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[House Report 109-314]
[From the U.S. Government Publishing Office]

109th Congress                                            Rept. 109-314
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================
 
 RAIL INFRASTRUCTURE DEVELOPMENT AND EXPANSION ACT FOR THE 21ST CENTURY

                                _______
                                

               November 18, 2005.--Ordered to be printed

                                _______
                                

     Mr. Young of Alaska, from the Committee on Transportation and 
                Infrastructure, submitted the following

                              R E P O R T

                        [To accompany H.R. 1631]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Transportation and Infrastructure, to whom 
was referred the bill (H.R. 1631) to provide for the financing 
of high-speed rail infrastructure, and for other purposes, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                       Purpose of the Legislation

    H.R. 1631 would authorize approximately $60 billion in 
infrastructure funding for high-speed rail corridors and other 
rail infrastructure. This would be divided principally between 
authority for states participating in a high-speed rail 
corridor to issue tax-exempt and/or tax-credit bonds, and an 
expansion of the existing railroad infrastructure financing 
loan program established in TEA-21 (P.L. 105-178) from $3.5 
billion in authorized principal to $35 billion. H.R. 1631 would 
also reauthorize and expand the existing Swift Rail Development 
Act program of general fund grants for planning and technology 
development related to high-speed rail corridors.

                Background and Need for the Legislation

    H.R. 1631 was introduced by Mr. Young (of Alaska), Mr. 
Oberstar, Mr. LaTourette, and Ms. Brown (of Florida) on April 
14, 2005.
    Over a ten-year period, states or interstate compacts would 
be permitted to issue $12 billion in federally tax-exempt bonds 
and $12 billion in federal tax-credit bonds for infrastructure 
improvements for high-speed passenger rail. The Secretary of 
Transportation would be authorized to approve overall corridor 
design. The design must include the following elements:
          1. The applicant must have an agreement with the 
        freight railroad if the latter's rights-of-way are to 
        be used;
          2. Railroad grade crossings that would impede high-
        speed operations must not be created and must be 
        eliminated if existing now; and
          3. An interstate compact must be in place for multi-
        state corridors.
    Once a design has been approved, the Secretary of 
Transportation would be authorized to approve specific projects 
that make a substantial contribution to providing the 
infrastructure and equipment to complete a high-speed rail 
corridor (including corridors designated under section 
104(d)(2) of title 23, U.S. Code).
    The Secretary may give preference in approving bond 
financing to projects that:
          --use a mix of tax-credit and tax-exempt bonds;
          --link rail passenger service with other modes of 
        transportation;
          --are expected to have a significant impact on air 
        traffic congestion;
          --are expected to also improve commuter rail 
        operations;
          --have all environmental work completed and are ready 
        to commence; or
          --have received state or local financial and other 
        support.
    The Secretary would be permitted to designate $1.2 billion 
per year for 10 years of private-activity tax-exempt bonds, 
plus $1.2 billion per year for 10 years of tax-credit bonds. 
Authority to designate unused annual amounts of each type of 
bond would carry over to subsequent years. Tax-exempt bond 
amounts would be excluded from the $225 million cap on state-
issued federally tax-exempt bonds. States would be required to 
submit annual reports on the status of bonds issued and bond-
funded projects.
    Potentially displaced workers would be provided protection 
through hiring preference for positions with new providers of 
high-speed rail passenger service.
    In addition to the foregoing, H.R. 1631 would reauthorize 
and modify the existing Swift Rail Development Act, an existing 
program of federal assistance for planning and design of high-
speed rail corridors, by extending the program authority 
through fiscal year 2013. The bill authorizes $100 million per 
year for high-speed rail technology and corridor development. 
In addition, the bill shifts the funding emphasis from 
technology development (increasing the current authorization 
from $25 million per year to $30 million per year) to corridor 
development (previously corridor planning) (increasing the 
current authorization from $10 million per year to $70 million 
per year) and allows acquisition of locomotives, rolling stock, 
and track and signal equipment with program funds.
    H.R. 1631 also would expand the existing Railroad 
Rehabilitation and Infrastructure Financing (RRIF) direct loan 
and loan guarantee program by increasing funding authority from 
$3.5 billion to $35 billion of outstanding loan principal at 
any time.
    The RRIF program would be modified as follows:
    --Interstate compacts as well as states are made eligible 
for assistance.
    --Magnetic levitation systems as well as conventional 
steel-wheel systems are eligible for assistance.
    --Amount reserved for Class II and III railroads is 
increased from $1 billion to $7 billion out of $35 billion in 
total loan principal authority.
    --Eliminates obstacles in the current RRIF program 
(structure of loan cohorts, collateral requirements, artificial 
limits on loan amounts, prior rejection requirement).
    --The Secretary of Transportation must approve or 
disapprove an application within 180 days after receiving it.
    --The Secretary may not assess applicant fees or other 
charges beyond those authorized in the statute.
    --The Secretary is required to publish review standards and 
criteria within 30 days after enactment.
    --Applicants must apply prevailing wage rate standards to 
construction projects.
    H.R. 1631 provides nearly $60 billion in new funding for 
high speed rail and other forms of rail transportation. States 
will select and design their own corridors and choose the 
appropriate technology, as well as the financing mechanism, 
whether tax-credit or tax-exempt bonds, loans, loan guarantees, 
orSwift Act grants, or a combination of these. The Swift Act 
will be expanded to include not just infrastructure, but the purchase 
of trains. The RRIF program will be expanded tenfold and impediments to 
the existing program will be removed. This legislation protects the 
interests of railroad employees and existing collective arrangements 
with rail carriers. The Committee believes that H.R. 1631 is crucial to 
the future of our nation's rail system.

                       Summary of the Legislation

Section 1. Short title

    Section 1 names the bill the ``Rail Infrastructure 
Development and Expansion Act for the 21st Century.''

