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S. 348A SECTION-BY-SECTION ANALYSIS

(Introduced by Senator Claiborne Pell, Democrat, of Rhode Island,

January 7, 1965)

TITLE I-SHORT TITLE AND STATEMENT OF FINDINGS AND DECLARATIONS OF POLICY

Sections 101 and 102

These sections provide that the act may be cited as the “Northeast Rail Authority Act of 1965" and state a congressional finding that the preservation and proper maintenance of passenger rail transportation in the northeastern seaboard region is necessary to the national defense and to the general welfare of the Nation, and to the area involved. Congress declares it a continuing policy and responsibility of the Federal Government to encourage the State governments to enter into a compact to create a Northeast Rail Authority.

TITLE II-NORTHEAST RAIL AUTHORITY COMPACT Section 201

This section grants the consent and approval of Congress to the States of Massachusetts, Rhode Island, Connecticut and New York to negotiate and enter into the Northeast Rail Authority Compact for the purpose of creating a multistate authority to own, lease or otherwise acquire the right to operate a passenger rail transportation system within the Northeastern States. The section then goes on to set forth the provisions of the compact in 15 articles as follows:

Articles 1 and 2: These articles create a northeast rail district embracing the area of the four States, and create the Northeast Rail Authority as a corporate body having the right and authority to own, lease or otherwise acquire the right to operate a passenger rail transportation system within the district.

Article 3: This article states that the authority shall consist of four commissioners, one each appointed by the Governors of the participating states, to serve for a term of 4 years. It also provides that a Federal representative (to be appointed pursuant to title III of this same act) shall have the power of veto on any matter relating to the issue and sale of bonds or other indebtedness guaranteed by the Federal Government pursuant to said title III. The article fixes the compensation of commissioners at the rate of $100 per day. It also provides for the appointment of an executive director, to be compensated at the rate of $30,000 per annum, and such other personnel as may be necessary.

Article 4: States that no action may be taken by the authority unless a majority of the commissioners concur, but permits the authority to delegate duties.

Article 5: Lists the powers of the authority, including the power to operate faciilties or enter into agreements with other parties for the operation of passenger transportation services; the power to set fares and tariffs for the services it renders; the power to acquire property by purchase, lease or condemnation, and other powers normally vested in such bodies.

Article 6: Directs the authority, insofar as possible, to set fares and tariffs at such levels that the revenues of the authority may be reasonably expected to cover costs of operating and maintenance. However, the authority is not required to operate any portion of its facilities without loss, but may set fares on the basis of all its facilities considered as a whole.

Article 7: Provides that in any years in which the operating revenues of the authority, shall be inadequate to cover the operating expenses of the authority, the net deficit shall be borne by each of the signatories in the proportion which the number of passenger miles traveled within each State on railroads owned, leased or otherwise operated by the authority, bears to the total number of passenger miles traveled on railroads owned, leased or otherwise operated by the authority within the entire district. Provides that the authority shall annually submit to the States a budget of requirements for the next ensuing year, and that such budget shall also set forth the percentage by which each signatory shall bear its share of the deficit, if any. The signatories agree to appropriate their porportion of the budget as set forth in this article and to pay such appropriation to the authority.

This article also provides that at such time as the annual revenues of the authority exceed its annual expenses, the commissioners may at their discretion make partial reimbursement of any payments made by the States pursuant to this article, at a prudent rate and in the same ratio as set forth in this article.

Article 8: Provides that the authority may sell bonds, notes and other evidences of indebtedness in an amount not exceeding $500 million to finance its

operations. Provides that such bonds and other indebtedness shall be legal investments and shall be at all times free of taxation by the signatories.

Article 9: Provides that, except in years when the expenses of the authority exceed revenues, the authority may make payments to the States and local governments in lieu of property taxes upon property within the district which was subject to such taxes before acquisition by the authority.

