Title: National Multimodal and Sustainable Freight Infrastructure Act
Policy area: Transportation and Public Works

Summary:
National Multimodal and Sustainable Freight Infrastructure Act
This bill directs the Department of Transportation to improve the efficiency and reliability of freight movement in the United States by establishing (1) a Multimodal Freight Formula Program to distribute funds to each state based on the amount of existing infrastructure within the state; and (2) a National Freight Competitive Grant Program to provide grants to certain entities, including local governments and metropolitan planning organizations.
National and state freight plans must include strategies and goals to decrease greenhouse gas emissions, local air pollution, water runoff, and wildlife habitat loss.
The bill imposes a 1% excise tax upon the ground transportation cost of property and requires the deposit of such tax revenues into a Freight Trust Fund to finance the Multimodal Freight Formula Program and the National Freight Competitive Grant Program.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2723 Introduced in House (IH)]

<DOC>






116th CONGRESS
  1st Session
                                H. R. 2723

   To amend title 49, United States Code, to establish a Multimodal 
 Freight Funding Formula Program and a National Freight Infrastructure 
Competitive Grant Program to improve the efficiency and reliability of 
     freight movement in the United States, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 14, 2019

     Mr. Lowenthal (for himself, Mr. Blumenauer, Mr. Cardenas, Mr. 
   Cartwright, Mr. Cisneros, Ms. Kelly of Illinois, Mr. Meadows, Ms. 
Moore, Mrs. Napolitano, Mr. Pocan, Mr. Rouda, Mr. Takano, and Ms. Hill 
of California) introduced the following bill; which was referred to the 
Committee on Transportation and Infrastructure, and in addition to the 
Committee on Ways and Means, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To amend title 49, United States Code, to establish a Multimodal 
 Freight Funding Formula Program and a National Freight Infrastructure 
Competitive Grant Program to improve the efficiency and reliability of 
     freight movement in the United States, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Multimodal and Sustainable 
Freight Infrastructure Act''.

SEC. 2. FREIGHT FUNDING PROGRAMS.

