II 110th CONGRESS 2d Session S. 3700 IN THE SENATE OF THE UNITED STATES November 19, 2008 Mr. Kerry (for himself, Mr. Specter, Mr. Lautenberg, Mr. Inouye, Mr. Brown, Ms. Stabenow, Mrs. Feinstein, Mr. Dodd, Mr. Casey, Mr. Lieberman, Mr. Whitehouse, Mrs. Clinton, Mr. Schumer, Ms. Snowe, Mr. Menendez, and Mr. Carper) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To encourage and support the development of high-speed passenger rail transportation in the United States, and for other purposes.

1.

Short title

This Act may be cited as the High-Speed Rail for America Act of 2008.

2.

Findings and purposes

(a)

Findings

Congress makes the following findings: (1)Highway congestion, which is increasing every year, annually costs our Nation’s economy $78,000,000,000, 2,900,000,000 gallons of wasted fuel, and 4,200,000,000 lost hours of productivity. (2)High-speed rail travel, which can be more reliable than air travel, could potentially reduce travel time by 30 percent, compared with air travel, for passengers traveling between 100 and 500 miles from city center to city center. (3)Several European Union countries spend as much as 20 times more than the United States spends, per capita, on intercity rail. (4)Rail travel could potentially reduce the effect of greenhouse gas emissions generated by travel between cities that are between 100 and 500 miles apart— (A)by 80 percent compared with airplanes; and (B)by 21 percent compared with automobiles. (5)Rail travel, which is significantly safer than travel by automobile, has a fatality rate per passenger mile traveled that is 96 percent less than the rate for automobile travel. (b)

Purpose

The purposes of this Act are to— (1)provide for the development of world-class, high-speed passenger rail transportation in the United States; and (2)provide a constant and reliable source of funding for high-speed passenger rail and intercity passenger rail in the form of tax-exempt bonds and tax credit bonds in order to— (A)reduce nonrail traffic congestion; (B)reduce greenhouse gas emissions; and (C)provide alternative modes or transportation between city centers.

3.

High-speed passenger rail program

Chapter 261 of title 49, United States Code, is amended— (1)in the chapter analysis, by adding at the end the following: 26107. Office of High-Speed Passenger Rail. ; and(2)by adding at the end the following:

26107.

Office of High-Speed Passenger Rail

(a)

Establishment

There is established, within the Federal Railroad Administration, the Office of High-Speed Passenger Rail, which shall be headed by the Associate Administrator for High-Speed Rail. (b)

Functions

The Office shall— (1)assume responsibility for all high-speed rail activities carried out by the Office of Railroad Development before the date of the enactment of the High-Speed Rail for America Act of 2008; and (2)consult with the Secretary of Transportation to assist eligible entities to— (A)finance qualified high-speed intercity rail facility projects through bonds issued in accordance with section 54F or 142(i) of the Internal Revenue Code of 1986; and (B)understand the procedures and criteria for submitting applications for financial assistance for such projects. (c)

Consultation

The Secretary of Transportation, working through the Office, shall consult with the Secretary of Homeland Security and the Secretary of Defense to understand how high-speed rail can benefit the Nation’s infrastructure in times of emergency and prioritize which corridors will prove most beneficial if other modes of transportation are compromised or not available or large numbers of people must be moved quickly in an emergency. (d)

Staff

In addition to employees of the Federal Railroad Administration, the Associate Administrator, in consultation with the Administrator, may, by agreement, on a reimbursable basis or otherwise, utilize the personnel services, equipment, and facilities of any other Federal agency in administering the program. Each individual detailed to the Office from another department or agency shall report to a supervisor in the Office, who shall be responsible for the performance evaluation of such detailee.

.

4.

Authorization of appropriations

(a)

In general

There are authorized to be appropriated to the Secretary of Transportation $15,000,000 for each of the fiscal years 2009 through 2014, for the operation of the Office of High-Speed Passenger Rail established under section 26107 of title 49, United States Code. (b)

Appropriated funds remain available

Amounts appropriated pursuant to subsection (a) for any fiscal year shall remain available until expended.

5.

