
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 45USC662]

 
                           TITLE 45--RAILROADS
 
                   CHAPTER 15--EMERGENCY RAIL SERVICES
 
Sec. 662. Guarantee of certificates


(a) Authority of Secretary; prerequisites; procedures; waiver

    The trustees of any railroad undergoing reorganization 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 obtaining funds to 
    meet payroll and other expenses 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 intention to make such finding 
in the Federal Register not less than fifteen days prior to such 
finding, give interested persons, including agencies of the Federal 
Government, an opportunity to submit written data, views, or arguments 
(with or without opportunity for oral presentation), 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. 
Notwithstanding 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 cessation of essential 
    transportation services by the railroad, the Secretary shall have 
    the option 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 certificates, the money paid or expenses incurred by 
    the United States as a result thereof shall be deemed to have been 
    applied to the purchase or lease price. The terms of purchase or 
    lease shall be subject to the approval of the reorganization 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; priority of certificate

    The Secretary shall not guarantee any certificate under this section 
unless such certificate is treated as an expense of administration and 
receives 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 ownership plan.

(d) Interest rate; date of maturity; other terms and conditions

    A certificate under this chapter shall bear interest at such per 
annum rate as the Secretary deems reasonable, taking into account the 
range of interest rates prevailing in the private market 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 
prescribe 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 outstanding

    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 regulations as are 
appropriate to carry out the authority granted by this chapter.

(Pub. L. 91-663, Sec. 3, Jan. 8, 1971, 84 Stat. 1975; Pub. L. 95-598, 
title III, Sec. 333, Nov. 6, 1978, 92 Stat. 2679; Pub. L. 95-611, 
Sec. 3(b), Nov. 8, 1978, 92 Stat. 3089; Pub. L. 96-86, Sec. 115(a), Oct. 
12, 1979, 93 Stat. 662; Pub. L. 96-101, Sec. 7(a)-(c), Nov. 4, 1979, 93 
Stat. 739, 740; Pub. L. 104-88, title III, Sec. 325(2), Dec. 29, 1995, 
109 Stat. 951.)

                       References in Text

    The Bankruptcy Act, referred to in subsecs. (a) and (c), is act July 
1, 1898, ch. 541, 30 Stat. 544, as amended, 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, Secs. 401(a), 402(a), Nov. 6, 
1978, 92 Stat. 2682, section 101 of which enacted revised Title 11. For 
current provisions relating to railroad reorganization, see subchapter 
IV (Sec. 1161 et seq.) of chapter 11 of Title 11.


                               Amendments

    1995--Subsec. (a). Pub. L. 104-88, Sec. 325(2)(B), substituted 
``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, Sec. 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 sentence after Dec. 31, 1979.
    Subsec. (c). Pub. L. 96-101, Sec. 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, Sec. 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, during period Oct. 1, 1979, through Nov. 30, 1979, 
certificates 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 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.
    1978--Subsec. (a). Pub. L. 95-611 inserted provision authorizing 
Secretary to waive requirements of paragraphs (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 administrative expense and priority of 
the certificate.


                    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 701 of 
Title 49, Transportation.


                    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 Effective Date note preceding 
section 101 of Title 11, Bankruptcy.

                  Section Referred to in Other Sections

    This section is referred to in sections 664, 666, 906 of this title.
