[Congressional Record Volume 149, Number 115 (Wednesday, July 30, 2003)]
[Senate]
[Pages S10286-S10296]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. HUTCHISON (for herself, Mr. Lott Mr. Burns, and Ms. 
        Snowe):
  S. 1505. A bill to establish a National Passenger Rail Office, and 
for other purposes; to the Committee on Finance.
  Mrs. HUTCHISON. Mr. President, I support Amtrak and believe we can 
have a viable national passenger rail system. Unfortunately, we are far 
from realizing that goal. Outside the Northeast Corridor (NEC), trains 
seldom run on time, and service is abysmal. Lateness is often measured 
in days, not hours. Several years ago, when the airlines on-time rate 
fell below 75 percent it was considered a national emergency. At 
Amtrak, on-time records under 50 percent are business as usual. Rail 
critics point to low ridership as the reason why we starve the national 
system. I contend that starvation is the reason for low ridership.
  In the Northeast, a passenger can board a train here at Union Station 
and reasonably expect to be in New York City, about 225 miles away, in 
less than three hours. If one of my constituents buy a ticket from 
Austin to Fort Worth, a trip thirty-eight miles shorter than DC to New 
York, the best he can expect is that it will take four and one-half 
hours. Of course, the Texas Eagle makes its schedule only 35 percent of 
the time, so my constituent will likely waste even more time on this 
short trip. An Austin businessman may prefer not to deal with airport 
hassles for such a short flight, and he may want to avoid the traffic 
on I-35, but the train is not a reasonable option if he has a meeting 
in fort worth at a time certain.
  This inequity cannot continue. Either we commit to building a rail 
transportation alternative for the entire Nation, or we abandon the 
pretense of Amtrak and turn it over to the States and private 
companies. Our motto for Amtrak is ``National or Nothing!''
  Improving service on the national system will require creative 
thinking and innovative financing. We cannot continue to fund Amtrak 
just enough to keep it going until the next crisis. That is a road map 
for failure. Private investment, State participation, and the 
cooperation of the freight railroads are all essential to achieving 
service upgrades.
  In Texas, most passenger trains are forced to operate at less than 
thirty miles per hour due to track conditions and freight operations. 
The national system needs at least $38 billion in capital improvements 
to allow trains to meet a reasonable schedule. Safety improvements 
alone will cost $13.8 billion. The Northeast Corridor needs roughly $10 
billion to avoid an increased risk of accidents and a systemwide 
slowdown. Postponing these upgrades and repairs will only make them 
more expensive.
  In the 1950s, President Eisenhower convinced the Nation to pay for 
the construction of the National Highway System. Fiscal realities have 
changed since then, and we must find a way to creatively finance the 
rail infrastructure needs of the nation without draining resources from 
alternative modes of transportation and other federal priorities. 
Municipal bonding and private investment are necessary components of 
any plan to restore and improve rail infrastructure.
  Making this investment will not only improve passenger service, but 
also upgrade freight operations throughout the country. Outside the 
NEC, freight and passenger trains must run on the same tracks. In 
exchange for an investment in upgrading those tracks, the freight must 
agree to allow Amtrak to meet its schedule. I realize the critical role 
played by freight railroads in the American economy, and I know this 
industry has seen better days. That is why I urge them to work with us 
to achieve a mutually beneficial agreement. If we cooperate, freight 
railroads will enjoy capital improvements they could not otherwise hope 
to afford, as we secure the future of passenger rail in this country. 
It can be a win-win situation.
  I was deeply disappointed to see Amtrak's proposed 5-year capital 
plan call for $9.1 billion in Federal funding, with more than $8 
billion spent in the Northeast Corridor. The national system must 
receive more than the crumbs left over after the needs of the NEC have 
been met.
  We will never have a better opportunity to accomplish this goal than 
right now. That is why I am introducing legislation along with Senators 
Lott, Burns, Snowe and Smith to begin to bring the national system up 
to Northeast Corridor standards. My bill will strengthen the Federal 
role by creating a National Passenger Rail Office at DOT, responsible 
for coordinating with States and the railroads to assure the national 
system receive the improvements necessary to operate an effective 
inter-city passenger rail system. The legislation authorizes $12 
billion for Amtrak in operating assistance. Amtrak will be required to 
bring the national system up to an 80 percent on-time arrival rate. 
Once a route has enjoyed reasonable on-time performance, it can be 
fairly evaluated from a cost-benefit perspective. 80 percent is a 
modest goal, but it is not going to be easy to attain. If Amtrak is 
unable to meet performance requirements on a route, that route should 
be opened for bidding by other operators.
  If we fail to enact real change in this reauthorization bill, we may 
run out of chances to obtain the elusive intermodal transportation 
system we profess to seek. We must decide whether we want to create a 
viable national system, or settle for a single rail corridor providing 
ever-deteriorating service to only one sector of the country. I will 
not support any proposal that does not put the national system on par 
with the Northeast Corridor. Today marks a new beginning, or the 
beginning of the end. It's national or nothing.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1505

       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 ``American Rail Equity Act of 
     2003''.

     SEC. 2. AMENDMENT OF TITLE 49, UNITED STATES CODE.

       Except as otherwise expressly provided, whenever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or a repeal of, a section or other provision, 
     the reference shall be considered to be made to a section or 
     other provision of title 49, United States Code.

     SEC. 3. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Amendment of title 49, United States Code.
Sec. 3. Table of contents.

                TITLE I--NATIONAL PASSENGER RAIL OFFICE

Sec. 101. Establishment of National Passenger Rail Office.

                TITLE II--NATIONAL PASSENGER RAIL SYSTEM

               Subtitle A--National Passenger Rail System

Sec. 201. National passenger rail system.

          Subtitle B--High-speed Corridors for Passenger Rail

Sec. 211. Interstate railroad passenger high-speed transportation 
              policy.
Sec. 212. High-speed rail corridor planning.
Sec. 213. Assistance for establishment of corridors for high-speed rail 
              service.

               TITLE III--RAIL INFRASTRUCTURE IMPROVEMENT

          Subtitle A--Rail Infrastructure Finance Corporation

Sec. 301. Establishment of corporation.
Sec. 302. Board of directors.
Sec. 303. Officers and employees.
Sec. 304. Nonprofit and nonpolitical nature of the corporation.
Sec. 305. Purpose and activities of corporation.
Sec. 306. Report to Congress.
Sec. 307. Administrative matters.
Sec. 308. Rail infrastructure finance trust.

               Subtitle B--Rail Development Grant Program

Sec. 311. National system improvement grant program.

[[Page S10287]]

Sec. 312. Grant program requirements and limitations.

            Subtitle C--Rail Infrastructure Tax Credit Bonds

Sec. 321. Credit to holders of qualified rail infrastructure bonds.
Sec. 322. Annual report by Treasury on rail infrastructure trust 
              account.
Sec. 323. Issuance of regulations.
Sec. 324. Effective date.

      TITLE IV--RAIL INFRASTRUCTURE AND INTERMODAL TRANSPORTATION

Sec. 401. Intermodal transportation policy.
Sec. 402. State rail plans.

                TITLE I--NATIONAL PASSENGER RAIL OFFICE

     SEC. 101. ESTABLISHMENT OF NATIONAL PASSENGER RAIL OFFICE.

       (a) Establishment.--(1) Chapter 1 of title 49, United 
     States Code, is amended by inserting after section 107 the 
     following new section:

     ``Sec. 107A. National Passenger Rail Office

       ``(a) In General.--The National Passenger Rail Office is an 
     office in the Department of Transportation.
       ``(b) Head of Office.--The head of the Office is the 
     Director of the National Passenger Rail Office who is 
     appointed by the President, by and with the advice and 
     consent of the Senate.
       ``(c) Administrative Matters.--
       ``(1) Administrative location.--The Office is located 
     within the Federal Transit Administration for administrative 
     purposes.
       ``(2) Supervision.--The Director of the National Passenger 
     Rail Office reports directly to the Administrator of the 
     Federal Transit Administration.
       ``(d) Duties.--The duties of the Office are as follows:
       ``(1) To carry out the responsibilities of the Office with 
     respect to the national passenger railroad system under 
     chapter 251 of this title, including--
       ``(A) the allocation of funds to the National Passenger 
     Rail Corporation for the operations of the Corporation under 
     section 25005 of this title;
       ``(B) the responsibilities for the national passenger 
     railroad system set forth under section 25006 of this title;
       ``(C) the responsibilities for the national passenger 
     railroad system route map set forth under section 25007 of 
     this title; and
       ``(D) the quarterly identification of infrastructure 
     improvement projects for the national passenger railroad 
     system under section 25008 of this title.
       ``(2) To carry out such other responsibilities as may be 
     provided by the Secretary of Transportation or by law.
       ``(e) Funding of Administrative Expenses.--The amount 
     available under section 25010(c)(1) of this title each fiscal 
     year shall be available for the administrative costs of the 
     Office in such fiscal year.''.
       (2) The table of section at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     107 the following new item:

``107A. National Passenger Rail Office.''.

       (b) Rate of Pay of Director of Office.--Section 5315 of 
     title 5, United States Code, is amended by adding at the end 
     the following:
       ``Director, National Passenger Rail Office.''.

                TITLE II--NATIONAL PASSENGER RAIL SYSTEM

               Subtitle A--National Passenger Rail System

     SEC. 201. NATIONAL PASSENGER RAIL SYSTEM.

       (a) In General.--Part C of subtitle V of title 49, United 
     States Code, is amended by adding at the end the following 
     new chapter:

             ``CHAPTER 251--NATIONAL PASSENGER RAIL SYSTEM

``Sec.
``25001. Purpose.
``25002. National passenger rail system.
``25003. Designation of Amtrak as National Passenger Rail Corporation.
``25004. National Passenger Rail Corporation: responsibility for 
              national passenger rail system; status.
``25005. National Passenger Rail Office: allocation of operating funds 
              to National Passenger Rail Corporation.
``25006. National Passenger Rail Office: responsibility for national 
              passenger rail system.
``25007. National Passenger Rail Office: responsibility for national 
              passenger rail system route map.
``25008. National Passenger Rail Office: identification of rail 
              infrastructure improvement projects for national 
              passenger rail system.
``25009. Rail infrastructure improvements grant program.
``25010. Construction with other law; preservation and allocation of 
              authorities.
``25011. Authorizations.

     ``Sec. 25001. Purpose

       ``The purpose of this chapter is to improve rail passenger 
     service in the United States by--
       ``(1) redesignating Amtrak as the National Passenger Rail 
     Corporation; and
       ``(2) reallocating the responsibilities of Amtrak for 
     intercity and commuter rail passenger transportation (and 
     related transportation) among the National Passenger Rail 
     Corporation and the National Rail Passenger Office so that--
       ``(A) the National Passenger Rail Corporation retains the 
     responsibilities of Amtrak for the provision of such 
     transportation; and
       ``(B) the National Rail Passenger Office assumes the 
     responsibilities of Amtrak for the equipment and facilities 
     of Amtrak and for the route map of the national passenger 
     rail system.

