II
110th CONGRESS
2d Session
S. 3360
IN THE SENATE OF THE UNITED STATES
July 29 (legislative day, July 28), 2008
Mr. Durbin (for himself and Mr. Carper) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To increase the availability of domestically manufactured passenger cars for intercity passenger rail service, and for other purposes.
Short title
This Act may be cited as
the Creating American Rolling Stock
Act of 2008
or the Train CARS Act
.
Definitions
In this Act:
Amtrak
The term Amtrak means the National Railroad Passenger Corporation.
Eligible applicant
The term eligible applicant means Amtrak, a State (including the District of Columbia), a group of States, an interstate compact, or a regional transportation authority established by 1 or more States and having responsibility for providing intercity passenger rail service.
Intercity passenger rail service
The term intercity passenger rail service means transportation services with the primary purpose of passenger transportation between towns, cities, and metropolitan areas by rail.
Rehabilitate
The term rehabilitate means extending the useful life or improving the effectiveness of existing rolling stock, including—
the correction of a deficiency;
the modernization or replacement of equipment;
the modernization of, or replacement of parts for, rolling stock;
the rehabilitation or remanufacture of rail rolling stock and associated facilities used primarily in intercity passenger rail service; and
the use of nonstructural elements.
Secretary
The term Secretary means the Secretary of Transportation.
Grants to purchase domestically manufactured rolling stock for intercity passenger rail service
Grant authorized
In general
The Secretary of Transportation may award grants under this section to eligible applicants to purchase or rehabilitate domestically manufactured rolling stock necessary to provide or improve intercity passenger rail transportation.
Conditions
Not later than 90 days after the date of the enactment of this Act, the Secretary shall promulgate regulations that establish procedures and schedules for the awarding of grants under this section, including application and qualification procedures and a record of decision on applicant eligibility.
Project as part of State rail plan
In general
The Secretary may not award a grant for a purchase of rolling stock under this section unless the Secretary determines that—
the project is part of a State rail plan developed under chapter 225 of title 49, United States Code; and
the applicant or recipient has or will have the legal, financial, and technical capacity to purchase, install, and maintain the rolling stock.
Information
An eligible applicant shall provide sufficient information upon which the Secretary can make the determination required under paragraph (1).
Selection criteria
In selecting grant recipients under subsection (a), the Secretary shall—
require that each rail car purchased with grant funds meet all applicable safety and security requirements;
give preference to rail cars with high levels of estimated ridership, increased on-time performance, reduced trip time, additional service frequency to meet anticipated or existing demand, or other significant service enhancements;
ensure that each rail car is compatible with, and is operated in conformance with—
plans developed pursuant to the requirements of section 135 of title 23, United States Code; and
the national rail plan, if available; and
give preference to purchases of rolling stock that—
are expected to have a significant favorable impact on air or highway traffic congestion, capacity, or safety;
will improve freight or commuter rail operations;
will have significant environmental benefits, including the purchase of environmentally sensitive, fuel-efficient, and cost-effective passenger rail equipment;
will have positive economic and employment impacts;
have commitments of funding from non-Federal Government sources in a total amount that exceeds the minimum amount of the non-Federal contribution required for the project;
involve donated property interests or services;
are identified by the Surface Transportation Board as necessary to improve the on-time performance and reliability of intercity passenger rail under section 24308(f) of title 49, United States Code;
are designed to support intercity passenger rail service;
can be easily transferred to commuter service or to another intercity passenger rail route; and
are produced domestically.
Amtrak eligibility
To receive a grant under this section, Amtrak may enter into a cooperative agreement with 1 or more States to purchase or rehabilitate rolling stock for 1 or more projects on a State rail plan’s ranked list of rail capital projects developed under section 22504(a)(5) of title 49, United States Code.
Federal share of net project cost
A grant for the purchase of rolling stock under this section shall not exceed 80 percent of the total cost.
Authorization of appropriations
There is authorized to be appropriated such sums as are necessary to the Secretary for fiscal year 2009 and for each subsequent fiscal year for the grants to purchase domestically manufactured and rehabbed rolling stock under this section.