Section 2. High-speed intercity rail facility bonds

    Section 2 amends Chapter 261 of Title 49 by adding Section 
26106, which empowers the Secretary of Transportation to 
designate bonds for funding the development of high-speed rail 
in the United States, and amends the table of contents of this 
Chapter to reflect the addition of Section 26106. Under section 
26106, the Secretary 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 Subsections of Section 26106 are summarized 
below.
    Subsection (a) provides that 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 has 
determined viable. Those projects include, but are not limited 
to, some specifically enumerated projects types such as 
financing or refinancing equipment and capital improvements, 
eliminating grade crossings, or station rehabilitation or 
construction. The Secretary must also determine that the 
projects are part of a viable and comprehensive corridor design 
for intercity passenger rail. The ``substantial contribution'' 
requirement precludes projects that do not substantially 
advance the overall corridor towards high-speed rail 
transportation. The provision does permit an incremental 
approach to developing the corridor, both as to geographic 
scope and cruising speed increase.
     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 regarding 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 current law to the RRIF rail loan 
program.
     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.
    Subsection (b) limits the amount of bonds the Secretary may 
designate to be issued in each year to $1.2 billion per year 
from 2004 to 2013 of private activity, federal tax-exempt bonds 
and $1.2 billion per year from 2004 to 2013 of tax-credit 
bonds. This section also provides that any amount that the 
Secretary does not designate in a year may be carried over and 
designated in subsequent years.
    Subsection (c) provides that when designating bonds, the 
Secretary shall 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.
    Subsection (d) streamlines the designation process by 
requiring that the Secretary grant or deny the applicant's 
request within 9 months after receiving the application.
    Subsection (e) requires the issuer of the bonds to report 
annually to the Secretary. 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, in consultation with the 
Secretary of the Treasury, to submit to the Congress an annual 
report on the program and the bonds designated.
    Subsection (f) addresses the tax treatment of tax-exempt 
bonds designated by the Secretary and issued by a State, 
States, or compact of States. In particular, it provides that 
the interest on those bonds is exempt from federal taxation. 
This subsection also exempts bonds issued pursuant to the 
Secretary's designation from any cap in the Internal Revenue 
Code on the amount of federal tax-exempt bonds a State may 
issue in one year.
    Subsection (g) imposes certain requirements on the use of 
bond proceeds for refinancing projects.
    Subsection (h) makes entities providing intercity high-
speed rail passenger service (including magnetic levitation 
systems) that use property acquired through bonds designated by 
the Secretary subject to rail statutes, such as the Railway 
Labor Act and the Railroad Retirement Act of 1974. 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. It further provides 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. It also establishes a process for 
implementing such hiring priority, pay, work rules and working 
conditions. A process for negotiating new labor arrangements is 
also provided.
    Subsection (i) requires the Secretary to issue implementing 
regulations within 6 months after enactment.
    Subsection (j) defines the terms regarding (1) tax-exempt 
bonds and (2) tax-credit bonds.

Section 3. Tax credit to holders of qualified high-speed rail 
        infrastructure bonds

    Section 3 adds a new subpart to Part IV of subchapter A of 
chapter 1 of the Internal Revenue Code to create the tax-credit 
bonds that the Secretary may designate pursuant to the newly 
created Section 26106 of Title 49.

Section 4. High-speed rail corridor development

    Section 4 reauthorizes the Swift Rail Development Act 
(``Swift Act'') and makes some technical amendments.
    Subsection (a) amends the Swift Act to address ``corridor 
development'' rather than ``corridor planning.'' It also 
authorizes the acquisition of track, signals, rail rolling 
stock and locomotives under the program.
    Subsection (b) reauthorizes the Swift Act at $100 million 
per year from Fiscal Year 2004 through Fiscal Year 2013. Of 
this $100 million, $70 million is for corridor development 
activities and $30 million is for technology development 
activities.

Section 5. Rehabilitation and improvement financing

    This Section makes technical amendments to the Railroad 
Revitalization and Regulatory Reform Act of 1976 and provides 
for $35 billion in direct and guaranteed loans for financing 
rail capacity improvements through the Railroad Rehabilitation 
and Infrastructure Financing (``RRIF'') program.
    Certain technical amendments are necessary because only a 
small number of loans have been issued since the Transportation 
Equity Act for the 21st Century created the program in 1998 as 
a successor to the 1976 program established by Section 511 of 
the 4R Act. These technical amendments remove barriers that 
have prevented the program from working as Congress intended.
    Subsection (a) amends the definition of ``railroad'' to 
include modern high-speed ground transportation technology such 
as magnetic levitation.
    Subsection (b) amends the scope of entities that are 
eligible to participate in the RRIF program by including 
interstate compacts.
    Subsection (c) authorizes the RRIF program at $35 billion 
in outstanding principal at any one time, with $7 billion set 
aside for non-Class I railroads. It also provides that the 
Secretary shall not establish any a priori limit on the amount 
of one loan or loan guarantee issued under the program.
    Subsection (d) amends the structure of the loan cohorts, 
making the program more flexible and usable by railroads.
    Subsection (e) clarifies that the applicant for a loan or 
loan guarantee under this program does not have to provide 
collateral (other than as an optional means of reducing a 
credit risk premium) or to demonstrate that it has sought other 
financial assistance before applying under the program, but 
must address certain labor issues.
    Subsection (f) establishes a deadline of 90 days after the 
applicant submits an application for the Secretary to issue a 
decision approving or disapproving an application.
    Subsection (g) prohibits the Secretary from assessing fees 
or charges (other than the investigative charge already 
explicitly authorized) against an applicant under the RRIF 
program.
    Subsection (h) requires the Secretary, within 30 days after 
enactment of the bill, to make publicly available and to 
publish on the Department's website the substantive criteria 
and standards used by the Secretary in rendering a decision to 
approve or disapprove an application. This subsection does not 
require a newrulemaking by the Secretary. Rather, it requires 
the Secretary to publish the criteria already in use, and to continue 
to make the criteria publicly available, even if amended or revised in 
the future.

            Legislative History and Committee Consideration

    No hearings were held by the Committee on H.R. 1630 (H.R. 
1631's immediate predecessor) in the 108th Congress. However, 
extensive hearings were conducted on a predecessor bill, H.R. 
2950, in the 107th Congress. In the 108th Congress, the 
Committee reported such legislation to the House (H.R. 2950).
    In the 109th Congress, the Full Committee met in open 
session on April 27, 2005, and favorably reported H.R. 1631 by 
voice vote. Subsequent to that action by the Committee, the 
content of Sections 4 and 5 was enacted into law as Sections 
9001 and 9003 of the Safe, Accountable, Flexible, Efficient 
Transportation Act: A Legacy for Users Act [Public Law 109-59, 
119 Stat. 1144 (Aug. 10, 2005)].