     ``Sec. 25002. National passenger rail system

       ``(a) In General.--The system of intercity rail passenger 
     transportation (and related transportation), known as the 
     national passenger rail system, includes--
       ``(1) the segment of the Northeast Corridor between Boston, 
     Massachusetts, and Washington, D.C.;
       ``(2) rail corridors that have been designated by the 
     Secretary of Transportation as high-speed corridors, but only 
     after they have been improved to permit operation of high-
     speed service;
       ``(3) long-distance routes of more than 750 miles between 
     endpoints operated by Amtrak as of the date of enactment of 
     the American Rail Equity Act of 2003; and
       ``(4) short-distance corridors or routes operated by 
     Amtrak.
       ``(b) Transportation Requested by States, Authorities, and 
     Other Persons.--
       ``(1) Contracts for transportation.--Amtrak and a State, a 
     regional or local authority, or another person may enter into 
     a contract for Amtrak to operate an intercity rail service or 
     route not included in the national rail passenger 
     transportation system upon such terms as the parties thereto 
     may agree.
       ``(2) Discontinuance.--Upon termination of a contract 
     entered into under this subsection, or the cessation of 
     financial support under such a contract, Amtrak may 
     discontinue such service or route, notwithstanding any other 
     provision of law.

     ``Sec. 25003. Designation of Amtrak as National Passenger 
       Rail Corporation

       ``Effective as of the date of the enactment of the American 
     Rail Equity Act of 2003, the portion of Amtrak that is 
     responsible for the operations relating to intercity rail 
     passenger transportation and commuter rail passenger 
     transportation (and related transportation) specified in 
     section 25004(b) of this title is hereby redesignated as the 
     National Passenger Rail Corporation.

     ``Sec. 25004. National Passenger Rail Corporation: 
       responsibility for national passenger rail system; status

       ``(a) Termination of For-Profit Status.--The National 
     Passenger Rail Corporation shall not be required to be 
     operated or managed as a for-profit corporation.
       ``(b) Limitation of Responsibilities to Transportation and 
     Certain Maintenance Facilities.--The Corporation shall have 
     responsibility only for the following:
       ``(1) Operations relating to the provision of intercity 
     rail passenger transportation.
       ``(2) Operations relating to the provision of commuter rail 
     passenger transportation.
       ``(3) Operations relating to the transportation of mail and 
     express.
       ``(4) Operations relating to auto-ferry transportation.
       ``(5) Marketing relating to transportation provided under 
     paragraphs (1) through (4).
       ``(6) Facilities for the maintenance of the rolling stock 
     necessary to provide transportation under paragraphs (1) 
     through (4).
       ``(c) Transfer of Other Assets and Responsibilities to 
     National Passenger Rail Office.--The Corporation shall 
     transfer to the National Passenger Rail Office jurisdiction 
     of all equipment and facilities of the Corporation as of the 
     date of the enactment of the American Rail Equity Act of 2003 
     that are not the responsibility of the Corporation under 
     subsection (b).

     ``Sec. 25005. National Passenger Rail Office: allocation of 
       operating funds to National Passenger Rail Corporation

       ``(a) In General.--The National Passenger Rail Office 
     shall, from amounts available for a fiscal year under section 
     25010(c)(2)(A) of this title, allocate amounts to the 
     National Passenger Rail Corporation in order to permit the 
     Corporation carry out operations for the provision of 
     transportation under section 25004(b) of this title.
       ``(b) Allocation on Route-By-Route Basis.--The Office shall 
     allocate amounts to the Corporation under subsection (a) on a 
     route-by-route basis.
       ``(c) Oversight of Expenditures.--The Office shall oversee 
     and review expenditures of amounts allocated to the 
     Corporation under subsection (a) in order to ensure that the 
     Corporation is utilizing amounts so allocated in an 
     appropriate manner.

     ``Sec. 25006. National Passenger Rail Office: responsibility 
       for national passenger rail system

       ``(a) Northeast Corridor Equipment and Facilities.--The 
     National Passenger Rail Office shall have responsibility for 
     all equipment and facilities relating to the Northeast 
     Corridor route that are transferred to the Office under 
     section 25003(c) of this title.
       ``(b) Pennsylvania Station, New York.--The Office shall 
     treat Pennsylvania Station, New York, and the electric power 
     generation facilities at Pennsylvania Station for the 
     Northeast Corridor route, as a part of the Northeast Corridor 
     route under subsection (a).
       ``(c) Other Equipment and Facilities.--
       ``(1) Operation through lease required.--The Office shall 
     provide for the operation of any equipment and facilities 
     transferred to the Office under section 25004(c) of this 
     title that are not the responsibility of the Office under 
     subsections (a) and (b) through the lease of such equipment 
     and facilities to 1 or more appropriate persons or entities.

[[Page S10288]]

       ``(2) Full and open competition.--The Office shall identify 
     any lessee of equipment and facilities under paragraph (1) 
     utilizing procedures for full and open competition.

     ``Sec. 25007. National Passenger Rail Office: responsibility 
       for national passenger rail system route map

       ``(a) In General.--The National Passenger Rail Office shall 
     have responsibility for the modification of routes of the 
     National Passenger Rail Corporation.
       ``(b) Failure of On-Time Performance.--
       ``(1) Surveys of on-time performance.--Not later than 12 
     months after the date of the enactment of this American Rail 
     Equity Act of 2003 and every year thereafter, the Office 
     shall determine for each route of the Corporation whether the 
     Corporation met the on-time performance goal for such route 
     during the most recent performance period.
       ``(2) Contingent requirement to preserve routes.--The 
     Office may not discontinue a route of the Corporation as in 
     effect on the date of the enactment of that Act unless the 
     Office determines under paragraph (1) in any year that the 
     Corporation did not meet the on-time performance goal for 
     such route in 3 out of the 5 years immediately preceding the 
     year in which the determination is made.
       ``(3) Transportation rights following failure on on-time 
     performance.--
       ``(A) Forfeiture of rights.--If the Office determines (in 
     the determination under paragraph (2) that is required to be 
     completed 5 years after the date of the enactment of the 
     American Rail Equity Act of 2003) that the Corporation did 
     not meet the on-time performance goal for a route of the 
     Corporation during the most recent performance period, the 
     Corporation shall forfeit to the Office the right to provide 
     passenger rail transportation on such route (including the 
     right to use the tracks of such route to provide such 
     transportation).
       ``(B) Lease of forfeited rights.--The Office shall lease to 
     an appropriate person or entity the right to provide 
     passenger rail transportation on a route (including the right 
     to use the tracks of such route to provide such 
     transportation) that is forfeited under subparagraph (A). The 
     Office shall identify any lessee of such right to provide 
     rail passenger transportation on a route utilizing procedures 
     for full and open competition.
       ``(C) Transportation.--A person or entity leasing the right 
     to provide rail passenger transportation on a route under 
     subparagraph (B) shall provide such rail passenger 
     transportation on the route as is specified by the Office in 
     the lease under subparagraph (B). The rail passenger 
     transportation so specified for a route shall be equivalent 
     to the rail passenger transportation scheduled to provided by 
     the Corporation on the route before the forfeiture of the 
     right to provide transportation on the route under 
     subparagraph (A).
       ``(D) Assistance.--A person or entity providing rail 
     passenger transportation on a route under subparagraph (B) 
     shall be entitled to such assistance under this part, and 
     under any other provision of law, for the provision of such 
     rail passenger transportation as would otherwise have been 
     provided to the Corporation if the Corporation had provided 
     such rail passenger transportation on such route.
       ``(E) Bonus.--If the Office determines that a person or 
     entity providing rail passenger transportation on a route 
     under subparagraph (B) has met the on-time performance goal 
     for that route during the most recent performance period, the 
     Office may pay such person or entity a bonus in an amount 
     determined appropriate by the Office.
       ``(4) Failure of on-time performance based on lack of 
     access.--
       ``(A) Notice.--The Corporation shall notify the Office of 
     each allegation of the Corporation that the failure of the 
     Corporation to meet the on-time performance goal for a route 
     is due to the denial of access to the tracks of the route by 
     the rail carrier owning the route.
       ``(B) Transmittal.--Amtrak shall transmit to the Surface 
     Transportation Board each allegation received by the Office 
     under subparagraph (A).
       ``(C) Investigation.--The Board shall investigate each 
     allegation transmitted under subparagraph (B).
       ``(D Civil penalties.--If as a result of an investigation 
     under subparagraph (C) the Board verifies an allegation under 
     subparagraph (A), the Board may impose a civil penalty on the 
     rail carrier that is the subject of the allegation in such 
     amount as the Board considers appropriate.
       ``(5) Definitions.--In this subsection:
       ``(A) On-time performance goal.--Within 12 months after the 
     date of enactment of the American Rail Equity Act of 2003, 
     the National Rail Office, after consulation with Amtrak, 
     shall establish criteria for determining what attributes 
     characterize an `on-time performance goal'. In the case of a 
     route, the criteria shall be based upon at least 80 percent 
     of the trains scheduled to provide passenger rail 
     transportation on the route during the most recent 
     performance period arriving not later than their scheduled 
     arrival time.
       ``(B) Performance period.--The term `performance period' 
     means the 12-month period ending on the date a determination 
     is made regarding whether the trains scheduled to provide 
     passenger rail transportation on a route met their on-time 
     performance goal.
       ``(c) Additional Routes.--
       ``(1) Additional routes.--The Office may establish 1 or 
     more additional routes for the national rail passenger system 
     if the Office determines pursuant to the study under section 
     502 of the American Rail Equity Act of 2003 that the 
     establishment of such route or routes is feasible and 
     advisable.
       ``(2) Corridors for high-speed rail service.--The Office 
     may add to the national passenger rail system any corridor 
     for high-speed rail service established pursuant to section 
     26104 of this title.

