov, including any 
personal information provided. Please see the Privacy Act heading in 
the ``Supplemental Information'' section of this document for Privacy 
Act information related to any submitted petitions or materials.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov at any time, or to 
the U.S. Department of Transportation, Docket Operations, M-30, West 
Building, Ground Floor, room W12-140, 1200 New Jersey Ave. SE., 
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal Holidays.

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. Notice of Proposed Rulemaking

A. Statutory Background

    The proposed rule is in response to a statutory mandate--
specifically, section 11307 of the Fixing America's Surface 
Transportation (FAST) Act, Public Law 114-94, sec. 11307, 129 Stat. 
1312, 1660-1664 (2015). Section 11307 states that the Secretary of 
Transportation (Secretary) must 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, as defined 
in 49 U.S.C. 24102 and operated by Amtrak on the date the Passenger 
Rail Reform and Investment Act of 2015 (title XI of the FAST Act) was 
enacted.
    Section 11307 also provides for, among other things, the following:
    (1) Establishment of a petition, notification, and bid process 
through which the Secretary would evaluate bids to provide passenger 
rail service over particular long-distance routes by interested 
eligible petitioners and Amtrak;
    (2) The Secretary's selection of a winning bidder;
    (3) The Secretary'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 
such performance standards as the Secretary may require;
    (4) Amtrak must provide access to the Amtrak-owned reservation 
system, stations, and facilities to a winning bidder;
    (5) Employees used in the operation of a route under the pilot 
program would be considered an employee of that eligible petitioner and 
would be subject to the applicable Federal laws and regulations 
governing similar crafts or classes of employees of Amtrak;
    (6) The winning bidder must provide hiring preference to displaced 
qualified Amtrak employees;
    (7) The winning bidder would be subject to 49 U.S.C. 24405 grant 
conditions; and
    (8) If a winning bidder ceases to operate the service, or to 
otherwise fulfill their obligations, the Secretary, in collaboration 
with the Surface Transportation Board, would take any necessary action 
consistent with the FAST Act to enforce the contract and to ensure the 
continued provision of service.

B. Timeline Established by the Proposed Rule

    The proposed rule would establish deadlines for filing petitions, 
filing bids, and FRA's execution of contract(s) with any winning 
bidders. As to the filing of petitions, Sec.  269.7(b) of the proposed 
rule would require a petition to be filed with FRA no later than 60 
days after publication of the final rule implementing the pilot 
program. Section 269.9(a) would then require the FRA to publish in the 
Federal Register a notice of receipt of a petition not later than 30 
days after the date of receipt.
    As to the filing of bids, proposed Sec.  269.9(b) would require 
both the petitioner and Amtrak, if Amtrak chose to do so, to submit 
complete bids to provide intercity passenger rail transportation over 
the applicable route with FRA not later than 120 days after FRA 
publishes a notice of receipt in the Federal Register under Sec.  
269.9(a). Proposed Sec.  269.9(b) articulates the bid requirements.
    Lastly, as to the award and execution of contracts with winning 
bidders (who are or do not include Amtrak), proposed Sec.  269.13 would 
require FRA to execute a contract with a winning bidder not later than 
270 days after the bid deadline established by proposed Sec.  269.9.

C. Operating Subsidy

    Section 11307 of the FAST Act requires the Secretary to award an 
operating subsidy to a winning bidder that is not or does not include 
Amtrak. 49 U.S.C. 24711(b)(1)(E)(ii). Specifically, the operating 
subsidy, as determined by the Secretary, would be 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.
    To determine the operating subsidy amount, FRA would take the 
fully-allocated costs of the route, as operated by Amtrak in the prior 
fiscal year, including direct route costs, shared route costs, and 
indirect costs, into consideration so that the operating subsidy award 
would not result in an increase in the Federal subsidy of intercity 
passenger rail. In addition, as section 11307 of the FAST Act requires, 
FRA would provide to Amtrak an appropriate portion of the applicable 
appropriations to cover any cost directly attributable to 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. 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.
    The FAST Act also 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, section 11101(e), 
129 Stat. at 1623. However, if Congress does not appropriate funds that 
allow the Secretary to pay an operating subsidy, then the Secretary 
cannot award an operating subsidy to a winning bidder other than Amtrak 
as required by the FAST Act. Consequently, this pilot program proposes 
to make the award of any operating subsidy to a winning bidder that is 
not or does not include Amtrak, subject to the availability of funding. 
Accordingly, the Secretary's contract with a winning bidder that is not 
or does not include Amtrak would not award an operating subsidy unless 
the award is consistent with the FAST Act and the applicable 
appropriations act. In addition, the Secretary would award the

[[Page 40626]]

operating subsidy to the winning bidder annually and, again, only 
consistent with the FAST Act and the applicable appropriations act 
(i.e., the Secretary would not award all four years of the operating 
subsidy at one time).

