I 

116TH CONGRESS 

2D SESSION H. R. 8082 

To amend the Internal Revenue Code of 1986 to provide a tax credit to 

encourage the replacement or modernization of inefficient, outdated 

freight railcars, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 21, 2020 

Mr. SCHNEIDER (for himself, Mr. LAHOOD, Mr. LIPINSKI, Mr. CRAWFORD, 

Mr. BLUMENAUER, and Mr. FERGUSON) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a tax credit to encourage the replacement or modernization of inefficient, outdated freight railcars, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Freight Rail Assist5 ance and Investment to Launch Coronavirus-era Activity 

6 and Recovery Act of 2020’’ or the ‘‘Freight RAILCAR 

7 Act of 2020’’. 


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1 SEC. 2. QUALIFIED FREIGHT RAILCAR CREDIT. 

2 (a) IN GENERAL.—Subpart D of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of 

4 1986 is amended by adding at the end the following new 

5 section: 

6 ‘‘SEC. 45U. QUALIFIED FREIGHT RAILCAR CREDIT. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

8 the qualified freight railcar credit determined under this 

9 section for the taxable year is an amount equal to 50 per10 cent of the sum of— 

11 ‘‘(1) the qualifying replacement or moderniza12 tion amount, 

13 ‘‘(2) the qualifying scrap amount, and 

14 ‘‘(3) the qualifying railcar facility and tech15 nology modernization amount. 

16 ‘‘(b) DEFINITIONS.—In this section— 

17 ‘‘(1) QUALIFYING REPLACEMENT OR MOD18 ERNIZATION AMOUNT.—The term ‘qualifying re19 placement or modernization amount’ means— 

20 ‘‘(A) the basis of any newly built qualified 

21 freight railcar placed in service by the taxpayer 

22 during the taxable year, plus 

23 ‘‘(B) the qualified freight railcar mod24 ernization expenditures of the taxpayer for the 

25 taxable year. 


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1 ‘‘(2) QUALIFYING SCRAP AMOUNT.—The term 

2 ‘qualifying scrap amount’ means— 

3 ‘‘(A) the depreciated value of a qualified 

4 freight railcar, as such value is defined and cal5 culated in accordance with the Association of 

6 American Railroads Interchange Rules, less 

7 ‘‘(B) the sum of scrap and part out net 

8 proceeds received by the taxpayer for such 

9 qualified freight railcar. 

10 ‘‘(3) QUALIFYING RAILCAR FACILITY AND

11 TECHNOLOGY MODERNIZATION AMOUNT.—The term 

12 ‘qualifying railcar facility equipment and technology 

13 modernization amount’ means total expenditures 

14 chargeable to capital account by a qualified railway 

15 supply company— 

16 ‘‘(A) for re-equipping and enhancing the 

17 infrastructure of an existing qualified facility 

18 for the manufacture, repair, or modernization 

19 of railcars, which— 

20 ‘‘(i) enables such facility, after such 

21 improvements, to modernize railcars such 

22 that they will meet the requirements of the 

23 Association of American Railroads Stand24 ard S–286 or the design standards set 

25 forth in the Pipeline and Hazardous MateVerDate Sep 11 2014 23:29 Sep 17, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8082.IH H8082

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1 rials Safety Administration’s HM–251 

2 final rule (as amended by HM–251C), or 

3 ‘‘(ii) enables such facility to imple4 ment enhanced controls to meet environ5 mental standards including emissions lim6 its under the Clean Air Act or wastewater 

7 standards under the Clean Water Act and 

8 corresponding state/local requirements, or 

9 ‘‘(B) is associated with the deployment of 

10 technology, including equipment, used by any 

11 owner of a qualified freight railcar or an exist12 ing qualified facility to manufacture, repair, or 

13 modernize railcars or to manufacture railcar 

14 components that improves the efficiency, qual15 ity, or safety of railcar or railcar component 

16 manufacturing, repair, modernization or fleet 

17 management operations. 

18 ‘‘(4) NEWLY BUILT REPLACEMENT RAILCAR.— 

19 The term ‘newly built replacement railcar’ means a 

20 qualified freight railcar which— 

21 ‘‘(A) is built after the date of the enact22 ment of this section, and 

23 ‘‘(B) is ordered or originally placed in serv24 ice before January 1, 2025. 


