49–006 

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 TransporVerDate Aug 31 2005 08:42 Nov 22, 2005 Jkt 049006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR314P1.XXX HR314P1
2 

tation 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 highspeed 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. 

3 

—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, or Swift 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 

4 

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 des- ignate 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 comVerDate Aug 31 2005 08:42 Nov 22, 2005 Jkt 049006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6602 E:\HR\OC\HR314P1.XXX HR314P1
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pact 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 

6 

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 new rulemaking 

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 

7 

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. 

8 

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 pe- riod. 2 The 2005 level is the amount appropriated for that year. 

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

9 

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. 

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 highspeed 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 govern- ment 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. 

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 milVerDate Aug 31 2005 08:42 Nov 22, 2005 Jkt 049006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\HR314P1.XXX HR314P1
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lion 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 

11 

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). 

12 

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 øplanning¿ development. 

* * * * * * * 

26106. High-speed rail infrastructure bonds. 

* * * * * * * 

§ 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 øplanning¿ 

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 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) * * * 

* * * * * * * 

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

other States; 

* * * * * * * 

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

13 

(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 carrying 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). 

14 

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 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. 

* * * * * * * 

§ 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; 

15 

(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; 

16 

(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 

17 

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 

18 

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). 

* * * * * * * 

INTERNAL REVENUE CODE OF 1986 

* * * * * * * 

SUBTITLE A—INCOME TAXES 

* * * * * * * 

19 

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. 

20 

(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 

21 

(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 

22 

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 

* * * * * * * 

23 

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 ø150 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) * * * 

* * * * * * * 

24 

(8) REPORTING OF CREDIT ON QUALIFIED HIGH-SPEED RAIL IN- FRASTRUCTURE 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, øand 

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 

* * * * * * * 

25 

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. 

ø(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 

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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 

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TITLE V—RAILROAD REHABILITATION AND IMPROVEMENT 

FINANCING 

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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. 

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(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. 

* * * * * * * 

(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. 

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27 

(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) * * * 

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(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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Æ