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[House Report 108-278]
[From the U.S. Government Publishing Office]

108th Congress                                            Rept. 108-278
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================

 
 RAIL INFRASTRUCTURE DEVELOPMENT AND EXPANSION ACT FOR THE 21ST CENTURY

                                _______
                                

November 6, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Thomas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2571]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2571) to provide for the financing of high-speed 
rail infrastructure, and for other purposes, having considered 
the same, report thereon with amendments and without 
recommendation.
    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:
    Page 2, strike line 1 and all that follows through line 23 
on page 26 (sections 2 and 3 of the bill) and redesignate the 
succeeding sections accordingly.

                                CONTENTS

                                                                   Page
 I. Summary and Background............................................2
        A. Purpose and Summary...................................     2
        B. Background and Need for Legislation...................     2
        C. Legislative History...................................     2
II. Explanation of the Bill...........................................2
        A. Overview of Rules Governing the Issuance of Tax-Exempt 
            and Tax-Credit Bonds.................................     2
        B. Description of Sections 2 and 3 of H.R. 2571, as 
            Ordered Reported by the Committee on Transportation 
            and Infrastructure...................................     5
III.Votes of the Committee............................................7

IV. Budget Effects of the Bill........................................8
        A. Committee Estimate of Budgetary Effects...............     8
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures Budget Authority........................     9
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     9
        D. Macroeconomic Impact Analysis.........................    12
 V. Other Matters To Be Discussed Under the Rules of the House.......12
        A. Committee Oversight Findings and Recommendations......    12
        B. Statement of General Performance Goals and Objectives.    12
        C. Constitutional Authority Statement....................    12
        D. Information Relating to Unfunded Mandates.............    12
        E. Applicability of House Rule XXI 5(b)..................    13
        F. Tax Complexity Analysis...............................    13
    VI. Changes in Existing Law Made by the Bill, As Reported........13

                       I. SUMMARY AND BACKGROUND

                         A. Purpose and Summary

    The bill, H.R. 2571 (the ``Rail Infrastructure Development 
and Expansion Act for the 21st Century''), as reported by the 
Committee on Transportation and Infrastructure, provides for 
the financing of high-speed rail infrastructure, and for other 
purposes. Sections two and three of the reported bill provide 
for the issuance of $12 billion in tax-exempt bonds and $12 
billion in tax credit bonds to finance high-speed rail 
infrastructure. The provisions approved by the Committee strike 
sections two and three of the bill as reported by the Committee 
on Transportation and Infrastructure.

                 B. Background and Need for Legislation

    Members of Congress have introduced many proposals 
involving the use of tax-exempt bonds and tax-credit bonds to 
finance various activities. The provisions approved by the 
Committee reflect the need for the Committee on Ways and Means 
to evaluate and address these proposals in a comprehensive 
fashion.

                         C. Legislative History

                            COMMITTEE ACTION

    On June 25, 2003, the Committee on Transportation and 
Infrastructure favorably reported H.R. 2571 by voice vote. The 
bill was then referred to the Committee on Ways and Means.
    On October 28, 2003, the Committee on Ways and Means marked 
up the provisions of the bill as reported by the Committee on 
Transportation and Infrastructure and reported the provisions, 
as amended, on October 28, 2003, by voice vote.

                      II. EXPLANATION OF THE BILL

   A. Overview of Rules Governing the Issuance of Tax-Exempt and Tax-
                                 Credit

                              PRESENT LAW

Tax-exempt bonds

            In general
    Interest on debt incurred by States or local governments is 
excluded from income if the proceeds of the borrowing are used 
to carry out governmental functions of those entities or the 
debt is repaid with governmental funds. Interest on bonds that 
nominally are issued by States or local governments, but the 
proceeds of which are used (directly or indirectly) by a 
private person and payment of which is derived from funds of 
such a private person is taxable unless the purpose of the 
borrowing is approved specifically in the Code or in a non-Code 
provision of a revenue Act. These bonds are called ``private 
activity bonds.'' The term ``private person'' includes the 
Federal Government and all other individuals and entities other 
than States or local governments.

