[House Report 109-314]
[From the U.S. Government Publishing Office]



109th Congress                                            Rept. 109-314
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 2

======================================================================



 
 RAIL INFRASTRUCTURE DEVELOPMENT AND EXPANSION ACT FOR THE 21ST CENTURY

                                _______
                                

                February 3, 2006.--Ordered to be printed

                                _______
                                

   Mr. Thomas, from the Committee on Ways and Means,  submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1631]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 1631) to provide for the financing of high-speed 
rail infrastructure, and for other purposes, having considered 
the same, report thereon with an amendment and without 
recommendation.

                                CONTENTS

                                                                   Page
 I. Summary and Background............................................1
        A. Purpose and Summary...................................     1
        B. Background and Need for Legislation...................     2
        C. Legislative History...................................     2
II. Explanation of the Bill...........................................2
        A. Overview of Rules Governing the Issuance of Tax-Exempt 
            and Tax-Credit Bonds.................................     2
        B. Description of Sections 2 and 3 of H.R. 1631..........     6
III.Votes of the Committee...........................................10

IV. Budget Effects of the Bill.......................................10
 V. Other Matters To Be Discussed Under the Rules of the House.......13
VI. Changes in Existing Law Made by the Bill, as Reported............14
  The amendment is as follows:
  Strike sections 2 and 3 of the bill and redesignate the 
succeeding sections accordingly.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 1631 (the ``Rail Infrastructure Development 
and Expansion Act for the 21st Century''), as reported by the 
Committee on Transportation and Infrastructure, provides for 
the financing of high-speed rail infrastructure, and for other 
purposes. Sections two and three of the reported bill provide 
for the issuance of $12 billion in tax-exempt bonds and $12 
billion in tax credit bonds to finance high-speed rail 
infrastructure. The provisions approved by the Committee strike 
sections two and three of the bill as reported by the Committee 
on Transportation and Infrastructure.

                 B. Background and Need for Legislation

    Members of Congress have introduced many proposals 
involving the use of tax-exempt bonds and tax-credit bonds to 
finance various activities. The provisions approved by the 
Committee reflect the need for the Committee on Ways and Means 
to evaluate and address these proposals in a comprehensive 
fashion.

                         C. Legislative History

    On April 27, 2005, the Committee on Transportation and 
Infrastructure favorably reported H.R. 1631 by voice vote. The 
bill was referred to the Committee on Ways and Means on April 
14, 2005.
    On February 1, 2006, the Committee on Ways and Means marked 
up the provisions of the bill within its jurisdiction and 
reported the provisions, as amended, on February 1, 2006, by 
voice vote.

                        EXPLANATION OF THE BILL


   A. Overview of Rules Governing the Issuance of Tax-Exempt and Tax-
                              Credit Bonds


                              PRESENT LAW

Tax-exempt bonds

            In general
    Interest on debt incurred by States or local governments is 
excluded from income if the proceeds of the borrowing are used 
to carry out governmental functions of those entities or the 
debt is repaid with governmental funds. Interest on bonds that 
nominally are issued by States or local governments, but the 
proceeds of which are used (directly or indirectly) by a 
private person and payment of which is derived from funds of 
such a private person, is taxable unless the purpose of the 
borrowing is approved specifically in the Code or in a non-Code 
provision of a revenue Act. These bonds are called ``private 
activity bonds.'' The term ``private person'' includes the 
Federal Government and all other individuals and entities other 
than States or local governments.

            Private activities eligible for financing with tax-exempt 
                    private activity bonds

    Present law includes several exceptions permitting States 
or local governments to act as conduits providing tax-exempt 
financing for private activities.
    States or local governments may issue tax-exempt ``exempt 
facility bonds'' to finance property for certain private 
businesses. Business facilities eligible for this financing 
include transportation (airports, ports, local mass commuting, 
and high speed intercity rail facilities); privately owned and/
or privately operated public works facilities (sewage, solid 
waste disposal, water, local district heating or cooling, and 
hazardous waste disposal facilities); privately-owned and/or 
operated low-income rental housing; and certain private 
facilities for the local furnishing of electricity or gas. 
Bonds issued to finance ``environmental enhancements of hydro-
electric generating facilities,'' qualified public educational 
facilities, qualified green building and sustainable design 
projects and qualified highway or surface freight transfer 
facilities also may qualify as exempt facility bonds.
    Tax-exempt financing also is authorized for capital 
expenditures for small manufacturing facilities and land and 
equipment for first-time farmers, local redevelopment 
activities, and eligible empowerment zone and enterprise 
community businesses. Tax-exempt private activity bonds also 
may be issued to finance limited non-business purposes: certain 
student loans and mortgage loans for owner-occupied housing. 
Both capital expenditures and limited working capital 
expenditures of charitable organizations described in section 
501(c)(3) of the Code may be financed with tax-exempt private 
activity bonds (``qualified 501(c)(3) bonds'').
    In most cases, the aggregate volume of private activity tax 
exempt bonds is restricted by annual aggregate volume limits 
imposed on bonds issued by issuers within each State. 
Forcalendar year 2005, these annual volume limits, which are indexed 
for inflation, equal $80 per resident of the State, or $239,180,000 
million, if greater.\1\
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    \1\ Rev. Proc. 2004-71.
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            Exempt facility bonds for high-speed intercity rail 
                    facilities