                            Roll Call Votes

    Clause 3(b) of rule XIII of the House of Representatives 
requires each committee report to include the total number of 
votes cast for and against on each roll call vote on a motion 
to report and on any amendment offered to the measure or 
matter, and the names of those members voting for and against. 
There were no roll call votes.

                      Committee Oversight Findings

    With respect to the requirements of clause 3(c)(1) of rule 
XIII of the Rules of the House of Representatives, the 
Committee's oversight findings and recommendations are 
reflected in this report.

                          Cost of Legislation

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives does not apply where a cost estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974 has been timely submitted prior to the filing of the 
report and is included in the report. Such a cost estimate is 
included in this report.

                    Compliance with House Rule XIII

    1. With respect to the requirement of clause 3(c)(2) of 
rule XIII of the Rules of the House of Representatives, and 
308(a) of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included below.
    2. With respect to the requirement of clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, the 
performance goals and objective of this legislation establishes 
a goal of State-directed construction of high-speed rail 
corridors, as well as rehabilitation and improvement of rail 
infrastructure generally. States are permitted to establish 
their own timetable and performance goals in building high-
speed corridors, and railroads (or joint ventures including 
railroads) are permitted to establish their own priorities in 
seeking direct or guaranteed loan funding.
    3. With respect to the requirement of clause 3(c)(3) of 
rule XIII of the Rules of the House of Representatives and 
section 402 of the Congressional Budget Act of 1974, the 
Committee has received the following cost estimate for H.R. 
1631 from the Director of the Congressional Budget Office.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 12, 2005.
Hon. Don Young,
Chairman, Committee on Transportation and Infrastructure, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1631, 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 Lisa Cash 
Driskill.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 1631--Rail Infrastructure Development and Expansion Act for the 
        21st Century

    Summary: H.R. 1631 would authorize states to issue $12 
billion in tax-exempt bonds and $12 billion in tax-credit bonds 
to finance infrastructure for high-speed-rail transportation 
projects. The Joint Committee on Taxation (JCT) estimates that 
those two provisions would lower revenues by $854 million over 
the 2006-2010 period and by about $4.2 billion over the next 10 
years.
    In addition to authorizing the bonds, H.R. 1631 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. 
1631 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 2015. Pursuant to section 407 of H. Con. Res. 95 
(the Concurrent Resolution on the Budget, Fiscal Year 2006), 
CBO estimates that enacting H.R. 1631 would be unlikely to 
cause an increase in direct spending greater than $5 billion in 
any of the next four 10-year periods after 2015.
    Finally, H.R. 1631 would authorize the appropriation of 
$100 million each year over the 2006-2013 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 2006-2010 period and another $547 million 
after 2010.
    CBO has reviewed the nontax provisions of H.R. 1631 and 
determined that they contain no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
(UMRA); any costs to state, local, or tribal governments would 
be incurred voluntarily.JCT has reviewed section 3 of H.R. 1631 
and has determined that those provisions contain no intergovernmental 
or private-sector mandates as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1631 is shown in the following table. 
The costs of this legislation fall within budget function 400 
(transportation).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                              --------------------------------------------------
                                                                2005    2006    2007     2008     2009     2010
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

Estimated Revenues...........................................       0     -18     -74     -154     -251     -357

                                      SPENDING SUBJECT TO APPROPRIATION \1\

Spending Under Current Law for High-Speed-Rail Programs:
    Budget Authority \2\.....................................      19       0       0        0        0        0
    Estimated Outlays........................................      29      24      18       13        6        0
Proposed Changes:
    Authorization Level......................................       0     100     100      100      100      100
    Estimated Outlays........................................       0      14      26       42       71      100
Spending Under H.R. 1631 for High-Speed-Rail Programs:
    Authorization Level \2\..................................      19     100     100      100      100      100
    Estimated Outlays........................................      29      38      44       55       77     100
----------------------------------------------------------------------------------------------------------------
\1\ Enacting the bill also would increase direct spending, but CBO estimates those effects would not be
  significant over the 2006-2015 period.
\2\ The 2005 level is the amount appropriated for that year.

Sources. Congressional Budget Office and the Joint Committee on Taxation.

    Basis of estimate: Enacting H.R. 1631 would lower revenues 
by authorizing states to sell tax-exempt and tax-credit bonds. 
Implementing H.R. 1631 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. 1631 would increase direct 
spending after 2015 by expanding the RRIF program.

Revenues

    Enacting H.R. 1631 would lower revenues to the federal 
government by authorizing states to issue $12 billion in tax-
exempt and tax-credit bonds. The 10-year cost of the bond 
provisions is summarized in the following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2006    2007     2008     2009     2010     2011     2012     2013     2014     2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Tax-Exempt Bonds................................................      -4     -16      -32      -51      -71      -92     -112     -131     -149     -168
Tax-Credit Bonds................................................     -14     -58     -122     -200     -286     -376     -461     -541     -617     -694
                                                                 ---------------------------------------------------------------------------------------
      Total Changes in Revenues.................................     -18     -74     -154     -251     -357     -468     -573     -672     -766     -862
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Tax-Exempt Bonds. H.R. 1631 would authorize states to issue 
$1.2 billion in tax-exempt bonds each year over the 2006-2015 
period, and states would use the bond proceeds to finance 
infrastructure for high-speed-rail projects. States would pay 
both principal and interest to bondholders; however, interest 
on the tax-exempt bonds would be excluded from federal income 
taxes, lowering revenues to the federal government. JCT 
estimates that the additional tax-exempt bonds that would be 
authorized under the bill would lower revenues by $174 million 
over the 2006-2010 period and by $826 million over the next 10 
years.
    Tax-Credit Bonds. H.R. 1631 would authorize states to issue 
$1.2 billion in tax-credit bonds each year over the 2006-2015 
period and use the bond proceeds to finance infrastructure for 
high-speed-rail projects. States would repay only the principal 
to bondholders; the federal government would provide interest 
to the bondholders in the form of credits against their federal 
income tax liability, thus lowering revenues to the federal 
government.\1\ JCT estimates that the tax-credit bonds would 
lower revenues by $680 million over the 2006-2010 period and by 
$3.4 billion over the next 10 years.
---------------------------------------------------------------------------
    \1\ Providing tax credits has the same impact on the federal budget 
as outlays for interest costs. For a more complete discussion of the 
potential use of tax-credit bonds for transportation programs, see A 
Comparison of Tax-Credit Bonds, Other Special-Purpose Bonds, and 
Appropriations in Financing Federal Transportation Programs, 
Congressional Budget Office, June 2003, available at www.cbo.gov.
---------------------------------------------------------------------------

