commuter rail passenger operations (as so defined); 
or 
‘‘(2) the National Railroad Passenger Corpora-
tion’s access rights to railroad rights of way and fa-
cilities under current law for projects funded under 
this chapter where train operating speeds do not ex-
ceed 79 miles per hour. 
‘‘§ 24406. Authorization of appropriations. 
‘‘There are authorized to be appropriated to the Sec-
retary of Transportation for carrying out this chapter 
$200,000,000 for each of the fiscal years 2008 through 
2012.’’. 
(b) CONFORMING AMENDMENTS.—The table of chap-
ters for subtitle V of title 49, United States Code, is 
amended by inserting the following after the item relating 
to chapter 243: 
‘‘244. INTERCITY PASSENGER RAIL SERVICE CAPITAL AS-
SISTANCE ................................................................... 24401’’. 
SEC. 522. STATE RAIL PLANS. 
(a) IN GENERAL.—Part B of subtitle V of title 49, 
United States Code, is amended by adding at the end the 
following: 
‘‘CHAPTER 225—STATE RAIL PLANS AND 
HIGH PRIORITY PROJECTS 
‘‘Sec. 
‘‘22501. Definitions. 
‘‘22502. Authority. 
‘‘22503. Purposes. 
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‘‘22504. Transparency; coordination; review. 
‘‘22505. Content. 
‘‘22506. Review. 
‘‘§ 22501. Definitions 
‘‘In this subchapter: 
‘‘(1) PRIVATE BENEFIT.— 
‘‘(A) IN
GENERAL.—The term ‘private 
benefit’— 
‘‘(i) means a benefit accrued to a per-
son or private entity, other than the Na-
tional Railroad Passenger Corporation, 
that directly improves the economic and 
competitive condition of that person or en-
tity through improved assets, cost reduc-
tions, service improvements, or any other 
means as defined by the Secretary; and 
‘‘(ii) shall be determined on a project- 
by-project basis, based upon an agreement 
between the parties. 
‘‘(B) CONSULTATION.—The Secretary may 
seek the advice of the States and rail carriers 
in further defining this term. 
‘‘(2) PUBLIC BENEFIT.— 
‘‘(A) IN GENERAL.—The term ‘public ben-
efit’— 
‘‘(i) means a benefit accrued to the 
public in the form of enhanced mobility of 
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people or goods, environmental protection 
or enhancement, congestion mitigation, en-
hanced trade and economic development, 
improved air quality or land use, more effi-
cient energy use, enhanced public safety or 
security, reduction of public expenditures 
due to improved transportation efficiency 
or infrastructure preservation, and any 
other positive community effects as defined 
by the Secretary; and 
‘‘(ii) shall be determined on a project- 
by-project basis, based upon an agreement 
between the parties. 
‘‘(B) CONSULTATION.—The Secretary may 
seek the advice of the States and rail carriers 
in further defining this term. 
‘‘(3) STATE.—The term ‘State’ means any of 
the 50 States and the District of Columbia. 
‘‘(4) STATE
RAIL
TRANSPORTATION
AUTHOR-
ITY.—The term ‘State rail transportation authority’ 
means the State agency or official responsible under 
the direction of the Governor of the State or a State 
law for preparation, maintenance, coordination, and 
administration of the State rail plan. 
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‘‘§ 22502. Authority 
‘‘(a) IN GENERAL.—Each State may prepare and 
maintain a State rail plan in accordance with the provi-
sions of this subchapter. 
‘‘(b) REQUIREMENTS.—For the preparation and peri-
odic revision of a State rail plan, a State shall— 
‘‘(1) establish or designate a State rail trans-
portation authority to prepare, maintain, coordinate, 
and administer the plan; 
‘‘(2) establish or designate a State rail plan ap-
proval authority to approve the plan; 
‘‘(3) submit the State’s approved plan to the 
Secretary of Transportation for review; and 
‘‘(4) revise and resubmit a State-approved plan 
no less frequently than once every 5 years for re-
approval by the Secretary. 
‘‘§ 22503. Purposes 
‘‘(a) PURPOSES.—The purposes of a State rail plan 
are as follows: 
‘‘(1) To set forth State policy involving freight 
and passenger rail transportation, including com-
muter rail operations, in the State. 
‘‘(2) To establish the period covered by the 
State rail plan. 
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‘‘(3) To present priorities and strategies to en-
hance rail service in the State that benefits the pub-
lic. 
‘‘(4) To serve as the basis for Federal and 
State rail investments within the State. 