Buy American conditions
Domestic buying preference
Requirement
In general
In using grant funds or bond proceeds made available under this Act or an amendment made by this Act for purchasing rolling stock, a grant or bond proceeds recipient may only purchase—
unmanufactured articles, material, and supplies mined or produced in the United States; or
manufactured articles, material, and supplies manufactured in the United States substantially from articles, material, and supplies mined, produced, or manufactured in the United States.
De minimis amount
Subparagraph (A) shall only apply to purchases totaling at least $1,000,000.
Exemptions
The Secretary of Transportation may exempt a grant or bond proceeds recipient from the requirements of this subsection if the Secretary, after receiving an application for such exemption, determines that, for particular articles, material, or supplies—
such requirements are inconsistent with the public interest;
the cost of imposing the requirements is unreasonable; or
the articles, material, or supplies, or the articles, material, or supplies from which they are manufactured, are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and are not of a satisfactory quality.
Operators deemed rail carriers and employers for certain purposes
Any entity that conducts rail operations using rolling stock that has been manufactured or rehabilitated with funding provided in whole or in part by a grant or bond proceeds made available under this Act or an amendment made by this Act shall be considered a rail carrier (as defined in section 10102(5) of title 49, United States Code) for purposes of this Act and any other law that adopts that definition or in which that definition applies, including—
the Railroad Retirement Act of 1974 (45 U.S.C. 231 et seq.);
the Railway Labor Act (43 U.S.C. 151 et seq.); and
the Railroad Unemployment Insurance Act (45 U.S.C. 351 et seq.).
Prevailing wage requirement
Any entity that purchases or rehabilitates rolling
stock which has been financed in whole or in part by grants or bond proceeds
made available under this Act or an amendment made by this Act shall comply
with subchapter IV of chapter 31 of title 40, United States Code, commonly
referred to as the Davis-Bacon Act
.
Next generation corridor train equipment pool
In general
Not later than 180 days after the date of the enactment
of this Act, Amtrak shall establish a Next Generation Corridor Equipment Pool
Committee (referred to in this section as the Committee
), which
shall be comprised of representatives of Amtrak, the Federal Railroad
Administration, host freight railroad companies, passenger railroad equipment
manufacturers, commuter rail agencies, railroad labor unions, other passenger
railroad operators, as appropriate, and interested States.
Purpose
The purpose of the Committee shall be to design, develop specifications for, and procure standardized next-generation corridor equipment, including rolling stock that is easily transferred from commuter rail service to new intercity passenger rail service.
Functions
The Committee may—
determine the number of different types of equipment required, taking into account variations in operational needs and corridor infrastructure;
establish a pool of equipment to be used on corridor routes funded by participating States;
subject to agreements between Amtrak and States, utilize services provided by Amtrak to design, maintain, and rehabilitate equipment; and
explore the benefits of creating a public or private entity that would—
purchase and own domestically produced rolling stock; and
lease such rolling stock to States or Amtrak for passenger rail service.
Cooperative agreements
Amtrak and States participating in the Committee may—
enter into agreements for the funding, procurement, rehabilitation, ownership, management, or leasing of corridor equipment, including equipment currently owned or leased by Amtrak and next generation corridor equipment acquired as a result of the Committee's actions; and
establish a corporation, which may be owned or jointly owned by Amtrak, participating States or other entities, to perform these functions.
Intercity passenger rail rolling stock account
Establishment of account
Section 9503 of the Internal Revenue Code of 1986 (relating to Highway Trust Fund) is amended by adding at the end the following new subsection:
Intercity passenger rail rolling stock account
Creation of account
There is established in the Highway Trust Fund a separate
account to be known as the Intercity Passenger Rail Rolling Stock
Account
, consisting of such amounts as may be transferred or credited
to the Intercity Passenger Rail Rolling Stock Account as provided in this
subsection or section 9602(b).
Transfer to account of amounts equivalent to certain taxes
The Secretary of the Treasury shall transfer to the Intercity Passenger Rail Rolling Stock Trust Fund the intercity passenger rail rolling stock portion of the amounts appropriated to the Highway Trust Fund under subsection (b) which are attributable to taxes under section 4041 or 4081 imposed after September 30, 2009, and before October 1, 2012. For purposes of the preceding sentence, the term intercity passenger rail rolling stock portion means for any fuel with respect to which tax was imposed under section 4041 or 4081 and otherwise deposited into the Highway Trust Fund, the determined at the rate of .25 cent per gallon.