Article 10: Provides that in the acquisition of any transportation facilities in the district, the authority shall make arrangements to protect the interests of employees affected by such acquisition.

Articles 11, 12, 13: Provides that the compact shall become effective 90 days after the date of adoption; that it may be amended with the consent of all signatories and the Congress. Pledges cooperation between the signatory states.

Article 14: Provides that a judgment by any competent court rendering a portion of this compact invalid shall not affect or impair the validity of the remainder of the compact, and expresses the intention that the compact be liberally construed.

Article 15: Provides that other States may join this compact on the same terms and under the same obligations as have been set forth in the preceding articles, with the consent of all the signatories and of the Congress.

TITLE III—FEDERAL BOND GUARANTY Section 301

Defines terms. “Additions and betterments or other capital expenditures" means expeditures for the acquisition or construction of property used in transportation service, chargeable to the road, property, or equipment investment accounts. “Expenditures for maintenance of property" means expenditures for labor, materials and other costs incurred in maintaining, repairing, modernizing or renewing equipment, road or property used in transportation service. Section 302

Authorizes the Secretary of Commerce to guarantee bonds and other evidence of indebtedness of the authority in principal amount not exceeding $500 million issued by the authority for the purpose of financing or refinancing additions and betterments and other capital expenditures and expenditures for maintenance of property. Such guarantees are to be made upon terms and conditons prescribed by the Secretary of Commerce after consultation with the Interstate Commerce Commission. Section 303

States that no guarantee shall be made if in the judgment of the Secretary the bonds or other indebtedness carry a rate of interest which is unreasonably high or if the terms of such bonds permit redemption more than 15 years after date of issuance. Section 304

Permits the Secretary to consent to modifications as to rate of interest, time of payment or other terms and conditions of bonds which he has guaranteed, whenever he shall determine it to be equitable to do so. Section 305

Provides that any payment required as a consequence of any guarantee under this act shall be made by the Secretary of the Treasury from funds authorized to be appropriated to carry out the provisions of this act. In the event of any default of bonds guaranteed pursuant to this title and payment in accordance with this title, the Attorney General is empowered to recover the amount of such payment, with interest, from the authority. Section 306

Authorizes the Secretary to prescribe and collect a guarantee fee to cover the administrative costs of extending guarantees pursuant to this title. Section 307

Authorizes the Secretary of Commerce to appoint a Federal representative to the authority, as provided in article III of the Northeast Rail Authority Compact, and permits the Secretary to use the advice and services of other departments and agencies of the Government as he may require.

Senator PASTORE. The third bill, S. 1234, was introduced by Senator Javits of New York on February 23, 1965. This bill would grant the

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consent of Congress to the States of New York and Connecticut to enter into a compact to create a two-State authority, which other States may join, to operate the New Haven commuter service. The bill would also provide a Federal matching grant incentive to the States.

Senator Javits intends to propose an amendment to S. 1234 which would limit the duration of the Federal matching grant to a period of 2 years after the proposed authority becomes operational.

Without objection, a copy of S. 1234, an analysis of its provision, and the proposed amendment thereto, will be printed at this point in the record. (The bill follows:)

[S. 1234, 89th Cong., 1st sess.) A BILL To encourage the preservation and development of a modern and efficient pas

senger rail transportation service in the northeastern seaboard area by granting the consent and approval of Congress to the States of New York and Connecticut to negotiate and enter into a compact to create their own New York-Connecticut Ra Authority, and by guaranteeing certain bonds of, and furnishing certain assistance to, such authority

Be is enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-SHORT TITLE AND STATEMENT OF FINDINGS AND

DECLARATION OF POLICY

SHORT TITLE

Sec. 101. This Act may be cited as the “New York-Connecticut Rail Authority Act of 1965".