‘‘(b) COORDINATION.—A State rail plan shall be co-
ordinated with other State transportation planning goals 
and programs and set forth rail transportation’s role with-
in the State transportation system. 
‘‘§ 22504. Transparency; coordination; review 
‘‘(a) PREPARATION.—A State shall provide adequate 
and reasonable notice and opportunity for comment and 
other input to the public, rail carriers, commuter and tran-
sit authorities operating in, or affected by rail operations 
within the State, units of local government, and other in-
terested parties in the preparation and review of its State 
rail plan. 
‘‘(b) 
INTERGOVERNMENTAL
COORDINATION.—A 
State shall review the freight and passenger rail service 
activities and initiatives by regional planning agencies, re-
gional transportation authorities, and municipalities with-
in the State, or in the region in which the State is located, 
while preparing the plan, and shall include any rec-
ommendations made by such agencies, authorities, and 
municipalities as deemed appropriate by the State. 
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‘‘§ 22505. Content 
‘‘(a) IN GENERAL.—Each State rail plan shall con-
tain the following: 
‘‘(1) An inventory of the existing overall rail 
transportation system and rail services and facilities 
within the State and an analysis of the role of rail 
transportation within the State’s surface transpor-
tation system. 
‘‘(2) A review of all rail lines within the State, 
including proposed high speed rail corridors and sig-
nificant rail line segments not currently in service. 
‘‘(3) A statement of the State’s passenger rail 
service objectives, including minimum service levels, 
for rail transportation routes in the State. 
‘‘(4) A general analysis of rail’s transportation, 
economic, and environmental impacts in the State, 
including congestion mitigation, trade and economic 
development, air quality, land-use, energy-use, and 
community impacts. 
‘‘(5) A long-range rail investment program for 
current and future freight and passenger infrastruc-
ture in the State that meets the requirements of 
subsection (b). 
‘‘(6) A statement of public financing issues for 
rail projects and service in the State, including a list 
of current and prospective public capital and oper-
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ating funding resources, public subsidies, State tax-
ation, and other financial policies relating to rail in-
frastructure development. 
‘‘(7) An identification of rail infrastructure 
issues within the State that reflects consultation 
with all relevant stake holders. 
‘‘(8) A review of major passenger and freight 
intermodal rail connections and facilities within the 
State, including seaports, and prioritized options to 
maximize service integration and efficiency between 
rail and other modes of transportation within the 
State. 
‘‘(9) A review of publicly funded projects within 
the State to improve rail transportation safety and 
security, including all major projects funded under 
section 130 of title 23. 
‘‘(10) A performance evaluation of passenger 
rail services operating in the State, including pos-
sible improvements in those services, and a descrip-
tion of strategies to achieve those improvements. 
‘‘(11) A compilation of studies and reports on 
high-speed rail corridor development within the 
State not included in a previous plan under this sub-
chapter, and a plan for funding any recommended 
development of such corridors in the State. 
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‘‘(12) A statement that the State is in compli-
ance with the requirements of section 22102. 
‘‘(b) LONG-RANGE SERVICE AND INVESTMENT PRO-
GRAM.— 
‘‘(1) PROGRAM
CONTENT.—A long-range rail 
investment program included in a State rail plan 
under subsection (a)(5) shall include the following 
matters: 
‘‘(A) A list of any rail capital projects ex-
pected to be undertaken or supported in whole 
or in part by the State. 
‘‘(B) A detailed funding plan for those 
projects. 
‘‘(2) PROJECT LIST CONTENT.—The list of rail 
capital projects shall contain— 
‘‘(A) a description of the anticipated public 
and private benefits of each such project; and 
‘‘(B) a statement of the correlation be-
tween— 
‘‘(i) public funding contributions for 
the projects; and 
‘‘(ii) the public benefits. 
‘‘(3) CONSIDERATIONS FOR PROJECT LIST.—In 
preparing the list of freight and intercity passenger 
rail capital projects, a State rail transportation au-
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thority should take into consideration the following 
matters: 
‘‘(A) Contributions made by non-Federal 
and non-State sources through user fees, 
matching funds, or other private capital involve-
ment. 
‘‘(B) Rail capacity and congestion effects. 
‘‘(C) Effects to highway, aviation, and 
maritime capacity, congestion, or safety. 
‘‘(D) Regional balance. 
‘‘(E) Environmental impact. 
‘‘(F) Economic and employment impacts. 
‘‘(G) Projected ridership and other service 
measures for passenger rail projects. 
