(a) The railroad shall provide for the initial inspection of newly manufactured rail, and for initial inspection of new welds made in either new or used rail. The railroad may demonstrate compliance with this section by providing for—

(1) Mill inspection. A continuous inspection at the rail manufacturer's mill shall constitute compliance with the requirement for initial inspection of new rail, provided that the inspection equipment meets the applicable requirements as specified under the railroad's inspection, testing, and maintenance program and § 299.321. The railroad shall obtain a copy of the manufacturer's report of inspection and retain it as a record until the rail receives its first scheduled inspection under § 299.341;

(2) Welding plant inspection. A continuous inspection at a welding plant, if conducted in accordance with the provisions of paragraph (a)(1) of this section, and accompanied by a plant operator's report of inspection which is retained as a record by the railroad, shall constitute compliance with the requirements for initial inspection of new rail and plant welds, or of new plant welds made in used rail; and

(3) Inspection of field welds. Initial inspection of new field welds, either those joining the ends of CWR strings or those made for isolated repairs, shall be conducted before the start of revenue service in accordance with the railroad's inspection, testing, and maintenance program. The initial inspection may be conducted by means of portable test equipment. The railroad shall retain a record of such inspections until the welds receive their first scheduled inspection under § 299.341.

(b) Each defective rail found during inspections conducted under paragraph (a)(3) of this section shall be marked with highly visible markings on both sides of the rail and the appropriate remedial action as set forth in § 299.341 will apply.