    (a) In General.--Chapter 701 of title 49, United States Code, is 
amended by adding at the end the following:
``Sec. 70104. Multimodal Freight Funding Formula Program
    ``(a) In General.--The Secretary of Transportation shall establish 
a Multimodal Freight Funding Formula Program under which the Secretary 
shall distribute funds to States to improve the efficiency and 
reliability of freight movement in the United States.
    ``(b) Formula Apportionment.--Of funds made available to the 
Secretary for a fiscal year to carry out the Multimodal Freight Funding 
Formula Program under this section, the Secretary shall calculate the 
amount available to be apportioned to a State based on the following:
            ``(1) 6.25 percent in the ratio that--
                    ``(A) the number of ports in each State; bears to
                    ``(B) the number of ports in all States.
            ``(2) 6.25 percent in the ratio that--
                    ``(A) the number of rail track-miles used for the 
                movement of freight in each State; bears to
                    ``(B) the number of such rail track-miles in all 
                States.
            ``(3) 6.25 percent in the ratio that--
                    ``(A) the number of cargo-handling airports in each 
                State; bears to
                    ``(B) the number of such airports in all States.
            ``(4) 6.25 percent in the ratio that--
                    ``(A) the number of Interstate system miles in each 
                State; bears to
                    ``(B) the number of Interstate system miles in all 
                States.
            ``(5) 37.5 percent in the ratio that--
                    ``(A) the tonnage of rail, waterborne, highway, and 
                airport freight moved in each State; bears to
                    ``(B) the tonnage of such freight moved in all 
                States.
            ``(6) 37.5 percent in the ratio that--
                    ``(A) the value of rail, waterborne, highway and 
                airport freight moved in each State; bears to
                    ``(B) the value of such freight moved in all 
                States.
    ``(c) Tier I Eligibility.--The Secretary shall provide to a State 
in a fiscal year 40 percent of the amount of the funds available to the 
State under subsection (b) for that fiscal year if the State--
            ``(1) has an established freight advisory committee in 
        accordance with section 70201;
            ``(2) developed any analyses or plans required for the 
        completion of a State freight plan in accordance with section 
        70202;
            ``(3) has an approved State freight plan;
            ``(4) has conducted a statewide analysis of freight needs 
        and bottlenecks on all modes of transportation, including 
        intermodal and last mile needs;
            ``(5) demonstrates use of the statewide analysis of freight 
        needs in prioritizing projects in the State freight plan;
            ``(6) demonstrates that the State will use the funding that 
        it is provided under this paragraph for the highest priority 
        projects identified in the freight investment plan described 
        under section 70202; and
            ``(7) demonstrates that the program of projects will use 
        the strategies and contribute to the goals described in the 
        State freight plan to decrease--
                    ``(A) greenhouse gas emissions;
                    ``(B) local air pollution, including ozone and 
                ozone precursors, nitrogen oxides, sulfur dioxide, 
                particulate matter, carbon monoxide, and lead;
                    ``(C) water runoff and other adverse water impacts; 
                and
                    ``(D) wildlife habitat loss.
    ``(d) Tier II Eligibility.--The Secretary shall provide to a State 
in a fiscal year 60 percent of the amount of the funds available to the 
State under subsection (b) for that fiscal year if the State--
            ``(1) has met the eligibility criteria of subsection (c);
            ``(2) has conducted, in cooperation with at least one other 
        State, a multistate analysis of freight needs and bottlenecks 
        on all modes of transportation, including intermodal and last 
        mile needs along a multistate freight corridor; and
            ``(3) has developed, in cooperation with at least one other 
        State or a relevant entity in Canada or Mexico, a regional 
        freight investment plan that focuses on the end-to-end 
        investment needs of critical multistate freight corridors based 
        on the multistate analysis of freight needs and bottlenecks on 
        all modes of transportation, including intermodal and last mile 
        needs.
    ``(e) Redistribution of Funds.--The Secretary shall make available 
under the National Freight Infrastructure Competitive Grant Program 
under section 70105 any funds that--
            ``(1) the Secretary calculated under subsection (b) as 
        available to a State for a fiscal year but did not provide to 
        that State for that fiscal year under subsection (c) or 
        subsection (d); or
            ``(2) the Secretary provided to a State under subsection 
        (c) or subsection (d) but remain unobligated in that State at 
        the end of the third fiscal year following the fiscal year in 
        which they were provided to the State.
    ``(f) Eligible Uses.--A State may use funds provided under this 
section only for--
            ``(1) the development of corridor freight plans or regional 
        freight plans; or
            ``(2) one or more phases of capital projects, equipment, or 
        operational improvements on roads, rails, landside 
        infrastructure on ports and airports, and intermodal connectors 
        included in a State freight plan for projects that--
                    ``(A) maintain or improve the efficiency and 
                reliability of freight supply chains;
                    ``(B) demonstrate public freight benefits;
                    ``(C) improve modal components of a multimodal 
                corridor that is critical to a State or region;
                    ``(D) address freight needs to facilitate a 
                regionally or nationally significant economic 
                development issue;
                    ``(E) in accordance with the State freight plan, 
                decrease--
                            ``(i) greenhouse gas emissions;
                            ``(ii) local air pollution, including ozone 
                        and ozone precursors, nitrogen oxides, sulfur 
                        dioxide, particulate matter, carbon monoxide, 
                        and lead;
                            ``(iii) water runoff and other adverse 
                        water impacts; and
                            ``(iv) wildlife habitat loss;