II. Section-by-Section Analysis

Section 269.1 Purpose

    This section provides that the proposed rule would carry 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.

Section 269.3 Application

    Paragraph (a) of this section provides that the proposed pilot 
program would not be made available to more than three Amtrak long-
distance routes, as defined in 49 U.S.C. 24102. This proposed paragraph 
is based on the FAST Act directive in 49 U.S.C. 24711(a).
    Paragraph (b) of this section proposes that any eligible petitioner 
awarded a contract to provide passenger rail service under the pilot 
program could 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 could renew such service for 
one additional operation period of four years. This proposed paragraph 
is based on the statutory directive in 49 U.S.C. 24711(b)(1)(A).

Section 269.5 Definitions

    This section contains the definitions FRA proposes to use in this 
rule for the following terms: Act; Administrator; Amtrak; Eligible 
petitioner; File and Filed; Financial plan; FRA; Operating plan; and 
Long-distance route.
    This section proposes to define ``financial plan'' to mean a plan 
that contains, for each Federal fiscal year fully or partially covered 
by the bid: an annual projection of the revenues, expenses, capital 
expenditure requirements, and cash flows (from operating activities, 
investing activities, and financing activities, showing sources and 
uses of funds) attributable to the route; and a statement of the 
assumptions underlying the financial plan's contents.
    In addition, this proposed section defines ``operating plan'' to 
mean a plan that contains, for each Federal fiscal year fully or 
partially covered by the bid: A complete description of the service 
planned to be offered, including the train schedules, frequencies, 
equipment consists, fare structures, and such amenities as sleeping 
cars and food service provisions; station locations; hours of 
operation; provisions for accommodating the traveling public, including 
proposed arrangements for stations shared with other routes; expected 
ridership; passenger-miles; revenues by class of service between each 
city-pair proposed to be served; and a statement of the assumptions 
underlying the operating plan's contents. The proposed rule would 
require bidders to include a financial plan and an operating plan--as 
those terms are defined here--in their bids. These proposed definitions 
would ensure that bids contain sufficient information to be evaluated.
    This section also proposes to define ``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 proposes that 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 
proposed paragraph is based on the statutory directive in 49 U.S.C. 
24711(b)(1)(A).
    Paragraph (b) of this section proposes that a petition submitted to 
FRA under this rule must: be filed with FRA no later than 60 days after 
FRA publishes 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''; and 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. This proposed paragraph is intended to ensure a 
petition provides clear notice to FRA.

Section 269.9 Bid Process

    Paragraph (a) of this section proposes 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 proposed paragraph is 
based on the statutory directive in 49 U.S.C. 24711(b)(1)(B)(i).
    Paragraph (b) of this section describes the proposed 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 proposes the 
detailed information such bids must include. This proposed paragraph is 
based on the statutory directive in 49 U.S.C. 24711(b)(1)(C).
    Paragraph (c) of this section proposes that FRA could 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 that Amtrak 
would still incur following the cessation of service, including the 
increased costs for other services. FRA would establish a deadline by 
which the bidder and/or Amtrak must submit the supplemental information 
to FRA.

Section 269.11 Evaluation

    Paragraph (a) of this section proposes that FRA would select a 
winning bidder by evaluating the bids based on the requirements of this 
proposed part.
    Paragraph (b) of this section proposes that, upon selecting a 
winning bidder, FRA would 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 would request public comment for 30 days after the 
date on which FRA selects the bid. This proposed 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 proposes that FRA would execute a 
contract with a winning bidder that is not or does not include Amtrak, 
consistent with the requirements of proposed Sec.  269.13, and as FRA 
may otherwise require, not later than 270 days after the bid deadline 
established by proposed paragraph 269.9(b). This proposed paragraph is 
based on the statutory directive in 49 U.S.C. 24711(b)(1)(E).
    Paragraph (b) of this section proposes what the contract would 
include. This proposed paragraph is based on the statutory directive in 
49 U.S.C. 24711(b)(1)(E), (b)(4), and (c)(3).
    Paragraph (c) of this section proposes 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 proposed paragraph is

[[Page 40627]]

based on the statutory directive in 49 U.S.C. 24711(b)(1)(C)(ii).