Expenditures from account
In general
Amounts in the Intercity Passenger Rail Rolling Stock Account shall be available without fiscal year limitation to—
eligible applicants (as defined in section 2 of the Train CARS Act) to finance the purchase and rehabilitation of rolling stock, and
each non-Amtrak State, to the extent determined under subparagraph (B), for transportation-related expenditures.
Maximum amount of funds to non-amtrak states
Except as provided under subparagraph (C), each non-Amtrak State shall receive under this paragraph an amount equal to the lesser of—
the State's qualified expenses for the fiscal year, or
the product of the number of months such State is a non-Amtrak State in such fiscal year and 1/12 of 1 percent of the lesser of—
the aggregate amounts transferred and credited to the Intercity Passenger Rail Account under paragraph (1) for such fiscal year, or
the aggregate amounts appropriated from the Intercity Passenger Rail Account for such fiscal year.
Adjustment
If the amount determined under subparagraph (B)(ii) exceeds the amount under subparagraph (B)(i) for any fiscal year, the amount under subparagraph (B)(ii) for the following fiscal year shall be increased by the amount of such excess.
Definitions
For purposes of this subsection—
Qualified expenses
The term qualified expenses means expenses incurred, with respect to obligations made, after September 30, 2009, and before October 1, 2012—
for—
in the case of the National Railroad Passenger Corporation, the acquisition of equipment and rolling stock, the upgrading of rolling stock maintenance facilities, and the maintenance of existing equipment in intercity passenger rail service, and the payment of interest and principal on obligations incurred for such acquisition, upgrading, and maintenance, and
in the case of a non-Amtrak State, transportation-related expenses, and
certified by the Secretary of Transportation on October 1 as meeting the requirements of clause (i) and as qualified for payment under paragraph (5) for the fiscal year beginning on such date.
Non-amtrak state
The term non-Amtrak State means any State which does not receive intercity passenger rail service from the National Railroad Passenger Corporation.
Contract authority
Notwithstanding any other provision of law, the Secretary of Transportation shall certify expenses as qualified for a fiscal year on October 1 of such year, in an amount not to exceed the amount of receipts estimated by the Secretary of the Treasury to be transferred to the Intercity Passenger Rail Rolling Stock Account for such fiscal year. Such certification shall result in a contractual obligation of the United States for the payment of such expenses.
Tax treatment of trust fund expenditures
With respect to any payment of qualified expenses from the Intercity Passenger Rail Rolling Stock Account during any taxable year to a taxpayer—
such payment shall not be included in the gross income of the taxpayer for such taxable year,
no deduction shall be allowed to the taxpayer with respect to any amount paid or incurred which is attributable to such payment, and
the basis of any property shall be reduced by the portion of the cost of such property which is attributable to such payment.
Termination
The Secretary shall determine and retain, not later than October 1, 2012, the amount in the Intercity Passenger Rail Rolling Stock Account necessary to pay any outstanding qualified expenses, and shall transfer any amount not so retained to the Highway Trust Fund.
.
Conforming amendment
Section 9503 of the Internal Revenue Code of 1986 is amended by striking paragraph (5) of subsection (e) and by adding at the end the following new subsection:
Portion of certain transfers To be made from accounts
In general
Transfers under paragraphs (2), (3), and (4) of subsection (c) shall be borne by the Highway Account, the Mass Transit Account, and the Intercity Passenger Rail Rolling Stock Account in proportion to the respective revenues transferred under this section to the Highway Account (after the application of subsections (e)(2) and (g)(2)) and the Mass Transit Account and the Intercity Passenger Rail Rolling Stock Account.
Highway account
For purposes of paragraph (1), the term Highway Account means the portion of the Highway Trust Fund which is not the Mass Transit Account or the Intercity Passenger Rail Rolling Stock Account.
.
Capacity improvement charge matching program
Any eligible applicant that subsidizes intercity passenger rail service and imposes a capital investment fee on each ticket sold for such service is eligible to receive $1 from the Intercity Passenger Rail Rolling Stock Account (as established in section 9503(g) of the Internal Revenue Code of 1986) for every $1 of such fee that is used to purchase domestically manufactured rolling stock.
