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encourage the replacement or modernization of inefficient, outdated 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 moderniza-
tion of inefficient, outdated freight railcars, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Freight Rail Assist-
ance and Investment to Launch Coronavirus-era Activity 
and Recovery Act of 2020’’ or the ‘‘Freight RAILCAR 
Act of 2020’’. 
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SEC. 2. QUALIFIED FREIGHT RAILCAR CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45U. QUALIFIED FREIGHT RAILCAR CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the qualified freight railcar credit determined under this 
section for the taxable year is an amount equal to 50 per-
cent of the sum of— 
‘‘(1) the qualifying replacement or moderniza-
tion amount, 
‘‘(2) the qualifying scrap amount, and 
‘‘(3) the qualifying railcar facility and tech-
nology modernization amount. 
‘‘(b) DEFINITIONS.—In this section— 
‘‘(1) QUALIFYING
REPLACEMENT
OR
MOD-
ERNIZATION
AMOUNT.—The term ‘qualifying re-
placement or modernization amount’ means— 
‘‘(A) the basis of any newly built qualified 
freight railcar placed in service by the taxpayer 
during the taxable year, plus 
‘‘(B) the qualified freight railcar mod-
ernization expenditures of the taxpayer for the 
taxable year. 
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‘‘(2) QUALIFYING SCRAP AMOUNT.—The term 
‘qualifying scrap amount’ means— 
‘‘(A) the depreciated value of a qualified 
freight railcar, as such value is defined and cal-
culated in accordance with the Association of 
American Railroads Interchange Rules, less 
‘‘(B) the sum of scrap and part out net 
proceeds received by the taxpayer for such 
qualified freight railcar. 
‘‘(3) QUALIFYING
RAILCAR
FACILITY
AND 
TECHNOLOGY MODERNIZATION AMOUNT.—The term 
‘qualifying railcar facility equipment and technology 
modernization amount’ means total expenditures 
chargeable to capital account by a qualified railway 
supply company— 
‘‘(A) for re-equipping and enhancing the 
infrastructure of an existing qualified facility 
for the manufacture, repair, or modernization 
of railcars, which— 
‘‘(i) enables such facility, after such 
improvements, to modernize railcars such 
that they will meet the requirements of the 
Association of American Railroads Stand-
ard S–286 or the design standards set 
forth in the Pipeline and Hazardous Mate-
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rials Safety Administration’s HM–251 
final rule (as amended by HM–251C), or 
‘‘(ii) enables such facility to imple-
ment enhanced controls to meet environ-
mental standards including emissions lim-
its under the Clean Air Act or wastewater 
standards under the Clean Water Act and 
corresponding state/local requirements, or 
‘‘(B) is associated with the deployment of 
technology, including equipment, used by any 
owner of a qualified freight railcar or an exist-
ing qualified facility to manufacture, repair, or 
modernize railcars or to manufacture railcar 
components that improves the efficiency, qual-
ity, or safety of railcar or railcar component 
manufacturing, repair, modernization or fleet 
management operations. 
‘‘(4) NEWLY BUILT REPLACEMENT RAILCAR.— 
The term ‘newly built replacement railcar’ means a 
qualified freight railcar which— 
‘‘(A) is built after the date of the enact-
ment of this section, and 
‘‘(B) is ordered or originally placed in serv-
ice before January 1, 2025. 
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‘‘(5) ORIGINATES.—The term ‘originates’ refers 
to the country of origin of a part, component, sub-
assembly or finished product, as described in the 
Rules of Origin of Article 4.2 of the United States– 
Mexico–Canada Agreement (19 U.S.C. 4531(c)) or 
any subsequent free trade agreement between the 
United States, Mexico, and Canada. 
‘‘(6) QUALIFIED RAILWAY SUPPLY COMPANY.— 
The term ‘qualified railway supply company’ means 
an entity that manufactures, repairs, modernizes or 
owns a qualified freight railcar or manufactures 
components for qualified freight railcars, that is not 
an entity that would be ineligible for an award of a 
contract or subcontract under 49 U.S.C. 5323(u). 
‘‘(7) QUALIFIED FREIGHT RAILCAR.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
freight railcar’ means a freight railcar that— 
‘‘(i) is either acquired or modernized 
by the taxpayer after the date of the enact-
ment of this section, 
‘‘(ii) meets the significant improve-
ment requirements for capacity, fuel effi-
ciency, or performance of subparagraph 
(B), 
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‘‘(iii) originates from a qualified rail-
way supply company and was built in a 
qualified facility, and 
‘‘(iv) with respect to which no credit 
under this section has been previously 
claimed by any taxpayer. 
‘‘(B) 
SIGNIFICANT
IMPROVEMENT
RE-
QUIREMENTS.— 
‘‘(i) IN GENERAL.—A freight railcar 
shall be treated as meeting significant im-
provement requirements for capacity, fuel 
efficiency, or performance if— 
‘‘(I) in the case of a newly built 
replacement railcar, the taxpayer cer-
tifies— 
‘‘(aa) such railcar is owned 
by the taxpayer, and 
‘‘(bb) that— 
‘‘(AA) such railcar re-
places two freight railcars 
owned by the taxpayer that 
were in service within the 48 
months preceding the tax-
able year, and 
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‘‘(BB) such freight rail-
cars were scrapped and per-
manently removed from the 
AAR Umler System master 
file during the taxable year, 
and 
‘‘(II) in the case of a freight rail-
car that is modernized, the taxpayer 
certifies that the modernization has 
resulted in a significant improvement 
in capacity, fuel efficiency or perform-
ance. 