Spending subject to appropriation

    For this estimate, CBO assumes that H.R. 1631 will be 
enacted this fall and that amounts authorized will be 
appropriated for each year. Outlay estimates are based on 
historical spending patterns 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. 1631 would authorize the 
appropriation of $70 million each year over the 2006-2013 
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 2006-2010 period and 
another $383 million after 2010, assuming appropriation of the 
authorized funds.
    Technology for High-Speed Rail. H.R. 1631 would authorize 
the appropriation of $30 million each year over the 2006-2013 
period to continue FRA's program aimed at improving high-speed-
rail technology. CBO estimates this provision would cost $76 
million over the 2006-2010 period and another $164 million 
after 2010, 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. 
1631 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 2015, CBO estimates that enacting H.R. 
1631 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 10 loans and disbursed $425 million. 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 
2015. 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.
    Although costs after 2015 could be significant, CBO 
estimates that enacting the bill would be unlikely to cause an 
increase in direct spending greater than $5 billion in any of 
the four 10-year periods following 2015. While the amount of 
loans and guarantees made in the decades after 2015 might total 
more than $30 billion, the budgetary impact would be a much 
smaller amount because only the subsidy cost would appear as an 
outlay on the budget.
    Intergovernmental and private-sector impact: CBO has 
reviewed the nontax provisions of H.R. 1631 and determined that 
they contain no intergovernmental or private-sector mandates as 
defined in UMRA. States that would be authorized to issue 
federally tax-exempt and tax-credit bonds would be 
participating in a voluntary federal program; any costs they 
face would be incurred voluntarily. State and local governments 
generally would benefit from using bonds, grants, loans, and 
loan guarantees to finance high-speed-rail projects.
    JCT has determined that the tax provisions in H.R. 1631 
contain no intergovernmental or private-sector mandates as 
defined in UMRA.
    Estimate prepared by: Federal Costs: Lisa Cash Driskill; 
Impact on State, Local, and Tribal Governments: Sarah Puro; 
Impact on the Private Sector; Jean Talarico.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause (3)(d)(1) of rule XIII of the Rules of 
the House of Representatives, committee reports on a bill or 
joint resolution of a public character shall include a 
statement citing the specific powers granted to the Congress in 
the Constitution to enact the measure. The Committee on 
Transportation and Infrastructure finds that Congress has the 
authority to enact this measure pursuant to its powers granted 
under article I, section 8 of the Constitution.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act. (Public Law 104-4).

                        Preemption Clarification

    Section 423 of the Congressional Budget Act of 1994 
requires the report of any Committee on a bill or joint 
resolution to include a statement on the extent to which the 
bill or joint resolution is intended to preempt state, local or 
tribal law. The Committee states that H.R. 1631 does not 
preempt any state, local, or tribal law.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act. (Public Law 
104-1).

         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):

TITLE 49, UNITED STATES CODE

           *       *       *       *       *       *       *

SUBTITLE V--RAIL PROGRAMS

           *       *       *       *       *       *       *

PART D--HIGH-SPEED RAIL

           *       *       *       *       *       *       *

                CHAPTER 261--HIGH-SPEED RAIL ASSISTANCE

Sec.
26101.  Corridor [planning] development.
     * * * * * * *
26106.  High-speed rail infrastructure bonds.

           *       *       *       *       *       *       *

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] development for up to 50 percent of the publicly 
financed costs associated with eligible activities.
  (2) No less than 20 percent of the publicly financed costs 
associated with eligible activities shall come from State and 
local sources, which State and local sources may not include 
funds from any Federal program.
  (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) * * *

           *       *       *       *       *       *       *

          (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 2006 Through 2013.--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 2006 through 2013.
  (b) Funds to Remain Available.--Funds made available under 
this section shall remain available until expended.

