45 U.S.C. § 662 — Guarantee of certificates

Page 152 TITLE 45—RAILROADS § 662 ‘‘ ‘Commission’ means the Interstate Commerce Com- mission.’’ Par. (3). Pub. L. 104–88, § 325(1)(B), substituted ‘‘rail carrier subject to part A of subtitle IV of title 49’’ for ‘‘common carrier by railroad subject to part I of the Interstate Commerce Act (49 U.S.C. 1–27)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1995 AMENDMENT Amendment by Pub. L. 104–88 effective Jan. 1, 1996, see section 2 of Pub. L. 104–88, set out as an Effective Date note under section 1301 of Title 49, Transpor- tation. SHORT TITLE Pub. L. 91–663, § 1, Jan. 8, 1971, 84 Stat. 1975, provided: ‘‘That this Act [enacting this chapter] may be cited as the ‘Emergency Rail Services Act of 1970’.’’ § 662. Guarantee of certificates (a) Authority of Secretary; prerequisites; proce- dures; waiver The trustees of any railroad undergoing reor- ganization under section 77 of the Bankruptcy Act, as amended, upon approval of the court, may apply to the Secretary for the guarantee of certificates. The Secretary, after consultation with the Board, is authorized to guarantee such certificates upon findings in writing that— (1) cessation of essential transportation services by the railroad would endanger the public welfare; (2) cessation of such services is imminent; (3) there is no other practicable means of ob- taining funds to meet payroll and other ex- penses necessary to provide such services than the issuance of such certificates; (4) such certificates cannot be sold without a guarantee; (5) the railroad can reasonably be expected to become self-sustaining; and (6) the probable value of the assets of the railroad in the event of liquidation provides reasonable protection to the United States. The Secretary shall publish notice of his inten- tion to make such finding in the Federal Reg- ister not less than fifteen days prior to such finding, give interested persons, including agen- cies of the Federal Government, an opportunity to submit written data, views, or arguments (with or without opportunity for oral presen- tation), and give consideration to the relevant matter presented. The Secretary for good cause shown and upon a finding that extraordinary circumstances warrant doing so may waive the requirements of the preceding sentence. Not- withstanding any other provision of this section, the Secretary, in guaranteeing certificates under this section, is authorized to waive the findings required by paragraphs (1), (5), and (6) of this subsection. (b) Conditions to guarantee As a condition to a guarantee, the Secretary, after consultation with the Board, shall require that: (1) the proceeds of the sale of certificates guaranteed under this chapter, will be used solely for meeting payroll and other expenses which, if not met, would preclude continued provision of essential transportation services by the railroad; (2) other revenues of the railroad will be used, to the fullest extent possible, for such expenses; (3) proceeds from the sale of assets will be devoted to the fullest extent possible to the provision of essential transportation services by the railroad; and (4) in the event of actual or threatened ces- sation of essential transportation services by the railroad, the Secretary shall have the op- tion to procure by purchase or lease trackage rights over the lines of the railroad and such equipment as may be necessary to provide such services by the Secretary or his assignee, and, in the event of a default in the payment of principal or interest as provided by the cer- tificates, the money paid or expenses incurred by the United States as a result thereof shall be deemed to have been applied to the pur- chase or lease price. The terms of purchase or lease shall be subject to the approval of the re- organization court and the operation over the lines shall be subject to the approval of the Board pursuant to subchapter II of chapter 113 of title 49, but in no event shall the rendition of services by the Secretary or his assignee await the outcome of proceedings before the reorganization court or the Board. (c) Certificate as administrative expense; pri- ority of certificate The Secretary shall not guarantee any certifi- cate under this section unless such certificate is treated as an expense of administration and re- ceives the highest lien on the railroad’s property and priority in payment under the Bankruptcy Act, except that this subsection shall not apply to certificates guaranteed for a railroad that is actively engaged in restructuring, as defined by the Secretary. For purposes of this subsection, the term ‘‘restructuring’’ includes an employee ownership plan or an employee-shipper owner- ship plan. (d) Interest rate; date of maturity; other terms and conditions A certificate under this chapter shall bear in- terest at such per annum rate as the Secretary deems reasonable, taking into account the range of interest rates prevailing in the private mar- ket for similar loans and the risks assumed by the Federal Government; nor may its maturity date, including all extensions and renewals thereof, be later than fifteen years from the date of original issuance. The Secretary may pre- scribe such other terms and conditions as he deems appropriate. In each case, the Secretary shall consider the feasibility of requiring the railroad to dispose of nonrailroad assets as a condition to a guarantee. (e) Maximum aggregate principal amount out- standing At any one time the outstanding aggregate principal amount of all certificates guaranteed under this chapter shall not exceed $200,000,000. (f) Rules and regulations The Secretary shall issue such rules and regu- lations as are appropriate to carry out the au- thority granted by this chapter. (Pub. L. 91–663, § 3, Jan. 8, 1971, 84 Stat. 1975; Pub. L. 95–598, title III, § 333, Nov. 6, 1978, 92 Stat. 2679; Page 153 TITLE 