            Private activities eligible for financing with tax-exempt 
                    private activity bonds
    Present law includes several exceptions permitting States 
or local governments to act as conduits providing tax-exempt 
financing for private activities.
    States or local governments may issue tax-exempt ``exempt 
facility bonds'' to finance property for certain private 
businesses. Business facilities eligible for this financing 
include transportation (airports, ports, local mass commuting, 
and high speed intercity rail facilities); privately owned and/
or privately operated public works facilities (sewage, solid 
waste disposal, water, local district heating or cooling, and 
hazardous waste disposal facilities); privately-owned and/or 
operated low-income rental housing; and certain private 
facilities for the local furnishing of electricity or gas. 
Bonds issued to finance ``environmental enhancements of hydro-
electric generating facilities'' and qualified public 
educational facilities also may qualify as exempt facility 
bonds.
    Tax-exempt financing also is authorized for capital 
expenditures for small manufacturing facilities and land and 
equipment for first-time farmers, local redevelopment 
activities, and eligible empowerment zone and enterprise 
community businesses. Tax-exempt private activity bonds also 
may be issued to finance limited non-business purposes: certain 
student loans and mortgage loans for owner-occupied housing. 
Both capital expenditures and limited working capital 
expenditures of charitable organizations described in section 
501(c)(3) of the Code may be financed with tax-exempt private 
activity bonds (``qualified 501(c)(3) bonds'').
    In most cases, the aggregate volume of private activity 
tax-exempt bonds is restricted by annual aggregate volume 
limits imposed on bonds issued by issuers within each State. 
Theseannual volume limits, which are indexed for inflation, 
currently equal $75 per resident of the State, or $228,580,000 million, 
if greater.\1\
---------------------------------------------------------------------------
    \1\ Rev. Proc. 2002-70 2002-2 C.B. 845.
---------------------------------------------------------------------------
            Exempt facility bonds for high-speed intercity rail 
                    facilities
    Private activity bonds can be issued for high-speed 
intercity rail facilities.\2\ A facility qualifies as a high-
speed intercity rail facility if it is a facility (other than 
rolling stock) for fixed guideway rail transportation of 
passengers and their baggage between metropolitan statistical 
areas.\3\ The facilities must use vehicles that are reasonably 
expected to operate at speeds in excess of 150 miles per hour 
between scheduled stops and the facilities must be made 
available to members of the general public as passengers. If 
the bonds are to be issued for a nongovernmental owner of the 
facility, such owner must irrevocably elect not to claim 
depreciation or credits with respect to the property financed 
by the net proceeds of the issue.\4\
---------------------------------------------------------------------------
    \2\ Sec. 142(a)(11) and sec. 142(i).
    \3\ A metropolitan statistical area for this purpose is defined by 
reference to section 143(k)(2)(B). Under that provision, the term 
metropolitan statistical area includes the area defined as such by the 
Secretary of Commerce.
    \4\ Sec. 142(i)(2).
---------------------------------------------------------------------------
    The Code imposes a special redemption requirement for these 
types of bonds. Any proceeds not used within three years of the 
date of issuance of the bonds must be used within the following 
six months to redeem such bonds.\5\
---------------------------------------------------------------------------
    \5\ Sec. 142(i)(3).
---------------------------------------------------------------------------
    Seventy-five percent of the principal amount of the bonds 
issued for high-speed rail facilities is exempt from the volume 
limit.\6\ If all the property to be financed by the net 
proceeds of the issue is to be owned by a governmental unit, 
then such bonds are completely exempt from the volume limit.
---------------------------------------------------------------------------
    \6\ Sec. 146(g)(4).
---------------------------------------------------------------------------

Tax-credit bonds for qualified zone academies

    As an alternative to traditional tax-exempt bonds, States 
and local governments are given the authority to issue 
``qualified zone academy bonds'' (``QZABs'').\7\ ``Qualified 
zone academy bonds'' are defined as any bond issued by a State 
or local government, provided that (1) at least 95 percent of 
the proceeds are used for the purpose of renovating, providing 
equipment to, developing course materials for use at, or 
training teachers and other school personnel in a ``qualified 
zone academy'', and (2) private entities have promised to 
contribute to the qualified zone academy certain equipment, 
technical assistance or training, employee services, or other 
property or services with a value equal to at least 10 percent 
of the bond proceeds.
---------------------------------------------------------------------------
    \7\ Sec. 1397E.
---------------------------------------------------------------------------
    A total of $400 million of qualified zone academy bonds was 
authorized to be issued annually in calendar years 1998 through 
2003. The $400 million aggregate bond cap is allocated to the 
States according to their respective populations of individuals 
below the poverty line. Each State, in turn, allocates the 
credit authority to qualified zone academies within such State.
    Financial institutions that hold qualified zone academy 
bonds are entitled to a nonrefundable tax credit in an amount 
equal to a credit rate multiplied by the face amount of the 
bond. A taxpayer holding a qualified zone academy bond on the 
credit allowance date is entitled to a credit. The credit is 
includable in gross income (as if it were a taxable interest 
payment on the bond), and may be claimed against regular income 
tax and alternative minimum tax liability.
    The Treasury Department sets the credit rate at a rate 
estimated to allow issuance of the qualified zone academy bonds 
without discount and without interest cost to the issuer. The 
maximum term of the bond is determined by the Treasury 
Department, so that the present value of the obligation to 
repay the bond was 50 percent of the face value of the bond.