Effective date
The amendments made by this section shall apply with respect to taxes imposed after September 30, 2009.
Rail infrastructure investment
Credit to holders of qualified Amtrak bonds
Subpart I of 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 section:
Credit to holders of qualified Amtrak bonds
Qualified Amtrak bond
For purposes of this subpart, the term qualified Amtrak bond means any bond issued as part of an issue if—
100 percent or more of the available project proceeds of such issue are to be used for expenditures incurred after the date of the enactment of this section for any qualified project,
the bond is issued by the National Railroad Passenger Corporation, is in registered form, and meets the bond limitation requirements under subsection (b),
the issuer designates such bond for purposes of this section,
the issuer certifies that it meets the State contribution requirement of subsection (h) with respect to such project, as in effect on the date of the enactment of this section,
the issuer certifies that it has obtained the written approval of the Secretary of Transportation for such project in accordance with section 26301 of title 49, United States Code, as in effect on the date of the enactment of this section,
the payment of principal with respect to such bond is the obligation of the National Railroad Passenger Corporation, and
in lieu of the requirements of section 54A(d)(2), the issue meets the requirements of subsection (d).
Limitations on amount of bonds designated
In general
There is a qualified Amtrak bond limitation for each fiscal year. Such limitation is—
$700,000,000 for each of the fiscal years 2009 through 2012, and
except as provided in paragraph (4), $0 after fiscal year 2012.
Limits on bonds for individual states
Not more than $300,000,000 of the limitation under paragraph (1) may be designated for any individual State.
Limit on bonds for other projects
Not more than $100,000,000 of the limitation under paragraph (1) for any fiscal year may be designated for all qualified projects described in subsection (g)(1)(C).
Carryover of unused limitation
If for any fiscal year—
the limitation amount under paragraph (1), exceeds
the amount of bonds issued during such year which are designated under subsection (a)(3),
Maturity limitations
In lieu of section 54A(d)(5), a bond shall not be treated as a qualified Amtrak bond if the maturity of such bond exceeds 20 years.
Special rules relating to expenditures
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—
to spend 100 percent or more of the available project proceeds of the issue for 1 or more qualified projects within the 3-year period beginning on such date,
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
to proceed with due diligence to complete such projects and to spend the proceeds from the sale of the issue.
Rules regarding continuing compliance after 3-year determination
If at least 100 percent of the available project proceeds 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—
the issuer uses all unspent proceeds of the issue to redeem bonds of the issue within 90 days after the end of such 3-year period, or
the following requirements are met:
The issuer spends at least 75 percent of the available project proceeds of the issue for 1 or more qualified projects within the 3-year period beginning on the date of issuance.
Either—
the issuer spends at least 100 percent of the available project proceeds of the issue for 1 or more qualified projects within the 4-year period beginning on the date of issuance, or
the issuer pays to the Federal Government any earnings on the proceeds of the issue that accrue after the end of the 3-year period beginning on the date of issuance and uses all unspent proceeds 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.
Recapture of portion of credit where cessation of compliance
In general
If any bond which when issued purported to be a qualified Amtrak 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—
the aggregate of the credits allowable under section 54A with respect to such bond (determined without regard to section 54A(c)) for taxable years ending during the calendar year in which such cessation occurs and the 2 preceding calendar years, and
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.
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 section 54A to such holder for taxable years beginning in such 3 calendar years which would have resulted solely from denying any credit under section 54A with respect to such issue for such taxable years.
Special rules
Tax benefit rule
The tax for the taxable year shall be increased under paragraph (2) only with respect to credits allowed by reason of section 54A which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted.
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—
the amount of any credit allowable under this part, or
the amount of the tax imposed by section 55.
Treatment of changes in use
For purposes of paragraph (1), 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 Amtrak bond.
Trust account
In general
The following amounts shall be held in a trust account by a trustee independent of the National Railroad Passenger Corporation:
The proceeds from the sale of all bonds designated for purposes of this section.
The amount of any matching contributions with respect to such bonds.
The temporary period investment earnings on proceeds from the sale of such bonds.
Any earnings on any amounts described in subparagraph (A), (B), or (C).