Private activity bonds for high-speed rail

(a)

In general

Subsection (i) of section 142 of the Internal Revenue Code of 1986 (relating to exempt facility bond) is amended to read as follows: (i)

Qualified high-speed intercity rail facility projects

(1)

In general

For purposes of subsection (a)(11), the term qualified high-speed intercity rail facility project means a project for a high-speed intercity rail facility which the Secretary determines, after consultation with the Secretary of Transportation— (A)satisfies the criteria described in section 26106(e)(2) of title 49, United States Code, and (B)makes a substantial contribution to improving a rail transportation corridor for high-speed passenger rail use. (2)

High-speed intercity rail facility

For purposes of this subsection, the term high-speed intercity rail facility means any facility used in conjunction with high-speed rail (as defined in section 26106(b)(4) of title 49, United States Code). (3)

Aggregate face amount of tax-exempt financing

(A)

In general

An issue shall not be treated as an issue described in subsection (a)(11) if the aggregate face amount of bonds issued pursuant to such issue for a project (when added to the aggregate face amount of bonds previously so issued for such project) exceeds an amount allocated by the Secretary for such project as part of the designation of such project under paragraph (1). (B)

Limitation on amount of bonds

The Secretary may not allocate authority to issue bonds for qualified high-speed intercity rail projects in an aggregate face amount exceeding $8,000,000,000. (4)

Election by nongovernmental owners

A project shall be treated as described in subsection (a)(11) only if any owner of such project which is not a governmental unit irrevocably elects not to claim— (A)any deduction under section 167 or 168, and (B)any credit under this subtitle, with respect to the property to be financed by the net proceeds of the issue.(5)

Use of proceeds

A bond issued as part of an issue described in subsection (a)(11) shall not be considered an exempt facility bond unless any net proceeds not used within the 5-year period beginning on the date of the issuance of such bond are used (not later than 6 months after the close of such period) to redeem bonds which are part of such issue. (6)

Conditions

Any project for which bonds were issued under subsection (a)(11) shall be subject to the grant requirements under section 24405 of title 49, United States Code. . (b)

Exemption from State volume cap

Section 146(g) of the Internal Revenue Code of 1986 (relating to exception for certain bonds) is amended— (1)by adding and at the end of paragraph (2), (2)by inserting (11), after (2), in paragraph (3), and (3)by striking , and at the end of paragraph (3) and all that follows through the end of the subsection and inserting a period. (c)

Conforming amendment

Paragraph (11) of section 142(a) of the Internal Revenue Code of 1986 is amended to read as follows: (11)qualified high-speed intercity rail facility projects, . (d)

Effective date

(1)

In general

The amendments made by this section shall apply to any bond issued after the date of the enactment of this Act and on or before the date which is 6 years after such date of enactment. (2)

Application of Code

The Internal Revenue Code of 1986 shall be applied and administered to bonds issued after the date which is 6 years after the date of the enactment of this Act as if the amendments described in paragraph (1) had never been enacted.

6.

Credit to holders of qualified rail bonds

(a)

In general

Subpart I of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

54F.

Credit to holders of qualified rail bonds

(a)

Qualified rail bond

For purposes of this subpart, the term qualified rail bond means— (1)any qualified super high-speed intercity rail facility bond, and (2)any qualified rail infrastructure bond. (b)

Qualified super high-speed intercity rail facility bond

For purposes of this section— (1)

In general

The term qualified super high-speed intercity rail facility bond means any bond issued as part of an issue if— (A)the bond is issued by a qualified issuer pursuant to an allocation by the Secretary to such issuer of a portion of the national qualified rail bond limitation under subsection (f)(1)(A) by not later than the end of the calendar year following the year of such allocation, (B)100 percent of the available project proceeds of such issue are to be used for capital expenditures described in paragraph (3) incurred for one or more qualified super high-speed intercity rail facility projects, (C)the State designates such bond for purposes of this section and the bond is in registered form, and (D)in lieu of the requirements of section 54A(d)(2), the issue meets the requirements of subsection (g). (2)

Qualified super high-speed intercity rail facility project

(A)