B. Description of Sections 2 and 3 of H.R. 2571, as Ordered Reported by 
           the Committee on Transportation and Infrastructure

Section 2 of H.R. 2571: High-speed rail infrastructure bonds

    Section 2 amends Chapter 261 of Title 49 by adding a new 
section 26106. This section permits the Secretary of 
Transportation to designate bonds for funding the development 
of high-speed rail in the United States. The Secretary of 
Transportation may designate two types of bonds: private-
activity bonds, the interest on which is exempt from Federal 
taxes, and tax-credit bonds, on which the government provides 
the holder a credit rather than the issuer paying interest to 
the holder.
    The Secretary of Transportation may designate high-speed 
rail infrastructure bonds if six requirements are met.
     First, a State, group of States, or compact of 
States, depending on the circumstances, must be the proposed 
issuer of the bonds.
     Second, the bonds must finance projects that make 
a substantial contribution to providing the infrastructure and 
equipment required to eventually complete a high-speed rail 
transportation corridor design that the Secretary of 
Transportation determined viable. Those projects include, but 
are not limited to, some specifically enumerated project types 
such as financing or refinancing equipment and capital 
improvements, eliminating grade crossings, or station 
rehabilitation and construction. The Secretary of 
Transportation must also determine that the projects are part 
of acomprehensive corridor design for intercity passenger rail. 
Projects for the Alaska Railroad are also qualified projects.
     Third, if the rail corridor includes the use of 
rights-of-way owned by a freight railroad, the State applicant 
must demonstrate that it has entered into a written agreement 
with such freight railroad regarding the use of the rights-of-
way, and that collective bargaining agreements with freight 
railroad employees (including terms regulating the contracting 
of work) shall remain in full force and effect.
     Fourth, the corridor design submitted by the 
applicant must eliminate railroad grade crossings that would 
impede high-speed rail operations.
     Fifth, the applicant must comply with the existing 
Amtrak prevailing wage standards and the labor protection 
benefits applicable under section 504 of the Railroad 
Revitalization and Regulatory Reform Act of 1976.
     Sixth, the applicant must agree not to pay the 
principal or interest on any bonds using funds from the Highway 
Trust Fund, except as permitted by law on the date of 
enactment.
    The amount of bonds the Secretary of Transportation may 
designate to be issued in each year is limited to $1.2 billion 
per year from 2004 to 2013 of private activity tax-exempt bonds 
and $1.2 billion per year from 2004 to 2013 of tax-credit 
bonds. Any amount that the Secretary of Transportation does not 
designate in a year may be carried over and designated in 
subsequent years (through fiscal year 2017).
    When designating bonds, the Secretary of Transportation is 
to give preference to projects that: (1) are funded through a 
combination of both tax-exempt and tax-credit bonds; (2) 
propose to link rail passenger service to other passenger 
transportation modes, such as public transportation or air 
service; (3) expect to have a significant impact on air traffic 
congestion; (4) expect to also improve commuter rail 
operations; (5) have completed all environmental work and the 
project is ready to begin construction; and (6) have received 
all financial commitments and other support from State and 
local governments.
    The Secretary of Transportation is to grant or deny the 
applicant's request within nine months after receiving the 
application.
    The issuer of the bonds is to report annually to the 
Secretary of Transportation. That report must include 
statements about the terms of the outstanding designated bonds 
and about the progress made on the project financed with the 
bonds. In addition, it requires the Secretary of 
Transportation, in consultation with the Secretary of the 
Treasury, to submit to the Congress an annual report on the 
program and the bonds designated.
    Interest on bonds designated by the Secretary of 
Transportation and issued by a State, States, or compact of 
States is exempt from Federal taxation, notwithstanding section 
149(c) of the Code.\8\ In addition, the bill provides that such 
bonds are exempt from the volume limitation on private activity 
bonds.
---------------------------------------------------------------------------
    \8\ Under present law, Section 149(c) of the Code provides that 
``no interest on any bond shall be exempt from taxation under [the 
Code] unless such interest is exempt from tax under [the Code] without 
regard to any provision of law which is not contained in [the Code] and 
which is not contained in a revenue Act.''
---------------------------------------------------------------------------
    Bonds designated by the Secretary of Transportation may be 
issued for refinancing projects if certain requirements are 
met.
    The bill makes entities providing intercity high-speed rail 
passenger service that use property acquired through bonds 
designated by the Secretary of Transportation subject to rail 
statutes, such as the Railway Labor Act and the Railroad 
Retirement Act of 1974. This rule does not apply to projects 
for the Alaska Railroad. Any entity providing high-speed rail 
service commencing after the date of enactment which replaces 
another intercity carrier must enter a collective bargaining 
agreement covering employees of the displaced carrier. The 
agreement must further provide for priority hiring by new 
entities providing intercity high-speed rail passenger service 
of workers of an incumbent rail passenger provider who are 
displaced because of projects financed by bonds designated by 
the Secretary. The agreement must also establish a process for 
implementing such hiring priority, pay work rules and working 
conditions. A process for negotiating new labor arrangements is 
also provided by the bill.
    The Secretary of Transportation is to issue implementing 
regulations within 6 months after the date of enactment.