‘‘(ii) SIGNIFICANT
IMPROVEMENT.— 
For purposes of this paragraph, an im-
provement in capacity or fuel efficiency 
and performance with respect to a modern-
ized freight railcar shall be treated as a 
significant improvement if— 
‘‘(I) such capacity or fuel effi-
ciency, as the case may be, is in-
creased by at least 8 percent, or 
‘‘(II) in the case of performance, 
the qualified freight railcar meets the 
requirements of the Association of 
American Railroads Standard S–286 
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or is modernized to meet the design 
standards set forth in final rule HM– 
251 of the Pipeline and Hazardous 
Materials Safety Administration (as 
amended by HM–251C). 
‘‘(C) MODERNIZED.—The term ‘modern-
ized’ means a modification, retrofit, conversion 
or rebuild for the purpose of meeting capacity, 
fuel efficiency, or performance criteria identified 
in subparagraph (B)(ii). 
‘‘(8) 
QUALIFIED
FREIGHT
RAILCAR
MOD-
ERNIZATION
EXPENDITURE.—The term ‘qualified 
freight railcar significant improvement expenditure’ 
means any amount paid or incurred— 
‘‘(A) in connection with the modernization 
of a freight railcar resulting in such railcar 
being designated a qualified freight railcar, and 
‘‘(B) which is properly chargeable to a cap-
ital account with respect to such freight railcar. 
‘‘(9) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means a facility that is not owned by 
an entity that would be ineligible for an award of a 
contract or subcontract under 49 U.S.C. 5323(u). 
‘‘(c) SPECIAL RULES.— 
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‘‘(1) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under subsection (a) for any ex-
pense for which a deduction or credit is allowed 
under any other provision of this chapter. 
‘‘(2) CREDIT TREATED AS REFUNDABLE.—In 
the case of any taxable year in which the taxpayer 
is allowed a credit under subsection (a)(1) and is 
unable to utilize such credit as an offset to their reg-
ular tax liability, the taxpayer may elect to have 
such credit treated as an overpayment and refunded 
to the taxpayer for such year. 
‘‘(3) BASIS
ADJUSTMENT.—For purposes of 
this subtitle, if a credit is allowed under subsection 
(a)(1) with respect to any qualified freight railcar, 
the basis of such railcar shall be reduced by the 
amount of the credit so allowed. 
‘‘(4) SALE-LEASEBACK.—For purposes of sub-
section (a)(1), if any qualified freight railcar is— 
‘‘(A) originally placed in service by a per-
son after the date of the enactment of this sec-
tion, and 
‘‘(B) sold and leased back by such person 
within 3 months after the railcars are originally 
placed in service (or, in the case of more than 
one railcar subject to the same lease, within 3 
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same as when such railcar was originally placed 
in service, such railcars shall be treated as 
originally placed in service not earlier than the 
date of such last sale. 
‘‘(6) ENTITIES
OWNED
OR
CONTROLLED
BY 
STATE-OWNED ENTERPRISES INELIGIBLE.—No cred-
it under subsection (a) shall be allowed to any tax-
payer that would be ineligible for an award of a con-
tract or subcontract under 49 U.S.C. 5323(u). 
‘‘(d) TERMINATION.—This section shall not apply to 
any qualifying railcar facility equipment and technology 
modernization amount after December 31, 2023, or to any 
qualifying replacement or modernization amount, or any 
qualifying scrap amount after December 31, 2024.’’. 
(b) CREDIT ALLOWED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 (relating 
to current year business credit) is amended by striking 
‘‘plus’’ at the end of paragraph (32), by striking the period 
at the end of paragraph (33) and inserting ‘‘, plus’’ and 
by inserting at the end thereof the following new para-
graph: 
‘‘(34) the qualified freight railcar credit deter-
mined under section 45U.’’. 
(c) COORDINATION
WITH
SECTION
55.—Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is 
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amended by redesignating clauses (x), (xi), and (xii) as 
clauses (xi), (xii), and (xiii) respectively, and by inserting 
after clause (ix) the following new clause: 
‘‘(x) the qualified freight railcar credit 
determined under section 45U,’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 45T the following 
new item: 
‘‘Sec. 45U. Qualified freight railcar credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service, and 
amounts paid or incurred, after April 30, 2020. 
SEC. 3. REPORT ON THE QUALIFIED FREIGHT RAILCAR 
CREDIT. 
(a) IN GENERAL.—Not later than 3 years after the 
date of the enactment of this Act, the Secretary of the 
Treasury (or the Secretary’s delegate), shall submit to the 
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate 
a report on activity with respect to the qualified freight 
railcar credit under section 36D of the Internal Revenue 
Code of 1986. 
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(b) REPORT
CONTENTS.—The report submitted 
under subsection (a) shall contain information with re-
spect to the following: 
(1) The number of times the credit was 
claimed. 
(2) The number of railcars scrapped as a result 
of the credit. 
(3) The number of new railcars entered into 
contract as a result of the credit. 
(4) The number of new railcars built as a result 
of the credit. 
(5) The number of facilities modified as a result 
of the credit. 
Æ 
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