     ``Sec. 25008. National Passenger Rail Office: identification 
       of rail infrastructure improvement projects for national 
       passenger rail system

       ``(a) Identification of Rail Infrastructure Improvement 
     Projects.--
       ``(1) In general.--The National Passenger Rail Office 
     shall, on a quarterly basis, identify the rail infrastructure 
     improvement projects that are advisable to improve or enhance 
     the operations of the national passenger rail system, 
     including operations in the Northeast Corridor.
       ``(2) Nature of improvements.--The infrastructure 
     improvements covered by rail infrastructure improvement 
     projects under paragraph (1) may include--
       ``(A) track and other capital improvements;
       ``(B) the acquisition of rights-of-way; and
       ``(C) such other improvements as the Office considers 
     advisable to improve or enhance the operations of the 
     national passenger rail system.
       ``(3) State input.--Recommendations of States for projects 
     for identification under paragraph (1) shall be submitted to 
     the National Passenger Rail Office in accordance with such 
     requirements as the Director of the Office may prescribe.
       ``(b) Information on Potential Projects.--A rail carrier 
     seeking to carry out a rail infrastructure improvement 
     project for purposes of subsection (a) shall submit to the 
     Office such information on the project as the Director of the 
     Office shall require, including--
       ``(1) the nature of the infrastructure improvements under 
     the project;
       ``(2) the cost of the infrastructure improvements; and
       ``(3) an assessment of the extent to which the 
     infrastructure improvements will improve or enhance the 
     operations of the national passenger rail system.
       ``(c) Reports to National Rail Transportation Financing 
     Corporation.--
       ``(1) In general.--The Director of the Office shall, on a 
     quarterly basis, submit to the National Rail Transportation 
     Financing Corporation a report setting forth the rail 
     infrastructure improvement projects identified under 
     subsection (a) during the preceding quarter.
       ``(2) Report elements.--Each report under paragraph (1) 
     shall contain such information as the Director of the Office 
     and the Corporation jointly consider appropriate in order--
       ``(A) to fully inform the Corporation of the nature, cost, 
     benefits, and priority of each rail infrastructure 
     improvement project identified in such report; and
       ``(B) to permit the Corporation to evaluate the 
     advisability of making a grant for each such rail 
     infrastructure improvement project under 306 of the American 
     Rail Equity Act of 2003.

     ``Sec. 25009. Rail infrastructure improvements grant program

       ``The National Passenger Rail Office may make grants for 
     rail infrastructure improvement projects identified under 
     section 25008 of this title.

     ``Sec. 25010. Construction with other law; preservation and 
       allocation of authorities

       ``(a) Construction.--The provisions of this chapter 
     supersede any provisions of this part, and any other 
     provisions of law, that are inconsistent with the provisions 
     of this chapter.
       ``(b) Preservation of Authorities.--
       ``(1) National passenger rail office.--For purposes of 
     carrying out its responsibility under this chapter, including 
     the operation and maintenance of facilities under section 
     25005(c) of this title, the National Passenger Rail Office 
     may utilize any power or authority of Amtrak under this part, 
     or under any other provision of law, to the extent that such 
     power or authority is not inconsistent with a provision of 
     this chapter, as if the Office were Amtrak.
       ``(2) National passenger rail authority.--For purposes of 
     carrying out its responsibilities under section 25004(b) of 
     this title, the National Passenger Rail Corporation may 
     utilize any power or authority of Amtrak under this part, or 
     under any other provision of law, to the extent that such 
     power or authority is not inconsistent with a provision of 
     this chapter, as if the Corporation were Amtrak.
       ``(c) Memorandum of Understanding.--The Office and the 
     Corporation shall, subject to the supervision and concurrence 
     of the Administrator of the Federal Transit Administration, 
     enter into a memorandum of understanding allocating among the 
     Office and the Corporation the authorities, powers, and 
     responsibilities of Amtrak under this part, and under any 
     other provision of law, in a manner consistent with the 
     provisions of this chapter.
       ``(d) References.--
       ``(1) National passenger rail authority.--Any reference to 
     Amtrak in any law, regulation, map, document, record, or 
     other paper of the United States with respect to the 
     performance of any function or activity that is retained by 
     the National Passenger

[[Page S10289]]

     Rail Corporation under this chapter shall be considered to be 
     a reference to the National Passenger Rail Corporation.
       ``(2) National passenger rail office.--Any reference to 
     Amtrak in any law, regulation, map, document, record, or 
     other paper of the United States with respect to the 
     performance of any function or activity that is assumed by 
     the National Passenger Rail Office under this chapter shall 
     be considered to be a reference to the National Passenger 
     Rail Office.

     ``Sec. 25011. Authorizations

       ``(a) In General.--There are authorized to be appropriated 
     $2,000,000,000 for each of fiscal years 2004 through 2009 for 
     the operations of the National Passenger Rail Corporation 
     under this chapter.
       ``(b) Allocations.--To the extent provided in 
     appropriations Acts, $3,000,000 of the amount appropriated 
     pursuant to the authorization of appropriations in subsection 
     (a) in any fiscal year shall be available for the National 
     Passenger Rail Office for the administrative expenses of the 
     Office in such fiscal year.''.
       (b) Clerical Amendment.--The table of chapters at the 
     beginning of subtitle V of title 49, United States Code, is 
     amended by inserting after the item relating to chapter 249 
     the following new item:

``251. NATIONAL PASSENGER RAILROAD SYSTEM..................25001''.....

          Subtitle B--High-Speed Corridors for Passenger Rail

     SEC. 211. INTERSTATE RAILROAD PASSENGER HIGH-SPEED 
                   TRANSPORTATION POLICY.

       (a) In General.--Chapter 261 is amended by inserting before 
     section 26101 the following:

     ``Sec. 26100. Policy.

       ``The Congress declares that it is the policy of the United 
     States that designated high-speed railroad passenger 
     transportation corridors are the building blocks of an 
     interconnected interstate railroad passenger system that 
     serves the entire Nation.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     261 is amended by inserting before the item relating to 
     section 26101 the following:

``26100. Policy''.

     SEC. 212. HIGH-SPEED RAIL CORRIDOR PLANNING.

       (a) In General.--Section 26101(a) is amended to read as 
     follows:
       ``(a) Planning.--
       ``(1) In general.--The Secretary of Transportation shall 
     provide planning assistance to States or group of States and 
     other public agencies promoting the development of high-speed 
     rail corridors designated by the Secretary under section 
     104(d) of title 23.
       ``(2) Secretary may provide direct or financial 
     assistance.--The Secretary may provide planning assistance 
     under paragraph (1) directly or by providing financial 
     assistance to a public agency or group of public agencies to 
     undertake planning activities approved by the Secretary. Not 
     less than 20 percent of the publicly financed planning costs 
     associated with projects assisted under this chapter shall 
     come from non-Federal sources. State matching contributions 
     may not be derived, directly or indirectly, from Federal 
     funds.''.
       (b) Conforming and Other Amendments to Section 26101.--
     Section 26101 is further amended--
       (1) by striking subsection (c)(2) and inserting the 
     following:
       ``(2) the extent to which the proposed planning focuses on 
     high-speed rail systems, giving a priority to systems which 
     will achieve sustained speeds of 125 miles per hour or 
     greater and projects involving dedicated rail passenger 
     rights-of-way;'';
       (2) by inserting ``and'' after the semicolon in subsection 
     (c)(12);
       (3) by striking ``completed; and'' in subsection (c)(13) 
     and inserting ``completed.''; and
       (4) by striking subsection (c)(14).
       (c) Conforming Amendment.--Section 26105(2)(A) is amended 
     by striking ``more than 125 miles per hour;'' and inserting 
     ``90 miles per hour or more;''.
       (d) Financial Assistance To Include Loans and Loan 
     Guarantees.--Section 26105(1) is amended by inserting 
     ``loans, loan guarantees,'' after ``contracts,''.
       (e) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation such 
     sums as may be necessary for each of fiscal years 2004 
     through 2008 to provide planning assistance under section 
     26101(a) of title 49, United States Code, as amended by 
     subsection (a).

     SEC. 213. ASSISTANCE FOR ESTABLISHMENT OF CORRIDORS FOR HIGH-
                   SPEED RAIL SERVICE.

       (a) In General.--Chapter 261 of title 49, United States 
     Code, is amended--
       (1) by redesignating sections 26104 and 26105 as sections 
     26105 and 26106, respectively; and
       (2) by inserting after section 26103 the following new 
     section 26104:

     ``Sec. 26104. Additional support for establishment of high-
       speed rail corridors

       ``(a) Purpose.--The purpose of this section is to 
     facilitate the establishment of a national network of 
     corridors for high-speed rail service.
       ``(b) Corporation To Make Grants.--The National Rail 
     Transportation Financing Corporation under title III of the 
     American Rail Equity Act of 2003 may make grants of financial 
     assistance to individual States or compacts of States for the 
     establishment of corridors for high-speed rail service.
       ``(c) Application.--A State or compact of States seeking a 
     grant under this section shall submit to the Corporation an 
     application therefor in such form, and including such 
     information, as the Corporation shall require.
       ``(d) Matching Requirement.--A State or compact of States 
     receiving a grant under this section for activities relating 
     to the establishment of a corridor for high-speed rail 
     service shall bear not less than 80 percent of the costs of 
     the activities funded by the grant.
       ``(e) Use of Grant.--A State or compact of States receiving 
     a grant under this section shall use the grant amount for 
     purposes of the establishment of 1 or more corridors for 
     high-speed rail service, including the purchase of rights-of-
     way for the provision of such service.
       ``(f) Treatment of Corridors.--The National Passenger Rail 
     Office may treat a corridor established pursuant to this 
     section as part of the national passenger rail system under 
     chapter 251 of this title.
       ``(g) Construction With Other Assistance Corporation.--The 
     authority to make grants under this section for the 
     establishment of corridors for high-speed rail service is in 
     addition to any other authority in this chapter, or under any 
     other provision of law, relating to the provision of 
     assistance for the establishment of corridors for high-speed 
     rail service.
       ``(h) Funding.--Amounts derived from the issuance of 
     qualified rail transportation bonds under title III of the 
     American Rail Equity Act of 2003 and section 54 of the 
     Internal Revenue Code of 1986 shall be available for grants 
     under this section.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 261 of such title is amended by striking 
     the items relating to section 26104 and 26105 and inserting 
     the following new items:

``26104. Additional support for establishment of high-speed rail 
              corridors.
``26105. Authorization of appropriations.
``26106. Definitions.''.

               TITLE III--RAIL INFRASTRUCTURE IMPROVEMENT

          Subtitle A--Rail Infrastructure Finance Corporation

     SEC. 301. ESTABLISHMENT OF CORPORATION.

       There is established a nonprofit corporation, to be known 
     as the ``Rail Infrastructure Finance Corporation''. The Rail 
     Infrastructure Finance Corporation is not an agency or 
     establishment of the United States Government. The 
     Corporation shall be subject to the provisions of this 
     subtitle, and, to the extent consistent with this section, to 
     the laws of the State of Delaware applicable to corporations 
     not for profit.

     SEC. 302. BOARD OF DIRECTORS.