Use of funds
Amounts in the trust account may be used only to pay costs of qualified projects and redeem qualified Amtrak bonds, except that amounts withdrawn from the trust account to pay costs of qualified projects may not exceed the aggregate proceeds from the sale of all qualified Amtrak bonds issued under this section.
Use of remaining funds in trust account
Upon the redemption of all qualified Amtrak bonds issued under this section, any remaining amounts in the trust account described in paragraph (1) shall be available to the issuer for any qualified project.
Qualified project
For purposes of this section, the term qualified
project has the meaning given the term qualified expenses
in section 9503(g) of the Internal Revenue Code of 1986.
State contribution requirements
In general
For purposes of subsection (a)(4), the State contribution requirement of this subsection is met with respect to any qualified project if the National Railroad Passenger Corporation has received from 1 or more States, not later than the date of issuance of the bond, matching contributions of not less than 20 percent of the cost of the qualified project.
State matching contributions may not include federal funds
For purposes of this subsection, State matching contributions shall not be derived, directly or indirectly, from Federal funds, including any transfers from the Highway Trust Fund under section 9503.
.
Exclusion from gross income of contributions by amtrak to other rail carriers
In general
Section 118 of the Internal Revenue Code of 1986 (relating to contributions to the capital of a corporation) is amended by redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection:
Special rule for contributions by Amtrak to other rail carriers
For purposes of this section, the term contribution to the capital of the taxpayer does not include any contribution by the National Railroad Passenger Corporation of personal or real property funded by the proceeds of qualified Amtrak bonds under section 54C.
.
Conforming amendment
Subsection (b) of such section 118 is amended by
striking subsection (c)
and inserting subsections (c) and
(d)
.
Conforming amendments
Paragraph (1) of section 54A(d) of the Internal Revenue Code of 1986 is amended to read as follows:
Qualified tax credit bond
The term qualified tax credit bond means—
a qualified forestry conservation bond, or
a qualified Amtrak bond,
.
Subparagraph (C) of section 54A(d)(2) of such Code is amended to read as follows:
Qualified purpose
For purposes of this paragraph, the term qualified purpose means—
in the case of a qualified forestry conservation bond, a purpose specified in section 54B(e), and
in the case of a qualified Amtrak bond, a purpose specified in section 54C(g).
.
The table of sections for subpart I of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:
Sec. 54C. Qualified Amtrak bonds.
.
Annual report by Treasury on Amtrak Trust Account
The Secretary of the Treasury shall annually report to Congress as to whether the amount deposited in the trust account established by Amtrak under section 54C(f) of the Internal Revenue Code of 1986, as added by this section, is sufficient to fully repay at maturity the principal of any outstanding qualified Amtrak bonds issued pursuant to section 54C of such Code (as so added), together with amounts expected to be deposited into such account, as certified by Amtrak in accordance with procedures prescribed by the Secretary of the Treasury.
Issuance of regulations
The Secretary of the Treasury shall issue regulations required under section 54C of the Internal Revenue Code of 1986 (as added by this section) not later than 90 days after the date of the enactment of this Act.
Effective date
The amendments made by this section shall apply to obligations issued after the date of enactment of this Act.
National Passenger Rail Electrification System Study
In general
Not later than 1 year after the date of the enactment of this Act, the Comptroller General of the United States shall conduct a study to determine the potential costs, benefits, and economic impact of providing intercity passenger rail along a national railway electrification system.
Components of study
The study conducted under subsection (a) shall analyze the infrastructure needed to operate reliable, high-speed rail intercity passenger service along a national railway electrification system, including an analysis of—
the equipment costs to achieve such service;
the environmental impacts related to transitioning to an electrified system;
safety issues;
national security issues;
the high-speed benefits of an electrified system;
the need for any improvements to existing tunnels, bridges, and other railroad facilities, or the need for the construction of new facilities; and
the impacts to freight rail traffic.
Report required
Not later than 90 days after the date of the enactment of this Act, the Secretary of Labor shall submit a report to Congress that describes—
existing Federal programs, policies, and initiatives that could assist in the training of workers from the automotive, aviation, and manufacturing industries to transition such workers to the railcar manufacturing and maintenance industry; and
recommendations for specific legislative and administrative changes that would assist and encourage workers who have been displaced by cutbacks in the aviation, automotive, and manufacturing industries into transitioning to the rail industry.