    Private activity bonds can be issued for high-speed 
intercity rail facilities.\2\ A facility qualifies as a high-
speed intercity rail facility if it is a facility (other than 
rolling stock) for fixed guideway rail transportation of 
passengers and their baggage between metropolitan statistical 
areas.\3\ The facilities must use vehicles that are reasonably 
expected to operate at speeds in excess of 150 miles per hour 
between scheduled stops and the facilities must be made 
available to members of the general public as passengers. If 
the bonds are to be issued for a nongovernmental owner of the 
facility, such owner must irrevocably elect not to claim 
depreciation or credits with respect to the property financed 
by the net proceeds of the issue.\4\
---------------------------------------------------------------------------
    \2\ Sec. 142(a)(11) and sec. 142(i).
    \3\ A metropolitan statistical area for this purpose is defined by 
reference to section 143(k)(2)(B). Under that provision, the term 
metropolitan statistical area includes the area defined as such by the 
Secretary of Commerce.
    \4\ Sec. 142(i)(2).
---------------------------------------------------------------------------
    The Code imposes a special redemption requirement for these 
types of bonds. Any proceeds not used within three years of the 
date of issuance of the bonds must be used within the following 
six months to redeem such bonds.\5\
---------------------------------------------------------------------------
    \5\ Sec. 142(i)(3).
---------------------------------------------------------------------------
    Seventy-five percent of the principal amount of the bonds 
issued for high-speed rail facilities is exempt from the volume 
limit.\6\ If all the property to be financed by the net 
proceeds of the issue is to be owned by a governmental unit, 
then such bonds are completely exempt from the volume limit.
---------------------------------------------------------------------------
    \6\ Sec. 146(g)(4).
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            Arbitrage and other requirements
    The tax exemption for State and local bonds does not apply 
to any arbitrage bond.\7\ An arbitrage bond is defined as any 
bond that is part of an issue if any proceeds of the issue are 
reasonably expected to be used (or intentionally are used) to 
acquire higher yielding investments or to replace funds that 
are used to acquire higher yielding investments.\8\ In general, 
arbitrage profits may be earned only during specified periods 
(e.g., defined ``temporary periods'') before funds are needed 
for the purpose of the borrowing or on specified types of 
investments (e.g., ``reasonably required reserve or replacement 
funds''). Subject to limited exceptions, investment profits 
that are earned during these periods or on such investments 
must be rebated to the Federal government.
---------------------------------------------------------------------------
    \7\ Sec. 103(a) and (b)(2).
    \8\ Sec. 148.
---------------------------------------------------------------------------
    An issuer must file with the IRS certain information in 
order for a bond issue to be tax-exempt.\9\ Generally, this 
information return is required to be filed no later than the 
15th day of the second month after the close of the calendar 
quarter in which the bonds were issued.
---------------------------------------------------------------------------
    \9\ Sec. 149(e).
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Tax-credit bonds