           *       *       *       *       *       *       *

Sec. 26106. High-speed rail infrastructure bonds

  (a) Designation.--The Secretary may designate bonds for 
purposes of subsection (f) or section 54 of the Internal 
Revenue Code of 1986 if--
          (1) the bonds are to be issued by--
                  (A) a State, if the entire railroad passenger 
                transportation corridor containing the 
                infrastructure project to be financed is within 
                the State;
                  (B) 1 or more of the States that have entered 
                into an agreement or an interstate compact 
                consented to by Congress under section 410(a) 
                of Public Law 105-134 (49 U.S.C 24101 nt); or
                  (C) an agreement or an interstate compact 
                described in subparagraph (B);
          (2) the bonds are for the purpose of financing--
                  (A) projects that make a substantial 
                contribution to providing the infrastructure 
                and equipment required to complete a high-speed 
                rail transportation corridor (including 
                projects for the acquisition, financing, or 
                refinancing of equipment and other capital 
                improvements, including the introduction of new 
                high-speed technologies such as magnetic 
                levitation systems, track or signal 
                improvements, the elimination of grade 
                crossings, development of intermodal 
                facilities, improvement of train speeds or 
                safety, or both, and station rehabilitation or 
                construction), but only if the Secretary 
                determines that the projects are part of a 
                viable and comprehensive high-speed rail 
                transportation corridor design for intercity 
                passenger service, including a design for 
                minimally operable segments of a corridor 
                designated under section 104(d)(2) of title 23, 
                United States Code; or
                  (B) projects for the Alaska Railroad;
          (3) for a railroad passenger transportation corridor 
        design that includes the use of rights-of-way owned by 
        a freight railroad, a written agreement exists between 
        the applicant and the freight railroad regarding such 
        use and ownership, including compensation for such use 
        and assurances regarding the adequacy of infrastructure 
        capacity to accommodate both existing and future 
        freight and passenger operations, and including an 
        assurance by the freight railroad that collective 
        bargaining agreements with the freight railroad's 
        employees (including terms regulating the contracting 
        of work) shall remain in full force and effect 
        according to their terms for work performed by the 
        freight railroad on such railroad passenger 
        transportation corridor;
          (4) the corridor design eliminates existing railway-
        highway grade crossings that the Secretary determines 
        would impede high-speed rail operations;
          (5) the applicant agrees to comply with--
                  (A) the standards of section 24312, as in 
                effect on September 1, 2002, with respect to 
                the project in the same manner that the 
                National Railroad Passenger Corporation is 
                required to comply with such standards for 
                construction work financed under an agreement 
                made under section 24308(a); and
                  (B) the protective arrangements established 
                under section 504 of the Railroad 
                Revitalization and Regulatory Reform Act of 
                1976 (45 U.S.C. 836) with respect to employees 
                affected by actions taken in connection with 
                the project to be financed by the bond; and
          (6) the applicant agrees not to pay the principal or 
        interest on the bonds using funds derived directly or 
        indirectly from the Highway Trust Fund, except as 
        permitted by law as of the date of the enactment of 
        this section.
  (b) Bond Amount Limitation.--
          (1) In general.--The amount of bonds designated under 
        this section may not exceed--
                  (A) in the case of subsection (f) bonds, 
                $1,200,000,000 for each of the fiscal years 
                2006 through 2015; and
                  (B) in the case of section 54 bonds, 
                $1,200,000,000 for each of the fiscal years 
                2006 through 2015.
          (2) Carryover of unused limitation.--If for any 
        fiscal year the limitation amount under subparagraph 
        (A) or (B) of paragraph (1) exceeds--
                  (A) with respect to subparagraph (A) of 
                paragraph (1), the amount of subsection (f) 
                bonds issued during such year; or
                  (B) with respect to subparagraph (B) of 
                paragraph (1), the amount of section 54 bonds 
                issued during such year,
        the limitation amount under subparagraph (A) or (B) of 
        paragraph (1), as the case may be, for the following 
        fiscal year (through fiscal year 2019) shall be 
        increased by the amount of such excess.
  (c) Preference.--The Secretary shall give preference to the 
designation under this section of bonds for projects--
          (1) to be funded through a combination of subsection 
        (f) bonds and section 54 bonds;
          (2) which propose to link rail passenger service with 
        other modes of transportation;
          (3) expected to have a significant impact on air 
        traffic congestion;
          (4) expected to also improve commuter rail 
        operations;
          (5) where all environmental work has already been 
        completed and the project is ready to commence; or
          (6) that have received financial commitments and 
        other support of State and local governments.
  (d) Timely Disposition of Application.--The Secretary shall 
grant or deny a requested designation within 9 months after 
receipt of an application.
  (e) Annual Reports.--
          (1) From issuer of bonds.--The issuer of bonds 
        designated under subsection (a) shall report annually 
        to the Secretary regarding the terms of outstanding 
        designated bonds and the progress made with respect to 
        the project financed by the bonds.
          (2) From secretary.--The Secretary, in consultation 
        with the Secretary of the Treasury, shall transmit to 
        the Congress an annual report which includes--
                  (A) reports received under paragraph (1); and
                  (B) an assessment of the progress made toward 
                completion of high-speed rail transportation 
                corridors resulting from projects financed by 
                bonds designated under subsection (a).
  (f) Tax Treatment of Subsection (f) Bonds.--
          (1) Exclusion from gross income.--The interest on a 
        bond designated by the Secretary under subsection (a) 
        for purposes of this subsection shall be excluded from 
        gross income under section 103 of the Internal Revenue 
        Code of 1986, notwithstanding section 149(c) of such 
        Code.
          (2) Exemption from volume cap.--For purposes of 
        section 146 of such Code, a bond designated by the 
        Secretary under subsection (a) for purposes of this 
        subsection shall be considered to be exempt from the 
        volume cap of the issuing authority in the same manner 
        as bonds listed in subsection (g) of such section 146.