                    ``(F) are multimodal, multi-jurisdictional, or 
                corridor-based and address freight needs;
                    ``(G) relieve freight or non-freight access, 
                congestion, or safety issues; or
                    ``(H) address first and last mile connectors.
    ``(g) EPA Report.--A State that receives funds under this section 
shall collect data and, beginning 1 year from the date of the 
completion of each project or project phase that receives such funds, 
and annually thereafter for 15 years, report to the Secretary and the 
Administrator of Environmental Protection Agency on progress made 
toward greenhouse gas emission reductions and local air pollution 
reductions in accordance with the State freight plan. All relevant data 
and reporting shall be collected and reported in accordance with 
guidance developed by the Administrator in consultation with the 
Secretary.
    ``(h) Federal Share.--
            ``(1) In general.--The Federal share of the cost of a 
        project carried out by a State using funds provided under this 
        section may not be more than 80 percent.
            ``(2) Additional federal share.--The Federal share of the 
        cost of a project carried out by a State using funds provided 
        under this section may be increased by 5 percent if the such 5 
        percent is used for the mitigation of diesel emissions from 
        construction activities associated with the project. The 
        Administrator of Environmental Protection Agency, in 
        consultation with the Secretary, shall develop guidance for 
        eligible equipment and activities consistent with existing 
        State, local, and nonprofit clean construction guidelines.
    ``(i) Reservation of Funds for Territories.--Before making a 
calculation under subsection (b), the Secretary shall withhold funds 
for distribution to each territory in an amount based on the freight 
infrastructure need of the territories, as determined by the Secretary. 
Such funds shall not otherwise be made available for distribution under 
this section.
    ``(j) Authorization of Appropriations.--There is authorized to be 
appropriated from the Freight Trust Fund to carry out this section an 
amount equal to 50 percent of the receipts of the Freight Trust Fund 
for each fiscal year beginning in fiscal year 2020.
    ``(k) Administration and Oversight Costs.--The Secretary may retain 
up to one-half of 1 percent of the amounts available to carry out this 
section for each fiscal year for the cost of administration and 
oversight of projects funded under this section.
    ``(l) Availability of Funds.--Amounts authorized under subsection 
(j) shall be--
            ``(1) available for obligation on October 1 of the fiscal 
        year for which they are authorized; and
            ``(2) available until expended.
    ``(m) Application of Rate Requirements.--The Secretary shall take 
such action as may be necessary to apply the requirements described 
under section 113 of title 23, as applicable, to any project receiving 
funds under this section.
    ``(n) Definitions.--In this section:
            ``(1) State.--The term `State' means each of the 50 States, 
        the District of Columbia, and Puerto Rico.
            ``(2) State freight plan.--The term `State freight plan' 
        means the State freight plan described under section 70202.
            ``(3) Territory.--The term `territory' has the meaning 
        given such term in section 165(c)(1) of title 23.
``Sec. 70105. National Freight Infrastructure Competitive Grant Program
    ``(a) Establishment.--The Secretary of Transportation shall 
establish a National Freight Infrastructure Competitive Grant Program 
under which the Secretary shall make grants, on a competitive basis, to 
designated entities for eligible projects to improve the efficiency and 
reliability of freight movement in the United States.
    ``(b) Project Goals.--In carrying out the Program, the Secretary 
shall prioritize projects that--
            ``(1) improve the efficiency and reliability of freight 
        transportation;
            ``(2) reduce the cost of freight transportation;
            ``(3) improve the safety of freight transportation;
            ``(4) relieve bottlenecks in the freight transportation 
        system;
            ``(5) improve the state of good repair of the freight 
        transportation system;
            ``(6) contribute to the environmental goals described in 
        the State freight plan; and
            ``(7) reduce the adverse impacts of freight transportation 
        on communities traversed by freight.
    ``(c) Grant Applications.--To be eligible to receive a grant under 
the Program a designated entity shall submit to the Secretary an 
application at such time, in such form, and containing such information 
as the Secretary may require.
    ``(d) Eligible Project.--A project is eligible for a grant under 
the Program only if the Secretary determines that the project--
            ``(1) that is--
                    ``(A) a capital investment project for a 
                transportation infrastructure facility significantly 
                used for the movement of freight; or
                    ``(B) infrastructure necessary to mitigate the 
                adverse impact of freight transportation on communities 
                traversed by freight, including--
                            ``(i) a road, rail, or landside air or 
                        water facility;
                            ``(ii) an intermodal facility such as a 
                        seaport or port on the inland waterway system, 
                        an airport, or a highway and rail intermodal 
                        facility;
                            ``(iii) a facility related to an 
                        international border crossing;
                            ``(iv) is for an operational improvement or 
                        equipment of a facility described in this 
                        paragraph; or
                            ``(v) railway-roadway grade separations and 
                        related improvements;
            ``(2) will help to achieve the goals set out in subsection 
        (b);
            ``(3) has non-Federal source or sources of committed 
        financing, along with any Federal funds, sufficient to complete 
        the project;
            ``(4) has independent utility;
            ``(5) is included in the State freight plan; and
            ``(6) includes the development of project plans and 
        analysis.
    ``(e) Grant Criteria.--The Secretary shall select eligible projects 
for funding based on the following criteria:
            ``(1) The extent to which the project is likely to advance 
        the goals described in subsection (b).
            ``(2) The likely benefits of the project relative to its 
        costs.