       (a) Appointment.-- The Rail Infrastructure Finance 
     Corporation shall have a Board of Directors consisting of 9 
     members appointed by the President, by and with the advice 
     and consent of the Senate. Not more than 5 members of the 
     Board may be members of the same political party.
       (b) Membership Qualifications.--
       (1) In general.--The 9 members of the Board shall be 
     appointed from among citizens of the United States (not 
     regular full-time employees of the United States) who are 
     eminent in the fields of rail transportation, rail financing, 
     and intermodal transportation planning, and the financing and 
     management of large-scale, long-term public-private 
     cooperative projects.
       (2) Representation of specific interests.--Of the 9 members 
     of the Board, 8 of the members shall be selected as follows:
       (A) Two members from among individuals who represent the 
     interests of freight rail transportation.
       (B) One member from among individuals who represent the 
     interests of passenger rail transportation.
       (C) One member from among individuals who represent the 
     interests of the States.
       (D) One member from among individuals who represent the 
     interests of intercity passenger rail users.
       (E) One member from among individuals who represent the 
     interests of organized labor.
       (F) Two members from among persons who are involved in 
     finance.
       (c) Incorporation.--The members initially appointed to the 
     Board of Directors shall serve as incorporators and shall 
     take whatever actions are necessary to establish the 
     Corporation under the laws of Delaware.
       (d) Terms of Office.--Members of the Board shall be 
     appointed for terms of 6 years, except that of the members 
     first appointed, the President shall designate 2 to serve a 
     term of 1 year and 2 to serve a term of 3 years. No member of 
     the Board shall be eligible to serve in excess of 2 
     consecutive full terms.
       (e) Vacancies.--A member of the Board appointed to fill a 
     vacancy occurring before the expiration of the term for which 
     the member's predecessor was appointed shall serve only for 
     the remainder of the term. Upon the expiration of a member's 
     term, the member shall continue to serve until a successor is 
     appointed.
       (f) Attendance Required.--Members of the Board shall attend 
     not less than 50 percent of all duly convened meetings of the 
     Board in any calendar year. A member who fails to meet the 
     requirement of the preceding sentence shall forfeit 
     membership and the President shall appoint a new member to 
     fill the

[[Page S10290]]

     resulting vacancy not later than 30 days after such vacancy 
     is determined by the Chairman of the Board.
       (g) Election of Chairman and Vice Chairman.--Members of the 
     Board shall annually elect 1 of their members to be Chairman 
     and elect 1 or more of their members as a Vice Chairman or 
     Vice Chairmen.
       (h) Compensation.--The members of the Board shall not, by 
     reason of such membership, be considered to be officers or 
     employees of the United States. They shall, while attending 
     meetings of the Board or while engaged in duties related to 
     such meetings or other activities of the Board pursuant to 
     this title, be entitled to receive compensation at the rate 
     of $150 per day, including traveltime. No Board member shall 
     receive compensation of more than $10,000 in any fiscal year. 
     While away from their homes or regular places of business, 
     Board members shall be allowed travel and actual, reasonable, 
     and necessary expenses.
       (i) Meetings Open to Public.--All meetings of the Board of 
     Directors of the Corporation, including any committee of the 
     Board, shall be open to the public under such terms, 
     conditions, and exceptions as the Board may establish.

     SEC. 303. OFFICERS AND EMPLOYEES.

       (a) In General.--The Rail Infrastructure Finance 
     Corporation shall have a President, and such other officers 
     as may be named and appointed by the Board for terms and at 
     rates of compensation fixed by the Board. No officer or 
     employee of the Corporation may be compensated by the 
     Corporation at an annual rate of pay that exceeds the rate of 
     basic pay for level I of the Executive Schedule under section 
     5312 of title 5, United States Code. No individual other than 
     a citizen of the United States may be an officer of the 
     Corporation. Subject to section 302(h), no officer of the 
     Corporation may receive any salary or other compensation 
     (except for compensation for services on boards of directors 
     of other organizations that do not receive funds from the 
     Corporation, on committees of such boards, and in similar 
     activities for such organizations) from any sources other 
     than the Corporation for services rendered during the period 
     of his or her employment by the Corporation. Service by any 
     officer on boards of directors of other organizations, on 
     committees of such boards, and in similar activities for such 
     organizations shall be subject to annual advance approval by 
     the Board and subject to the provisions of the Corporation's 
     Statement of Ethical Conduct. All officers shall serve at the 
     pleasure of the Board.
       (b) Nonpartisan Nature of Appointments.--Except as provided 
     in the second sentence of section 302(a), no political test 
     or qualification shall be used in selecting, appointing, 
     promoting, or taking other personnel actions with respect to 
     officers, agents, and employees of the Corporation.

     SEC. 304. NONPROFIT AND NONPOLITICAL NATURE OF THE 
                   CORPORATION.

       (a) Stock.--The Rail Infrastructure Finance Corporation 
     shall have no power to issue any shares of stock, or to 
     declare or pay any dividends.
       (b) No Private Benefit.--No part of the income or assets of 
     the Corporation shall inure to the benefit of any director, 
     officer, employee, or any other individual except as salary 
     or reasonable compensation for services.
       (c) Political Activity Prohibited.--The Corporation may not 
     contribute to or otherwise support any political party or 
     candidate for elective public office.
       (d) Conflicts of Interest.--No director, officer, or 
     employee of the Corporation shall in any manner, directly or 
     indirectly, participate in the deliberation upon or the 
     determination of any question affecting his or her personal 
     interests or the interests of any corporation, partnership, 
     or organization in which he or she is directly or indirectly 
     interested. Board members shall recuse themselves from Board 
     decisions that directly affect either them or entities they 
     represent regarding grants and other assistance provided to 
     States by the Board.

     SEC. 305. PURPOSE AND ACTIVITIES OF CORPORATION.

       (a) Purpose.--The Rail Infrastructure Finance Corporation 
     shall, through the issuance of qualified rail infrastructure 
     bonds in accordance with section 54 of the Internal Revenue 
     Code of 1986 and this title, provide financial support for 
     rail transportation capital projects under subtitle B.
       (b) Bond Issuance Corporation.--
       (1) In general.--In order to carry out its purposes, the 
     Corporation is authorized to issue qualified rail 
     infrastructure bonds (as defined in section 54(e) of the 
     Internal Revenue Code of 1986) during the 6-year period 
     beginning October 1, 2003.
       (2) Limitation.--The total face amount of the bonds 
     outstanding under paragraph (1) at any time may not exceed 
     $48,000,000,000.
       (3) No federal guarantee.--
       (A) Obligations insured by the corporation.--No obligation 
     that is insured, guaranteed, or otherwise backed by the 
     Corporation shall be deemed to be an obligation that is 
     guaranteed by the full faith and credit of the United States.
       (B) Special rule.--This paragraph shall not affect the 
     determination of whether such obligation is guaranteed for 
     purposes of Federal income taxes.
       (C) Securities offered by the corporation.--No debt or 
     equity securities of the Corporation shall be deemed to be 
     guaranteed by the full faith and credit of the United States.
       (4) Authority.--To carry out the foregoing purposes and 
     engage in the foregoing activities, the Corporation shall 
     have the usual powers conferred upon a nonprofit corporation 
     under the laws of the State of Delaware.
       (c) Federal Assistance.--The Corporation shall be eligible 
     to receive discretionary grants, contracts, gifts, 
     contributions, or technical assistance from any department or 
     agency of the Federal Government, but only to the extent 
     permitted by law and to the extent necessary to carry out the 
     purpose set forth in subsection (a) and the activities 
     described in subsection (b).

     SEC. 306. REPORT TO CONGRESS.

       (a) In General.--On or before May 15 of each year, the Rail 
     Infrastructure Finance Corporation shall submit an annual 
     report for the fiscal year ending on September 30 of the 
     preceding year to the Committee on Commerce, Science, and 
     Transportation of the Senate and the Committee on 
     Transportation and Infrastructure of the House of 
     Representatives. The report shall include a comprehensive and 
     detailed report of the Corporation's operations, activities, 
     financial condition, and accomplishments under this title and 
     such recommendations as the Corporation deems appropriate.
       (b) Availability for Testimony.--The officers and directors 
     of the Corporation shall be available to testify before those 
     committees with respect to such report, the report of any 
     audit made by the Comptroller General pursuant to section 
     307(d)(3), or any other matter which such committees may 
     determine.

     SEC. 307. ADMINISTRATIVE MATTERS.

       (a) Budget.--The Rail Infrastructure Finance Corporation 
     shall establish an annual budget for the Corporation, 
     including the Rail Infrastructure Investment Account under 
     subsection (c).
       (b) Implementation Plan.--
       (1) Requirement for plan.--The Corporation shall conduct a 
     study and prepare a plan on how the Corporation can best 
     achieve the purposes and fulfill the requirements of this 
     title.
       (2) Consultation.--In preparing the plan, the Corporation 
     may consult with the Secretary of Transportation, the 
     Secretary of the Treasury, and representatives of State and 
     local governments.
       (3) Other requirements.--The plan, which shall be based on 
     the conclusions resulting from the study conducted under 
     paragraph (1), shall be submitted by the Corporation to the 
     Committee on Commerce, Science, and Transportation of the 
     Senate and the Committee on Transportation and Infrastructure 
     of the House of Representatives not later than January 31, 
     2004. Unless directed otherwise by law, the Corporation shall 
     implement the plan during the first fiscal year beginning 
     after the fiscal year in which the plan is submitted to 
     Congress.
       (c) Rail Infrastructure Investment Account.--
       (1) Establishment.--The Board of Directors for the 
     Corporation shall establish an account to be known as the 
     Rail Infrastructure Investment Account.
       (2) Deposit of bond proceeds.--The Corporation shall 
     deposit the proceeds of sales of any bonds issued under 
     section 54 of the Internal Revenue Code of 1986 into the 
     Account.
       (3) Deposit of non-federal contributions.--The Board shall 
     deposit all contributions received under section 304(a) into 
     the Account.
       (4) Disbursements.--The Board shall make available and may 
     disburse, at the beginning of fiscal year 2004 and of each 
     succeeding fiscal year thereafter, such funds as may be 
     available for obligation and expenditure from the Account.
       (5) Use of account funds.--Funds in the Account--
       (A) shall be used by the Corporation for investment 
     purposes through the trust established under section 308 to 
     generate an amount sufficient--
       (i) to repay the principal of the bonds at their maturity; 
     and
       (ii) to pay the administrative costs of the Corporation and 
     the Rail Infrastructure Finance Trust under section 308; and
       (B) shall, to the extent of the net spendable proceeds in 
     the account, be held in the Rail Infrastructure Finance Trust 
     established under section 308 and be available for 
     distribution as grants of financial assistance under subtitle 
     B.
       (6) Net spendable proceeds defined.--In this subsection, 
     the term `net spendable proceeds', with respect to the Rail 
     Infrastructure Investment Account, means the amount equal to 
     the excess of--
       (A) the total amount in such Account, over
       (B) the amount in such Account that is needed for uses 
     under paragraph (5)(A).
       (d) Records and Audit.--
       (1) In general.--The account of the Corporation shall be 
     audited annually in accordance with generally accepted 
     auditing standards by independent certified public 
     accountants or independent licensed public accountants 
     certified or licensed by a regulatory authority of a State or 
     other political subdivision of the United States. The audits 
     shall be conducted at the place or places where the accounts 
     of the Corporation are normally kept. All books, accounts, 
     financial records, reports, files, and all other papers, 
     things, or property belonging to or in use by the Corporation 
     and necessary to facilitate the audits shall be made 
     available to the person or persons conducting the audits; and 
     full facilities for verifying transactions with the

