‘‘(c) PREFERENCE.—The Secretary shall give pref-
erence to the designation under this section of bonds for 
projects—
‘‘(1) to be funded through a combination of 
subsection (f) bonds and section 54 bonds; 
‘‘(2) which propose to link rail passenger serv-
ice with other modes of transportation; 
‘‘(3) expected to have a significant impact on 
air traffic congestion; 
‘‘(4) expected to also improve commuter rail op-
erations; 
‘‘(5) where all environmental work has already 
been completed and the project is ready to com-
mence; 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 transpor-
tation 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, notwith-
standing section 149(c) of such Code. 
‘‘(2) EXEMPTION
FROM
VOLUME
CAP.—For 
purposes of section 146 of such Code, a bond des-
ignated 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 refi-
nancing 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 sec-
tion; 
‘‘(2) for a term of not more than 3 years; 
‘‘(3) to finance projects described in subsection 
(a)(2); and 
‘‘(4) in anticipation of being refinanced with 
proceeds of a bond designated under subsection (a). 
‘‘(h) PROVISIONS REGARDING HIGH-SPEED RAIL 
SERVICE.—
‘‘(1) STATUS AS EMPLOYER OR CARRIER.—Any 
entity providing railroad transportation (within the 
meaning of section 20102) that begins operations 
after the date of the enactment of this section and 
that uses property acquired pursuant to this section 
(except as provided in subsection (a)(2)(B)), shall be 
considered an employer for purposes of the Railroad 
Retirement Act of 1974 (45 U.S.C. 231 et seq.) and 
considered a carrier for purposes of the Railway 
Labor Act (45 U.S.C. 151 et seq.).
‘‘(2) COLLECTIVE BARGAINING AGREEMENT.—
Any entity providing high-speed intercity passenger 
railroad transportation (within the meaning of sec-
tion 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 sub-
section (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 prede-
cessor provider priority in hiring according to 
the employee’s seniority on the predecessor pro-
vider for each position with the replacing entity 
that is in the employee’s craft or class and is 
available within three years after the termi-
nation 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 oc-
curs 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 pas-
senger service to the authorized collective bar-
gaining agent or agents for the employees of 
the predecessor provider at least 90 days prior 
to the date it plans to commence service. With-
in 5 days after the date of receipt of such writ-
ten notice, negotiations between the replacing 
entity and the collective bargaining agent or 
agents for the employees of the predecessor pro-
vider shall commence for the purpose of reach-
ing agreement with respect to all matters set 
forth in paragraph (2)(A)–(D). The negotia-
tions 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 mat-
ters, 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 mat-
ters set forth in paragraph (2)(A)–(D) as pro-
vided in subparagraph (A) of this paragraph, 
the parties shall select an arbitrator. If the par-
ties 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 arbi-
trators with experience in arbitrating rail labor 
protection disputes. Within 5 days after such 
notification, the parties shall alternately strike 
names from the list until only one name re-
mains, and that person shall serve as the neu-
tral arbitrator. Within 45 days after selection of 
the arbitrator, the arbitrator shall conduct a 
hearing on the dispute and shall render a deci-
sion 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 arbi-
trator shall be borne equally by the parties; all
other expenses shall be paid by the party incur-
ring them. 
‘‘(C) SERVICE
COMMENCEMENT.—A re-
placing entity under this paragraph shall com-
mence service only after an agreement is en-
tered 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 em-
ployees 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 en-
tered 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 proce-
dures set forth in paragraph (3)(B), who shall, with-
in 20 days after the commencement of the arbitra-
tion, conduct a hearing and decide all unresolved