Section 269.15 Access to Facilities; Employees

    Paragraph (a) of this section proposes that, if an award under 
proposed Sec.  269.13 is made to a 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. This proposed paragraph is based on the statutory 
directive in 49 U.S.C. 24711(c).
    Paragraph (b) of this section proposes that the employees of any 
person, except as provided in a collective bargaining agreement, a 
bidder uses to operate a route under the proposed rule would be 
considered an employee of that bidder and subject to the applicable 
Federal laws and regulations governing similar crafts or classes of 
employees of Amtrak. This proposed paragraph is based on the statutory 
directive in 49 U.S.C. 24711(c)(2).
    Paragraph (c) of this section proposes that a winning bidder would 
provide hiring preference to qualified Amtrak employees displaced by 
the award of the bid, consistent with the staffing plan submitted by 
the winning bidder. This proposed paragraph is based on the statutory 
directive in 49 U.S.C. 24711(c)(3).

Section 269.17 Cessation of Service

    This section proposes 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 proposed 
Sec.  269.13, the Administrator, in collaboration with the Surface 
Transportation Board, 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 the installment of 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 proposes under 
paragraph (b) that the entity providing interim service would either be 
Amtrak or an eligible petitioner under Sec.  269.5. This proposed 
paragraph 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 proposed 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 evaluation 
addressing the economic impact of the proposed rule.
    FRA does not expect any regulatory costs because this proposed rule 
would be voluntary and would not require an eligible petitioner to take 
any action. In addition, the proposed 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 proposed pilot program. Of 
course, if no eligible petitioners participate in the pilot program, 
then no costs or benefits would be incurred because of the proposed 
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 would submit bids to 
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 may have some of the data necessary to 
prepare the bid available. Therefore, their cost may 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 cost   entity bidder cost   Amtrak cost  (FRA
                                                                             (FRA cost * 3)        cost * 2)
----------------------------------------------------------------------------------------------------------------
Total Cost per Bid..................................            $49,834            $149,503             $99,669
----------------------------------------------------------------------------------------------------------------

    As stated above, FRA's total burden estimate assumes three bids 
would be 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 proposed rule. FRA cannot 
quantify the benefits but discussed them qualitatively in the 
regulatory evaluation. If no railroads submit a bid for operating 
service, Amtrak would continue to operate service as it currently does. 
Therefore, no benefits would occur because of this proposed 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 proposed 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

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an Initial Regulatory Flexibility Analysis (IRFA) 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 has not 
determined whether this proposed rule would have a significant economic 
impact on a substantial number of small entities. Therefore, FRA is 
publishing this IRFA to help the public comment on the potential small 
business impacts of the requirements in this NPRM. FRA invites all 
interested parties to submit data and information regarding the 
potential economic impact on small entities that would result from the 
adoption of the proposals in this NPRM. FRA will consider all 
information and comments received in the public comment process to 
determine the economic impact on small entities.

Reasons for Considering Agency Action

    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 
proposed rule would develop this pilot program consistent with the 
statutory directive.

A Succinct Statement of the Objectives of, and the Legal Basis for, the 
Proposed Rule

    The objective of this proposed rule is to implement the statutory 
mandate in FAST Act section 11307 to develop 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, operated by Amtrak on the date of enactment of the FAST 
Act.

A Description of and, Where Feasible, an Estimate of the Number of 
Small Entitles to Which the Proposed Rule Would Apply

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) 
requires a review of proposed and final rules to assess their impact on 
small entities, unless the Secretary certifies 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 the Surface Transportation 
Board's revenue threshold for a Class III railroad carrier. Railroad 
revenue is adjusted for inflation by applying a revenue deflator 
formula under 49 CFR 1201.1-1. FRA is using this definition for the 
proposed rule. For other entities, the same dollar limit in revenues 
governs whether a railroad, contractor, or other respondent is a small 
entity.
    This proposed rule would apply to the following eligible 
petitioners: (a) 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; (b) 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 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 (c) 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 proposed rule is voluntary for all eligible petitioners. 
Therefore, there are no mandates placed on large or small railroads. In 
addition, the proposed rule is limited to not more than three long-
distance routes operated by Amtrak. Consequently, this proposed rule is 
not likely to affect a substantial number of small entities, and most 
likely will not impact any small entities. However, since small 
entities can bid for service, FRA requests comments on this finding.

A Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Rule, Including an Estimate of the Class 
of Small Entities That Will Be Subject to the Requirements and the Type 
of Professional Skill Necessary for Preparation of the Report or Record

    Since this program is voluntary, small railroads would not have to 
take any action. Therefore, this proposed rule would not have any 
negative economic impact on small entities. 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 would allow small railroads to enter a 
market which currently has substantial barriers.
    FRA notes this proposed 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 proposed 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 proposed 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.

Identification, to the Extent Practicable, of All Relevant Federal 
Rules That May Duplicate, Overlap, or Conflict With the Proposed Rule

    FRA is not aware of any relevant Federal rule that duplicates, 
overlaps with, or conflicts with this proposed rule. FRA invites all 
interested parties to submit comments, data, and information 
demonstrating the potential economic

[[Page 40629]]

impact on small entities that would result from the adoption of the 
proposed language in this NPRM. FRA particularly encourages small 
entities that could potentially be impacted by the proposed rule to 
participate in the public comment process. FRA will consider all 
comments received during the public comment period for this NPRM when 
making a final determination of the NPRM's economic impact on 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 section 
1320.4, the obtaining, causing to be obtained, soliciting, or 
requiring the disclosure to an agency, third parties or the public 
of information by or for an agency by means of identical questions 
posed to, or identical reporting, recordkeeping, or disclosure 
requirements imposed on, ten or more persons, whether such 
collection of information is mandatory, voluntary, or required to 
obtain or retain a benefit.

    FRA expects the requirements of this proposed rule would 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 NPRM 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 NPRM is not a 
major FRA action (requiring the preparation of an environmental impact 
statement or environmental assessment) because the proposed rulemaking 
would not result in a change in current passenger service; instead, the 
program would only potentially result in a change in the operator of 
such service. Under section 4(c) and (e) of FRA's Procedures, FRA 
concludes no extraordinary circumstances exist for this NPRM that might 
trigger the need for a more detailed environmental review. As a result, 
FRA finds this NPRM is not a major Federal action significantly 
affecting the quality of the human environment.

5. Federalism Implications

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

6. Unfunded Mandates Reform Act of 1995

    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 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 proposed rule would 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 NPRM consistent with Executive Order 13211. 
FRA determined this NPRM 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.

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

[[Page 40630]]

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

    Railroads, Railroad employees.

The Proposed Rule

    For the reasons discussed in the preamble, FRA proposes to revise 
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 (Public 
Law 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 [email protected] 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) attributable to the route; and
    (2) A statement of the assumptions underlying the financial plan's 
contents.
    FRA means the Federal Railroad Administration.
    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.
    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; and
    (2) A statement of the assumptions underlying the operating plan's 
contents.


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 60 days after FRA 
publishes the competitive passenger rail service pilot program final 
rule;
    (2) Describe the petition as a ``Petition to Provide Passenger Rail 
Service under 49 CFR part 269''; and
    (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.


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 Sec.  269.9(a). 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 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

[[Page 40631]]

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;
    (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. At a minimum, this description must 
include, for each Federal fiscal year fully or partially covered by the 
bid a projection of the route's expected on-time performance and train 
delays;
    (10) Analyze the reasonably foreseeable effects, both positive and 
negative, of the passenger rail service on other intercity passenger 
rail services; and
    (11) Describe the bidder's compliance with all applicable Federal 
environmental laws.
    (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 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 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, 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 Sec.  269.13(b)(2), 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 last fiscal year; 
and
    (6) Subject the winning bidder to the grant conditions established 
by 49 U.S.C. 24405.
    (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. 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).
    (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.


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.

Sarah E. Feinberg,
Administrator.
[FR Doc. 2016-14698 Filed 6-21-16; 8:45 am]
 BILLING CODE 4910-06-P