[[Page S10291]]

     balances or securities held by depositories, fiscal agents 
     and custodians shall be afforded to such person or persons.
       (2) Audit report.--The report of each such independent 
     audit shall be included in the annual report required by 
     section 306. The audit report shall set forth the scope of 
     the audit and include such statements as are necessary to 
     present fairly the Corporation's assets and liabilities, 
     surplus or deficit, with an analysis of the changes therein 
     during the year, supplemented in reasonable detail by a 
     statement of the Corporation's income and expenses during the 
     year, and a statement of the sources and application of 
     funds, together with the independent auditor's opinion of 
     those statements.
       (3) Audit by comptroller general.--The financial 
     transactions of the Corporation may be audited by the General 
     Accounting Office in accordance with the principles and 
     procedures applicable to commercial corporate transactions 
     and under such rules and regulations as may be prescribed by 
     the Comptroller General of the United States. Any such audit 
     shall be conducted at the place or places where accounts of 
     the Corporation are normally kept. The representative of the 
     General Accounting Office shall have access to all books, 
     accounts, records, reports, files, and all other papers, 
     things, or property belonging to or in use by the Corporation 
     pertaining to its financial transactions and necessary to 
     facilitate the audit, and they shall be afforded full 
     facilities for verifying transactions with the balances or 
     securities held by depositories, fiscal agents, and 
     custodians. All such books, accounts, records, reports, 
     files, papers and property of the Corporation shall remain in 
     possession and custody of the Corporation.
       (4) GAO report to congress.--A report of each audit under 
     paragraph (3) shall be made by the Comptroller General to the 
     Committee on Commerce, Science, and Transportation of the 
     Senate and the Committee on Transportation and Infrastructure 
     of the House of Representatives. The report shall contain 
     such comments and information as the Comptroller General 
     considers necessary to inform the committees of the financial 
     operations and condition of the Corporation, together with 
     such recommendations with respect thereto as he may deem 
     advisable. The report shall also show specifically any 
     program, expenditure, or other financial transaction or 
     undertaking observed in the course of the audit, which, in 
     the opinion of the Comptroller General, has been carried on 
     or made without authority of law. A copy of each report shall 
     be furnished to the President, to the Secretary, and to the 
     Corporation at the time submitted to the Congress.
       (5) Accounting principles.--
       (A) Applicable principles.--Not later than 1 year after the 
     date of the enactment of this Act, the Corporation shall 
     develop accounting principles which shall be used uniformly 
     by all entities receiving funds under this title, taking into 
     account organizational differences among various categories 
     of such entities. Such principles shall be designed to 
     account fully for all funds received and expended for 
     purposes of this title by such entities.
       (B) Consultation.--The Corporation may consult with the 
     Comptroller General and, as appropriate, with others in the 
     development of the accounting principles under subparagraph 
     (A).
       (6) Requirements for recipients.--Each entity receiving 
     funds under this title shall--
       (A) keep its books, records, and accounts in such form as 
     may be required by the Corporation;
       (B) either--
       (i) undergo a biennial audit by independent certified 
     public accountants or independent licensed public accountants 
     certified or licensed by a regulatory authority of a State, 
     which audit shall be in accordance with auditing standards 
     developed by the Corporation, in consultation with the 
     Comptroller General; or
       (ii) submit a financial statement in lieu of the audit 
     required by subparagraph (A) if the Corporation determines 
     that the cost burden of such audit on such entity is 
     excessive in light of the financial condition of such entity; 
     and
       (C) furnish biennially to the Corporation a copy of the 
     audit report required pursuant to the subparagraph (B), as 
     well as such other information regarding finances (including 
     an annual financial report) as the Corporation may require.
       (7) Additional recordkeeping.--Any recipient of assistance 
     by grant or contract under this section, other than a fixed 
     price contract awarded pursuant to competitive bidding 
     procedures, shall keep such records as may be reasonably 
     necessary to disclose fully the amount and the disposition by 
     such recipient of such assistance, that total cost of the 
     project or undertaking in connection with which such 
     assistance is given or used, and the amount and nature of 
     that portion of the cost of the projects or undertaking 
     supplied by other sources, and such other records as will 
     facilitate an effective audit.
       (8) Access to records.--The Corporation or any of its duly 
     authorized representatives shall have access to any books, 
     documents, papers, and records of any recipient of assistance 
     for the purpose of auditing and examining all funds received 
     from the Corporation. The Comptroller General of the United 
     States or any of his duly authorized representatives also 
     shall have access to such books, documents, papers, and 
     records for the purpose of auditing and examining all funds 
     received from the Corporations during any fiscal year for 
     which Federal funds are available to the Corporation.
       (9) Public inspection.--The Corporation shall maintain the 
     information described in paragraphs (6), (7), and (8) at its 
     offices for public inspection and copying for at least 3 
     years, according to such reasonable guidelines as the 
     Corporation may issue. This public file shall be updated 
     regularly.

     SEC. 308. RAIL INFRASTRUCTURE FINANCE TRUST.

       (a) Establishment.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation shall establish the Rail 
     Infrastructure Finance Trust (hereafter in this section 
     referred to as the ``Trust'') as a trust domiciled in the 
     State of Delaware. The Trust shall, to the extent not 
     inconsistent with this Act, be subject to the laws of the 
     State of Delaware that are applicable to trusts. The Trust 
     shall manage and invest the assets of the Rail Infrastructure 
     Account described in section 307(c) that are transferred to 
     it by the Board in the manner set forth in this section.
       (b) Not a Federal Agency or Instrumentality.--The Trust is 
     not a department, agency, or other instrumentality of the 
     Government of the United States and shall not be subject to 
     title 31, United States Code.
       (c) Board of Trustees.--
       (1) Establishment.--The Trust shall have a Board of 
     Trustees.
       (2) Composition.--
       (A) Appointment.--The Board of Trustees shall consist of 5 
     members each of whom (hereafter in this title referred to as 
     a ``Trustee'') is appointed by a unanimous vote of the Board 
     of Directors of the Rail Infrastructure Finance Corporation. 
     The Board of Directors, by unanimous vote, may remove any 
     member of the Board of Trustees.
       (B) Representation of particular interests.--The 5 members 
     of the Board of Trustees shall be selected as follows:
       (i) One from among persons who represent the interests of 
     the States.
       (ii) One from among persons who represent the interests of 
     freight railroads.
       (iii) One from among persons who represent the interests of 
     passenger railroads.
       (iv) One from among persons who represent the interests of 
     holders of qualified rail infrastructure bonds issued by the 
     Rail Infrastructure Finance Corporation.
       (v) One from among persons whose interests are independent 
     of interests referred to in the other clauses of this 
     subparagraph.
       (3) Members not united states officials.--The members of 
     the Board of Trustees may not be considered officers or 
     employees of the Government of the United States.
       (4) Qualifications.--The Trustees shall be appointed only 
     from among persons who have experience and expertise in the 
     management of financial investments. No member of the Board 
     of Directors of the Rail Infrastructure Finance Corporation 
     is eligible to be a Trustee.
       (5) Terms.--Each member of the Board of Trustees shall be 
     appointed for a 3-year term. Any member whose term has 
     expired may serve until such member's successor has taken 
     office, or until the end of the calendar year in which such 
     member's term has expired, whichever is earlier. A vacancy in 
     the Board of Trustees shall not affect the powers of the 
     Board of Trustees and shall be filled in the same manner as 
     the member whose departure caused the vacancy. Any member 
     appointed to fill a vacancy occurring prior to the expiration 
     of the term for which such member's predecessor was appointed 
     shall be appointed for the remainder of such term.
       (d) Powers.--The Board of Trustees shall--
       (1) establish investment policies, including guidelines, 
     and retain independent advisers to assist in the formulation 
     and adoption of the investment guidelines;
       (2) retain independent investment managers to invest the 
     assets of the Trust in a manner consistent with such 
     investment guidelines;
       (3) invest assets in the Trust, pursuant to the policies 
     adopted in paragraph (1);
       (4) pay administrative expenses of the Trust from the 
     assets in the Trust; and
       (5) transfer money to the Rail Infrastructure Investment 
     Account, upon request of the Board of Directors of the Rail 
     Infrastructure Finance Corporation, for bond repayment and 
     administrative expenses, and for grants under subtitle B.
       (e) Reporting Requirements and Fiduciary Standards.--The 
     following reporting requirements and fiduciary standards 
     shall apply with respect to the Trust:
       (1) Duties of the board of trustees.--The Trust and each 
     member of the Board of Trustees shall discharge the duties of 
     the Trust and the duties of the Trustee, respectively 
     (including the voting of proxies), with respect to the assets 
     of the Trust solely in the interests of the Rail 
     Infrastructure Finance Corporation and the programs funded 
     under this title--
       (A) for the exclusive purposes of--
       (i) providing sufficient funds to repay qualified rail 
     infrastructure bonds issued by the Rail Infrastructure 
     Finance Corporation, to fund the administrative costs of the 
     Rail Infrastructure Finance Corporation and to provide grants 
     for rail capital projects under subtitle B; and
       (ii) defraying reasonable expenses of administering the 
     Trust;
       (B) with the care, skill, prudence, and diligence under the 
     circumstances then prevailing that a prudent person acting in 
     a like

