The Honorable Jack Danforth
| Decision Date | 18 March 1985 |
| Docket Number | B-217662 |
| Court | Comptroller General of the United States |
| Parties | THE HONORABLE JACK DANFORTH: CHAIRMAN, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE |
National railroad passenger corporation - employees - labor protection agreement digest: 1. AMTRAK is liable to its employees to pay labor protection costs resulting from a partial or total discontinuance of intercity rail passenger service. Appendix c-2 to the basic agreement between AMTRAK and the railroads provides in unambiguous terms that AMTRAK must provide labor protection benefits to any of its employees that is adversely affected by a discontinuance of passenger service. No distinction is made in the agreement between a total or partial discontinuance. Contrary decisions of the interstate commerce commission are not applicable since those cases did not involve contract rights of railroad employees to labor protection benefits. National railroad passenger corporation - employees - labor protection agreement 2. The united states is not legally liable to pay labor protection costs that would result from the partial or total discontinuance of intercity rail passenger service by Amtrak. The rights of AMTRAK employees to receive labor protection benefits are based on provisions contained in an appendix to the basic agreement between AMTRAK and the railroads. While the secretary of labor did certify that the labor protection arrangements were "fair and equitable" as provided by 45 U.S.C. 565(c), the united states was not a party to the agreement which was a private operating agreement between AMTRAK and the railroads. The statute specifically provides that AMTRAK is not an agency or establishment of the U.S and numerous courts have held that AMTRAK is not a goverment-controlled entity or instrumentality. See Comp.Gen Dec. Cited. National railroad passenger corporation - employees - labor protection agreement 3. If federal subsidies to AMTRAK are terminated and AMTRAK is placed into bankruptcy, as it contends it would be, the relative priorities of the labor protection claims of amtrak's employees and the claims of other creditors, including the united states, would be determined in a bankruptcy proceeding. Our office will not speculate on the possible outcome of such a proceeding. National railroad passenger corporation - employees - labor protection agreement 4. AMTRAK and its employees cannot agree, without legislation to revise the existing labor protection arrangements contained in the basic agreement between AMTRAK and the railroads. The statute providing for such arrangements requires that the contracts between AMTRAK and the railroads and the certification by the secretary of labor that the protective arrangements contained therein are fair and equitable be executed during specified periods of time that have long since Expired. Also, since AMTRAK employees were not a party to the private operating agreement between AMTRAK and the railroads, they cannot agree to modify the terms of that agreement.
This is in response to your letter dated January 29, 1985, asking six questions relating to the payment of labor protection costs in the event that the services of the national rail passenger corporation (amtrak) are terminated or significantly reduced as a result of the administration's proposal to eliminate further federal subsidies to AMTRAK in the 1986 fiscal year and thereafter. After providing some of the basic legal background to your questions, we will address your questions in order.
In 1970, congress enacted the rail passenger service act (rpsa) pub.L. No. 91-518, 84 Stat. 1327, October 30, 1970, 45 U.S.C Sec. 501 et seq. (1982). This act authorized the creation of AMTRAK as a mixed ownership government (31 U.S.C. Sec. 9101) "for profit Corporation, the purpose of which shall be to provide intercity and commuter rail passenger service, *** so as to fully develop the potential of modern rail service in meeting the nation's intercity and commuter passenger transportation requirements." 45 U.S.C. Sec. 541. The legislation expressly provides that AMTRAK "will not be an agency or establishment of the united states government." Id.
Under section 401(a) of rpsa, 45 U.S.C. Sec. 561(a), AMTRAK was authorized to enter into contracts with railroads to relieve them of their "entire responsibility for the provision of intercity rail passenger service." Relief under this section also requires that any contract between AMTRAK and a railroad include "protective arrangements for employees." Section 405 of rpsa, 45 U.S.C. Sec. 565 sets forth the extent to which employee interests must be protected under these arrangements as follows:
In April 1971, pursuant to this provision, AMTRAK tendered all passenger railroads in the united states and identical contract called the basic agreement that would relieve any railroad that accepted amtrak's offer of its legal obligation to continue to provide rail passenger service. The labor protective arrangements required by 45 U.S.C. Sec. 565 covering railroad employees and AMTRAK employees, were set forth in appendices c-1 and c-2 of the basic agreement, respectively. As required by the statute, the secretary of labor certified the employee protective arrangement contained in appendices c 1 and c-2 to be "fair and equitable."
Before proceeding to answer your questions, we must note that a legitimate difference of opinion May exist with respect to some, if not all, of our answers. In the event AMTRAK subsidies are terminated, resulting in a wide-spread or total discontinuance of further rail passenger service by amtrak, thereby triggering the labor protection provisions in appendices c-1 and c-2 and a host of other possible adverse consequences, questions of governmental responsibility and related issues will probably be brought before the courts. Considering the many possible factual variations that might trigger such litigation as well as the differences among courts and jurisdictions, it is impossible for us to predict the likely outcome of such litigation with any degree of confidence. Nevertheless, we have attempted to answer your questions as definitively as possible.
We have discussed this matter with Amtrak. It is amtrak's position that whether federal subsidies are terminated entirely or are substantially reduced, the effect on AMTRAK would be essentially the same. That is, AMTRAK maintains that it would be unable to pay the labor protection costs caused by a discontinuance of service and would be forced into bankruptcy. This would create a situation where all service eventually was discontinued and the entire workforce was laid Off. For purposes of answering these questions, we have accepted amtrak's position in this respect as correct. However, it must be emphasized that we have not independently examined the question of whether or not AMTRAK could continue to operate, perhaps on a reduced scale, if federal subsidies are substantially decreased or eliminated and are therefore not in a position to express any opinion on this matter.
Question 1. If employees of AMTRAK or the contract railroads were laid off as a result of discontinuances of railroad passenger service, would the federal government be legally or otherwise liable for the payment of the resultant labor protection costs? In answering this question, please include comments on the significance of Sec. 301 of the rail passenger service act of 1970, which provides that AMTRAK "will not be an agency or establishment of the U.S. Government.?"
For the reasons set forth hereafter it is our view that the united states would not be legally liable to pay labor protection costs resulting from the partial or total discontinuance of railroad passenger service by amtrak.
The legal basis for the rights of AMTRAK and railroad employees to receive labor protection benefits in the event of a discontinuance of intercity rail passenger service by AMTRAK rests on appendices c-1 and c-2 of the basic agreement between AMTRAK and the railroads with which AMTRAK contracts. As stated above, appendix c-1 protects the rights of railroad employees and appendix c-2 protects the rights of AMTRAK employees. The united states is not a signatory to the basic agreement of the appendices. While the secretary of labor did certify that the labor protection provisions contained in the appendices were "fair and equitable, " as required by the statute, such certification did not make the secretary of labor or the united states a party to the...
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