            In general
    As an alternative to traditional tax-exempt bonds, the Code 
permits three types of tax-credit bonds. States and local 
governments have the authority to issue ``qualified zone 
academy bonds,'' ``clean renewable energy bonds,'' and ``Gulf 
tax credit bonds.'' \10\
---------------------------------------------------------------------------
    \10\ Sec. 1397E, sec. 54, and sec. 1400N(1). Clean renewable energy 
bonds also may be issued by a clean renewable energy bond lender, an 
Indian tribal government, or a cooperative electric company.
---------------------------------------------------------------------------
            Qualified zone academy bonds
    ``Qualified zone academy bonds'' are defined as any bond 
issued by a State or local government, provided that (1) at 
least 95 percent of the proceeds are used for the purpose of 
renovating, providing equipment to, developing course materials 
for use at, or training teachers and other school personnel in 
a ``qualified zone academy,'' and (2) private entities have 
promised to contribute to the qualified zone academy certain 
equipment, technical assistance or training, employee services, 
or other property or services with a value equal to at least 10 
percent of the bond proceeds.
    A total of $400 million of qualified zone academy bonds is 
authorized to be issued annually in calendar years 1998 through 
2005. The $400 million aggregate bond cap is allocated to the 
States according to their respective populations of individuals 
below the poverty line. Each State, in turn, allocates the 
credit authority to qualified zone academies within such State.
    Financial institutions that hold qualified zone academy 
bonds are entitled to a nonrefundable tax credit in an amount 
equal to a credit rate multiplied by the face amount of the 
bond. A taxpayer holding a qualified zone academy bond on the 
credit allowance date is entitled to a credit. The credit is 
includable in gross income (as if it were a taxable interest 
payment on the bond), and may be claimed against regular income 
tax and alternative minimum tax liability.
    The Treasury Department sets the credit rate at a rate 
estimated to allow issuance of the qualified zone academy bonds 
without discount and without interest cost to the issuer. The 
maximum term of the bond is determined by the Treasury 
Department, so that the present value of the obligation to 
repay the bond was 50 percent of the face value of the bond.
    Qualified zone academy bonds are subject to neither 
arbitrage nor spending requirements. Treasury regulations 
require that the proceeds of a qualified zone academy bond be 
spent with due diligence. Issuers of qualified zone academy 
bonds are not required to file information returns with the 
Treasury.
            Clean renewable energy bonds

    Clean renewable energy bonds (``CREBs'') are defined as any 
bond issued by a qualified issuer if, in addition to the 
requirements discussed below, 95 percent or more of the 
proceeds of such bonds are used to finance capital expenditures 
incurred by qualified borrowers for facilities that qualify for 
the tax credit under section 45 (``qualified projects'' other 
than Indian coal production facilities), without regard to the 
placed-in-service date requirements of that section. There is a 
national CREB limitation of $800,000,000. Bonds must be issued 
before December 31, 2007.
    Like qualified zone academy bonds, CREBs are not interest-
bearing obligations. Rather, the taxpayer holding CREBs on a 
credit allowance date would be entitled to a tax credit. The 
amount of the credit is determined by multiplying the bond's 
credit rate by the face amount on the holder's bond. The credit 
rate on the bonds is determined by the Secretary and is to be a 
rate that permits issuance of CREBs without discount and 
interest cost to the qualified issuer. The credit accrues 
quarterly and is includible in gross income (as if it were an 
interest payment on the bond), and can be claimed against 
regular income tax liability and alternative minimum tax 
liability.
    CREBs are subject to a maximum maturity limitation. The 
maximum maturity is the term which the Secretary estimates will 
result in the present value of the obligation to repay the 
principal on a CREBs being equal to 50 percent of the face 
amount of such bond. Moreover, the provision requires level 
amortization of CREBs during the period such bonds are 
outstanding.
    CREBs also are subject to the arbitrage requirements of 
section 148 that apply to traditional tax-exempt bonds. 
Principles under section 148 and the regulations thereunder 
apply for purposes of determining the yield restriction and 
arbitrage rebate requirements applicable to CREBs.
    In addition, to qualify as CREBs, the qualified issuer must 
reasonably expect to and actually spend 95 percent or more of 
the proceeds of such bonds on qualified projects within the 
five-year period that begins on the date of issuance. To the 
extent less than 95 percent of the proceeds are used to finance 
qualified projects during the five-year spending period, bonds 
will continue to qualify as CREBs if unspent proceeds are used 
within 90 days from the end of such five-year period to redeem 
any ``nonqualified bonds.'' The five-year spending period may 
be extended by the Secretary upon the qualified issuer's 
request demonstrating that the failure to satisfy the five-year 
requirement is due to reasonable cause and the projects will 
continue to proceed with due diligence.
    Unlike qualified zone academy bonds, issuers of CREBs are 
required to report issuance to the IRS in a manner similar to 
the information returns required for tax-exempt bonds.