[[Page S10292]]

     capacity and familiar with such matters would use in the 
     conduct of an enterprise of a like character and with like 
     aims;
       (C) by diversifying investments so as to minimize the risk 
     of large losses and to avoid disproportionate influence over 
     a particular industry or firm, unless under the circumstances 
     it is clearly prudent not to do so; and
       (D) in accordance with Trust governing documents and 
     instruments insofar as such documents and instruments are 
     consistent with this Act.
       (2) Prohibitions with respect to members of the board of 
     trustees.--A member of the Board of Trustees may not--
       (A) deal with the assets of the Trust in the Trustee's own 
     interest or for the Trustee's own account;
       (B) in an individual or in any other capacity, act in any 
     transaction involving the assets of the Trust on behalf of a 
     party (or represent a party) whose interests are adverse to 
     the interests of the Trust and the Rail Infrastructure 
     Finance Corporation; or
       (C) receive any consideration for the Trustee's own 
     personal account from any party dealing with the assets of 
     the Trust.
       (3) Exculpatory provisions and insurance.--Any provision in 
     an agreement or instrument that purports to relieve a Trustee 
     from responsibility or liability for any responsibility, 
     obligation, or duty under this Act shall be void. Nothing in 
     this paragraph shall be construed to preclude--
       (A) the Trust from purchasing insurance for its Trustees or 
     for itself to cover liability or losses occurring by reason 
     of the act or omission of a Trustee, if such insurance 
     permits recourse by the insurer against the Trustee in the 
     case of a breach of a fiduciary obligation by such Trustee;
       (B) a Trustee from purchasing insurance to cover liability 
     under this section from and for his own account; or
       (C) an employer or an employee organization from purchasing 
     insurance to cover potential liability of 1 or more Trustees 
     with respect to their fiduciary responsibilities, 
     obligations, and duties under this section.
       (4) Trustees bonds.--
       (A) Requirement.--Each Trustee and every person who handles 
     funds or other property of the Trust (hereafter in this 
     section referred to as ``Trust official'') shall be bonded. 
     The bond shall provide protection to the Trust against loss 
     by reason of acts of fraud or dishonesty on the part of any 
     Trust official, directly or through the connivance of others.
       (B) Amount.--The amount of a bond for a Trustee under this 
     paragraph shall be fixed at the beginning of each fiscal year 
     of the Trust by the Board of Directors of the Rail 
     Infrastructure Finance Corporation. The amount may not be 
     less than 10 percent of the amount of the funds administered 
     by the Trust. In no case may such bond be less than $1,000 
     nor more than $500,000, except that the Board of Directors, 
     after consideration of the record, may prescribe an amount in 
     excess of $500,000, subject to the 10 percent minimum 
     requirement in the preceding sentence.
       (C) Unlawful conduct.--It shall be unlawful for--
       (i) any Trust official to receive, handle, disburse, or 
     otherwise exercise custody or control of any of the funds or 
     other property of the Trust without being bonded as required 
     by this subsection;
       (ii) any Trust official, or any other person having 
     authority to direct the performance of such functions, to 
     permit such functions, or any of them, to be performed by any 
     Trust official, with respect to whom the requirements of this 
     subsection have not been met; and
       (iii) any person to procure any bond required by this 
     subsection from any surety or other company or through any 
     agent or broker in whose business operations such person has 
     any control or significant financial interest, direct or 
     indirect.
       (f) Audit and Report.--
       (1) Requirement for annual audit.--The Trust shall annually 
     engage an independent qualified public accountant to audit 
     the financial statements of the Trust.
       (2) Annual management report.--The Trust shall submit an 
     annual management report to be included in the annual report 
     of the Corporation required under section 306. The management 
     report under this paragraph shall include the following 
     matters:
       (A) A statement of financial position.
       (B) A statement of operations.
       (C) A statement of cash flows.
       (D) A statement on internal accounting and administrative 
     control systems.
       (E) The report resulting from an audit of the financial 
     statements of the Trust conducted under paragraph (1).
       (F) Any other comments and information necessary to inform 
     Congress about the operations and financial condition of the 
     Trust.
       (3) Additional copies.--The Trust shall provide the 
     President and the Director of the Office of Management and 
     Budget a copy of the management report when it is submitted 
     to Congress.
       (g) Enforcement.--The Rail Infrastructure Finance 
     Corporation may commence a civil action--
       (1) to enjoin any act or practice by the Trust, its Board 
     of Trustees, or its employees or agents that violates any 
     provision of this Act; or
       (2) to obtain other appropriate relief to redress such 
     violations, or to enforce any provisions of this Act.
       (h) Administrative Matters.--
       (1) Authority.--The Board of Trustees shall have the 
     authority to make rules to govern its operations, employ 
     professional staff, and contract with outside advisers 
     (including the Rail Infrastructure Finance Corporation) to 
     provide legal, accounting, investment advisory, or other 
     services necessary for the proper administration of this 
     section. In the case of a contract for investment advisory 
     services, compensation for such services may be provided on a 
     fixed fee basis or on such other terms and conditions as are 
     customary for such services.
       (2) Quorum and proceedings.--Three members of the Board of 
     Trustees shall constitute a quorum for the Board to conduct 
     business. Investment guidelines shall be adopted by a 
     unanimous vote of the entire Board of Trustees. All other 
     decisions of the Board of Trustees shall be decided by a 
     majority vote of the quorum present. All decisions of the 
     Board of Trustees shall be entered upon the records of the 
     Board of Trustees.
       (3) Compensation of trustees and employees.--The salaries 
     of the Trustees and the employees of the Trust are subject to 
     the limitations in section 303.
       (4) Funding.--The expenses of the Trust and the Board of 
     Trustees that are incurred under this section shall be paid 
     from the Trust.
       (i) Exemption From Tax for Rail Infrastructure Finance 
     Trust.--Subsection (c) of section 501 of the Internal Revenue 
     Code of 1986 is amended by adding at the end the following 
     new paragraph:
       ``(29) The Rail Infrastructure Finance Trust established 
     under section 308 of the American Rail Equity Act of 2003.''.

               Subtitle B--Rail Development Grant Program

      SEC. 311. NATIONAL SYSTEM IMPROVEMENT GRANT PROGRAM.

       (a) Grants to States.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation may, by grant, provide 
     financial assistance to a State, group of States, or the 
     National Railroad Passenger Corporation, for, or in 
     connection with, intercity passenger rail capital projects 
     that are--
       (1) designated as National System Improvement Projects 
     under section 22506 of title 49, United States Code; and
       (2) as determined by the Board, will significantly benefit 
     the National System, as designated under section 25002(a) of 
     title 49, United States Code, of intercity passenger rail 
     infrastructure or services.
       (b) Project Selection Criteria.--The Board, in selecting 
     the recipients of financial assistance to be provided under 
     subsection (a), shall--
       (1) give preference to projects that most significantly 
     improve intercity passenger rail service on routes of the 
     National System through increased frequency of on-time 
     performance, reduced trip time, higher ridership, increased 
     service frequency, or other service measures as defined under 
     section 22506 of title 49, United States Code;
       (2) give preference to projects that effect multiple routes 
     or the entire National System;
       (3) require that each proposed project meet all safety 
     requirements that are applicable to the project under law, 
     and give a preference to any project determined by the Board 
     as having provided for particularly high levels of safety;
       (4) encourage intermodal connectivity through projects that 
     provide direct connections between train stations, airports, 
     bus terminals, subway stations, ferry ports, and other modes 
     of transportation;
       (5) ensure a general balance across geographic regions of 
     the United States in providing such assistance and avoid a 
     concentration of a disproportionate amount of such financial 
     assistance in a single project or region of the country;
       (6) favor projects that are expected to have a significant 
     favorable impact on air or highway traffic congestion;
       (7) encourage projects that also improve freight or 
     commuter rail operations;
       (8) favor projects that either--
       (A) have significant environmental benefits; or
       (B) are--
       (i) at a stage of preparation that all precommencement 
     compliance with environmental protection requirements has 
     already been completed; and
       (ii) ready to be commenced;
       (9) favor projects with positive economic and employment 
     impacts;
       (10) encourage the use of positive train control 
     technologies;
       (11) favor projects that have commitments of funding from 
     non-Federal Government sources in a total amount that exceeds 
     the minimum amount of the non-Federal contribution required 
     under section 315(a);
       (12) ensure that each project is compatible with, and is 
     operated in conformance with--
       (A) plans developed pursuant to the requirements of 
     sections 134 and 135 of title 23, United States Code;
       (B) State rail plans under chapter 225 of title 49, United 
     States Code; and
       (C) the national rail plan; and
       (13) favor projects that enhance national security.
       (c) Amtrak Eligibility.--To receive a grant under this 
     section, the National Railroad Passenger Corporation may 
     enter into a cooperative agreement with 1 or more States to 
     carry out 1 or more projects on an approved State rail plan's 
     ranked list of priority freight and passenger rail capital 
     projects developed under section 22504(5) of title 49, United 
     States Code, or may submit an independent application for a 
     grant for

[[Page S10293]]

     any project designated as a National System Improvement 
     Project under section 22506 of title 49, United States Code. 
     Any such independent grant request shall be subject to the 
     same selection criteria as apply under subsection (b) to 
     projects of States, except the criteria set forth in 
     subparagraphs (A) and (B) of subsection (b)(12).
       (e) Limitations.--
       (1) Two-year availability.--If any amount provided as a 
     grant to a State or the National Railroad Passenger 
     Corporation under this section is not obligated or expended 
     for the purposes described in subsections (a) and (b) within 
     2 years, such sums shall be returned to the Board for other 
     national system improvement projects under this section at 
     the discretion of the Board.
       (2) Single project amount.--In awarding grants to States 
     for eligible projects under this section, the Board shall 
     limit the amount of any grant made for a particular project 
     in a fiscal year to not more than 30 percent of the total 
     amount of the funds available for grants under this section 
     for that fiscal year.
       (3) Amtrak.--The total amount of grants made under this 
     section to the National Railroad Passenger Corporation in a 
     fiscal year may not exceed 50 percent of the total amount 
     available under this section for all grants in that fiscal 
     year.
       (4) Northeast corridor projects.--The total amount of 
     grants made under this section for the Northeast Corridor in 
     a fiscal year may not exceed 25 percent of the total amount 
     available under this section for all grants under this 
     section in that fiscal year.
       (5) Other projects.--The total amount of grants made under 
     this section for projects other than projects for the 
     Northeast Corridor in any fiscal year may not exceed 75 
     percent of the total amount available under this section for 
     all grants under this section in that fiscal year.
       (6) Northeast corridor defined.--In this section, the term 
     ``Northeast Corridor'' has the meaning given that term in 
     section 24102(6) of title 49, United States Code.
       (f) Funding.--
       (1) In general.--There are authorized to be appropriated to 
     the Secretary of Transportation for fiscal years 2004 through 
     2009 such sums as may be necessary to carry out subsections 
     (a) through (e) of this section.
       (2) Northeast corridor freight-only track.--
       (A) In general.--Notwithstanding any other provision of 
     this section, there are authorized to be appropriated to the 
     Secretary of Transportation for the construction of a 
     freight-only track on the Northeast Corridor for fiscal year 
     2005 $125,000,000, including capital improvements, 
     improvements to signal systems, high-speed interlockings, 
     track, and bridges, such sum to remain available until 
     expended.
       (B) Financial contribution from other users.--The Secrtary 
     shall consider the feasibility of seeking a financial 
     contribution to the construction of the track and capital 
     improvements related thereto from other users.
       (C) Project construction.--The Secretary shall coordinate 
     construction of the track with the owner of the freight 
     easement on the Northeast Corridor to ensure that current 
     service commitments for both passenger and freight rail 
     transportation are maintained.