  (g) Refinancing Rules.--Bonds designated by the Secretary 
under subsection (a) may be issued for refinancing projects 
only if the indebtedness being refinanced (including any 
obligation directly or indirectly refinanced by such 
indebtedness) was originally incurred by the issuer--
          (1) after the date of the enactment of this section;
          (2) for a term of not more than 3 years;
          (3) to finance projects described in subsection 
        (a)(2); and
          (4) in anticipation of being refinanced with proceeds 
        of a bond designated under subsection (a).
  (h) Provisions Regarding High-Speed Rail Service.--
          (1) Status as employer or carrier.--Any entity 
        providing railroad transportation (within the meaning 
        of section 20102) that begins operations after the date 
        of the enactment of this section and that uses property 
        acquired pursuant to this section (except as provided 
        in subsection (a)(2)(B)), shall be considered an 
        employer for purposes of the Railroad Retirement Act of 
        1974 (45 U.S.C. 231 et seq.) and considered a carrier 
        for purposes of the Railway Labor Act (45 U.S.C. 151 et 
        seq.).
          (2) Collective bargaining agreement.--Any entity 
        providing high-speed intercity passenger railroad 
        transportation (within the meaning of section 20102) 
        that begins operations after the date of enactment of 
        this section on a project funded in whole or in part by 
        bonds designated under subsection (a), and replaces 
        intercity rail passenger service that was provided by 
        another entity as of the date of enactment of this 
        section, shall enter into an agreement with the 
        authorized bargaining agent or agents for employees of 
        the predecessor provider that--
                  (A) gives each employee of the predecessor 
                provider priority in hiring according to the 
                employee's seniority on the predecessor 
                provider for each position with the replacing 
                entity that is in the employee's craft or class 
                and is available within three years after the 
                termination of the service being replaced;
                  (B) establishes a procedure for notifying 
                such an employee of such positions;
                  (C) establishes a procedure for such an 
                employee to apply for such positions; and
                  (D) establishes rates of pay, rules, and 
                working conditions.
          (3) Immediate replacement of existing rail passenger 
        service.--
                  (A) Negotiations.--If the replacement of 
                preexisting intercity rail passenger service 
                occurs concurrent with or within a reasonable 
                amount of time before the commencement of the 
                replacing entity's high-speed rail passenger 
                service, the replacing entity shall give 
                written notice of its plan to replace existing 
                rail passenger service to the authorized 
                collective bargaining agent or agents for the 
                employees of the predecessor provider at least 
                90 days prior to the date it plans to commence 
                service. Within 5 days after the date of 
                receipt of such written notice, negotiations 
                between the replacing entity and the collective 
                bargaining agent or agents for the employees of 
                the predecessor provider shall commence for the 
                purpose of reaching agreement with respect to 
                all matters set forth in paragraph (2)(A)-(D). 
                The negotiations shall continue for 30 days or 
                until an agreement is reached, whichever is 
                sooner. If at the end of 30 days the parties 
                have not entered into an agreement with respect 
                to all such matters, the unresolved issues 
                shall be submitted for arbitration in 
                accordance with the procedure set forth in 
                subparagraph (B).
                  (B) Arbitration.--If an agreement has not 
                been entered into with respect to all matters 
                set forth in paragraph (2)(A)-(D) as provided 
                in subparagraph (A) of this paragraph, the 
                parties shall select an arbitrator. If the 
                parties are unable to agree upon the selection 
                of such arbitrator within 5 days, either or 
                both parties shall notify the National 
                Mediation Board, which shall provide a list of 
                seven arbitrators with experience in 
                arbitrating rail labor protection disputes. 
                Within 5 days after such notification, the 
                parties shall alternately strike names from the 
                list until only one name remains, and that 
                person shall serve as the neutral arbitrator. 
                Within 45 days after selection of the 
                arbitrator, the arbitrator shall conduct a 
                hearing on the dispute and shall render a 
                decision with respect to the unresolved issues 
                set forth in paragraph (2)(A)-(D). This 
                decision shall be final, binding, and 
                conclusive upon the parties. The salary and 
                expenses of the arbitrator shall be borne 
                equally by the parties; all other expenses 
                shall be paid by the party incurring them.
                  (C) Service commencement.--A replacing entity 
                under this paragraph shall commence service 
                only after an agreement is entered into with 
                respect to the matters set forth in paragraph 
                (2)(A)-(D) or the decision of the arbitrator 
                has been rendered.
          (4) Subsequent replacement of existing rail passenger 
        service.--If the replacement of existing rail passenger 
        service takes place within 3 years after the replacing 
        entity commences high-speed rail passenger service, the 
        replacing entity and the collective bargaining agent or 
        agents for the employees of the predecessor provider 
        shall enter into an agreement with respect to the 
        matters set forth in paragraph (2)(A)-(D). If the 
        parties have not entered into an agreement with respect 
        to all such matters within 60 days after the date on 
        which the replacing entity replaces the predecessor 
        provider, the parties shall select an arbitrator using 
        the procedures set forth in paragraph (3)(B), who 
        shall, within 20 days after the commencement of the 
        arbitration, conduct a hearing and decide all 
        unresolved issues. This decision shall be final, 
        binding, and conclusive upon the parties.
  (i) Issuance of Regulations.--Not later than 6 months after 
the date of the enactment of this section, the Secretary shall 
issue regulations for carrying out this section.
  (j) Definitions.--For purposes of this section--
          (1) Subsection (f) bond.--The term ``subsection (f) 
        bond'' means a bond designated by the Secretary under 
        subsection (a) for purposes of subsection (f).
          (2) Section 54 bond.--The term ``section 54 bond'' 
        means a bond designated by the Secretary under 
        subsection (a) for purposes of section 54 of the 
        Internal Revenue Code of 1986 (relating to credit to 
        holders of qualified high-speed rail infrastructure 
        bonds).