In general

The term qualified super high-speed intercity rail facility project means a project for a super high-speed intercity rail facility which— (i)the Secretary determines, after consultation with the Secretary of Transportation— (I)satisfies the criteria described in section 26106(e)(2) of title 49, United States Code, and (II)makes a substantial contribution to improving a high-speed rail transportation corridor for intercity passenger rail use, and (ii)the Secretary designates as a qualified super high-speed intercity rail facility project. (B)

Requirements for project designation

(i)

In general

A project may not be designated by the Secretary under subparagraph (A) as a qualified super high-speed intercity rail facility project unless— (I)the passenger service provided by the project is over rail track dedicated for such service, (II)the project does not include any at-grade rail crossings, and (III)all Federal environmental review processes have been completed at the time of the designation. (ii)

Waiver of certain requirements

The Secretary, after consultation with the Secretary of Transportation, may waive subclauses (I) and (II) of clause (i), in the designation of any qualified super high-speed intercity rail facility project, if the Secretary determines that it is in the public interest and is not inconsistent with the purposes of this section. (iii)

Exception for existing high-speed rail corridors

Clause (i) shall not apply in the case of any project to enhance any railroad providing high-speed passenger rail transportation as of the date of the enactment of the High-Speed Rail for America Act of 2008, if such railroad is capable of operating speeds of at least 150 miles per hour on such date. (C)

Super high-speed intercity rail facility

For purposes of this paragraph, the term super high-speed intercity rail facility means any facility used in conjunction with an intercity passenger rail service that is reasonably expected to operate at speeds of at least 150 miles per hour. (3)

Capital expenditures

For purposes of paragraph (1)(B), the term capital expenditures means— (A)expenditures related to the development and operation of high-speed rail infrastructure for acquiring, constructing, or improving equipment, track, track structures, and rights-of-way, (B)payments for the capital portion of rail trackage rights agreements, (C)highway-rail grade crossing improvements, separations, and closures, (D)communication and signal improvements, and (E)other expenditures related to high-speed rail service. (c)

Qualified rail infrastructure bond

For purposes of this section— (1)

In general

The term qualified rail infrastructure bond means any bond issued as part of an issue if— (A)the bond is issued by a qualified issuer pursuant to an allocation by the Secretary to such issuer of a portion of the national qualified rail bond limitation under subsection (f)(1)(B) by not later than the end of the calendar year following the year of such allocation, (B)100 percent of the available project proceeds of such issue are to be used for capital expenditures incurred for one or more qualified rail infrastructure projects, (C)the qualified issuer designates such bond for purposes of this section and the bond is in registered form, and (D)in lieu of the requirements of section 54A(d)(2), the issue meets the requirements of subsection (g). (2)

Qualified rail infrastructure project

The term qualified rail infrastructure project means a project eligible under subsection (b) of section 26101 of title 49, United States Code (determined without regard to paragraph (2) thereof), based on the criteria of subsection (c) of such section, which the Secretary determines, after consultation with the Secretary of Transportation, makes a substantial contribution to improving a rail transportation corridor for intercity passenger rail use. (d)

Special use rules

For purposes of subsection (b)(1)(B) or (c)(1)(B)— (1)

Refinancing rules

A qualified project may be refinanced with proceeds of a qualified rail bond only if the indebtedness being refinanced (including any obligation directly or indirectly refinanced by such indebtedness) was originally incurred after the date of the enactment of this section. (2)

Reimbursement

A qualified rail bond may be issued to reimburse for amounts paid after the date of the enactment of this section with respect to a qualified project, but only if— (A)prior to the payment of the original expenditure, the issuer declared its intent to reimburse such expenditure with the proceeds of a qualified rail bond, (B)not later than 60 days after payment of the original expenditure, the issuer adopts an official intent to reimburse the original expenditure with such proceeds, and (C)the reimbursement is made not later than 18 months after the date the original expenditure is paid. (3)

Treatment of changes in use

The proceeds of an issue shall not be treated as used for a qualified project to the extent that an issuer takes any action within its control which causes such proceeds not to be used for such 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 rail bond. (e)

Maturity limitations

In lieu of section 54A(d)(5), a bond shall not be treated as a qualified rail bond if the maturity of such bond exceeds— (1)in the case of a qualified super high-speed intercity rail facility bond, 20 years, and (2)in the case of a qualified rail infrastructure bond, 15 years. (f)