Section 3 of H.R. 2571: Tax Credit to Holders of Qualified High-Speed 
        Rail Infrastructure Bonds

    Section 3 amends the Code to create tax-credit bonds that 
the Secretary may designate pursuant to the newly created 
Section 26106 of Title 49.
    The bill creates a new type of tax-credit bond, qualified 
high-speed rail infrastructure bonds. In lieu of interest, the 
bondholder receives a tax credit equal to the applicable credit 
rate multiplied by the outstanding face amount of the bond. The 
``credit rate'' for the qualified high-speed rail 
infrastructure bonds is the rate equal to the average market 
yield (as of the day before the date of sale of the issue) on 
outstanding long-term corporate debt obligations. Credits 
accrue quarterly and are includable in the gross income of the 
taxpayer. The credit is allowable against regular income tax 
and alternative minimum tax liability. Unused credits may be 
carried over to succeeding taxable years. Unlike qualified zone 
academy bonds, which may be held only by certain financial 
institutions, any taxpayer would be eligible to be a holder of 
a qualified high-speed rail infrastructure bond and thereby 
claim the credit.
    To be a qualified high-speed rail infrastructure bond, five 
requirements must be met: (1) the issuer must certify that the 
Secretary of Transportation has designated the bond under the 
new section 26106 of Title 49 for purposes of the tax-credit 
provision; (2) 95 percent or more of the proceeds from the sale 
of the issue are to be used for expenditures incurred after the 
date of enactment for a qualified project (as defined in the 
new section 26106 of Title 49); (3) the term of each bond that 
is part of the issue cannot exceed 20 years; (4) the payment of 
the principal with respect to such bond is the obligation 
solely of the issuer; and (5) the issue must meet certain 
arbitrage requirements.
    If any qualified high-speed rail infrastructure bond ceases 
to be such a qualified bond, the issuer is required to 
reimburse the Treasury for all tax credits (including interest) 
that accrued within three years of the date of noncompliance. 
If the issuer fails to make a full and timely reimbursement of 
tax credits, holders of the bonds are liable for any remaining 
amounts.
    Section 3 also changes the requirements for present-law 
high-speed intercity rail exempt facility bonds under sections 
142(a)(11) and 142(i) of the Code. The minimum speed 
requirement for vehicles using high-speed rail facilities is 
reduced from 150 miles per hour to vehicles reasonably expected 
to operate in excess of 110 miles per hour between scheduled 
stops. In addition, to be a qualified high-speed intercity rail 
facility bond, section 3 of the bill requires that such bonds 
meet the same requirements for designation as high-speed 
infrastructure bonds described in section 2.

                           REASONS FOR CHANGE

    The Committee notes that there are many proposals to expand 
the use of tax-exempt and tax-credit bonds for various 
projects. The Committee believes that such proposals should be 
considered by the Committee in a comprehensive rather than 
piece-meal fashion. Further, the Committee believes that 
legislation involving tax-exempt and tax credit bonds should 
originate in the Ways and Means Committee, after careful 
consideration by the Committee of such proposals.

                        EXPLANATION OF PROVISION

    The Committee strikes sections 2 and 3 of H.R. 2571 from 
the bill.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of the bill, H.R. 2571.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 2571, as amended, was ordered reported, 
without recommendation, by voice vote (with a quorum being 
present).

                           VOTE ON AMENDMENT

    A rollcall vote was conducted on the following amendment:
    An amendment by Chairman Thomas, to strike sections 2 and 3 
of the bill (relating to rules governing issuance of tax-exempt 
and tax-credit bonds), as introduced and reported by the 
Committee on Transportation and Infrastructure, was agreed to 
by a rollcall vote of 24 yeas to 15 nays. The vote was as 
follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................        3   ........  .........  Mr. Rangel.......  ........        3   .........
Mr. Crane......................        3   ........  .........  Mr. Stark........  ........        3   .........
Mr. Shaw.......................        3   ........  .........  Mr. Matsui.......  ........        3   .........
Mrs. Johnson...................        3   ........  .........  Mr. Levin........  ........  ........  .........
Mr. Houghton...................        3   ........  .........  Mr. Cardin.......  ........        3   .........
Mr. Herger.....................        3   ........  .........  Mr. McDermott....  ........        3   .........
Mr. McCrery....................        3   ........  .........  Mr. Kleczka......  ........        3   .........
Mr. Camp.......................        3   ........  .........  Mr. Lewis (GA)...  ........        3   .........
Mr. Ramstad....................        3   ........  .........  Mr. Neal.........  ........        3   .........
Mr. Nussle.....................        3   ........  .........  Mr. McNulty......  ........        3   .........
Mr. Johnson....................        3   ........  .........  Mr. Jefferson....  ........        3   .........
Ms. Dunn.......................        3   ........  .........  Mr. Tanner.......  ........  ........  .........
Mr. Collins....................        3   ........  .........  Mr. Becerra......  ........        3   .........
Mr. Portman....................        3   ........  .........  Mr. Doggett......  ........        3   .........
Mr. English....................        3   ........  .........  Mr. Pomeroy......  ........        3   .........
Mr. Hayworth...................        3   ........  .........  Mr. Sandlin......  ........        3   .........
Mr. Weller.....................        3   ........  .........  Ms. Tubbs Jones..  ........        3   .........
Mr. Hulshof....................        3   ........  .........
Mr. McInnis....................        3   ........  .........
Mr. Lewis (KY).................        3   ........  .........
Mr. Foley......................        3   ........  .........
Mr. Brady......................        3   ........  .........
Mr. Ryan.......................        3   ........  .........
Mr. Cantor.....................        3   ........  .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of the rule XIII of the 
Rules of the House of Representatives, the following statement 
is made concerning the effects on the budget of the revenue 
provisions of the bill, H.R. 2571 as reported.
    The bill, as reported, is estimated to have the following 
effects on budget receipts for fiscal years 2003-2008:

ESTIMATED BUDGET EFFECTS OF THE TAX PROVISIONS CONTAINED IN H.R. 2571, THE ``RAIL INFRASTRUCTURE DEVELOPMENT AND
 EXPANSION ACT FOR THE 21ST CENTURY,'' AS INTRODUCED AND ORDERED REPORTED BY THE COMMITTEE ON TRANSPORTATION AND
                         INFRASTRUCTURE, AS REPORTED BY THE COMMITTEE ON WAYS AND MEANS
                                [Fiscal years 2004-2008, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
               Provision                       Effective         2004    2005    2006    2007    2008    2004-08
----------------------------------------------------------------------------------------------------------------
1. Strike Provision to Allow High-      DOE...................       4      16      32      51      70       173
 Speed Rail Infrastructure Bonds.
2. Strike Provision to Allow a Tax      DOE...................      14      54     115     189     270       641
 Credit to Holders of Qualified High-
 Speed Rail Infrastructure Bonds.
                                                               -------------------------------------------------
      Net Total.......................  ......................      18      70     147     240     340       814
----------------------------------------------------------------------------------------------------------------
Legend for ``Effective'' column: DOE =date of enactment.

Note.--Details may not add to totals due to rounding.

Source: Joint Committee on Taxation.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 31, 2003.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2571, the Rail 
Infrastructure Development and Expansion Act for the 21st 
Century.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Rachel 
Milberg.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 2571--Rail Infrastructure Development and Expansion Act for the 
        21st Century

    Summary: H.R. 2571 would authorize the appropriation of 
$100 million each year over the 2004-2011 period to provide 
grants to public agencies for developing high-speed-rail 
corridors, and for improving the technology for high-speed-rail 
systems. Assuming appropriation of the authorized amounts, CBO 
estimates that implementing those provisions would cost $253 
million over the 2004-2008 period and another $547 million 
after 2008.
    H.R. 2571 also would expand the Railroad Rehabilitation and 
Improvement Financing (RRIF) program. This program authorizes 
the Federal Railroad Administration (FRA) to provide direct 
loans and loan guarantees for the development of railroad 
infrastructure. H.R. 2571 would raise the ceiling on the total 
amount of outstanding loans or loan guarantees authorized under 
the RRIF program from $3.5 billion to $35 billion. CBO 
estimates that additional direct spending under this provision 
would be insignificant until after 2013.
    H.R. 2571 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on State, local, or tribal 
governments. State and local governments would benefit from 
using grants, loans, and loan guarantees to finance high-speed-
rail projects and any costs they face would be incurred 
voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2571 is shown in the following table. 
The costs of this legislation fall within budget function 400 
(transportation).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2003     2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
                                      SPENDING SUBJECT TO APPROPRIATION \1\

Spending Under Current Law for High-Speed-Rail Programs:
    Budget Authority \2\..................................       30        0        0        0        0        0
    Estimated Outlays.....................................       25       21       18       15        9        0
Proposed Changes:
    Authorized Level......................................        0      100      100      100      100      100
    Estimated Outlays.....................................        0       14       26       42       71      100
Spending Under H.R. 2571 for High-Speed-Rail Programs:
    Authorization Level...................................       30      100      100      100      100      100
    Estimated Outlays.....................................       25       35       44       57       80      100
----------------------------------------------------------------------------------------------------------------
\1\ Enacting the bill also would increase direct spending, but CBO estimates those effects would not be
  significant over the 2004-2013 period.
\2\ A full-year appropriation for fiscal year 2004 has not yet been enacted.

    Basis of Estimate: Implementing H.R. 2571 would increase 
spending on grants to develop high-speed-rail corridors and 
improvements in technology for high-speed rail. This spending 
would be subject to appropriation. Enacting H.R. 2571 also 
could increase direct spending by expanding the RRIF program; 
but CBO estimates those effects would not be significant over 
the 2004-2013 period.

