of the Debtor's involvement in railroad operations on April 1, 1976, marked the end of the period for which the Debtor was to receive compensation from Amtrak, under the proposed agreement or any other alternative thereto, and seemed to transfer the pending proposed agreement to the category of "loose ends" which should be cleared up eventually, but need not be resolved immediately.
Because of its relationship to the pending litigation over the proposed Plan of Reorganization, and the possible impact of other litigation between the Trustees and Amtrak, resolution of the pending issues should not be further postponed.
In 1970, the Government responded to the dual problems of customer dissatisfaction with passenger service and staggering deficits from passenger operations by enacting the Rail Passenger Service Act of 1970, 45 U.S.C. §§ 501 et seq. The Act created Amtrak and charged it to provide modern and efficient intercity rail passenger service. After the Secretary of the Department of Transportation designated the service routes, Amtrak was to negotiate contracts with the private rail carriers for the necessary service. Failing agreement, the Interstate Commerce Commission was empowered to order carriers to provide the designated service for such "just and reasonable" compensation as the Commission might determine.
This Court approved an initial agreement between the Trustees and Amtrak, covering the start-up period. In re Penn Central Trans. Co., 329 F. Supp. 477 (E.D. Pa. 1971). Under that agreement, in return for providing specified passenger service, the Trustees were to receive compensation equal to the expenses "reasonably and necessarily incurred by the [Debtor] which are solely for the benefit of the [Amtrak] service." Article 5.1. Solely related costs do not include "common expenses which are inseparably incurred for the simultaneous or general benefit of more than one service" (Appendix A). The compensation provision applied to the 10-year contract term, but after May 1, 1972, either party was free to initiate negotiations for modification of the compensation formula. If a negotiated agreement could not be reached within 90 days, the Interstate Commerce Commission was to fix a just and reasonable compensation for the period beginning July 1, 1973.
From the outset, Penn Central's creditors opposed approval of the agreement, alleging that the compensation provision was constitutionally inadequate. I approved the agreement despite these objections. In doing so I stated:
"It may be argued that, at least on any prolonged basis, the 'solely related' concept of reimbursement may run afoul of constitutional limitations. The statute on its face does not require any such result, and I am not prepared to assume that the ultimate determination, by negotiation or by ICC decision, will have that effect . . . The Court also wishes to make clear that approval of the contract and its arbitration provisions does not constitute approval of a waiver of constitutional rights after the initial period, nor a judgment that such rights would or would not be impaired thereafter." In re Penn Central Trans. Co., 329 F. Supp. 477, 479-90 (E.D. Pa. 1971).