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1 ‘‘(5) ORIGINATES.—The term ‘originates’ refers 

2 to the country of origin of a part, component, sub3 assembly or finished product, as described in the 

4 Rules of Origin of Article 4.2 of the United States– 

5 Mexico–Canada Agreement (19 U.S.C. 4531(c)) or 

6 any subsequent free trade agreement between the 

7 United States, Mexico, and Canada. 

8 ‘‘(6) QUALIFIED RAILWAY SUPPLY COMPANY.— 

9 The term ‘qualified railway supply company’ means 

10 an entity that manufactures, repairs, modernizes or 

11 owns a qualified freight railcar or manufactures 

12 components for qualified freight railcars, that is not 

13 an entity that would be ineligible for an award of a 

14 contract or subcontract under 49 U.S.C. 5323(u). 

15 ‘‘(7) QUALIFIED FREIGHT RAILCAR.— 

16 ‘‘(A) IN GENERAL.—The term ‘qualified 

17 freight railcar’ means a freight railcar that— 

18 ‘‘(i) is either acquired or modernized 

19 by the taxpayer after the date of the enact20 ment of this section, 

21 ‘‘(ii) meets the significant improve22 ment requirements for capacity, fuel effi23 ciency, or performance of subparagraph 

24 (B), 


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1 ‘‘(iii) originates from a qualified rail2 way supply company and was built in a 

3 qualified facility, and 

4 ‘‘(iv) with respect to which no credit 

5 under this section has been previously 

6 claimed by any taxpayer. 

7 ‘‘(B) SIGNIFICANT IMPROVEMENT RE8 QUIREMENTS.— 

9 ‘‘(i) IN GENERAL.—A freight railcar 

10 shall be treated as meeting significant im11 provement requirements for capacity, fuel 

12 efficiency, or performance if— 

13 ‘‘(I) in the case of a newly built 

14 replacement railcar, the taxpayer cer15 tifies— 

16 ‘‘(aa) such railcar is owned 

17 by the taxpayer, and 

18 ‘‘(bb) that— 

19 ‘‘(AA) such railcar re20 places two freight railcars 

21 owned by the taxpayer that 

22 were in service within the 48 

23 months preceding the tax24 able year, and 


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1 ‘‘(BB) such freight rail2 cars were scrapped and per3 manently removed from the 

4 AAR Umler System master 

5 file during the taxable year, 

6 and 

7 ‘‘(II) in the case of a freight rail8 car that is modernized, the taxpayer 

9 certifies that the modernization has 

10 resulted in a significant improvement 

11 in capacity, fuel efficiency or perform12 ance. 

13 ‘‘(ii) SIGNIFICANT IMPROVEMENT.— 

14 For purposes of this paragraph, an im15 provement in capacity or fuel efficiency 

16 and performance with respect to a modern17 ized freight railcar shall be treated as a 

18 significant improvement if— 

19 ‘‘(I) such capacity or fuel effi20 ciency, as the case may be, is in21 creased by at least 8 percent, or 

22 ‘‘(II) in the case of performance, 

23 the qualified freight railcar meets the 

24 requirements of the Association of 

25 American Railroads Standard S–286 


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1 or is modernized to meet the design 

2 standards set forth in final rule HM– 

3 251 of the Pipeline and Hazardous 

4 Materials Safety Administration (as 

5 amended by HM–251C). 

6 ‘‘(C) MODERNIZED.—The term ‘modern7 ized’ means a modification, retrofit, conversion 

8 or rebuild for the purpose of meeting capacity, 

9 fuel efficiency, or performance criteria identified 

10 in subparagraph (B)(ii). 

11 ‘‘(8) QUALIFIED FREIGHT RAILCAR MOD12 ERNIZATION EXPENDITURE.—The term ‘qualified 

13 freight railcar significant improvement expenditure’ 

14 means any amount paid or incurred— 

15 ‘‘(A) in connection with the modernization 

16 of a freight railcar resulting in such railcar 

17 being designated a qualified freight railcar, and 

18 ‘‘(B) which is properly chargeable to a cap19 ital account with respect to such freight railcar. 

20 ‘‘(9) QUALIFIED FACILITY.—The term ‘quali21 fied facility’ means a facility that is not owned by 

22 an entity that would be ineligible for an award of a 

23 contract or subcontract under 49 U.S.C. 5323(u). 

24 ‘‘(c) SPECIAL RULES.— 


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1 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No credit 

2 shall be allowed under subsection (a) for any ex3 pense for which a deduction or credit is allowed 

4 under any other provision of this chapter. 

5 ‘‘(2) CREDIT TREATED AS REFUNDABLE.—In 

6 the case of any taxable year in which the taxpayer 

7 is allowed a credit under subsection (a)(1) and is 

8 unable to utilize such credit as an offset to their reg9 ular tax liability, the taxpayer may elect to have 

10 such credit treated as an overpayment and refunded 

11 to the taxpayer for such year. 

12 ‘‘(3) BASIS ADJUSTMENT.—For purposes of 

13 this subtitle, if a credit is allowed under subsection 

14 (a)(1) with respect to any qualified freight railcar, 

15 the basis of such railcar shall be reduced by the 

16 amount of the credit so allowed. 

