HR 6004
110th CONGRESS
2d Session
H. R. 6004
To provide for the financing of high-speed rail infrastructure, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
May 8, 2008
Mr. OBERSTAR (for himself, Mr. MICA, Ms. CORRINE BROWN of Florida, and Mr.
SHUSTER) 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 provide for the financing of high-speed rail infrastructure, 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 `Rail Infrastructure Development and Expansion
Act for the 21st Century'.
SEC. 2. HIGH-SPEED INTERCITY RAIL FACILITY BONDS.
(a) Amendment- Chapter 261 of title 49, United States Code, is amended by
adding at the end the following new section:
`Sec. 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 passenger transportation corridor
containing the infrastructure project to be financed is within the State;
`(B) 1 or more of the States that have entered into an agreement or an
interstate compact 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 compact described in subparagraph (B);
`(2) the bonds are for the purpose of financing--
`(A) projects that make a substantial contribution 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, including the introduction of
new high-speed technologies such as magnetic levitation systems, track
or signal improvements, the elimination of grade crossings, development
of intermodal facilities, improvement of train speeds or safety, or both,
and station rehabilitation or construction), but only if the Secretary
determines that the projects are part of a viable and comprehensive high-speed
rail transportation corridor design 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
exists between the applicant and the freight railroad regarding such use
and ownership, including compensation for such use and assurances regarding
the adequacy of infrastructure capacity to accommodate both existing and
future freight and passenger operations, 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 railroad passenger transportation
corridor;
`(4) the corridor design eliminates existing railway-highway grade crossings
that the Secretary determines 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, 2008,
with respect to the project in the same manner that the National Railroad
Passenger Corporation is required to comply with such standards for construction
work financed under an agreement made under section 24308(a); and
`(B) the protective arrangements established under section 504 of the
Railroad Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 836)
with respect to employees affected by actions taken in connection with
the project to be financed by the bond; and
`(6) the applicant agrees not to pay the principal or interest on the bonds
using funds derived directly or indirectly from the Highway Trust Fund,
except as permitted by law as of the date of the enactment of this section.
`(b) Bond Amount Limitation-
`(1) IN GENERAL- The amount of bonds designated under this section may not
exceed--
`(A) in the case of subsection (f) bonds, $1,200,000,000 for each of the
fiscal years 2009 through 2018; and
`(B) in the case of section 54A bonds, $1,200,000,000 for each of the
fiscal years 2009 through 2018.
`(2) CARRYOVER OF UNUSED LIMITATION- If for any fiscal year the limitation
amount under subparagraph (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,
the limitation amount under subparagraph (A) or (B) of paragraph (1), as
the case may be, for the following fiscal year (through fiscal year 2023)
shall be increased by the amount of such excess.
`(c) Preference- The Secretary shall give preference 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 service with other modes of transportation;
`(3) expected to have a significant impact on air traffic congestion;
`(4) expected to also improve commuter rail operations;
`(5) where all environmental work has already been completed and the project
is ready to commence; 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.
`(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 transportation 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, notwithstanding section 149(c) of such Code.
`(2) EXEMPTION FROM VOLUME CAP- For purposes of section 146 of such Code,
a bond designated 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 refinancing 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 section;
`(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 section 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 subsection
(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 predecessor provider priority in hiring
according to the employee's seniority on the predecessor provider for
each position with the replacing entity that is in the employee's craft
or class and is available within three years after the termination 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 occurs 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 passenger service to the authorized collective bargaining
agent or agents for the employees of the predecessor provider at least
90 days prior to the date it plans to commence service. Within 5 days
after the date of receipt of such written notice, negotiations between
the replacing entity and the collective bargaining agent or agents for
the employees of the predecessor provider shall commence for the purpose
of reaching agreement with respect to all matters set forth in paragraph
(2)(A)-(D). The negotiations 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 matters, 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 matters set forth in paragraph (2)(A)-(D) as provided in subparagraph
(A) of this paragraph, the parties shall select an arbitrator. If the
parties 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 arbitrators 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 remains, and that person shall serve as the neutral arbitrator. Within
45 days after selection of the arbitrator, the arbitrator shall conduct
a hearing on the dispute and shall render a decision 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 arbitrator shall be borne equally by the parties; all other expenses
shall be paid by the party incurring them.