            Gulf tax credit bonds
    Gulf tax credit bonds may be issued by the States of 
Louisiana, Mississippi, and Alabama. To qualify as Gulf tax 
credit bonds, 95 percent or more of the proceeds of such bonds 
must be used to (i) pay principal, interest, or premium on a 
bond (other than a private activity bond) that was outstanding 
on August 28, 2005, and was issued by the State issuing the 
Gulf tax credit bonds, or any political subdivision thereof, or 
(ii) make a loan to any political subdivision of such State to 
pay principal, interest, or premium on a bond issued by such 
political subdivision. In addition, the issuer of Gulf tax 
credit bonds must provide additional funds to pay principal, 
interest, or premium on outstanding bonds equal to the amount 
of Gulf tax credit bonds issued to repay such outstanding 
bonds. Gulf tax credit bonds must be a general obligation of 
the issuing State and must be designated by the Governor of 
such State. The maximum maturity on Gulf tax credit bonds is 
two years. In addition, present-law arbitrage rules that 
restrict the ability of State and local governments to invest 
bond proceeds apply to Gulf tax credit bonds.
    Gulf tax credit bonds must be issued in calendar year 2006. 
The maximum amount of Gulf tax credit bonds that may be issued 
is $200 million in the case of Louisiana, $100 million in the 
case of Mississippi, and $50 million in the case of Alabama. 
Gulf tax credit bonds may not be used to pay principal, 
interest, or premium on any bond with respect to which there is 
any outstanding refunded or refunding bond. Moreover, Gulf tax 
credit bonds may not be used to pay principal, interest, or 
premium on any prior bond if the proceeds of such prior bond 
were used to provide any property described in section 
144(c)(6)(B) (i.e., any private or commercial golf course, 
country club, massage parlor, hot tub facility, suntan 
facility, racetrack or other facility used for gambling, or any 
store the principal purpose of which is the sale of alcoholic 
beverages for consumption off premises).
    As with CREBs, issuers of Gulf tax credit bonds are 
required to report issuance to the IRS in a manner similar to 
the information returns required for tax-exempt bonds.