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                              ----------                              

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

SUBTITLE A--INCOME TAXES

           *       *       *       *       *       *       *

CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *

Subchapter A--Determination of Tax Liability

           *       *       *       *       *       *       *

                      PART IV--CREDITS AGAINST TAX

        Subpart A. Nonrefundable personal credits.
     * * * * * * *

   Subpart H. Nonrefundable Credit for Holders of Qualified High-Speed 
Rail Infrastructure Bonds

           *       *       *       *       *       *       *

  Subpart H--Nonrefundable Credit for Holders of Qualified High-Speed 
                       Rail Infrastructure Bonds

Sec. 54. Credit to holders of qualified high-speed rail infrastructure 
          bonds.

SEC. 54. CREDIT TO HOLDERS OF QUALIFIED HIGH-SPEED RAIL INFRASTRUCTURE 
                    BONDS.

  (a) Allowance of Credit.--In the case of a taxpayer who holds 
a qualified high-speed rail infrastructure bond on a credit 
allowance date of such bond which occurs during the taxable 
year, there shall be allowed as a credit against the tax 
imposed by this chapter for such taxable year an amount equal 
to the sum of the credits determined under subsection (b) with 
respect to credit allowance dates during such year on which the 
taxpayer holds such bond.
  (b) Amount of Credit.--
          (1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit 
        allowance date for a qualified high-speed rail 
        infrastructure bond is 25 percent of the annual credit 
        determined with respect to such bond.
          (2) Annual credit.--The annual credit determined with 
        respect to any qualified high-speed rail infrastructure 
        bond is the product of--
                  (A) the applicable credit rate, multiplied by
                  (B) the outstanding face amount of the bond.
          (3) Applicable credit rate.--For purposes of 
        paragraph (2), the applicable credit rate with respect 
        to an issue is the rate equal to an average market 
        yield (as of the day before the date of sale of the 
        issue) on outstanding long-term corporate debt 
        obligations (determined under regulations prescribed by 
        the Secretary).
          (4) Credit allowance date.--For purposes of this 
        section, the term ``credit allowance date'' means--
                  (A) March 15,
                  (B) June 15,
                  (C) September 15, and
                  (D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
          (5) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month 
        period ending on a credit allowance date, the amount of 
        the credit determined under this subsection with 
        respect to such credit allowance date shall be a 
        ratable portion of the credit otherwise determined 
        based on the portion of the 3-month period during which 
        the bond is outstanding. A similar rule shall apply 
        when the bond is redeemed.
  (c) Limitation Based on Amount of Tax.--
          (1) In general.--The credit allowed under subsection 
        (a) for any taxable year shall not exceed the excess 
        of--
                  (A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed 
                by section 55, over
                  (B) the sum of the credits allowable under 
                this part (other than this subpart and subpart 
                C).
          (2) Carryover of unused credit.--If the credit 
        allowable under subsection (a) exceeds the limitation 
        imposed by paragraph (1) for such taxable year, such 
        excess shall be carried to the succeeding taxable year 
        and added to the credit allowable under subsection (a) 
        for such taxable year.
  (d) Credit Included in Gross Income.--Gross income includes 
the amount of the credit allowed to the taxpayer under this 
section (determined without regard to subsection (c)) and the 
amount so included shall be treated as interest income.
  (e) Qualified High-Speed Rail Infrastructure Bond.--For 
purposes of this part, the term ``qualified high-speed rail 
infrastructure bond'' means any bond issued as part of an issue 
if--
          (1) the issuer certifies that the Secretary of 
        Transportation has designated the bond for purposes of 
        this section under section 26106(a) of title 49, United 
        States Code, as in effect on the date of the enactment 
        of this section,
          (2) 95 percent or more of the proceeds from the sale 
        of such issue are to be used for expenditures incurred 
        after the date of the enactment of this section for any 
        project described in section 26106(a)(2) of title 49, 
        United States Code,
          (3) the term of each bond which is part of such issue 
        does not exceed 20 years,
          (4) the payment of principal with respect to such 
        bond is the obligation solely of the issuer, and
          (5) the issue meets the requirements of subsection 
        (f) (relating to arbitrage).
  (f) Special Rules Relating to Arbitrage.--
          (1) In general.--Subject to paragraph (2), an issue 
        shall be treated as meeting the requirements of this 
        subsection if as of the date of issuance, the issuer 
        reasonably expects--
                  (A) to spend at least 95 percent of the 
                proceeds from the sale of the issue for 1 or 
                more qualified projects within the 3-year 
                period beginning on such date,
                  (B) to incur a binding commitment with a 
                third party to spend at least 10 percent of the 
                proceeds from the sale of the issue, or to 
                commence construction, with respect to such 
                projects within the 6-month period beginning on 
                such date, and
                  (C) to proceed with due diligence to complete 
                such projects and to spend the proceeds from 
                the sale of the issue.
          (2) Rules regarding continuing compliance after 3-
        year determination.--If at least 95 percent of the 
        proceeds from the sale of the issue is not expended for 
        1 or more qualified projects within the 3-year period 
        beginning on the date of issuance, but the requirements 
        of paragraph (1) are otherwise met, an issue shall be 
        treated as continuing to meet the requirements of this 
        subsection if either--
                  (A) the issuer uses all unspent proceeds from 
                the sale of the issue to redeem bonds of the 
                issue within 90 days after the end of such 3-
                year period, or
                  (B) the following requirements are met:
                          (i) The issuer spends at least 75 
                        percent of the proceeds from the sale 
                        of the issue for 1 or more qualified 
                        projects within the 3-year period 
                        beginning on the date of issuance.
                          (ii) Either--
                                  (I) the issuer spends at 
                                least 95 percent of the 
                                proceeds from the sale of the 
                                issue for 1 or more qualified 
                                projects within the 4-year 
                                period beginning on the date of 
                                issuance, or
                                  (II) the issuer pays to the 
                                Federal Government any earnings 
                                on the proceeds from the sale 
                                of the issue that accrue after 
                                the end of the 3-year period 
                                beginning on the date of 
                                issuance and uses all unspent 
                                proceeds from the sale of the 
                                issue to redeem bonds of the 
                                issue within 90 days after the 
                                end of the 4-year period 
                                beginning on the date of 
                                issuance.
  (g) Recapture of Portion of Credit Where Cessation of 
Compliance.--
          (1) In general.--If any bond which when issued 
        purported to be a qualified high-speed rail 
        infrastructure bond ceases to be such a qualified bond, 
        the issuer shall pay to the United States (at the time 
        required by the Secretary) an amount equal to the sum 
        of--
                  (A) the aggregate of the credits allowable 
                under this section with respect to such bond 
                (determined without regard to subsection (c)) 
                for taxable years ending during the calendar 
                year in which such cessation occurs and the 2 
                preceding calendar years, and
                  (B) interest at the underpayment rate under 
                section 6621 on the amount determined under 
                subparagraph (A) for each calendar year for the 
                period beginning on the first day of such 
                calendar year.
          (2) Failure to pay.--If the issuer fails to timely 
        pay the amount required by paragraph (1) with respect 
        to such bond, the tax imposed by this chapter on each 
        holder of any such bond which is part of such issue 
        shall be increased (for the taxable year of the holder 
        in which such cessation occurs) by the aggregate 
        decrease in the credits allowed under this section to 
        such holder for taxable years beginning in such 3 
        calendar years which would have resulted solely from 
        denying any credit under this section with respect to 
        such issue for such taxable years.
          (3) Special rules.--
                  (A) Tax benefit rule.--The tax for the 
                taxable year shall be increased under paragraph 
                (2) only with respect to credits allowed by 
                reason of this section which were used to 
                reduce tax liability. In the case of credits 
                not so used to reduce tax liability, the 
                carryforwards under subsection (c) shall be 
                appropriately adjusted.
                  (B) No credits against tax.--Any increase in 
                tax under paragraph (2) shall not be treated as 
                a tax imposed by this chapter for purposes of 
                determining--
                          (i) the amount of any credit 
                        allowable under this part, or
                          (ii) the amount of the tax imposed by 
                        section 55.
  (h) Other Definitions and Special Rules.--For purposes of 
this section--
          (1) Bond.--The term ``bond'' includes any obligation.
          (2) Qualified project.--The term ``qualified 
        project'' means any project described in section 
        26106(a)(2) of title 49, United States Code.
          (3) Treatment of changes in use.--For purposes of 
        subsection (e)(2), the proceeds from the sale of an 
        issue shall not be treated as used for a qualified 
        project to the extent that the issuer takes any action 
        within its control which causes such proceeds not to be 
        used for a qualified project. The Secretary shall 
        prescribe regulations specifying remedial actions that 
        may be taken (including conditions to taking such 
        remedial actions) to prevent an action described in the 
        preceding sentence from causing a bond to fail to be a 
        qualified high-speed rail infrastructure bond.
          (4) Partnership; s corporation; and other pass-thru 
        entities.--Under regulations prescribed by the 
        Secretary, in the case of a partnership, trust, S 
        corporation, or other pass-thru entity, rules similar 
        to the rules of section 41(g) shall apply with respect 
        to the credit allowable under subsection (a).
          (5) Bonds held by regulated investment companies.--If 
        any qualified high-speed rail infrastructure bond is 
        held by a regulated investment company, the credit 
        determined under subsection (a) shall be allowed to 
        shareholders of such company under procedures 
        prescribed by the Secretary.
          (6) Reporting.--Issuers of qualified high-speed rail 
        infrastructure bonds shall submit reports similar to 
        the reports required under section 149(e).