`(C) SERVICE COMMENCEMENT- A replacing entity under this paragraph shall
commence service only after an agreement is entered 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 employees 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 procedures set forth in
paragraph (3)(B), who shall, within 20 days after the commencement of the
arbitration, conduct a hearing and decide all unresolved issues. This decision
shall be final, binding, and conclusive 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 `subsection (f) bond' means a bond designated
by the Secretary under subsection (a) for purposes of subsection (f).
`(2) SECTION 54A BOND- The term `section 54A bond' means a bond designated
by the Secretary 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 infrastructure 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.'.
SEC. 3. TAX CREDIT TO HOLDERS OF QUALIFIED HIGH-SPEED RAIL INFRASTRUCTURE
BONDS.
(a) In General- Part IV of subchapter A of chapter 1 of the Internal Revenue
Code of 1986 (relating to credits against tax) is amended by adding at the
end the following new subpart:
`Subpart I--Nonrefundable Credit for Holders of Qualified High-Speed
Rail Infrastructure Bonds
`Sec. 54A. Credit to holders of qualified high-speed rail infrastructure
bonds
`SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED HIGH-SPEED RAIL INFRASTRUCTURE
BONDS.
`(a) Allowance of Credit- In the case of a taxpayer who holds a qualified
high-speed rail infrastructure bond on a credit allowance date of such bond
which occurs during the taxable year, there shall be allowed as a credit against
the tax imposed by this chapter for such taxable year an amount equal to the
sum of the credits determined under subsection (b) with respect to credit
allowance dates during such year on which the taxpayer holds such bond.
`(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 credit determined with respect
to such bond.
`(2) ANNUAL CREDIT- The annual credit determined with respect to any qualified
high-speed rail infrastructure bond is the product of--
`(A) the applicable credit rate, multiplied by
`(B) the outstanding face amount of the bond.
`(3) APPLICABLE CREDIT RATE- For purposes of paragraph (2), the applicable
credit rate with respect to an issue is the rate equal to an average market
yield (as of the day before the date of sale of the issue) on outstanding
long-term corporate debt obligations (determined under regulations prescribed
by the Secretary).
`(4) CREDIT ALLOWANCE DATE- For purposes of this section, the term `credit
allowance date' means--
Such term includes the last day on which the bond is outstanding.
`(5) SPECIAL RULE FOR ISSUANCE AND REDEMPTION- In the case of a bond which
is issued during the 3-month period ending on a credit allowance date, the
amount of the credit determined under this subsection with respect to such
credit allowance 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 redeemed.
`(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 imposed by section 55, over
`(B) the sum of the credits allowable under this part (other than this
subpart and subpart C).
`(2) CARRYOVER OF UNUSED CREDIT- If the credit allowable under subsection
(a) exceeds the limitation imposed by paragraph (1) for such taxable 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 treated as interest
income.
`(e) Qualified High-Speed Rail Infrastructure Bond- For purposes of this part,
the term `qualified 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 section 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,
`(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 subsection (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 requirements 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 commence
construction, with respect to such projects within the 6-month period
beginning on such date, and
`(C) to proceed with due diligence to complete such projects and to spend
the proceeds from the sale of the issue.
`(2) RULES REGARDING CONTINUING COMPLIANCE AFTER 3-YEAR DETERMINATION- If
at least 95 percent of the proceeds from the sale of the issue 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 continuing 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 percent of the proceeds from the
sale of the issue for 1 or more qualified projects within the 3-year
period beginning on the date of issuance.
`(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 beginning on the date of issuance, or
`(II) the issuer pays to the Federal Government any earnings on the
proceeds from the sale of the issue that accrue after the end of the
3-year period beginning on the date of issuance and uses all unspent
proceeds from the sale of the issue to redeem bonds of the issue within
90 days after the end of the 4-year period 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 infrastructure 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 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 beginning in such 3 calendar years which would have resulted
solely from denying any credit under this section with respect to such issue
for such taxable years.
`(A) TAX BENEFIT RULE- The tax for the taxable year shall be increased
under paragraph (2) only with respect to credits allowed by reason of
this section which were used to reduce tax liability. In the case of credits
not so used to reduce tax liability, the carryforwards under subsection
(c) shall be appropriately adjusted.