     SEC. 312. GRANT PROGRAM REQUIREMENTS AND LIMITATIONS.

       (a) Authorized Uses.--The proceeds of a grant made for a 
     project under this subtitle may be used to defray the costs 
     of the project or to reimburse the recipient for costs of the 
     project paid by the recipient.
       (b) Non-Federal Contribution.--The proceeds of a grant for 
     1 or more projects under this subtitle may be released upon 
     receipt by the Board of Directors of the Rail Infrastructure 
     Finance Corporation of cash payment by a non-Federal 
     Government source, or 1 or more such sources jointly, in an 
     amount not less than the amount equal to 20 percent of the 
     amount of the grant disbursed. The cash payment may not be 
     derived, directly or indirectly, from Federal funds. Amounts 
     received under this subsection shall be credited to the Rail 
     Infrastructure Investment Account established under section 
     307(c).
       (c) Preference Involving Donated Property Interests and 
     Services.--In selecting projects for grant funding under this 
     subtitle, the Board may give preference to projects that 
     involve donated right-of-way, property, or in-kind services 
     by a public sector or private sector entity. The value of a 
     donation under subsection (c) may not be counted toward 
     satisfaction of the requirement in subsection (b).
       (d) Flexibility.--Notwithstanding any other provision of 
     this subtitle, amounts made available under section 316 may 
     be combined and used for projects that significantly benefit 
     both freight rail service and intercity passenger rail 
     service.
       (e) Suballocation; Public-Private Partnerships.--
       (1) In general.--A metropolitan planning organization, 
     State transportation department, or other project sponsor may 
     enter into an agreement with any public, private, or 
     nonprofit entity to cooperatively implement any project 
     funded with a grant under this subtitle.
       (2) Forms of participation.--Participation by an entity 
     under paragraph (1) may consist of--
       (A) ownership or operation of any land, facility, 
     locomotive, rail car, vehicle, or other physical asset 
     associated with the project;
       (B) cost-sharing of any project expense;
       (C) carrying out administration, construction management, 
     project management, project operation, or any other 
     management or operational duty associated with the project; 
     and
       (D) any other form of participation approved by the Board.
       (3) Sub-allocation.--A State may allocate funds under this 
     section to any entity described in paragraph (1).
       (f) Applications.--To seek a grant under this subtitle, a 
     State or, in the case of a grant under section 311, the 
     National Railroad Passenger Corporation shall submit an 
     application for the grant to the Board. The application shall 
     be submitted at such time and contain such information as the 
     Board requires.
       (g) Procedures for Grant Award.--The Board shall prescribe 
     procedures for the awarding of grants under this subtitle, 
     including application and qualification procedures and a 
     record of decision on applicant eligibility. The procedures 
     shall include the execution of a grant agreement between the 
     applicant and the Board. The Board shall initiate rulemaking 
     for the purpose of this subsection not later than 90 days 
     after the date of the enactment of this Act.

            Subtitle C--Rail Infrastructure Tax Credit Bonds

     SEC. 321. CREDIT TO HOLDERS OF QUALIFIED 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 H--Nonrefundable Credit for Holders of Qualified Rail 
                          Infrastructure Bonds

``Sec. 54. Credit to holders of qualified rail infrastructure bonds.

     ``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED RAIL INFRASTRUCTURE 
                   BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified 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.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a qualified 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 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--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     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 Rail Infrastructure Bond.--For purposes of 
     this part, the term `qualified rail infrastructure bond' 
     means any bond issued as part of an issue if--
       ``(1) the bond is issued by the Rail Infrastructure Finance 
     Corporation and is in registered form,
       ``(2) the term of each bond which is part of such issue 
     does not exceed 20 years,

[[Page S10294]]

       ``(3) the payment of principal with respect to such bond is 
     the obligation of the Rail Infrastructure Finance Corporation 
     and not an obligation of the United States,
       ``(4) all proceeds from the sale of the issue are used for 
     the purposes set forth in section 307(c)(5) of the American 
     Rail Equity Act of 2003, and
       ``(5) 95 percent or more of the net spendable proceeds from 
     the sale of such issue are to be used for expenditures 
     incurred after the date of enactment of the American Rail 
     Equity Act of 2003 for any project described in section 311, 
     312, 313, or 314 of that Act.
       ``(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 award grants under sections 311, 312, 313, and 314 
     of the American Rail Equity Act of 2003 in a total amount 
     that is at least 95 percent of the net spendable proceeds 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--
       ``(i) to spend at least 10 percent of the net spendable 
     proceeds of the issue, or to commence construction, with 
     respect to such projects within the 6-month period beginning 
     on such date, and
       ``(ii) to proceed with due diligence to complete such 
     projects, and
       ``(C) to expend the total amount of the net spendable 
     proceeds of the issue.
       ``(2) Rules regarding continuing compliance after 3-year 
     determination.--If at least 95 percent of the net spendable 
     proceeds of the issue is not awarded as grants to be 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 paragraph (1) if 
     either the requirement under subparagraph (A) or the 
     requirements under subparagraph (B) are met, as follows:
       ``(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 and disburses any remaining net 
     spendable proceeds to the Secretary of Transportation within 
     30 days after the end of such 3-year period.
       ``(B) The issuer--
       ``(i) awards in grants under sections 311, 312, 313, and 
     314 of the American Rail Equity Act of 2003 at least 75 
     percent of the net spendable proceeds of the issue for 1 or 
     more qualified projects within the 3-year period beginning on 
     the date of issuance, and
       ``(ii) either--

       ``(I) awards in grants under sections 311, 312, 313, and 
     314 of the American Rail Equity Act of 2003 at least 95 
     percent of the net spendable proceeds of the issue for 1 or 
     more qualified projects within the 4-year period beginning on 
     the date of issuance, or
       ``(II) 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 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.
       ``(3) Special rules.--
       ``(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 and carrybacks under section 
     39 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(19).
       ``(h) Rail Infrastructure Finance Trust.--
       ``(1) In general.--The following amounts shall be held in a 
     trust account by the Rail Infrastructure Finance Corporation:
       ``(A) An amount of the proceeds from the sale of all bonds 
     designated for purposes of this section that, when combined 
     with amounts described in subparagraphs (B), (C), and (D), is 
     sufficient--
       ``(i) to ensure the Corporation's ability to redeem all 
     bonds upon maturity; and
       ``(ii) to pay the administrative expenses of the 
     Corporation and the Rail Infrastructure Finance Trust.
       ``(B) The amount of any non-Federal contributions required 
     under section 304(a) of the American Rail Equity Act of 2003.
       ``(C) The temporary period investment earnings on proceeds 
     from the sale of such bonds.
       ``(D) Any earnings on any amounts described in subparagraph 
     (A), (B), or (C).
       ``(2) Use of funds.--Amounts in the trust account may be 
     used only for investment purposes to generate sufficient 
     funds to redeem qualified rail infrastructure bonds at 
     maturity and pay the administrative expenses of the 
     Corporation and the Trust, and for funding grants as provided 
     for in section 307(c)(5)(B) of the American Rail Equity Act 
     of 2003.
       ``(3) Use of remaining funds in trust account.--If the 
     Corporation determines that the amount in the trust account 
     exceeds the amount required to comply with paragraph (2), the 
     Corporation shall transfer the excess to the Rail 
     Infrastructure Finance Trust.
       ``(i) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Net spendable proceeds.--The term `net spendable 
     proceeds' has the meaning give such term in section 307(c)(6) 
     of the American Rail Equity Act of 2003.
       ``(3) Qualified project.--The term `qualified project' 
     means any project that is eligible for grant funding under 
     section 311, 312, 313, or 314 of the American Rail Equity Act 
     of 2003.
       ``(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 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 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:
       ``(8) Reporting of credit on qualified rail infrastructure 
     bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(d) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(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 Rail 
     Infrastructure Bonds.--For purposes of this section, the 
     credit allowed by section 54 to a taxpayer by reason of 
     holding a qualified 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 rail 
     infrastructure bonds.--For purposes of this section, the 
     credit allowed by section 54 to a taxpayer by reason of 
     holding a qualified 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.''.
       (c) Clerical Amendments.--
       (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 H. Nonrefundable Credit for Holders of Qualified Rail 
              Infrastructure Bonds.''.


[[Page S10295]]


       (2) Section 6401(b)(1) is amended by striking ``and G'' and 
     inserting ``G, and H''.

     SEC. 322. ANNUAL REPORT BY TREASURY ON RAIL INFRASTRUCTURE 
                   TRUST ACCOUNT.

       The Secretary of the Treasury shall annually report to 
     Congress as to whether the amount deposited in the trust 
     account established by the Rail Infrastructure Finance 
     Corporation under section 54(i) of the Internal Revenue Code 
     of 1986, as added by section 321, is sufficient to fully 
     repay at maturity the principal of any outstanding qualified 
     rail infrastructure bonds issued pursuant to section 54 of 
     such Code (as so added), together with amounts expected to be 
     deposited into such account, as certified by the Rail 
     Infrastructure Finance Corporation in accordance with 
     procedures prescribed by the Secretary of the Treasury.

     SEC. 323. ISSUANCE OF REGULATIONS.

       The Secretary of the Treasury shall issue regulations 
     required under section 54 of the Internal Revenue Code of 
     1986 (as added by this section 321) not later than 90 days 
     after the date of the enactment of this Act.

     SEC. 324. EFFECTIVE DATE.

       The amendments made by section 321 shall apply to 
     obligations issued after the date of enactment of this Act.

      TITLE IV--RAIL INFRASTRUCTURE AND INTERMODAL TRANSPORTATION

     SEC. 401. INTERMODAL TRANSPORTATION POLICY.

       Section 302(e) is amended by striking ``system'' and 
     inserting ``system, including freight and passenger rail 
     service and maritime transportation, including such 
     transportation via inland waterways,''.

     SEC. 402. STATE RAIL PLANS.

       (a) In General.--Part B of subtitle V is amended by adding 
     at the end the following:

                    ``CHAPTER 225--STATE RAIL PLANS

``Sec.
``22501. Authority.
``22502. Purposes and coordination.
``22503. Transparency and review.
``22504. Content.
``22505. High priority projects.
``22506. Approval.
``22507. Definitions.

     ``Sec. 22501. Authority

       ``(a) In General.--Each State may prepare and maintain a 
     State rail plan in accordance with the provisions of this 
     chapter.
       ``(b) Requirements.--For the preparation and periodic 
     revision of a State rail plan, a State shall--
       ``(1) establish or designate a State rail transportation 
     authority to prepare, maintain, coordinate, and administer 
     the plan;
       ``(2) establish or designate a State rail plan approval 
     authority to approve the plan;
       ``(3) submit the approved plan to the Secretary of 
     Transportation for approval; and
       ``(4) revise and resubmit an approved plan no less 
     frequently than once every 7 years for reapproval by the 
     Secretary.

