INTERIM AUTHORITY TO PROVIDE EMERGENCY FINANCIAL ASSISTANCE FOR RAILROADS OPERATING PASSENGER SERVICE.

SEC. 701. INTERIM AUTHORITY TO PROVIDE EMERGENCY FINANCIAL ASSISTANCE FOR RAILROADS OPERATING PASSENGER SERVICE. (a) For the purpose of permitting a railroad to enter into or carry out a contract entered into under this Act, the Secretary is authorized, on such terms and conditions as he may prescribe, to (1) make loans to such railroad, or (2) guarantee any lender against loss of principal or interest on any loan to such railroad. (b) Before making a loan or a guarantee under this section, the Secretary must find, in writing, that— (1) the loan or guarantee is necessary to carry out the provisions of this Act; (2) the, proceeds of any loan made or guaranteed under this Act will be used solely to carry out contracts entered into under this Act; (3) the loan or guarantee is not otherwise available on reasonable terms and conditions: and (4) there is reasonable assurance that the business affairs of the railroad will be conducted in a prudent manner. (c) (1) In any case in which there is a liquidation of the assets of any railroad which is the recipient of a loan made or guaranteed under this Act, the United States shall have the first right to redeem that portion of such assets consisting of those rights-of-way, tracks, and other facilities designated by the Secretary to be necessary for the purpose of providing intercity rail passenger service, including services employing innovative technology, within the basic system. (2) It is the intent of the Congress that, in the case of a loan guarantee under this Act, the United States shall stand in the same position with respect to other creditors as in the case of a direct loan by the United States giving the United States priority over secured and unsecured creditors. (d) Interest on loans made under this section shall be at a rate not less than 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 with remaining periods to maturity com pa cable to the average maturity of such loans adjusted to the nearest one-eighth of one per centum. (e) The maturity date on any loan made or guaranteed under this section, including renewals and extensions thereof, shall not be later than five years from the date of issuance. (f) The aggregate amount of loans and loan guarantees made under this section shall not exceed $200,000,000.