National limitation on amount of bonds designated

(1)

In general

There is a national qualified rail bond limitation of— (A)in the case of qualified super high-speed intercity rail facility bonds, $10,000,000,000, and (B)in the case of qualified rail infrastructure bonds, $5,400,000,000. (2)

Allocation by secretary

The national qualified rail bond limitation shall be allocated by the Secretary (in the case of qualified super high-speed intercity rail facility bonds, after consultation with the Secretary of Transportation) among qualified projects in such manner as the Secretary determines appropriate. (g)

Special rules relating to expenditures

(1)

In general

An issue shall be treated as meeting the requirements of this subsection if, as of the date of issuance, the issuer reasonably expects— (A)100 percent or more of the available project proceeds of the issue are to be spent for 1 or more qualified projects within the 5-year period beginning on the date of issuance of the qualified rail bond, (B)a binding commitment with a third party to spend at least 10 percent of the available project proceeds of the issue will be incurred within the 6-month period beginning on the date of issuance of the qualified rail bond, and (C)such projects will be completed with due diligence and the proceeds from the sale of the issue will be spent with due diligence. (2)

Extension of period

Upon submission of a request prior to the expiration of the period described in paragraph (1)(A), the Secretary may extend such period if the issuer establishes that the failure to satisfy the 5-year requirement is due to reasonable cause and the related projects will continue to proceed with due diligence. (3)

Failure to spend required amount of bond proceeds within 5 years

To the extent that less than 100 percent of the available project proceeds of such issue are expended by the close of the 5-year period beginning on the date of issuance (or if an extension has been obtained under paragraph (2), by the close of the extended period), the issuer shall redeem all of the nonqualified bonds within 90 days after the end of such period. For purposes of this paragraph, the amount of the nonqualified bonds required to be redeemed shall be determined in the same manner as under section 142. (h)

Special rules relating to pooled financing bonds

No portion of a pooled financing bond may be allocable to loan unless the borrower has entered into a written loan commitment for such portion prior to the issue date of such issue. (i)

Other definitions and special rules

For purposes of this section— (1)

Pooled financing bond

The term pooled financing bond shall have the meaning given such term by section 149(f)(6). (2)

Qualified project

The term qualified project means a qualified high-speed intercity rail facility project or a qualified rail infrastructure project. (3)

Reporting

Issuers of qualified super high-speed intercity rail facility bonds shall submit annual reports to the Secretary and the Secretary of Transportation regarding the progress of qualified super high-speed intercity rail facility projects in such manner determined by the Secretary, after consultation with the Secretary of Transportation. (4)

Conditions

Any project financed with the proceeds of a qualified rail bond shall be subject to the grant requirements under section 24405 of title 49, United States Code. (j)

Termination

This section shall not apply with respect to— (1)any qualified super high-speed intercity rail facility bond after December 31, 2014, and (2)any qualified rail infrastructure bond issued after December 31, 2014.

. (b)

Conforming amendments

(1)Paragraph (1) of section 54A(d) of the Internal Revenue Code of 1986 is amended— (A)by striking or at the end of subparagraph (C), (B)by adding or at the end of subparagraph (D), (C)by inserting after subparagraph (D) the following new subparagraph: (E)a qualified rail bond, , and (D)by inserting (paragraphs (3), (4), and (6) in the case of a qualified rail bond) after and (6). (2)Subparagraph (C) of section 54A(d)(2) of such Code is amended by striking and at the end of clause (iii), by striking the period at the end of clause (iv) and inserting , and, and by adding at the end the following new clause: (v)in the case of a qualified rail bond, a purpose specified in subsection (b)(1) or (c)(1) of section 54F. . (3)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. 54F. Qualified rail bonds. . (c)

Issuance of Regulations

The Secretary of the Treasury shall issue regulations required under section 54F of the Internal Revenue Code of 1986 (as added by this section) not later than 120 days after the date of the enactment of this Act. (d)

Effective date

The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

7.

Report on revenue provisions for high-speed rail

(a)

Study

The Secretary of the Treasury shall conduct a study on the use of excise taxes to fund projects related to high-speed rail. (b)

Report

Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury shall submit to Congress a report on the study conducted under subsection (a).