     ``Sec. 22502. Purposes and coordination

       ``(a) Purposes.--The purposes of a State rail plan are as 
     follows:
       ``(1) To set forth State policy for all freight and 
     passenger rail transportation, including commuter rail 
     operations, in the State.
       ``(2) To establish the period covered by the State rail 
     plan.
       ``(3) To present priorities and strategies to preserve, 
     enhance, or expand rail service in the State.
       ``(4) To serve as the basis for Federal and State rail 
     investments within the State.
       ``(b) Coordination.--A State rail plan shall be coordinated 
     with other State transportation planning goals and programs 
     and set forth rail transportation's role within the State 
     transportation system.

     ``Sec. 22503. Transparency and review

       ``(a) Preparation.--A State shall provide adequate and 
     reasonable notice and opportunity for comment and other input 
     to the public, rail carriers, commuter and transit 
     authorities operating in, or affected by rail operations 
     within the State, units of local government, and other 
     interested parties in the preparation and review of its State 
     rail plan.
       ``(b) Annual Reviews.--Each State shall transmit an annual 
     report on its plan to the Secretary of Transportation. The 
     report shall included, for the year preceding the year in 
     which submitted, the following matters:
       ``(1) A review of progress made, and actions taken, under 
     the plan during the year.
       ``(2) A schedule of actions to be taken during the current 
     year.
       ``(3) Any modifications made in the plan after approval of 
     the plan by the Secretary or after the submission of the most 
     recent annual report on the plan to the Secretary, including 
     any modifications made to the priority freight or passenger 
     rail capital project list required by section 22504(a)(5) of 
     this title.
       ``(c) Approval of Modified Plans.--Each modification of a 
     State rail plan that is determined substantive by the 
     Secretary, including any modification to a priority freight 
     or passenger rail capital project list required by section 
     22504(a)(5) of this title, is subject to approval (for the 
     purposes of this chapter) by the Secretary.

     ``Sec. 22504. Content

       ``(a) In General.--Each State rail plan shall contain the 
     following:
       ``(1) An evaluation of the existing overall rail 
     transportation system and rail services and facilities within 
     the State, a prioritization of such services and facilities 
     in terms of their contributions to the State's rail and 
     transportation system.
       ``(2) A comprehensive review of all rail lines within the 
     State, including proposed high speed rail corridors and 
     significant rail line segments not currently in service, 
     containing an analysis of the transportation services 
     provided by those lines, their ownership, operating 
     characteristics, the state of their infrastructure (including 
     capital and maintenance requirements), and the economic and 
     environmental impact of those lines.
       ``(3) A statement of freight and passenger rail service 
     objectives, including minimum service levels, for rail 
     transportation routes in the State.
       ``(4) A general analysis and quantification of rail's 
     transportation, economic, and environmental impacts in the 
     State, including congestion mitigation, trade and economic 
     development, air quality, land-use, energy-use, and community 
     impacts.
       ``(5) A long-range rail service and investment program for 
     current and future freight and passenger services in the 
     State that meets the requirements of subsection (b).
       ``(6) A statement of rail financing issues in the State, 
     including a list of current and prospective capital and 
     operating funding resources, public subsidies, State and 
     Federal taxation, and other financial policies relating to 
     rail service and rail infrastructure development.
       ``(7) A statement of rail service issues within the State, 
     such as congestion and capacity, and current system 
     deficiencies on a regional, intrastate, and interstate basis, 
     that reflects consultation with neighboring States and 
     describes any coordination of regional rail service.
       ``(8) A review of major passenger and freight intermodal 
     rail connections and facilities within the State, including 
     seaports, and options to maximize service integration and 
     efficiency between rail and other modes of transportation 
     within the State.
       ``(9) A description of new technology that relates to rail 
     transportation within the State, including logistics and 
     process improvements.
       ``(10) A review of plans and projects within the State to 
     improve rail transportation safety and security, including 
     all major projects funded under section 130 of title 23.
       ``(11) A performance evaluation of passenger rail services 
     operating in the State, including possible improvements in 
     those services, and a description of strategies to achieve 
     those improvements.
       ``(12) A description of activities by regional planning 
     agencies, regional transportation authorities, and 
     municipalities in the State on freight and passenger rail 
     service within the State, or in the region in which the State 
     is located, including a presentation of any recommendations 
     made by such agencies, authorities, and municipalities.
       ``(13) A compilation of studies and reports on high-speed 
     rail corridor development within the State not included in a 
     previous plan under this chapter, and a plan for funding any 
     recommended development of such corridors in the State.
       ``(14) A statement that the State is in compliance with the 
     requirements of section 22102.
       ``(b) Long-Range Service and Investment Program.--
       ``(1) Program content.--A long-range rail service and 
     investment program included in a State rail plan under 
     subsection (a)(5) shall include the following matters:
       ``(A) Two ranked lists for rail capital projects, one for 
     priority freight rail capital projects and one for priority 
     passenger rail capital projects.
       ``(B) A detailed funding plan for the projects.
       ``(2) Project list content.--The ranked list of priority 
     freight and passenger rail capital projects shall contain--
       ``(A) a description of the anticipated public and private 
     benefits of each such project; and
       ``(B) a statement of the correlation between--
       ``(i) private funding contributions for the projects; and
       ``(ii) the private benefits.
       ``(3) Considerations for project list.--In preparing the 
     ranked list of priority freight and passenger rail capital 
     projects, a State rail transportation authority shall take 
     into consideration the following matters:
       ``(A) Contributions made by non-Federal Government and non-
     State sources through user fees, matching funds, or other 
     private capital involvement.
       ``(B) Rail capacity and congestion effects.
       ``(C) Highway and transportation system congestion 
     mitigation.
       ``(D) Regional balance.
       ``(E) Environmental impact.
       ``(F) Competitive and service impact for rail carriers and 
     shippers.
       ``(G) Preservation of rail service.
       ``(H) Economic and employment impacts.
       ``(I) Projected ridership for passenger projects.
       ``(c) Waiver.--The Secretary may waive the any requirement 
     of subsection (a), except the requirement in paragraph (5) of 
     such subsection, upon application under circumstances that 
     the Secretary determines appropriate.

     ``Sec. 22505. High priority projects

       ``(a) Designation of Projects.--The Secretary of 
     Transportation may designate as a high priority project any 
     project that meets both of the following criteria:
       ``(1) The project is on a ranked list of priority freight 
     and passenger rail capital

[[Page S10296]]

     projects that is included in a State rail plan under section 
     22504(5).
       ``(2) The project focuses on key rail congestion points 
     that are selected by the Secretary--
       ``(A) on the basis of national benefits to the rail 
     transportation system; and
       ``(B) coordinated with the national rail plan.
       ``(b) Preferred Projects.--The Secretary, in designating 
     high priority projects, shall give preference to--
       ``(1) projects that have national significance for--
       ``(A) improving the national rail network and the Nation's 
     transportation system;
       ``(B) ensuring particularly high levels of safety;
       ``(C) increasing intermodal connectivity by providing or 
     improving direct connections between rail facilities and 
     other modes of transportation;
       ``(D) significantly affecting highway, aviation, or 
     maritime capacity, congestion, or safety;
       ``(E) improving both intercity passenger rail an freight 
     rail services;
       ``(F) enhancing rail completion or freight rail service for 
     shippers;
       ``(G) causing positive economic and employment results;
       ``(H) producing significant environmental or community 
     benefits;
       ``(I) having received financial commitments and other 
     support from numerous entities such as States, local 
     governments, or private entities;
       ``(J) enhancing international trade;
       ``(K) enhancing national security; or
       ``(L) employing positive train control technologies; and
       ``(2) projects that are at the stage of preparation that 
     all precommencement compliance with environmental protection 
     requirements has been completed and the projects are ready to 
     commence.
       ``(c) Regional Balance and Compatibility.--The Secretary, 
     in designating high priority projects, shall ensure that--
       ``(1) the geographic distribution of the projects 
     designated as high priority projects is generally balanced 
     among the geographic regions of the United States and a 
     disproportionate number of such projects is not concentrated 
     in a single region or State; and
       ``(2) all projects are compatible with, and carried out in 
     conformance with--
       ``(A) plans developed pursuant to the requirements of 
     sections 134 and 135 of title 23; and
       ``(B) the national rail plan.

     ``Sec. 22506. Approval

       ``(a) Criteria.--The Secretary may approve a State rail 
     plan for the purposes of this chapter if--
       ``(1) the plan meets all of the requirements applicable to 
     State plans under this chapter;
       ``(2) for each project listed on the ranked list of 
     priority freight and passenger rail capital projects under 
     the plan--
       ``(A) the project meets all safety requirements that are 
     applicable to the project under law; and
       ``(B) the State has entered into an agreement with any 
     owner of rail infrastructure directly affected by the project 
     that provides for the State to proceed with the project; and
       ``(3) the content of the plan is coordinated with--
       ``(A) plans developed pursuant to the requirements of 
     sections 134 and 135 of title 23; and
       ``(B) the national rail plan and any other transportation 
     plan of the Federal Government that is required by law.
       ``(b) Procedures for State Rail Plan Submission and 
     Approval.--The Secretary shall prescribe procedures for 
     States to submit State rail plans for review under this 
     subtitle, including application and qualification procedures. 
     The procedures shall provide for the Secretary to review a 
     State rail plan and issue a record of decision of approval or 
     disapproval, with comment, on such plan within 180 days after 
     the plan is submitted.

     ``Sec. 22507. Definitions

       ``In this chapter:
       ``(1) Private benefit.--The term `private benefit' means a 
     benefit accrued to a person or private entity that directly 
     improves the economic and competitive condition of that 
     person or entity through improved assets, cost reductions, 
     service improvements, or any other means as defined by the 
     Secretary.
       ``(2) Public benefit.--The term `public benefit' means a 
     benefit accrued to the public in the form of enhanced 
     mobility of people or goods, environmental protection or 
     enhancement, congestion mitigation, enhanced trade and 
     economic development, improved air quality or land use, more 
     efficient energy use, enhanced public safety or security, 
     reduction of public expenditures due to improved 
     transportation efficiency or infrastructure preservation, and 
     any other positive community effects as defined by the 
     Secretary.
       ``(3) State.--The term `State' means any of the 50 States 
     and the District of Columbia.
       ``(4) State rail transportation authority.--The term `State 
     rail transportation authority' means the State agency or 
     official responsible under the direction of the Governor of 
     the State or a State law for preparation, maintenance, 
     coordination, and administration of the State rail plan.''.
       (b) Clerical Amendment.--The table of chapters for subtitle 
     V is amended by inserting after the item relating to chapter 
     223 the following:

``225. STATE RAIL PLANS.......................................22501.''.

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