Spending subject to appropriation

    For this estimate, CBO assumes that H.R. 2571 will be 
enacted this fall and that amounts authorized will be 
appropriated for each year. Outlay estimates are based on 
historical spending patterns for the high-speed-rail assistance 
program and information from FRA.
    High-Speed-Rail Corridors. Under current law, FRA provides 
grants to public agencies for planning corridors for high-
speed-rail projects. H.R. 2571 would authorize theappropriation 
of $70 million each year over the 2004-2011 period for this program, 
and the bill would allow agencies to use grants for acquiring 
locomotives, rolling stock, track, and signal equipment. CBO estimates 
that extending this grant program would cost $177 million over the 
2004-2008 period and another $383 million after 2008, assuming 
appropriation of the authorized funds.
    Technology for High Speed Rail. H.R. 2571 would authorize 
the appropriation of $30 million each year over the 2004-2011 
period to continue FRA's program aimed at improving high-speed-
rail technology. CBO estimates this provision would cost $76 
million over the 2004-2008 period and another $164 million 
after 2008, assuming appropriation of the authorized funds.

Direct spending

    Under the RRIF program, FRA provides direct loans and loan 
guarantees for the development of railroad infrastructure. H.R. 
2571 would increase the total amount of outstanding loans or 
loan guarantees authorized under the RRIF program from $3.5 
billion to $35 billion. CBO estimates that the RRIF program 
operates at a net cost to the federal government; however, 
because we expect that the total level of loans and loan 
guarantees is unlikely to exceed the program's existing 
authority until after 2013, CBO estimates that enacting H.R. 
2571 would not result in any significant additional costs for 
this program over the next 10 years.
    Under the RRIF program, borrowers can pay a premium to the 
government to cover the estimated subsidy cost of their loans, 
thus securing a loan or loan guarantee without further 
appropriation. After borrowers have repaid their loans, current 
law requires the government to return the amount of premiums 
that exceeded the actual subsidy cost of their loans and 
guarantees. The government is not authorized to collect 
additional money, however, if the premiums do not fully cover 
the subsidy cost of the loans and loan guarantees. This 
asymmetry in the program structure is the reason why CBO 
expects that RRIF is likely to have a net cost to the 
government over many years. The actual subsidy cost of each 
loan or loan guarantee made under the RRIF program may be 
higher or lower than what FRA initially collects from the 
borrower; however, after the excess premiums have been repaid 
some premiums may be lower than the actual subsidy cost, but 
none will be higher.
    The RRIF program was authorized in 1998 by the 
Transportation Equity Act for the 21st Century. Since 1998, FRA 
has approved four loans and disbursed $107 million including a 
$100 million loan to Amtrak. Based on information from FRA, 
railroad associations, and railroads, CBO does not expect that 
FRA will disburse more than the $3.5 billion in loan principal 
authorized under current law before 2013. The bill would 
restrict the Administration from requiring applicants to offer 
collateral or seek financial assistance from other sources 
before applying for credit under RRIF. Although those changes 
to the program might increase demand for credit under RRIF, CBO 
expects that over the next 10 years, railroads are still likely 
to apply for relatively small loans in comparison to the size 
of the program under current law.
    Intergovernmental and private-sector impact: H.R. 2571 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments. State and local governments would benefit 
from using grants, loans, and loan guarantees to finance high-
speed-rail projects and any costs they face would be incurred 
voluntarily.
    Previous CBO estimate: On August 28, 2003, CBO transmitted 
a cost estimate for H.R. 2571 as ordered reported by the House 
Committee on Transportation and Infrastructure on June 25, 
2003. In addition to the provisions discussed in this estimate, 
the earlier version of the bill would authorize states to issue 
tax-exempt and tax-credit bonds to finance infrastructure for 
high-speed-rail transportation projects. The Joint Committee on 
Taxation estimated that the bond provisions would lower federal 
revenues, and CBO's cost estimate included those estimates.
    Estimate prepared by: Federal Costs: Rachel Milberg; Impact 
on State, Local, and Tribal Governments: Gregory Waring; and 
Impact on the Private Sector: Cecil McPherson.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                    D. Macroeconomic Impact Analysis

    In compliance with clause 3(h)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made by the Joint Committee on Taxation with respect to the 
provisions of the bill amending the Internal Revenue Code of 
1986: the effects of the bill on economic activity are so small 
as to be incalculable within the context of a model of the 
aggregate economy.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was a result of the Committee's 
oversight review concerning the tax burden on taxpayers that 
the Committee concluded that it is appropriate to report the 
bill as amended to the House of Representatives with no 
recommendation.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of the rule XIII of the 
Rules of the House of Representatives (relating to 
Constitutional Authority), the Committee states that the 
Committee's action in reporting this bill is derived from 
Article I of the Constitution, Section 8 (``The Congress shall 
have Power To lay and collect Taxes, Duties, Imposts and 
Excises * * *''), and from the 16th Amendment to the 
Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                E. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the provisions of the bill, and states that 
the provisions of the bill do not involve any Federal income 
tax rate increases within the meaning of the rule.

