[Federal Register Volume 82, Number 129 (Friday, July 7, 2017)]
[Rules and Regulations]
[Pages 31476-31489]
[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,<PHONE_NUMBER>, 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

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

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).

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

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

``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

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)

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

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

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

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

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<EMAIL_ADDRESS>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.

    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

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