           *       *       *       *       *       *       *

Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *

PART IV--TAX EXEMPTION REQUIREMENTS FOR STATE AND LOCAL BONDS

           *       *       *       *       *       *       *

Subpart A--Private Activity Bonds

           *       *       *       *       *       *       *

SEC. 142. EXEMPT FACILITY BOND.

  (a) * * *

           *       *       *       *       *       *       *

  (i) High-speed intercity rail facilities.--
          (1) In general.--For purposes of subsection (a)(11), 
        the term ``high-speed intercity rail facilities'' means 
        any facility (not including rolling stock) for the 
        fixed guideway rail transportation of passengers and 
        their baggage between metropolitan statistical areas 
        (within the meaning of section 143(k)(2)(B)) using 
        vehicles that are reasonably expected to operate at 
        speeds in excess of [150 miles per hour] 110 miles per 
        hour between scheduled stops, but only if such facility 
        will be made available to members of the general public 
        as passengers.

           *       *       *       *       *       *       *

          (4) Additional requirements.--A bond issued as part 
        of an issue described in subsection (a)(11) shall not 
        be considered an exempt facility bond unless the 
        requirements of paragraphs (1) through (6) of section 
        26106(a) of title 49, United States Code, are met.

           *       *       *       *       *       *       *

SUBTITLE F--PROCEDURE AND ADMINISTRATION

           *       *       *       *       *       *       *

CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *

Subchapter A--Returns and Records

           *       *       *       *       *       *       *

PART III--INFORMATIONAL RETURNS

           *       *       *       *       *       *       *

Subpart B--Information Concerning Transactions with Other Persons

           *       *       *       *       *       *       *

SEC. 6049. RETURNS REGARDING PAYMENTS OF INTEREST.

          (a) * * *

           *       *       *       *       *       *       *

          (d) Definitions and special rules.--For purposes of 
        this section--(1) * * *

           *       *       *       *       *       *       *

          (8) Reporting of credit on qualified high-speed rail 
        infrastructure bonds.--
                  (A) In general.--For purposes of subsection 
                (a), the term ``interest'' includes amounts 
                includible in gross income under section 54(d) 
                and such amounts shall be treated as paid on 
                the credit allowance date (as defined in 
                section 54(b)(4)).
                  (B) Reporting to corporations, etc.--Except 
                as otherwise provided in regulations, in the 
                case of any interest described in subparagraph 
                (A), subsection (b)(4) shall be applied without 
                regard to subparagraphs (A), (H), (I), (J), 
                (K), and (L)(i) of such subsection.
                  (C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require 
                more frequent or more detailed reporting.

           *       *       *       *       *       *       *

CHAPTER 65--ABATEMENTS, CREDITS, AND REFUNDS

           *       *       *       *       *       *       *

Subchapter A--Procedure in General

           *       *       *       *       *       *       *

SEC. 6401. AMOUNTS TREATED AS OVERPAYMENTS.

  (a) * * *
  (b) Excessive credits
          (1) In general.--If the amount allowable as credits 
        under subpart C of part IV of subchapter A of chapter 1 
        (relating to refundable credits) exceeds the tax 
        imposed by subtitle A (reduced by the credits allowable 
        under subparts A, B, D, [and G] G, and H of such part 
        IV), the amount of such excess shall be considered an 
        overpayment.

           *       *       *       *       *       *       *

 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *

Subchapter A--Additions to the Tax, Additional Amounts

           *       *       *       *       *       *       *

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

SEC. 6654. FAILURE BY INDIVIDUAL TO PAY ESTIMATED INCOME TAX.

  (a) * * *

           *       *       *       *       *       *       *

  (m) Special Rule for Holders of Qualified High-Speed Rail 
Infrastructure Bonds.--For purposes of this section, the credit 
allowed by section 54 to a taxpayer by reason of holding a 
qualified high-speed rail infrastructure bond on a credit 
allowance date shall be treated as if it were a payment of 
estimated tax made by the taxpayer on such date.
  [(m)] (n) Regulations.--The Secretary shall prescribe such 
regulations as may be necessary to carry out the purposes of 
this section.

           *       *       *       *       *       *       *

SEC. 6655. FAILURE BY CORPORATION TO PAY ESTIMATED INCOME TAX.

  (a) * * *

           *       *       *       *       *       *       *

  (g) Definitions and special rules.--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Special rule for holders of qualified high-speed 
        rail infrastructure bonds.--For purposes of this 
        section, the credit allowed by section 54 to a taxpayer 
        by reason of holding a qualified high-speed rail 
        infrastructure bond on a credit allowance date shall be 
        treated as if it were a payment of estimated tax made 
        by the taxpayer on such date.

           *       *       *       *       *       *       *

                              ----------                              

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) * * *

           *       *       *       *       *       *       *

          (3) will not make any discretionary dividend payments 
        that unreasonably conflict with the purposes stated in 
        subsection (b).

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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