(d) EFFECTIVE DATE.—The amendments made by 
this section take effect on October 1, 2003. 
SEC. 4. INFRASTRUCTURE SPECIAL ASSISTANCE FUND. 
(a) BALANCE OF ESSENTIAL PROGRAMS FINANCING 
RATE DEPOSITED IN FUND.—Section 9503 of the Inter-
nal Revenue Code of 1986 (as amended by section 3(b)(2)) 
is amended by adding at the end the following: 
‘‘(h) ESTABLISHMENT
OF INFRASTRUCTURE SPE-
CIAL ASSISTANCE FUND.—
‘‘(1) CREATION OF FUND.—There is established 
in the Highway Trust Fund a separate fund to be 
known as the ‘Infrastructure Special Assistance 
Fund’ consisting of such amounts as may be trans-
ferred or credited to the Infrastructure Special As-
sistance Fund as provided in this subsection or sec-
tion 9602(b). 
‘‘(2) TRANSFERS TO INFRASTRUCTURE SPECIAL 
ASSISTANCE FUND.—On the first day of each fiscal 
year, the Secretary, in consultation with the Sec-
retary of Transportation, shall determine the excess 
(if any) of—
‘‘(A) the sum of—
‘‘(i) the amounts appropriated in such 
fiscal year to the Highway Trust Fund 
under subsection (b) which are attributable
to the essential programs financing rate 
for such year, plus 
‘‘(ii) the amounts appropriated in 
such fiscal year to the Highway Trust 
Fund under subsection (b) which are at-
tributable to taxes under sections 4051, 
4061, 4071, and 4481 for such year, over 
‘‘(B) the amount appropriated under sub-
section (c) for such fiscal year, 
and shall transfer such excess to the Infrastructure 
Special Assistance Fund. 
‘‘(3) EXPENDITURES
FROM
INFRASTRUCTURE 
SPECIAL ASSISTANCE FUND.—
‘‘(A) TRANSITIONAL ASSISTANCE.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (iv), during fiscal years 
2004 through 2007, $1,000,000,000 in the 
Infrastructure Special Assistance Fund 
shall be available to States for transpor-
tation-related program expenditures. 
‘‘(ii) STATE SHARE.—
‘‘(I) IN
GENERAL.—Except as 
provided in clause (v), each State is 
entitled to a share of the amount 
specified in clause (i) upon enactment
of legislation providing 1 of the 2 
funding 
mechanisms 
described 
in 
clause (iii). 
‘‘(II) DETERMINATION OF STATE 
SHARE.—For purposes of subclause 
(I), each State’s share shall be deter-
mined in the following manner: 
‘‘(aa) Multiply the percent-
age of the amounts appropriated 
in the latest fiscal year for which 
such data are available to the 
Highway Trust Fund under sub-
section (b) which is attributable 
to taxes paid by highway users in 
the State, by the amount speci-
fied in clause (i). If the result 
does not exceed $15,000,000, the 
State’s 
share 
equals 
$15,000,000. If the result ex-
ceeds $15,000,000, the State’s 
share is determined under item 
(bb). 
‘‘(bb) Multiply the percent-
age determined under item (aa), 
by the amount specified in clause
(i) reduced by an amount equal 
to $15,000,000 times the number 
of States the share of which is 
determined under item (aa). 
‘‘(iii) LEGISLATIVE FUNDING MECHA-
NISMS.—A funding mechanism is described 
in this clause as follows: 
‘‘(I) A funding mechanism which 
results in revenues for transportation-
related projects in the State for fiscal 
year 2008 and each succeeding fiscal 
year which are equal to the excess 
of—
‘‘(aa) the mean annual aver-
age of distributions from the 
Highway Trust Fund to the 
State 
for 
fiscal 
years 
1998 
through 2003; over 
‘‘(bb) the distributions from 
the Highway Trust Fund to the 
State for such fiscal year attrib-
utable to the essential programs 
financing rate for such year. 
‘‘(II) 
A 
funding 
mechanism 
which results in an increase in the
State rate of tax on motor fuels equal 
to the decrease in the rate of tax on 
such fuels under section 4081 for fis-
cal year 2008 and any succeeding fis-
cal year. 
