SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emergency Rural and Small Railroad 
Preservation Act''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) a well-developed system of transportation and 
        infrastructure is critical to the economic well being, health, 
        and welfare of the United States;
            (2) a national emergency exists that threatens the survival 
        of essential rail transportation infrastructure, especially 
        infrastructure serving rural areas of the country;
            (3) a failure to address the growing crisis will result in 
        rail line abandonments which will add to highway costs and 
        congestion, thus increasing highway traffic that will lead to a 
        degradation of safety, increase environmental damage, and 
        further economically disadvantage rural areas of the country;
            (4) traditional funding techniques are unable to keep pace 
        with the rail infrastructure investment needs in rural areas, 
        including the requirement to upgrade track and bridges, to 
        ensure safety, and to accommodate 286,000 pound freight cars;
            (5) the requirement that railroads pay a 4.3-cent diesel 
        fuel excise tax into the general fund of the Treasury, while 
        similar taxes on competing modes of transportation improve the 
        infrastructures for those competing modes, is inequitable; and
            (6) a temporary Federal program utilizing the proceeds of 
        the 4.3-cent railroad fuel tax to address the national 
        emergency and preserve freight rail service is in the national 
        interest as long as the 4.3-cent diesel tax on railroads is in 
        existence.

SEC. 3. ESTABLISHMENT OF PROGRAM.

    (a) Establishment.--The Secretary of Transportation shall establish 
a program to preserve, rehabilitate, and improve rail tracks and 
bridges of Class II and III freight railroads to ensure that such 
railroads can be operated safely and can accommodate 286,000 pound rail 
cars.
    (b) Allocation of Funds.--
            (1) Eligible recipients.--The Secretary shall allocate 
        funds made available to carry out this section to entities 
        making applications to the Secretary for such funds, including 
        State and local governments, government-sponsored authorities 
        and corporations, and Class II and III railroads.
            (2) Criteria.--In allocating funds made available to carry 
        out this section, the Secretary shall give priority to 
        applications that--
                    (A) propose the rehabilitation or improvement of 
                track and bridges to a condition sufficient to 
                accommodate 286,000 pound rail cars at speeds of at 
                least 25 mph; or
                    (B) are designated by a State Department of 
                Transportation as--
                            (i) preserving an essential link in the 
                        State's transportation network;
                            (ii) providing a cost efficient alternative 
                        to a highway connection or highway project; or
                            (iii) enhancing safety.
            (3) Equitable distribution.--In allocating funds to carry 
        out this section, the Secretary shall ensure the equitable 
        distribution of funds to a diversity of geographic regions.
    (c) Use of Funds.--
            (1) Types of projects.--Funds available under this section 
        may be used only for capital rehabilitation and improvement 
        projects to Class II and III rail freight lines to--
                    (A) upgrade track and bridges to accommodate 
                286,000 pound freight cars; or
                    (B) promote essential service and enhance safety.
            (2) Types of funding.--The Secretary may make direct grants 
        for the purposes stated in paragraph (1), and may make grants 
        to supplement direct loans and loan guarantees under title V of 
        the Railroad Revitalization and Regulatory Reform Act of 1976 
        (45 U.S.C. 821 et seq.) to provide for such benefits as a 
        holiday on early payments, lowering rates of interest, or 
        paying credit risk premiums or premium risk subsidy amounts in 
        whole or in part.
    (d) Railroad Trust Fund.--
            (1) In general.--Subchapter A of chapter 98 of the Internal 
        Revenue Code of 1986 (relating to trust fund code) is amended 
        by adding at the end the following section:

``SEC. 9511. RAILROAD 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 `Railroad Trust 
Fund', consisting of any amount appropriated or credited to the Trust 
Fund as provided in this section or section 9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Railroad Trust Fund amounts equivalent to the taxes received in the 
Treasury under clause (ii) of section 4041(a)(1)(C) (relating to rate 
of tax on trains).
    ``(c) Expenditures.--Amounts in the Railroad Trust Fund shall be 
available, as provided by appropriation Acts, for making expenditures 
under the Emergency Rural and Small Railroad Preservation Act, as in 
effect on the date of the enactment of this section.''.
            (2) Clerical amendment.--The table of sections for 
        subchapter A of chapter 98 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 9511. Railroad Trust Fund.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts received after the date of the enactment 
        of this Act.
    (e) Administration.--The Secretary shall give priority to projects 
that are economically viable, and shall require a non-Federal matching 
contribution of at least 10 percent. The Secretary shall make grants 
available no later than 90 days following the availability of 
appropriations for each fiscal year.
    (f) Study.--Section 22301(d) of title 49, United States Code, is 
amended by inserting ``, and of projects carried out with assistance 
under the Emergency Rural and Small Railroad Preservation Act,'' after 
``under this section''.
Output: Amends the Internal Revenue Code to establish the Railroad Trust Fund consisting of amounts derived from taxes on trains to be used to carry out this Act.