                       F. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the 
Joint Committee on Taxation (in consultation with the Internal 
Revenue Service and the Department of the Treasury) to provide 
a tax complexity analysis. The complexity analysis is required 
for all legislation reported by the House Committee on Ways and 
Means, the Senate Committee on Finance, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code and has 
widespread applicability to individuals or small businesses.
    The staff of the Joint Committee on Taxation has determined 
that a complexity analysis is not required under section 
4022(b) of the IRS Reform Act because the bill contains no 
provisions that amend the Internal Revenue Code and that have 
``widespread applicability'' to individuals or small 
businesses.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

              CHAPTER 261 OF TITLE 49, UNITED STATES CODE

                CHAPTER 261--HIGH-SPEED RAIL ASSISTANCE

Sec.
26101.  Corridor [planning] development.
     * * * * * * *

Sec. 26101. Corridor [planning] development

  (a) Corridor [Planning] Development Assistance.--(1) The 
Secretary may provide under this section financial assistance 
to a public agency or group of public agencies for corridor 
planning for up to 50 percent of the publicly financed costs 
associated with eligible activities.

           *       *       *       *       *       *       *

  (b) Eligible Activities.--(1) A corridor [planning] 
development activity is eligible for financial assistance under 
subsection (a) if the Secretary determines that it is necessary 
to establish appropriate engineering, operational, financial, 
environmental, or socioeconomic projections for the 
establishment of high-speed rail service in the corridor and 
that it leads toward development of a prudent financial and 
institutional plan for implementation of specific high-speed 
rail improvements, or if it is an activity described in 
subparagraph (M). Eligible corridor [planning] development 
activities include--
          (A) environmental assessments;

           *       *       *       *       *       *       *

          (F) coordination with State and metropolitan area 
        transportation planning and corridor [planning] 
        development with other States;

           *       *       *       *       *       *       *

          (K) preparation of financing plans and prospectuses; 
        [and]
          (L) creation of public/private partnerships[.]; and
          (M) the acquisition of locomotives, rolling stock, 
        track, and signal equipment.
  (2) No financial assistance shall be provided under this 
section for corridor [planning] development with respect to the 
main line of the Northeast Corridor, between Washington, 
District of Columbia, and Boston, Massachusetts.

           *       *       *       *       *       *       *

  (c) Criteria for Determining Financial Assistance.--Selection 
by the Secretary of recipients of financial assistance under 
this section shall be based on such criteria as the Secretary 
considers appropriate, including--
          (1) * * *
          (2) the extent to which the proposed [planning] 
        development focuses on systems which will achieve 
        sustained speeds of 125 mph or greater;

           *       *       *       *       *       *       *

[Sec. 26104. Authorization of appropriations

  [(a) Fiscal Year 1995.--There are authorized to be 
appropriated to the Secretary $29,000,000 for fiscal year 1995, 
for carrying out sections 26101 and 26102 (including payment of 
administrative expenses related thereto).
  [(b) Fiscal Year 1996.--(1) There are authorized to be 
appropriated to the Secretary $40,000,000 for fiscal year 1996, 
for carrying out section 26101 (including payment of 
administrative expenses related thereto).
  [(2) There are authorized to be appropriated to the Secretary 
$30,000,000 for fiscal year 1996, for carrying out section 
26102 (including payment of administrative expenses related 
thereto).
  [(c) Fiscal Year 1997.--(1) There are authorized to be 
appropriated to the Secretary $45,000,000 for fiscal year 1997, 
for carrying out section 26101 (including payment of 
administrative expenses related thereto).
  [(2) There are authorized to be appropriated to the Secretary 
$40,000,000 for fiscal year 1997, for carrying out section 
26102 (including payment of administrative expenses related 
thereto).
  [(d) Fiscal Year 1998.--(1) There are authorized to be 
appropriated to the Secretary $10,000,000 for fiscal year 1998, 
for carrying out section 26101 (including payment of 
administrative expenses related thereto).
  [(2) There are authorized to be appropriated to the Secretary 
$25,000,000 for fiscal year 1998, for carrying out section 
26102 (including payment of administrative expenses related 
thereto).
  [(e) Fiscal Year 1999.--(1) There are authorized to be 
appropriated to the Secretary $10,000,000 for fiscal year 1999, 
for carrying out section 26101 (including payment of 
administrative expenses related thereto).
  [(2) There are authorized to be appropriated to the Secretary 
$25,000,000 for fiscal year 1999, for carrying out section 
26102 (including payment of administrative expenses related 
thereto).
  [(f) Fiscal Year 2000.--(1) There are authorized to be 
appropriated to the Secretary $10,000,000 for fiscal year 2000, 
for carrying out section 26101 (including payment of 
administrative expenses related thereto).
  [(2) There are authorized to be appropriated to the Secretary 
$25,000,000 for fiscal year 2000, for carrying out section 
26102 (including payment of administrative expenses related 
thereto).
  [(g) Fiscal Year 2001.--(1) There are authorized to be 
appropriated to the Secretary $10,000,000 for fiscal year 2001, 
for carrying out section 26101 (including payment of 
administrative expenses related thereto).
  [(2) There are authorized to be appropriated to the Secretary 
$25,000,000 for fiscal year 2001, for carrying out section 
26102 (including payment of administrative expenses related 
thereto).
  [(h) Funds to Remain Available.--Funds made available under 
this section shall remain available until expended.]