‘‘(iv) DISTRIBUTION
OF
REMAINING 
AMOUNT.—If after September 30, 2007, a 
portion of the amount specified in clause 
(i) remains, the Secretary, in consultation 
with the Secretary of Transportation, 
shall, on October 1, 2007, apportion the 
portion among the States which received a 
share of such amount under clause (ii) and 
which are not described in clause (v) using 
the percentages determined under clause 
(ii)(II)(aa) for such States. 
‘‘(v) ENFORCEMENT
OF
FUNDING 
MECHANISM
REQUIREMENT.—If a State, 
which enacted legislation providing for a 
funding mechanism described in clause 
(iii), terminates such mechanism before fis-
cal year 2007, the State’s share deter-
mined under clauses (ii) and (iv) shall be 
deducted from any amount the State would
otherwise receive from the Highway Trust 
Fund for fiscal year 2007. 
‘‘(B) ADDITIONAL
EXPENDITURES
FROM 
FUND.—
‘‘(i) IN
GENERAL.—Amounts in the 
Infrastructure Special Assistance Fund, in 
excess of the amount specified in subpara-
graph (A)(i), shall be available, as provided 
by appropriation Acts, to the States for 
any surface transportation (including mass 
transit and rail) purpose in such States, 
and the Secretary shall apportion such ex-
cess amounts among all States using the 
percentages 
determined 
under 
clause 
(ii)(II)(aa) for such States. 
‘‘(ii) ENFORCEMENT.—If the Sec-
retary determines that a State has used 
amounts under clause (i) for a purpose 
which is not a surface transportation pur-
pose as described in clause (i), the improp-
erly used amounts shall be deducted from 
any amount the State would otherwise re-
ceive from the Highway Trust Fund for 
the fiscal year which begins after the date 
of the determination.’’.
(b) EFFECTIVE DATE.—The amendment made by 
this section takes effect on October 1, 2003. 
SEC. 5. RETURN OF EXCESS TAX RECEIPTS TO STATES. 
(a) IN GENERAL.—Section 9503(c) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following:
‘‘(6) RETURN
OF
EXCESS
TAX
RECEIPTS
TO 
STATES
FOR
SURFACE
TRANSPORTATION
PUR-
POSES.—
‘‘(A) IN GENERAL.—On the first day of 
each of fiscal years 2004, 2005, 2006, and 
2007, the Secretary, in consultation with the 
Secretary of Transportation, shall—
‘‘(i) determine the excess (if any) of—
‘‘(I) the amounts appropriated in 
such fiscal year to the Highway Trust 
Fund under subsection (b) which are 
equivalent to the taxes attributable to 
the excess of—
‘‘(aa) the Highway Trust 
Fund financing rate for such 
year, over 
‘‘(bb) the essential programs 
financing rate for such year, over
‘‘(II) the amounts so appro-
priated which are equivalent to the 
taxes described in paragraphs (4)(D) 
and (5)(B), and 
‘‘(ii) allocate the amount determined 
under clause (i) among the States (as de-
fined in section 101(a) of title 23, United 
States Code) for surface transportation 
(including mass transit and rail) purposes 
so that—
‘‘(I) the percentage of that 
amount allocated to each State, is 
equal to 
‘‘(II) 
the 
percentage 
of 
the 
amount determined under clause (i)(I) 
paid into the Highway Trust Fund in 
the latest fiscal year for which such 
data are available which is attrib-
utable to highway users in the State. 
‘‘(B) ENFORCEMENT.—If the Secretary 
determines that a State has used amounts 
under subparagraph (A) for a purpose which is 
not a surface transportation purpose as de-
scribed in subparagraph (A), the improperly 
used amounts shall be deducted from any
amount the State would otherwise receive from 
the Highway Trust Fund for the fiscal year 
which begins after the date of the determina-
tion.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section takes effect on October 1, 2003. 
SEC. 6. FEDERAL-AID FACILITY PRIVATIZATION. 
(a) DEFINITIONS.—In this section—
(1) EXECUTIVE AGENCY.—The term ‘‘Executive 
agency’’ has the meaning provided in section 105 of 
title 5, United States Code. 