STATEMENT OF FINDINGS AND DECLARATION OF POLICY

SEC. 102. The Congress finds that it is necessary to the national defense and to the general welfare of the Nation as well as that of the area involved that passenger and commuter-rail transportation be preserved and properly maintained within the northeastern seaboard area. The Congress therefore declares that it is the continuing policy and responsibility of the Federal Government to encourage the State governments to enter into a compact to create their own New York-Connecticut Rail Authority to own, or lease, and operate such a system.

TITLE II-NEW YORK-CONNECTICUT RAIL AUTHORITY COMPACT

CONSENT AND APPROVAL OF COMPACT

Sec. 201. The consent and approval of Congress is hereby given to the States of New York and Connecticut to negotiate and enter into the New York-Connecticut rail authority compact for the purpose of creating a New York-Connecticut Rail Authority to own, or lease, and operate a passenger or commuter rail transportation system within such States. Such compact shall be as follows:

"NEW YORK-CONNECTICUT RAIL AUTHORITY COMPACT “The states of New York and Connecticut hereinafter collectively referred to as signatories, any one of thein being referred to as a signatory, do hereby covenant and agree as follows:

“ARTICLE I

“There is hereby created the New York-Connecticut Rail District, hereinafter referred to as 'District', which shall embrace the states of New York and Connecticut.

ARTICLE II

“The signatories hereby create the New York-Connecticut Rail Authority, hereinafter referred to as the 'Authority', which shall be a body corporate and politic, having the powers and jurisdiction hereinafter enumerated, and such other and additional powers and duties as may be conferred upon it by the legis

latures of the signatories and concurred in and approved by the Congress. The Authority shall have the power to own, or lease, and operate a passenger rail transportation system within the District.

"ARTICLE III "1. The Authority shall consist of four Commissioners, two each to be appointed by the Governors of New York and Connecticut. Each Commissioner so appointed shall serve for a term of four years.

"2. The Authority shall have a Federal representative, if such a representative is appointed by the Secretary of Commerce pursuant to title III of the New York-Connecticut Rail Authority Act of 1965. The function of such representative shall be (a) to have the authority to veto any matter relating to the issue and sale of bonds or other indebtedness guaranteed by the Federal Government pursuant to such title III, and (b) to report to the Secretary of Commerce with respect to the activities of the Authority.

“3. No Commissioner shall have financial interest in any corporation or other entity engaged in the business of providing public passenger transportation within the District or engaged in the manufacture or selling of passenger transportation facilities.

“4. The Authority shall annually elect a chairman from its commissioners and may appoint such other officers as it may require for the performance of its duties, and shall fix and determine their qualifications and duties.

5. Each Commissioner shall receive basic compensation at the rate of $100 per diem, to be paid by the Authority as current expenses. Commissioners shall be reimbursed for actual expenses, including traveling and subsistence expenses incurred by them in the performance of their duties.

*6. The Authority shall appoint an Executive Director, who shall be responsible for the day-to-day management of the operations conducted by the Authority. The Executive Director shall receive compensation at the rate established by the Authority.

7. In addition, the Authority may employ such engineering, technical, legal, clerical, and other personnel on a regular, part-time, or consulting basis as in its judgment may be necessary for the discharge of its functions. The Authority shall not be bound by any statute or regulation of any signatory in the employment or discharge of any officer or employee, except as may be contained in this compact.

"ARTICLE IV

"No action may be taken by the Authority unless a majority or more, as may be provided in this compact, of the Commissioners concur therein, but nothing in this Article shall be construed to limit in any respect the power of the Authority to delegate to its officers and employees the administration of such matters as it deems advisable. Three Commissioners shall constitute a quorum of the Authority.