Sec. 26104. Authorization of appropriations

  (a) Fiscal Years 2004 Through 2011.--There are authorized to 
be appropriated to the Secretary--
          (1) $70,000,000 for carrying out section 26101; and
          (2) $30,000,000 for carrying out section 26102,
for each of the fiscal years 2004 through 2011.
  (b) Funds To Remain Available.--Funds made available under 
this section shall remain available until expended.
                              ----------                              

       RAILROAD REVITALIZATION AND REGULATORY REFORM ACT OF 1976

           *       *       *       *       *       *       *
TITLE I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

                              definitions

  Sec. 102. As used in this Act, unless the context otherwise 
indicates, the term--
          (1) * * *

           *       *       *       *       *       *       *

          [(7) ``railroad'' means a rail carrier subject to 
        part A of subtitle IV of title 49, United States Code, 
        and includes the National Railroad Passenger 
        Corporation; and]
          (7) ``railroad'' has the meaning given that term in 
        section 20102 of title 49, United States Code; and

           *       *       *       *       *       *       *

TITLE V--RAILROAD REHABILITATION AND IMPROVEMENT FINANCING

           *       *       *       *       *       *       *

SEC. 502. DIRECT LOANS AND LOAN GUARANTEES.

  (a) General Authority.--The [Secretary may provide direct 
loans and loan guarantees to State and local governments,] 
Secretary shall provide direct loans and loan guarantees to 
State and local governments, agreements or interstate compacts 
consented to by Congress under section 410(a) of Public Law 
105-134 (49 U.S.C. 24101 nt), government sponsored authorities 
and corporations, railroads, and joint ventures that include at 
least 1 railroad.

           *       *       *       *       *       *       *

  (d) Extent of Authority.--The aggregate unpaid principal 
amounts of obligations under direct loans and loan guarantees 
made under this section shall not exceed [$3,500,000,000] 
$35,000,000,000 at any one time. Of this amount, not less than 
[$1,000,000,000] $7,000,000,000 shall be available solely for 
projects primarily benefiting freight railroads other than 
Class I carriers. The Secretary shall not establish any limit 
on the proportion of the unused amount authorized under this 
subsection that may be used for 1 loan or loan guarantee.

           *       *       *       *       *       *       *

  (f) Infrastructure Partners.--
          (1) * * *
          (2) Credit risk premium amount.--The Secretary shall 
        determine the amount required for credit risk premiums 
        under this subsection on the basis of--
                  (A) the circumstances of the applicant, 
                including the amount of collateral offered, if 
                any;

           *       *       *       *       *       *       *

                  (D) consultation with the Congressional 
                Budget Office; [and]
                  (E) the size and characteristics of the 
                cohort of which the loan or loan guarantee is a 
                member; and
                  [(E)] (F) any other factors the Secretary 
                considers relevant.

           *       *       *       *       *       *       *

          (4) Cohorts of loans.--In order to maintain 
        sufficient balances of credit risk premiums to 
        adequately protect the Federal Government from risk of 
        default, while minimizing the length of time the 
        Government retains possession of those balances, the 
        Secretary shall establish cohorts of loans. When all 
        obligations attached to a cohort of loans have been 
        satisfied, credit risk premiums paid for the cohort, 
        and interest accrued thereon, which were not used to 
        mitigate losses shall be returned to the original 
        source on a pro rata basis. A cohort may include loans 
        and loan guarantees. The Secretary shall not establish 
        any limit on the proportion of a cohort that may be 
        used for 1 loan or loan guarantee.

           *       *       *       *       *       *       *

  (h) Conditions of Assistance.--The Secretary shall, before 
granting assistance under this section, require the applicant 
to agree to such terms and conditions as are sufficient, in the 
judgment of the Secretary, to ensure that, as long as any 
principal or interest is due and payable on such obligation, 
the applicant, and any railroad or railroad partner for whose 
benefit the assistance is intended--
          (1) * * *

           *       *       *       *       *       *       *

The Secretary shall not require an applicant for a direct loan 
or loan guarantee under this section to provide collateral. The 
Secretary shall not require that an applicant for a direct loan 
or loan guarantee under this section have previously sought the 
financial assistance requested from another source. The 
Secretary shall require recipients of direct loans or loan 
guarantees under this section to apply the standards of section 
26106(a)(5) of title 49, United States Code, to their projects.
  (i) Time Limit for Approval or Disapproval.--Not later than 
90 days after receiving a complete application for a direct 
loan or loan guarantee under this section, the Secretary shall 
approve or disapprove the application.

SEC. 503. ADMINISTRATION OF DIRECT LOANS AND LOAN GUARANTEES.

  (a) * * *

           *       *       *       *       *       *       *

  (l) Fees and Charges.--Except as provided in this title, the 
Secretary may not assess any fees, including user fees, or 
charges in connection with a direct loan or loan guarantee 
provided under section 502.

           *       *       *       *       *       *       *

                                
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