‘‘§ 22506. Review 
‘‘The Secretary shall prescribe procedures for States 
to submit State rail plans for review under this title, in-
cluding standardized format and data requirements.’’. 
(b) CONFORMING AMENDMENT.—The table of chap-
ters for subtitle V of title 49, United States Code, is 
amended by inserting the following after the item relating 
to chapter 223: 
‘‘225. STATE RAIL PLANS ................................................................... 22501’’. 
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SEC. 523. RAIL COOPERATIVE RESEARCH PROGRAM. 
(a) ESTABLISHMENT AND CONTENT.—Chapter 249 
of title 49, United States Code, is amended by adding at 
the end the following: 
‘‘§ 24910. Rail cooperative research program 
‘‘(a) IN GENERAL.—The Secretary shall establish 
and carry out a rail cooperative research program. The 
program shall— 
‘‘(1) address, among other matters, intercity 
rail passenger and freight rail services, including ex-
isting rail passenger and freight technologies and 
speeds, incrementally enhanced rail systems and in-
frastructure, and new high-speed wheel-on-rail sys-
tems and rail security; 
‘‘(2) address ways to expand the transportation 
of international trade traffic by rail, enhance the ef-
ficiency of intermodal interchange at ports and other 
intermodal terminals, and increase capacity and 
availability of rail service for seasonal freight needs; 
‘‘(3) consider research on the interconnected-
ness of commuter rail, passenger rail, freight rail, 
and other rail networks; and 
‘‘(4) give consideration to regional concerns re-
garding rail passenger and freight transportation, 
including meeting research needs common to des-
ignated high-speed corridors, long-distance rail serv-
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ices, and regional intercity rail corridors, projects, 
and entities. 
‘‘(b) CONTENT.—The program to be carried out 
under this section shall include research designed— 
‘‘(1) to identify the unique aspects and at-
tributes of rail passenger and freight service; 
‘‘(2) to develop more accurate models for evalu-
ating the impact of rail passenger and freight serv-
ice, including the effects on highway and airport and 
airway congestion, environmental quality, and energy 
consumption; 
‘‘(3) to develop a better understanding of modal 
choice as it affects rail passenger and freight trans-
portation, including development of better models to 
predict utilization; 
‘‘(4) to recommend priorities for technology 
demonstration and development; 
‘‘(5) to meet additional priorities as determined 
by the advisory board established under subsection 
(c), including any recommendations made by the Na-
tional Research Council; 
‘‘(6) to explore improvements in management, 
financing, and institutional structures; 
‘‘(7) to address rail capacity constraints that 
affect passenger and freight rail service through a 
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100 
wide variety of options, ranging from operating im-
provements to dedicated new infrastructure, taking 
into account the impact of such options on oper-
ations; 
‘‘(8) to improve maintenance, operations, cus-
tomer service, or other aspects of intercity rail pas-
senger and freight service; 
‘‘(9) to recommend objective methodologies for 
determining intercity passenger rail routes and serv-
ices, including the establishment of new routes, the 
elimination of existing routes, and the contraction or 
expansion of services or frequencies over such 
routes; 
‘‘(10) to review the impact of equipment and 
operational safety standards on the further develop-
ment of high speed passenger rail operations con-
nected to or integrated with non-high speed freight 
or passenger rail operations; and 
‘‘(11) to recommend any legislative or regu-
latory changes necessary to foster further develop-
ment and implementation of high speed passenger 
rail operations while ensuring the safety of such op-
erations that are connected to or integrated with 
non-high speed freight or passenger rail operations. 
‘‘(c) ADVISORY BOARD.— 
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101 
‘‘(1) ESTABLISHMENT.—In consultation with 
the heads of appropriate Federal departments and 
agencies, the Secretary shall establish an advisory 
board to recommend research, technology, and tech-
nology transfer activities related to rail passenger 
and freight transportation. 
‘‘(2) MEMBERSHIP.—The advisory board shall 
include— 
‘‘(A) representatives of State transpor-
tation agencies; 
‘‘(B) transportation and environmental 
economists, scientists, and engineers; and 
‘‘(C) representatives of Amtrak, the Alaska 
Railroad, freight railroads, transit operating 
agencies, intercity rail passenger agencies, rail-
way labor organizations, and environmental or-
ganizations. 
‘‘(d) NATIONAL ACADEMY OF SCIENCES.—The Sec-
retary may make grants to, and enter into cooperative 
agreements with, the National Academy of Sciences to 
carry out such activities relating to the research, tech-
nology, and technology transfer activities described in sub-
section (b) as the Secretary deems appropriate.’’. 
