WASHINGTON (AP) _ Amtrak has settled a racial discrimination suit for the second time in nine months, the latest alleging that white supervisers created a hostile work environment for black engineering employees in the Northeast.

Amtrak admitted no wrongdoing in the settlement announced on Friday. But the national railway agreed to change company policies. And the settlement, which must be approved by a federal judge, sets up a $16 million fund to provide economic relief to 800 to 1,000 black employees who suffered discrimination since 1995 and as many as 4,000 black job applicants Amtrak turned away.

``There will be all sorts of personnel policy changes,'' said Maia Caplan, a Washington attorney representing black Amtrak employees who filed the federal class action suit in April 1998. ``There's a lot that Amtrak has agreed to here that would not have happened if this had gone into litigation.''

Amtrak President George Warrington said settling out-of-court was the right thing to do and made good business sense.

``Amtrak is committed to a cultural change at the company that will not only make Amtrak a better place in which to work, but also will enable us to be more responsive to the diverse marketplace we serve,'' he said. ``We have already taken a number of important steps in transforming the company's culture.''

The suit was filed by 13 black members of the Brotherhood of Maintenance of Way Employees who build and maintain railroad tracks for Amtrak's engineering department in the Northeast corridor between Washington and Boston. They claimed Amtrak discriminated in hiring, disciplining, training and promoting blacks.

The suit alleged that white managers separated employees into white and black work crews, and then gave white workers better assignments and kept them from being bumped by black employees with more seniority. They claimed white work crews were told in advance about drug tests and that white employees suspected of possibly failing the tests were encouraged to take the day off.

The plaintiffs said white supervisers called black employees ``boys'' and made comments like ``you people like watermelon'' and ``all you people lie.'' When a black employee's beeper sounded during a meeting, one white manager remarked that ``someone's drug deal is going down,'' the suit said.

The plaintiffs also complained in the suit that management did not promptly remove a racial epithet scrawled on company property and that a white manager once told a black worker that white members of a track-laying crew were in the Ku Klux Klan.

Pending court approval, the agreement settles the first of three race discrimination class action suits filed against Amtrak in the past two years.

In July 1999, Amtrak settled a suit filed by black managers and employees seeking management positions. The railway agreed to change company policies and set up an $8 million fund to compensate those who sued.

The remaining suit, which has not been resolved, was filed in November 1999 by 24 current and former workers who allege that Amtrak's Intercity Strategic Business Unit, which operates in 29 states, discriminates against black workers.