1. Reasons for Amendment

The Amendment prescribes standards for imposing penalty surcharges in cases where a railroad has fully or partially lost its function due to a private railroad service provider failing to comply with private railroad maintenance standards. It also prescribes standards to allow the Minister of Land, Infrastructure and Transport to request an explanation and modify a concession agreement in the event of a change in the capital adequacy ratio of a private railroad service provider, interest rate on borrowed capital, ratio of actual traffic volume relative to the concession agreement, etc., and otherwise addresses and improves upon a number of weaknesses that have emerged from the operation of the current system.

2. Major Provisions

A. Standards for imposing penalty surcharges on private railroad service providers (Article 9 (2), attached Table 1-2)

Strengthen the public character of private railways by requiring compliance with standards on the maintenance‧ and operation of private railways and accordingly, allow penalty surcharges to be imposed by prescribing standard amounts for each relevant act regarding cases where a private railroad service provider fails to comply and causes a railroad to lose its function or otherwise causes public damage.

B. Requests for explanation and measures to address significant changes in circumstances, etc. (Article 10-2)

Changes in the capital adequacy ratio of a private railroad service provider, interest rate on borrowed capital, or traffic volume may have a significant impact on business operation. Prescribe standards allowing the Minister of Land, Infrastructure and Transport to manage risks in a preemptive manner, such as by requesting a private railroad service provider to provide an explanation or address the circumstances and requesting a modification of the agreement when necessary, in the event of a change of a certain extent or greater for each circumstance, such as a change in traffic volume of 30 percent or greater.