“ARTICLE V "Except as otherwise specifically provided in this compact, the Authority shall have power to:

“(1) adopt, alter, and use a corporate seal, and such seal shall be judicially noticed ;

“(2) adopt, amend, and repeal by-laws, rules, and regulations ;

“(3) sue and be sued in its corporate name in any court of competent jurisdiction;

“(4) make contracts, as authorized in this compact; “(5) accept gifts or donations of property ;

“(6) acquire, by purchase, lease, condemnation, or in other lawful manner, any property whether real, personal, or mixed, tangible or intangible, and any interest therein; hold, maintain, use, and operate such property; sell, lease or otherwise dispose of the same at such time, in such manner, and to the extent deemed necessary or appropriate to carry out its functions ;

(7) operate all facilities acquired or constructed by it or enter into agreements with railroad corporations, government agencies and public bodies or other persons for the operation of its facilities, the use of its operating rights, its equipment or the provision of passenger transportation services making use of other facilities and operating rights;

“(8) determine the character of and the necessity for its obligations and expenditures, and the manner in which they shall be incurred, allowed, and paid;

"(9) set fares, tariffs, and other rates and charges to the public for the services rendered by its facilities;

“(10) execute, in accordance with its by-laws, rules or regulations all instruments necessary or appropriate in the exercise of any of its powers;

“(11) settle and adjust claims held by it against other persons or parties and by other persons or parties against it; and

“(12) take such actions as may be necessary or appropriate to carry out the powers and duties specifically conferred upon it by this compact.

(13) Apply for and be eligible for federal, state or other governmental assistance.

“ARTICLE VI "Insofar as possible the fares, tariffs, and other rates and charges to the public set by the Authority for the services rendered by its facilities shall be established at such levels that the revenues of the Authority may be reasonably expected to cover all costs of operating and maintaining the facilities under the administration of the Authority, including depreciation and payment of interest on its obligations. The Authority is not required, however, to operate any particular portion of its facilities without loss, but may set fares, tariffs or other rates and charges on the basis of all of its facilities considered as a whole. When, in the opinion of the Authority, it is in the best interest of the Authority not to charge fares, tariffs, or other rates and charges for a particular facility, it shall not be required to levy such charge. The Authority may enter into agreements with railroad corporations, government agencies or other persons or entities for the establishment of combination fares.

“ARTICLE VII

"1. The Authority shall annually submit to each of the signatories a budget for operating the Authority for the next ensuing year which shall include information concerning any amount by which costs of operations as conducted by the Authority are in excess of the revenues from such operations. To determine the proper allocation of any such amounts the Authority shall establish: a formula for determining the portions of the signatories' share of any such amounts to be borne by each of the signatories. Such formula shall be consistent with the Constitution and laws of the individual signatories, and shall be established only by unanimous consent of the commissioners. Upon allocating in accordance with such formula the portions of any such amounts to be borne by the signatories, the Authority shall immediately notify the chief executive of each signatory as to the share which it deems to be payable by such signatory under such formula. Such notice shall be submitted by the chief executive to the legislature of the signatory for its consideration and appropriate action. For the purpose of this article the 'signatories' share' of any such amount shall be the portion of any such amount in excess of the Federal share of such amount as established pursuant to section 307 of the New YorkConnecticut Rail Authority Act of 1965.

“2. At such time as the revenues per annum of the Authority may exceed the costs (including payment of indebtedness) per annum of the Authority. the Commissioners at their discretion may make payments to the Federal Government and the signatories in reimbursement of amounts paid to the Authority to cover deficits. Such reimbursement shall be made at a prudent rate and in the same ratio as deficits were borne by the various signatories and the Federal Government.

"3. The Authority shall keep accurate books of account, showing in full its receipts and disbursements, and said books of account shall be open at any reasonable time for inspection by such representatives of the respective signa. tories as may be duly constituted for that purpose.

"ARTICLE VIII

"1. The Authority is authorized to issue and sell bonds, notes, and other evidences of indebtedness, hereinafter collectively referred to a 'bonds'. in an amount not exceeding $500,000,000 outstanding at any time to assist in financing its operations pursuant to the powers granted by this compact. The Authority is authorized to enter into binding covenants with the holders of bonds, and with

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