(2) PRIVATIZATION.—The term ‘‘privatization’’ 
means the disposition or transfer of a transportation 
infrastructure asset, whether by sale, lease, or simi-
lar arrangement, from a Federal, State, or local gov-
ernment to a private party. 
(3) STATE OR LOCAL GOVERNMENT.—The term 
‘‘State or local government’’ means the government 
of—
(A) any State; 
(B) the District of Columbia; 
(C) any commonwealth, territory, or pos-
session of the United States; 
(D) any county, municipality, city, town, 
township, local public authority, school district,
special district, intrastate district, regional or 
interstate government entity, council of govern-
ments, or agency or instrumentality of a local 
government; or 
(E) any federally recognized Indian tribe. 
(4) 
TRANSPORTATION
INFRASTRUCTURE 
ASSET.—
(A) IN
GENERAL.—The term ‘‘transpor-
tation infrastructure asset’’ means any surface-
transportation-related asset financed in whole 
or in part by the Federal Government, includ-
ing a road, tunnel, bridge, or mass-transit-re-
lated or rail-related asset. 
(B) EXCLUSION.—The term does not in-
clude any transportation-related asset on the 
Interstate System (as defined in section 101 of 
title 23, United States Code). 
(b) PRIVATIZATION INITIATIVES
BY STATE
AND 
LOCAL GOVERNMENTS.—The head of each Executive 
agency shall—
(1) assist State and local governments in efforts 
to privatize the transportation infrastructure assets 
of the State and local governments; and 
(2) subject to subsection (a), approve requests 
from State and local governments to privatize trans-
portation infrastructure assets and waive or modify 
any condition relating to the original Federal pro-
gram that funded the asset. 
(c) CRITERIA.—The head of an Executive agency 
shall approve a request described in subsection (b)(2) if—
(1) the State or local government demonstrates 
that a market mechanism, legally enforceable agree-
ment, or regulatory mechanism will ensure that the 
transportation infrastructure asset will continue to 
be used for the general objectives of the original 
Federal program that funded the asset (which shall 
not be considered to include every condition required 
for the recipient of Federal funds to have obtained 
the original Federal funds), so long as needed for 
those objectives; and 
(2) the private party purchasing or leasing the 
transportation infrastructure asset agrees to comply 
with all applicable conditions of the original Federal 
program. 
(d) LACK
OF OBLIGATION
TO REPAY FEDERAL 
FUNDS.—A State or local government shall have no obli-
gation to repay to any agency of the Federal Government 
any Federal funds received by the State or local govern-
ment in connection with a transportation infrastructure 
asset that is privatized under this section.
(e) USE OF PROCEEDS.—
(1) IN GENERAL.—Subject to paragraph (2), a 
State or local government may use proceeds from 
the privatization of a transportation infrastructure 
asset to the extent permitted under applicable condi-
tions of the original Federal program. 
(2) RECOVER
OF
CERTAIN
COSTS.—Notwith-
standing any other provision of law, the State or 
local government shall be permitted to recover from 
the privatization of a transportation infrastructure 
asset—
(A) the capital investment in the transpor-
tation infrastructure asset made by the State or 
local government; 
(B) an amount equal to the unreimbursed 
operating expenses in the transportation infra-
structure asset paid by the State or local gov-
ernment; and 
(C) a reasonable rate of return on the in-
vestment made under subparagraph (A) and ex-
penses paid under subparagraph (B). 
SEC. 7. REDUCTION IN TAXES ON GASOLINE, DIESEL FUEL, 
KEROSENE, AND SPECIAL FUELS FUNDING 
HIGHWAY TRUST FUND. 
(a) REDUCTION IN TAX RATE.—
(1) IN GENERAL.—Section 4081(a)(2)(A) of the 
Internal Revenue Code of 1986 (relating to rates of 
tax) is amended—
(A) in clause (i), by striking ‘‘18.3 cents’’ 
and inserting ‘‘2 cents’’; and 
(B) in clause (iii), by striking ‘‘24.3 cents’’ 
and inserting ‘‘2 cents’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6427(b)(2)(A) of such Code is amended by striking 
‘‘7.4 cents’’ and inserting ‘‘1.9 cents’’. 