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102 
(b) CLERICAL AMENDMENT.—The chapter analysis 
for chapter 249 is amended by adding at the end the fol-
lowing: 
‘‘24910. Rail cooperative research program.’’. 
SEC. 524. HIGH-SPEED INTERCITY RAIL FACILITY BONDS. 
(a) AMENDMENT.—Chapter 261 of title 49, United 
States Code, is amended by adding at the end the fol-
lowing new section: 
‘‘§ 26106. High-speed rail infrastructure bonds 
‘‘(a) DESIGNATION.—The Secretary may designate 
bonds for purposes of subsection (f) or section 54A of the 
Internal Revenue Code of 1986 if— 
‘‘(1) the bonds are to be issued by— 
‘‘(A) a State, if the entire railroad pas-
senger transportation corridor containing the 
infrastructure project to be financed is within 
the State; 
‘‘(B) 1 or more of the States that have en-
tered into an agreement or an interstate com-
pact 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 com-
pact described in subparagraph (B); 
‘‘(2) the bonds are for the purpose of financ-
ing— 
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103 
‘‘(A) projects that make a substantial con-
tribution 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, in-
cluding the introduction of new high-speed tech-
nologies such as magnetic levitation systems, 
track or signal improvements, the elimination of 
grade crossings, development of intermodal fa-
cilities, improvement of train speeds or safety, 
or both, and station rehabilitation or construc-
tion), but only if the Secretary determines that 
the projects are part of a viable and comprehen-
sive high-speed rail transportation corridor de-
sign 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; 
‘‘(3) for a railroad passenger transportation 
corridor design that includes the use of rights-of-way 
owned by a freight railroad, a written agreement ex-
ists between the applicant and the freight railroad 
regarding such use and ownership, including com-
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104 
pensation for such use and assurances regarding the 
adequacy of infrastructure capacity to accommodate 
both existing and future freight and passenger oper-
ations, 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 rail-
road passenger transportation corridor; 
‘‘(4) the corridor design eliminates existing rail-
way-highway grade crossings that the Secretary de-
termines 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 Na-
tional Railroad Passenger Corporation is re-
quired to comply with such standards for con-
struction work financed under an agreement 
made under section 24308(a); and 
‘‘(B) the protective arrangements estab-
lished under section 504 of the Railroad Revi-
talization and Regulatory Reform Act of 1976 
(45 U.S.C. 836) with respect to employees af-
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105 
fected by actions taken in connection with the 
project to be financed by the bond; and 
‘‘(6) the applicant agrees not to pay the prin-
cipal or interest on the bonds using funds derived di-
rectly or indirectly from the Highway Trust Fund, 
except as permitted by law as of the date of the en-
actment of this section. 
‘‘(b) BOND AMOUNT LIMITATION.— 
‘‘(1) IN GENERAL.—The amount of bonds des-
ignated under this section may not exceed— 
‘‘(A) in the case of subsection (f) bonds, 
$1,200,000,000 for each of the fiscal years 
2008 through 2017; and 
‘‘(B) in the case of section 54A bonds, 
$1,200,000,000 for each of the fiscal years 
2008 through 2017. 
‘‘(2) CARRYOVER OF UNUSED LIMITATION.—If 
for any fiscal year the limitation amount under sub-
paragraph (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 54A 
bonds issued during such year, 
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106 
the limitation amount under subparagraph (A) or 
(B) of paragraph (1), as the case may be, for the 
following fiscal year (through fiscal year 2021) shall 
be increased by the amount of such excess. 
‘‘(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 54A 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.— 
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107 
‘‘(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 
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108 
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 
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109 
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; 
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‘‘(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 
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111 
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 
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112 
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 
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 proce-
dures set forth in paragraph (3)(B), who shall, with-
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113 
in 20 days after the commencement of the arbitra-
tion, conduct a hearing and decide all unresolved 
issues. This decision shall be final, binding, and con-
clusive 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 ‘sub-
section (f) bond’ means a bond designated by the 
Secretary under subsection (a) for purposes of sub-
section (f). 
‘‘(2) SECTION 54A BOND.—The term ‘section 
54A bond’ means a bond designated by the Sec-
retary under subsection (a) for purposes of section 
54A of the Internal Revenue Code of 1986 (relating 
to credit to holders of qualified high-speed rail infra-
structure bonds).’’. 
(b) TABLE OF SECTIONS AMENDMENT.—The table of 
sections of chapter 261 of title 49, United States Code, 
is amended by adding after the item relating to section 
26105 the following new item: 
‘‘26106. High-speed rail infrastructure bonds.’’. 