            ``(3) The extent to which the project demonstrates the use 
        of innovative technology, strategies, and practices.
            ``(4) The extent to which the project uses onroad 
        construction vehicles and nonroad construction equipment that 
        meet the emission standards of the Environmental Protection 
        Agency.
            ``(5) The extent to which the project demonstrates 
        effective reductions (in accordance with the State freight 
        plan) in--
                    ``(A) greenhouse gas emissions;
                    ``(B) local air pollution, including ozone and 
                ozone precursors, nitrogen oxides, sulfur dioxide, 
                particulate matter, carbon monoxide, and lead;
                    ``(C) water runoff and other adverse water impacts; 
                and
                    ``(D) wildlife habitat loss.
            ``(6) The likely effect of the project on increasing United 
        States exports.
            ``(7) The consistency of the project with the national 
        freight strategic plan described under section 70102.
            ``(8) The extent to which the project leverages Federal 
        funds by matching State, territorial, local, tribal, or private 
        funds to the Federal funding requested under the Program.
            ``(9) The extent to which funds for the project are not 
        available from other Federal sources.
    ``(f) Special Rule.--A minimum of 5 percent of funds made available 
under the Program for a fiscal year shall be provided to zero-emission 
freight demonstration projects, as defined by the Secretary of 
Transportation, in consultation with the Administrator of the 
Environmental Protection Agency.
    ``(g) Retrospective Analysis.--A grant agreement made under the 
Program shall require that the recipient collect data and report to the 
Secretary, at an appropriate time as determined by the Secretary, on--
            ``(1) the actual cost of constructing the project;
            ``(2) the time required to complete the project and put it 
        into service;
            ``(3) the level of usage of the facility built or improved 
        by the project;
            ``(4) the benefits of the project, measured in a way that 
        is consistent with the benefits that were estimated in the 
        application for funding that was submitted to the Secretary; 
        and
            ``(5) any costs resulting from the project in addition to 
        the costs of constructing the project.
    ``(h) EPA Report.--A grant agreement made under the Program shall 
require that the recipient collect data and, beginning 1 year from the 
date of the completion of the project and annually thereafter for 15 
years, report to the Secretary and the Administrator of Environmental 
Protection Agency on progress made toward greenhouse gas emission 
reductions and local air pollution reductions in accordance with the 
State freight plan. All relevant data and reporting shall be collected 
and reported in accordance with guidance developed by the Administrator 
in consultation with the Secretary.
    ``(i) Period of Availability.--In entering into agreements under 
this section, the Secretary shall ensure that any funds made available 
for a project that are not obligated or expended before the last day of 
the third fiscal year following the fiscal year in which the funds are 
made available are transferred back to the Secretary for making grants 
under the Program.
    ``(j) Redistribution of Funds.--If a designated entity that 
received a grant under this section has made no obligation of funding 
with respect to such grant by the end of the third fiscal year 
following the fiscal year in which the Secretary awarded the grant, the 
Secretary shall--
            ``(1) withdraw the grant from the designated entity; and
            ``(2) apply the funding to another grant under this 
        section.
    ``(k) Federal Share.--
            ``(1) In general.--The Federal share of the cost of a 
        project for which a grant is made under the Program, as 
        estimated by the Secretary, shall be not more than 80 percent.
            ``(2) Additional federal share.--The Federal share of the 
        cost of a project carried out by a State using funds provided 
        under this section may be increased by 5 percent if the such 5 
        percent is used for the mitigation of diesel emissions from 
        construction activities associated with the project. The 
        Administrator of Environmental Protection Agency, in 
        consultation with the Secretary, shall develop guidance for 
        eligible equipment and activities consistent with existing 
        State, local, and nonprofit clean construction guidelines.
    ``(l) Administration and Oversight Costs.--The Secretary may retain 
up to one-half of 1 percent of the amounts made available to carry out 
this section for each fiscal year for the cost of administration and 
oversight of projects funded under the Program.
    ``(m) Authorization and Availability of Funds.--
            ``(1) Authorization.--There is authorized to be 
        appropriated from the Freight Trust Fund to carry out this 
        section an amount equal to 50 percent of the receipts of the 
        Freight Trust Fund for each fiscal year beginning in fiscal 
        year 2020.
            ``(2) Availability.--Amounts authorized under paragraph (1) 
        shall be--
                    ``(A) available for obligation on October 1 of the 
                fiscal year for which they are authorized; and
                    ``(B) available for obligation until expended.
    ``(n) Application of Rate Requirements.--The Secretary shall take 
such action as may be necessary to apply the requirements described 
under section 113 of title 23, as applicable, to any project receiving 
funds under this section.
    ``(o) Definitions.--In this section:
            ``(1) Designated entity.--The term `designated entity' 
        means--
                    ``(A) a State;
                    ``(B) a unit of local government;
                    ``(C) a metropolitan planning organization;
                    ``(D) a public transportation authority (including 
                a port authority);
                    ``(E) a tribal government; or
                    ``(F) or a consortium of the entities described in 
                this paragraph.
            ``(2) State.--The term `State' means any of the 50 States, 
        the District of Columbia, Puerto Rico, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, Guam, and the 
        United States Virgin Islands.
            ``(3) State freight plan.--The term `State freight plan' 
        means the State freight plan described under section 70202.''.
    (b) Conforming Amendment.--The table of sections for chapter 701 of 
title 49, United States Code, is amended by adding at the end the 
following:

``70104. Multimodal Freight Funding Formula Program.
``70105. National Freight Infrastructure Competitive Grant Program.''.

SEC. 3. NATIONAL AND STATE FREIGHT PLANS.

    (a) National Freight Strategic Plan.--Section 70102(b) of title 49, 
United States Code, is amended--
            (1) in paragraph (10) by striking ``and'' at the end;
            (2) in paragraph (11) by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(12) best practices to reduce greenhouse gas emissions, 
        local air pollution, water runoff, and wildlife habitat 
        loss.''.
    (b) State Freight Advisory Committees.--Section 70201 of title 49, 
United States Code, is amended--
            (1) in subsection (a) by striking ``representatives of 
        ports, freight railroads,'' and all that follows through 
        ``local governments'' and inserting the following: 
        ``representatives of--
            ``(1) ports;
            ``(2) freight railroads;
            ``(3) shippers;
            ``(4) carriers;
            ``(5) freight-related associations;
            ``(6) third-party logistics providers;
            ``(7) the freight industry workforce;
            ``(8) the transportation department of the State;
            ``(9) metropolitan planning organizations;
            ``(10) local governments;
            ``(11) the environmental protection department of the 
        State, if applicable; and
            ``(12) the air resources board of the State, if 
        applicable'';
            (2) by redesignating subsection (b) as subsection (c);
            (3) by inserting after subsection (a) the following:
    ``(b) Qualifications.--Each member of a freight advisory committee 
established under subsection (a) shall be widely recognized to have 
qualifications sufficient to represent the interests of such member's 
stakeholder group, including, as applicable--
            ``(1) a general business and financial experience;
            ``(2) experience or qualifications in the areas of freight 
        transportation and logistics;
            ``(3) experience in transportation planning;
            ``(4) experience representing employees of the freight 
        industry; or
            ``(5) experience representing a State, local government, or 
        metropolitan planning organization.''; and
            (4) in subsection (b)--
                    (A) in paragraph (5) by inserting ``, including 
                advising on the development of the freight investment 
                plan'' after ``70202''; and
                    (B) by adding at the end the following:
            ``(6) approve the State freight plan under section 70202, 
        including the freight investment plan.''.
    (c) State Freight Plans.--Section 70202 of title 49, United States 
Code, is amended--
            (1) in subsection (b)--
                    (A) in paragraph (9)--
                            (i) by inserting ``and section 70104'' 
                        after ``section 167 of title 23''; and
                            (ii) by striking ``and'' at the end;
            (2) by redesignating paragraph (10) as paragraph (12);
            (3) by inserting after paragraph (9) the following:
            ``(10) strategies and goals to decrease--
                    ``(A) greenhouse gas emissions;
                    ``(B) local air pollution, including ozone and 
                ozone precursors, nitrogen oxides, sulfur dioxide, 
                particulate matter, carbon monoxide, and lead;
                    ``(C) water runoff and other adverse water impacts; 
                and
                    ``(D) wildlife habitat loss;
            ``(11) strategies and goals to decrease the adverse impact 
        of freight transportation on communities traversed by freight 
        railroads; and'';
            (4) by redesignating subsection (e) as subsection (f); and
            (5) by inserting after subsection (d) the following:
    ``(e) Certification.--The Secretary shall approve a freight plan if 
such plan meets the requirements of this section and is consistent with 
the National freight strategic plan described in section 70102. The 
Secretary, in consultation with the Administrator of the Environmental 
Protection Agency shall certify any environmental goal or strategy 
provisions of the plan.''.