(b) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 4041(a)(1)(C)(iii)(I) of the Internal 
Revenue Code of 1986 is amended by striking ‘‘(4.3 
cents per gallon after September 30, 2005)’’ and in-
serting ‘‘(zero after September 30, 2007)’’. 
(2) Section 4041(m)(1)(A) of such Code is 
amended—
(A) in clause (i), by striking ‘‘2005’’ and 
inserting ‘‘2007,’’; and 
(B) by striking clause (ii) and inserting the 
following: 
‘‘(ii) zero after September 30, 2007, 
and’’. 
(3) Section 4081(d)(1) of such Code is amend-
ed by striking ‘‘4.3 cents per gallon after September
30, 2005’’ and inserting ‘‘zero after September 30, 
2009’’. 
(4) Section 9503(b) of such Code is amended—
(A) in paragraphs (1) and (2), by striking 
‘‘October 1, 2005’’ both places it appears and 
inserting ‘‘October 1, 2009’’; 
(B) in the heading of paragraph (2), by 
striking ‘‘OCTOBER 1, 2005’’ and inserting ‘‘OC-
TOBER 1, 2009’’; 
(C) in paragraph (2), by striking ‘‘after 
September 30, 2005, and before July 1, 2006’’ 
and inserting ‘‘after September 30, 2009, and 
before July 1, 2010’’; and 
(D) in paragraph (4), by striking ‘‘2005’’ 
each place it appears and inserting ‘‘2007’’. 
(c) FLOOR STOCK REFUNDS.—
(1) IN GENERAL.—If—
(A) before October 1, 2007, tax has been 
imposed under section 4081 of the Internal 
Revenue Code of 1986 on any liquid; and 
(B) on such date such liquid is held by a 
dealer and has not been used and is intended 
for sale; 
there shall be credited or refunded (without interest) 
to the person who paid such tax (in this subsection
referred to as the ‘‘taxpayer’’) an amount equal to 
the excess of the tax paid by the taxpayer over the 
amount of such tax which would be imposed on such 
liquid had the taxable event occurred on such date. 
(2) TIME FOR FILING CLAIMS.—No credit or re-
fund shall be allowed or made under this subsection 
unless—
(A) claim therefor is filed with the Sec-
retary of the Treasury before April 1, 2008; 
and 
(B) in any case where liquid is held by a 
dealer (other than the taxpayer) on October 1, 
2007—
(i) the dealer submits a request for re-
fund or credit to the taxpayer before Janu-
ary 1, 2008; and 
(ii) the taxpayer has repaid or agreed 
to repay the amount so claimed to such 
dealer or has obtained the written consent 
of such dealer to the allowance of the cred-
it or the making of the refund. 
(3) EXCEPTION
FOR
FUEL
HELD
IN
RETAIL 
STOCKS.—No credit or refund shall be allowed under 
this subsection with respect to any liquid in retail
stocks held at the place where intended to be sold 
at retail. 
(4) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘dealer’’ and ‘‘held by a dealer’’ 
have the respective meanings given to such terms by 
section 6412 of such Code; except that the term 
‘‘dealer’’ includes a producer. 
(5) CERTAIN RULES TO APPLY.—Rules similar 
to the rules of subsections (b) and (c) of section 
6412 and sections 6206 and 6675 of such Code shall 
apply for purposes of this subsection. 
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to fuel removed after September 30, 
2007. 
(2) ADDITIONAL CONFORMING AMENDMENTS.—
The amendments made by subsection (c) take effect 
on October 1, 2003. 
SEC. 9. MASS TRANSPORTATION. 
(a) IN GENERAL.—Section 5338 of title 49, United 
States Code, is amended to read as follows:
‘‘§ 5338. Authorizations 
‘‘There are authorized to be appropriated to the Sec-
retary to carry out this chapter $2,500,000,000 for each 
of fiscal years 2004 through 2009, of which—
‘‘(1) $2,000,000,000 for each fiscal year shall 
be available to carry out sections 5307 and 5309; 
‘‘(2) $500,000,000 for each fiscal year shall be 
available to carry out section 5311; and 
‘‘(3) the amount remaining after allocation 
under paragraphs (1) and (2) for each fiscal year 
shall be used at the discretion of the Secretary, in-
cluding for capital expenditure under this chapter.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section takes effect on October 1, 2003.
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