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114 
SEC. 525. TAX CREDIT TO HOLDERS OF QUALIFIED HIGH- 
SPEED RAIL INFRASTRUCTURE BONDS. 
(a) IN GENERAL.—Subpart H of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to credits against tax) is amended by add-
ing at the end the following new section: 
‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED HIGH- 
SPEED RAIL INFRASTRUCTURE BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a qualified high-speed rail infrastructure bond on one or 
more credit allowance dates of the bond occurring during 
any taxable year, there shall be allowed as a credit against 
the tax imposed by this chapter for the taxable year an 
amount equal to the sum of the credits determined under 
subsection (b) with respect to such dates. 
‘‘(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 cred-
it determined with respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified high-speed 
rail infrastructure bond is the product of— 
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115 
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (3) for the day on 
which such bond was sold, multiplied by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) DETERMINATION.—For purposes of para-
graph (2), with respect to any qualified high-speed 
rail infrastructure bond, the Secretary shall deter-
mine daily or cause to be determined daily a credit 
rate which shall apply to the first day on which 
there is a binding, written contract for the sale or 
exchange of the bond. The credit rate for any day 
is the credit rate which the Secretary or the Sec-
retary’s designee estimates will permit the issuance 
of qualified high-speed rail infrastructure bonds with 
a specified maturity or redemption date without dis-
count and without interest cost to the qualified 
issuer. 
‘‘(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. 
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116 
Such term includes the last day on which the bond 
is outstanding. 
‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance 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 re-
deemed. 
‘‘(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 im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this part (other than subpart C, sections 
1400N(l) and 54, and this section). 
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
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117 
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 treat-
ed as interest income. 
‘‘(e) QUALIFIED HIGH-SPEED RAIL INFRASTRUC-
TURE BOND.—For purposes of this part, the term ‘quali-
fied 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 sec-
tion 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, 
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118 
‘‘(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 sub-
section (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 require-
ments 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 com-
mence construction, with respect to such 
projects within the 6-month period beginning on 
such date, and 
‘‘(C) to proceed with due diligence to com-
plete such projects and to spend the proceeds 
from the sale of the issue. 
‘‘(2) RULES REGARDING CONTINUING COMPLI-
ANCE AFTER 3-YEAR DETERMINATION.—If at least 
95 percent of the proceeds from the sale of the issue 
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119 
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 con-
tinuing 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 per-
cent of the proceeds from the sale of the 
issue for 1 or more qualified projects with-
in 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 be-
ginning on the date of issuance, or 
‘‘(II) the issuer pays to the Fed-
eral Government any earnings on the 
proceeds from the sale of the issue 
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that accrue after the end of the 3-year 
period beginning on the date of 
issuance and uses all unspent pro-
ceeds from the sale of the issue to re-
deem bonds of the issue within 90 
days after the end of the 4-year pe-
riod 
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 in-
frastructure 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 
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121 
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 begin-
ning in such 3 calendar years which would have re-
sulted solely from denying any credit under this sec-
tion 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 para-
graph (2) only with respect to credits allowed 
by reason of this section which were used to re-
duce tax liability. In the case of credits not so 
used to reduce tax liability, the carryforwards 
under subsection (c) shall be appropriately ad-
justed. 
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under paragraph (2) shall not be 
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122 
treated as a tax imposed by this chapter for 
purposes of determining— 
‘‘(i) the amount of any credit allow-
able 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 ob-
ligation. 
‘‘(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 pro-
ceeds not to be used for a qualified project. The Sec-
retary 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 infra-
structure bond. 
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123 
‘‘(4) PARTNERSHIP; 
S
CORPORATION; 
AND 
OTHER
PASS-THRU
ENTITIES.—Under regulations 
prescribed by the Secretary, in the case of a partner-
ship, 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
INVEST-
MENT COMPANIES.—If any qualified high-speed rail 
infrastructure bond is held by a regulated invest-
ment company, the credit determined under sub-
section (a) shall be allowed to shareholders of such 
company under procedures prescribed by the Sec-
retary. 
‘‘(6) REPORTING.—Issuers of qualified high- 
speed rail infrastructure bonds shall submit reports 
similar to the reports required under section 
149(e).’’. 
(b) REPORTING.— 
(1) IN GENERAL.—Subparagraph (A) of section 
6049(d)(8) of the Internal Revenue Code of 1986 is 
amended— 
(A) by inserting ‘‘, 54A(d),’’ after ‘‘54(g)’’, 
and 
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