`(B) NO CREDITS AGAINST TAX- Any increase in tax under paragraph (2) shall
not be treated as a tax imposed by this chapter for purposes of determining--
`(i) the amount of any credit allowable 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 obligation.
`(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 proceeds not to be used for a qualified project. The Secretary
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 infrastructure bond.
`(4) PARTNERSHIP; S CORPORATION; AND OTHER PASS-THRU ENTITIES- Under regulations
prescribed by the Secretary, in the case of a partnership, 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 INVESTMENT COMPANIES- If any qualified high-speed
rail infrastructure bond is held by a regulated investment company, the
credit determined under subsection (a) shall be allowed to shareholders
of such company under procedures prescribed by the Secretary.
`(6) REPORTING- Issuers of qualified high-speed rail infrastructure bonds
shall submit reports similar to the reports required under section 149(e).'.
(b) Amendments to Other Code Sections-
(1) REPORTING- Subsection (d) of section 6049 of the Internal Revenue Code
of 1986 (relating to returns regarding payments of interest) is amended
by adding at the end the following new paragraph:
`(9) REPORTING OF CREDIT ON QUALIFIED HIGH-SPEED RAIL INFRASTRUCTURE BONDS-
`(A) IN GENERAL- For purposes of subsection (a), the term `interest' includes
amounts includible in gross income under section 54A(d) and such amounts
shall be treated as paid on the credit allowance date (as defined in section
54A(b)(4)).
`(B) REPORTING TO CORPORATIONS, ETC- Except as otherwise provided in regulations,
in the case of any interest described in subparagraph (A), subsection
(b)(4) shall be applied without regard to subparagraphs (A), (H), (I),
(J), (K), and (L)(i) of such subsection.
`(C) REGULATORY AUTHORITY- The Secretary may prescribe such regulations
as are necessary or appropriate to carry out the purposes of this paragraph,
including regulations which require more frequent or more detailed reporting.'.
(2) TREATMENT FOR ESTIMATED TAX PURPOSES-
(A) INDIVIDUAL- Section 6654 of such Code (relating to failure by individual
to pay estimated income tax) is amended by redesignating subsection (m)
as subsection (n) and by inserting after subsection (l) the following
new subsection:
`(m) Special Rule for Holders of Qualified High-Speed Rail Infrastructure
Bonds- For purposes of this section, the credit allowed by section 54A to
a taxpayer by reason of holding a qualified high-speed rail infrastructure
bond on a credit allowance date shall be treated as if it were a payment of
estimated tax made by the taxpayer on such date.'.
(B) CORPORATE- Section 6655 of such Code (relating to failure by corporation
to pay estimated income tax) is amended by adding at the end of subsection
(g) the following new paragraph:
`(5) SPECIAL RULE FOR HOLDERS OF QUALIFIED HIGH-SPEED RAIL INFRASTRUCTURE
BONDS- For purposes of this section, the credit allowed by section 54A to
a taxpayer by reason of holding a qualified high-speed rail infrastructure
bond on a credit allowance date shall be treated as if it were a payment
of estimated tax made by the taxpayer on such date.'.
(1) The table of subparts for part IV of subchapter A of chapter 1 is amended
by adding at the end the following new item:
`subpart i. nonrefundable credit for holders of qualified high-speed rail
infrastructure bonds'.
(2) Section 6401(b)(1) is amended by striking `and H' and inserting `H,
and I'.
(d) Issuance of Regulations- Not later than 6 months after the date of the
enactment of this section, the Secretary of the Treasury shall issue regulations
for carrying out this section and the amendments made by this section.
(e) High-Speed Intercity Rail Facilities-
(1) REQUIREMENT TO MEET TITLE 49 REQUIREMENTS- Section 142(i) of the Internal
Revenue Code of 1986 is amended by adding at the end the following new paragraph:
`(4) ADDITIONAL REQUIREMENTS- A bond issued as part of an issue described
in subsection (a)(11) shall not be considered an exempt facility bond unless
the requirements of paragraphs (1) through (6) of section 26106(a) of title
49, United States Code, are met.'.
(2) REVISION OF SPEED REQUIREMENT- Section 142(i)(1) of such Code is amended
by striking `150 miles per hour' and inserting `110 miles per hour'.
(f) Effective Date- The amendments made by this section shall apply to obligations
issued after the date of the enactment of this Act.
END