45—RAILROADS § 664 Pub. L. 95–611, § 3(b), Nov. 8, 1978, 92 Stat. 3089; Pub. L. 96–86, § 115(a), Oct. 12, 1979, 93 Stat. 662; Pub. L. 96–101, § 7(a)–(c), Nov. 4, 1979, 93 Stat. 739, 740; Pub. L. 104–88, title III, § 325(2), Dec. 29, 1995, 109 Stat. 951.) Editorial Notes REFERENCES IN TEXT The Bankruptcy Act, referred to in subsecs. (a) and (c), is act July 1, 1898, ch. 541, 30 Stat. 544, which was classified generally to former Title 11, Bankruptcy. Section 77 of this Act was classified to section 205 of former Title 11. The Act was repealed effective Oct. 1, 1979, by Pub. L. 95–598, §§ 401(a), 402(a), Nov. 6, 1978, 92 Stat. 2682, section 101 of which enacted revised Title 11. For current provisions relating to railroad reorganiza- tion, see subchapter IV (§ 1161 et seq.) of chapter 11 of Title 11. AMENDMENTS 1995—Subsec. (a). Pub. L. 104–88, § 325(2)(B), sub- stituted ‘‘Board’’ for ‘‘Commission’’ in introductory provisions. Subsec. (b). Pub. L. 104–88 substituted ‘‘Board’’ for ‘‘Commission’’ wherever appearing and ‘‘subchapter II of chapter 113 of title 49’’ for ‘‘the provisions of section 5 of the Interstate Commerce Act’’ in par. (4). 1979—Subsec. (a). Pub. L. 96–101, § 7(a), struck out ‘‘upon a finding that the guarantee of certificates is necessary in order for a railroad which has received continued loan advances, pursuant to section 721(d)(1) of this title, to maintain rail services in the region (as such term is defined in section 702(15) of this title)’’ after ‘‘of this subsection’’ and provision requiring that Secretary not make any waiver under preceding sen- tence after Dec. 31, 1979. Subsec. (c). Pub. L. 96–101, § 7(b), added subsec. (c). Former subsec. (c) was repealed by Pub. L. 95–598. See 1978 Amendment note below. Subsec. (e). Pub. L. 96–101, § 7(c), substituted ‘‘$200,000,000’’ for ‘‘$125,000,000’’ and struck out provision requiring that with respect to a railroad which filed a petition for reorganization during fiscal year 1978, dur- ing period Oct. 1, 1979, through Nov. 30, 1979, certifi- cates be issued without regard to limitations of subsec. (a) of this section and with such priority in payment as Secretary deems appropriate to secure repayment, for purpose of continuing service on railroad system at level in effect on Oct. 1, 1979. Pub. L. 96–86 provided that, with respect to a railroad which filed a petition for reorganization during fiscal year 1978, during period Oct. 1, 1979, through Nov. 30, 1979, certificates shall be issued without regard to limi- tations of subsec. (a) of this section and with such pri- ority in payment as Secretary deems appropriate to se- cure repayment, for purpose of continuing service on railroad system at level in effect on Oct. 1, 1979. 1978—Subsec. (a). Pub. L. 95–611 inserted provision au- thorizing Secretary to waive requirements of para- graphs (1), (5), and (6) of subsec. (a) until Dec. 31, 1979. Subsec. (c). Pub. L. 95–598 struck out subsec. (c) which related to treatment of a certificate as an ad- ministrative expense and priority of the certificate. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1995 AMENDMENT Amendment by Pub. L. 104–88 effective Jan. 1, 1996, see section 2 of Pub. L. 104–88, set out as an Effective Date note under section 1301 of Title 49, Transpor- tation. EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–598 effective Oct. 1, 1979, see section 402(a) of Pub. L. 95–598, set out as an Effec- tive Date note preceding section 101 of Title 11, Bank- ruptcy. § 663. Inspection of accounts, books, etc., of rail- road receiving financial assistance The Secretary is authorized to, and shall as necessary, inspect and copy all accounts, books, records, memorandums, correspondence, and other documents of any railroad which has re- ceived financial assistance under this chapter concerning any matter which may bear upon (1) the ability of such railroad to repay the loan within the time fixed therefor, (2) the interest of the United States in the property of such rail- road, and (3) to insure that the purpose of this chapter is being carried out. (Pub. L. 91–663, § 4, Jan. 8, 1971, 84 Stat. 1976.) § 664. Issuance of obligations to Secretary of the Treasury (a) Forms and denominations; maturity dates; terms and conditions; interest rate; purchase and sale of obligations by Secretary of the Treasury; authorization of appropriations To enable the Secretary to carry out his rights and responsibilities under section 662 of this title, he is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such ma- turities, and subject to such terms and condi- tions, as may be prescribed by the Secretary with the approval of the Secretary of the Treas- ury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month pre- ceding the issuance of the notes or other obliga- tions. The Secretary of the Treasury shall pur- chase any notes and other obligations issued hereunder and for that purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under that chapter are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this sub- section. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. There are authorized to be appropriated to the Sec- retary such sums as may be necessary to pay the principal and interest on the notes or obliga- tions issued by him to the Secretary of the Treasury. (b) Revocation of guarantee; legal effect of guar- antee; validity and incontestability of guar- anteed certificate Any guarantee made by the Secretary under this chapter shall not be terminated, canceled, or otherwise revoked, except as provided by the terms and conditions prescribed by the Sec- retary under section 662(d) of this title; shall be conclusive evidence that such guarantee com- plies fully with the provisions of this chapter, and of the approval and legality of the principal amount, interest rate, and all other terms of the certificates and the guarantee; and shall be