SEC. 4. FREIGHT TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 9512. FREIGHT TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Freight Trust 
Fund' (hereinafter in this section referred to as the `Fund') 
consisting of such amounts as may be appropriated or credited to such 
Fund as provided in this section or section 9602(b).
    ``(b) Transfers to the Fund.--There are hereby appropriated to the 
Fund amounts equivalent to taxes received in the Treasury under section 
4286.
    ``(c) Expenditures From Fund.--Amounts in the Fund shall be made 
available, as provided by appropriation Acts, for making expenditures 
to meet obligations authorized to be paid out of the Fund under section 
2 of the National Multimodal and Sustainable Freight Infrastructure 
Act.''.
    (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 98 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

``Sec. 9512. Freight Trust Fund.''.

SEC. 5. FREIGHT MOBILITY INFRASTRUCTURE TAX.

    (a) Imposition of Tax.--Chapter 33 of the Internal Revenue Code of 
1986 is amended by inserting after subchapter C the following new 
subchapter:

           ``Subchapter D--Ground Transportation Freight Tax

``Sec. 4286. Imposition of tax.

``SEC. 4286. IMPOSITION OF TAX.

    ``(a) In General.--There is hereby imposed upon taxable ground 
transportation of property within the United States a tax equal to 1 
percent of the amount paid for such transportation.
    ``(b) By Whom Paid.--
            ``(1) In general.--The tax imposed by subsection (a) shall 
        be paid--
                    ``(A) by the person making the payment subject to 
                tax, or
                    ``(B) in the case of transportation by a related 
                person, by the person for whom such transportation is 
                made.
            ``(2) Determinations of amounts paid in certain cases.--For 
        purposes of this section, rules similar to the rules of section 
        4271(c) shall apply.
    ``(c) Transportation by Related Persons.--In the case of 
transportation of property by the shipper or a person related to the 
shipper, the fair market value of such transportation shall be the 
amount which would be paid for transporting such property if such 
property were transported by an unrelated person, determined on an 
arms' length basis.
    ``(d) Definitions and Special Rule.--For purposes of this 
subchapter--
            ``(1) Taxable ground transportation.--The term `taxable 
        ground transportation' means transportation of property by--
                    ``(A) freight rail, or
                    ``(B) truck trailer and semitrailer chassis and 
                bodies, suitable for use with a trailer or semitrailer 
                which has a gross vehicle weight of 26,000 pounds or 
                more.
        For purposes of subparagraph (B), the terms `truck trailer' and 
        `semitrailer' have the same meanings as such terms have in 
        section 4051.
            ``(2) Related person.--A person (hereinafter in this 
        paragraph referred to as the `related person') is related to 
        any person if--
                    ``(A) the related person bears a relationship to 
                such person specified in section 267(b) or 707(b)(1), 
                or
                    ``(B) the related person and such person are 
                engaged in trades or businesses under common control 
                (within the meaning of subsections (a) and (b) of 
                section 52).
        For purposes of the preceding sentence, in applying sections 
        267(b) and 707(b)(1), `10 percent' shall be substituted for `50 
        percent' each place it appears.
            ``(3) Transportation outside the united states.--In the 
        case an amount paid for transportation any portion of which is 
        outside the United States, the portion of such amount paid 
        which is allocable to transportation within the United States 
        shall be determined under regulations prescribed by the 
        Secretary. Such regulations shall include rules to include 
        transportation outside the United States the primary purpose of 
        which is to avoid the tax imposed by this section.
    ``(e) Exemption for United States and Possessions and State and 
Local Governments.--The tax imposed by subsection (a) shall not apply 
to amounts paid for transportation of property purchased for the 
exclusive use of the United States, or any State or political 
subdivision thereof.''.
    (b) Credits or Refunds to Persons Who Collected Certain Taxes.--
Section 6415 of such Code is amended by striking ``or 4271'' each place 
it appears and inserting ``4271, or 4286''.
    (c) Clerical Amendment.--The table of subchapters for chapter 33 of 
the Internal Revenue Code of 1986 is amended by inserting after the 
item relating to subchapter C the following new item:

          ``subchapter d. ground transportation freight tax''.

    (d) Regulations.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of the Treasury shall issue 
regulations to carry out the amendments made by this section.
    (e) Effective Date.--The amendments made by this section shall 
apply to transportation beginning on or after the last day of the 180-
day period beginning on the date of the issuance of regulations under 
subsection (c).
                                 <all>