17 ‘‘(4) SALE-LEASEBACK.—For purposes of sub18 section (a)(1), if any qualified freight railcar is— 

19 ‘‘(A) originally placed in service by a per20 son after the date of the enactment of this sec21 tion, and 

22 ‘‘(B) sold and leased back by such person 

23 within 3 months after the railcars are originally 

24 placed in service (or, in the case of more than 

25 one railcar subject to the same lease, within 3 


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1 months after the date the final railcar is placed 

2 in service, so long as the period between the 

3 time the first railcar is placed in service and the 

4 time the last railcar is placed in service does 

5 not exceed 24 months), 

6 such railcar shall be treated as originally placed in 

7 service not earlier than the date on which such rail8 car is used under the leaseback referred to in this 

9 paragraph. 

10 ‘‘(5) SYNDICATION.—For purposes of sub11 section (a)(1), if— 

12 ‘‘(A) any qualified freight railcar is origi13 nally placed in service after the date of enact14 ment of this section by the lessor of such rail15 car, 

16 ‘‘(B) such railcar is sold by such lessor or 

17 any subsequent purchaser within 3 months 

18 after the date such railcar was originally placed 

19 in service (or, in the case of more than one rail20 car subject to the same lease, within 3 months 

21 after the date the final railcar is placed in serv22 ice and the time the last railcar is placed in 

23 service does not exceed 12 months), and 

24 ‘‘(C) the user of such railcar after the last 

25 sale during such 3-month period remains the 


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1 same as when such railcar was originally placed 

2 in service, such railcars shall be treated as 

3 originally placed in service not earlier than the 

4 date of such last sale. 

5 ‘‘(6) ENTITIES OWNED OR CONTROLLED BY

6 STATE-OWNED ENTERPRISES INELIGIBLE.—No cred7 it under subsection (a) shall be allowed to any tax8 payer that would be ineligible for an award of a con9 tract or subcontract under 49 U.S.C. 5323(u). 

10 ‘‘(d) TERMINATION.—This section shall not apply to 

11 any qualifying railcar facility equipment and technology 

12 modernization amount after December 31, 2023, or to any 

13 qualifying replacement or modernization amount, or any 

14 qualifying scrap amount after December 31, 2024.’’. 

15 (b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec16 tion 38(b) of the Internal Revenue Code of 1986 (relating 

17 to current year business credit) is amended by striking 

18 ‘‘plus’’ at the end of paragraph (32), by striking the period 

19 at the end of paragraph (33) and inserting ‘‘, plus’’ and 

20 by inserting at the end thereof the following new para21 graph: 

22 ‘‘(34) the qualified freight railcar credit deter23 mined under section 45U.’’. 

24 (c) COORDINATION WITH SECTION 55.—Section 

25 38(c)(4)(B) of the Internal Revenue Code of 1986 is 


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1 amended by redesignating clauses (x), (xi), and (xii) as 

2 clauses (xi), (xii), and (xiii) respectively, and by inserting 

3 after clause (ix) the following new clause: 

4 ‘‘(x) the qualified freight railcar credit 

5 determined under section 45U,’’. 

6 (d) CLERICAL AMENDMENT.—The table of sections 

7 for subpart D of part IV of subchapter A of chapter 1 

8 of the Internal Revenue Code of 1986 is amended by in9 serting after the item relating to section 45T the following 

10 new item: 

‘‘Sec. 45U. Qualified freight railcar credit.’’. 

11 (e) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to property placed in service, and 

13 amounts paid or incurred, after April 30, 2020. 

14 SEC. 3. REPORT ON THE QUALIFIED FREIGHT RAILCAR 

15 CREDIT. 

16 (a) IN GENERAL.—Not later than 3 years after the 

17 date of the enactment of this Act, the Secretary of the 

18 Treasury (or the Secretary’s delegate), shall submit to the 

19 Committee on Ways and Means of the House of Rep20 resentatives and the Committee on Finance of the Senate 

21 a report on activity with respect to the qualified freight 

22 railcar credit under section 36D of the Internal Revenue 

23 Code of 1986. 


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1 (b) REPORT CONTENTS.—The report submitted 

2 under subsection (a) shall contain information with re3 spect to the following: 

4 (1) The number of times the credit was 

5 claimed. 

6 (2) The number of railcars scrapped as a result 

7 of the credit. 

8 (3) The number of new railcars entered into 

9 contract as a result of the credit. 

10 (4) The number of new railcars built as a result 

11 of the credit. 

12 (5) The number of facilities modified as a result 

13 of the credit. 

Æ 


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