29–006

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 

2

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 taxVerDate jul 14 2003 20:17 Nov 07, 2003 Jkt 029006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR278P2.XXX HR278P2
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1 Rev. Proc. 2002–70 2002–2 C.B. 845. 2Sec. 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. 

able 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 firsttime 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 owneroccupied 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. These annual 

volume limits, which are indexed for inflation, currently equal $75 

per resident of the State, or $228,580,000 million, if greater.1

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 credVerDate jul 14 2003 20:17 Nov 07, 2003 Jkt 029006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR278P2.XXX HR278P2
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4Sec. 142(i)(2). 

5Sec. 142(i)(3). 

6Sec. 146(g)(4). 

7Sec. 1397E. 

its with respect to the property financed by the net proceeds of the 

issue.4

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

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. 

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. 

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. 

5

B. DESCRIPTION OF SECTIONS 2 AND 3 OF H.R. 2571, AS ORDERED

REPORTED BY THE COMMITTEE ON TRANSPORTATION AND INFRA- STRUCTURE

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 a comprehensive 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 

6

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.’’

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. 

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 HighSpeed 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 highspeed 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 

7

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 highspeed 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 conVerDate jul 14 2003 20:17 Nov 07, 2003 Jkt 029006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR278P2.XXX HR278P2
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cerning 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 ........................... ✓ ........... ............. Mr. Rangel ........................... ........... ✓ .............

Mr. Crane .............................. ✓ ........... ............. Mr. Stark .............................. ........... ✓ .............

Mr. Shaw ............................... ✓ ........... ............. Mr. Matsui ............................ ........... ✓ .............

Mrs. Johnson ......................... ✓ ........... ............. Mr. Levin .............................. ........... ........... .............

Mr. Houghton ........................ ✓ ........... ............. Mr. Cardin ............................ ........... ✓ .............

Mr. Herger ............................. ✓ ........... ............. Mr. McDermott ..................... ........... ✓ .............

Mr. McCrery ........................... ✓ ........... ............. Mr. Kleczka ........................... ........... ✓ .............

Mr. Camp .............................. ✓ ........... ............. Mr. Lewis (GA) ..................... ........... ✓ .............

Mr. Ramstad ......................... ✓ ........... ............. Mr. Neal ............................... ........... ✓ .............

Mr. Nussle ............................. ✓ ........... ............. Mr. McNulty .......................... ........... ✓ .............

Mr. Johnson ........................... ✓ ........... ............. Mr. Jefferson ........................ ........... ✓ .............

Ms. Dunn .............................. ✓ ........... ............. Mr. Tanner ............................ ........... ........... .............

Mr. Collins ............................ ✓ ........... ............. Mr. Becerra .......................... ........... ✓ .............

Mr. Portman .......................... ✓ ........... ............. Mr. Doggett .......................... ........... ✓ .............

Mr. English ........................... ✓ ........... ............. Mr. Pomeroy ......................... ........... ✓ .............

Mr. Hayworth ......................... ✓ ........... ............. Mr. Sandlin .......................... ........... ✓ .............

Mr. Weller .............................. ✓ ........... ............. Ms. Tubbs Jones .................. ........... ✓ .............

Mr. Hulshof ........................... ✓ ........... .............

Mr. McInnis ........................... ✓ ........... .............

Mr. Lewis (KY) ...................... ✓ ........... .............

Mr. Foley ............................... ✓ ........... .............

Mr. Brady .............................. ✓ ........... .............

Mr. Ryan ............................... ✓ ........... .............

Mr. Cantor ............................. ✓ ........... .............

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:

9

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-Speed Rail Infrastructure Bonds.DOE 4 16 32 51 70 173

2. Strike Provision to Allow a Tax Credit to Holders of Qualified High-Speed Rail Infrastructure 

Bonds.

DOE 14 54 115 189 270 641

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. 

10

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 pe- riod. 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 the appropriation 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. 

11

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. 

12

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 deterVerDate jul 14 2003 20:17 Nov 07, 2003 Jkt 029006 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR278P2.XXX HR278P2
13

mined 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 øplanning¿ development. 

* * * * * * *

§ 26101. Corridor øplanning¿ development

(a) CORRIDOR øPLANNING¿ 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 

14

up to 50 percent of the publicly financed costs associated with eligible activities. 

* * * * * * *

(b) ELIGIBLE ACTIVITIES.—(1) A corridor øplanning¿ 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 øplanning¿ development activities include—

(A) environmental assessments; 

* * * * * * *

(F) coordination with State and metropolitan area transportation planning and corridor øplanning¿ development with 

other States; 

* * * * * * *

(K) preparation of financing plans and prospectuses; øand¿

(L) creation of public/private partnershipsø.¿; and

(M) the acquisition of locomotives, rolling stock, track, and 

signal equipment.

(2) No financial assistance shall be provided under this section 

for corridor øplanning¿ 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 øplanning¿ development

focuses on systems which will achieve sustained speeds of 125 

mph or greater; 

* * * * * * *

ø§ 26104. Authorization of appropriations 

ø(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). 

ø(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). 

ø(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). 

ø(c) FISCAL YEAR 1997.—(1) There are authorized to be appropriated to the Secretary $45,000,000 for fiscal year 1997, for carVerDate jul 14 2003 20:17 Nov 07, 2003 Jkt 029006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6601 E:\HR\OC\HR278P2.XXX HR278P2
15

rying out section 26101 (including payment of administrative expenses related thereto). 

ø(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). 

ø(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). 

ø(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). 

ø(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). 

ø(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). 

ø(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). 

ø(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). 

ø(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). 

ø(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). 

ø(h) FUNDS TO REMAIN AVAILABLE.—Funds made available under 

this section shall remain available until expended.¿

§ 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 

* * * * * * *

16

DEFINITIONS

SEC. 102. As used in this Act, unless the context otherwise indicates, the term—

(1) * * *

* * * * * * *

ø(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 øSecretary 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 ø$3,500,000,000¿

$35,000,000,000 at any one time. Of this amount, not less than 

ø$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; 

øand¿

(E) the size and characteristics of the cohort of which the 

loan or loan guarantee is a member; and

ø(E)¿ (F) any other factors the Secretary considers relevant. 

* * * * * * *

17

(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. 

* * * * * * *

Æ