            B. Description of Sections 2 and 3 of H.R. 1631


Selection 2 of H.R. 1631: High-speed rail infrastructure bonds

    Section 2 amends Chapter 261 of Title 49 by adding a new 
section 26106. This section permits the Secretary of 
Transportation to designate bonds for funding the development 
of high speed rail in the United States. The Secretary of 
Transportation may designate two types of bonds: private-
activity bonds, the interest on which is exempt from Federal 
taxes, and tax-credit bonds, for which the government provides 
the holder a credit rather than the issuer paying interest to 
the holder.
    The Secretary of Transportation may designate high-speed 
rail infrastructure bonds if six requirements are met.
           First, a State, group of States, or compact 
        of States, depending on the circumstances, must be the 
        proposed issuer of the bonds.
           Second, the bonds must finance projects that 
        make a substantial contribution to providing the 
        infrastructure and equipment required to complete a 
        high-speed rail transportation corridor that the 
        Secretary of Transportation determines are part of a 
        viable and comprehensive high-speed rail transportation 
        corridor design for intercity passenger service. Those 
        projects include, but are not limited to, the financing 
        or refinancing of equipment and capital improvements, 
        the elimination of grade crossings, the development of 
        intermodal facilities, improvement of train speeds or 
        safety, or station rehabilitation and construction. 
        Projects for the Alaska Railroad are also qualified 
        projects.
           Third, if the rail corridor includes the use 
        of rights-of-way owned by a freight railroad, the State 
        applicant must demonstrate that it has entered into a 
        written agreement with such freight railroad regarding 
        the use of the rights-of-way, and that collective 
        bargaining agreements with freight railroad employees 
        (including terms regarding the contracting of work) 
        shall remain in full force and effect.
           Fourth, the corridor design submitted by the 
        applicant must eliminate existing railway-highway grade 
        crossings that the Secretary of Transportation 
        determines would impede high-speed rail operations.
           Fifth, the applicant must comply with the 
        existing Amtrak prevailing wage standards and the labor 
        protection benefits applicable under section 504 of the 
        Railroad Revitalization and Regulatory Reform Act of 
        1976.
           Sixth, the applicant must agree not to pay 
        the principal or interest on any bonds using funds from 
        the Highway Trust Fund, except as permitted by law on 
        the date of enactment.
    The amount of bonds the Secretary of Transportation may 
designate to be issued in each year is limited to $1.2 billion 
per year from 2006 to 2015 of private activity tax-exempt bonds 
and $1.2 billion per year from 2006 to 2015 of tax-credit 
bonds. Any amount that the Secretary of Transportation does not 
designate in a year may be carried over and designated in 
subsequent years (through fiscal year 2019).
    When designating bonds, the Secretary of Transportation is 
to give preference to projects that: (1) are funded through a 
combination of both tax-exempt and tax-credit bonds; (2) 
propose to link rail passenger service to other passenger 
transportation modes, such as public transportation or air 
service; (3) are expected to have a significant impact on air 
traffic congestion; (4) are expected to improve commuter rail 
operations; (5) have completed all environmental work and the 
project is ready to begin construction; or (6) have received 
all financial commitments and other support from State and 
local governments.
    The Secretary of Transportation is to grant or deny the 
applicant's request within nine months after receiving the 
application.
    The issuer of the bonds is to report annually to the 
Secretary of Transportation. That report must include 
statements about the terms of the outstanding designated bonds 
and about the progress made on the project financed with the 
bonds. In addition, the bill requires the Secretary of 
Transportation, in consultation with the Secretary of the 
Treasury, to submit to the Congress an annual report including 
the reports provided by the issuers and an assessment of the 
progress made toward completion of high-speed rail 
transportation corridors resulting from projects financed with 
the bonds designated.
    Interest on bonds designated by the Secretary of 
Transportation and issued by a State, States, or Compact of 
States is exempt from Federal taxation, notwithstanding section 
149(c) of the Code.\11\ In addition, the bill provides that 
such bonds are exempt from the volume limitation on private 
activity bonds.
---------------------------------------------------------------------------
    \11\ Under present law, section 149(c) of the Code provides that 
``no interest on any bond sha1l be exempt from taxation under [the 
Code] unless such interest is exempt from tax under [the Code] without 
regard to any provision of law which is not contained in [the Code] and 
which is not contained in a revenue Act.''
---------------------------------------------------------------------------
    Bonds designated by the Secretary of Transportation may be 
issued for refinancing projects if certain requirements are 
met.
    The bill makes entities providing intercity high-speed rail 
passenger service that use property acquired through bonds 
designated by the Secretary of Transportation subject to rail 
statutes, such as the Railway Labor Act and the Railroad 
Retirement Act of 1974. This rule does not apply to projects 
for the Alaska Railroad. Any entity providing high-speed rail 
service commencing after the date of enactment which replaces 
another intercity carrier must enter a collective bargaining 
agreement covering employees of the displaced carrier. The 
agreement must further provide for priority hiring by new 
entities providing intercity high-speed rail passenger service 
of workers of an incumbent rail passenger provider who are 
displaced because of projects financed by bonds designated by 
the Secretary. The agreement must also establish a process for 
implementing such hiring priority, pay, work rules and working 
conditions. A process for negotiating new labor arrangements is 
also provided by the bill.
    The Secretary of Transportation is to issue implementing 
regulations within six months after the date of enactment.

Section 3 of H.R. 1631: Tax Credit to Holders of Qualified High-Speed 
        Rail Infrastructure Bonds

    Section 3 amends the Code to create the tax-credit bonds 
that the Secretary may designate pursuant to the newly created 
section 26106 of Title 49. It also imposes additional 
requirements on exempt facility bonds for high-speed intercity 
rail facilities.

            Qualified high-speed rail infrastructure tax-credit bonds
    The bill creates a new type of tax-credit bond, qualified 
high-speed rail infrastructure bonds. In lieu of interest, the 
bondholder receives a tax credit equal to the applicable credit 
rate multiplied by the outstanding face amount of the bond. The 
``credit rate'' for the qualified high-speed rail 
infrastructure bonds is the rate equal to the average market 
yield (as of the day before the date of sale of the issue) on 
outstanding long-term corporate debt obligations. Credits 
accrue quarterly and are includable in the gross income of the 
taxpayer. The credit is allowable against regular income tax 
and alternative minimum tax liability. Unused credits may be 
carried over to succeeding taxable years. Unlike qualified zone 
academy bonds, any taxpayer would be eligible to be a holder of 
a qualified high-speed rail infrastructure bond and thereby 
claim the credit.
    To be a qualified high-speed rail infrastructure bond, five 
requirements must be met: (1) the issuer must certify that the 
Secretary of Transportation has designated the bond under the 
new section 26106 of Title 49 for purposes of the tax-credit 
provision; (2) 95 percent or more of the proceeds from the sale 
of the issue are to be used for expenditures incurred after the 
date of enactment for a qualified project (as defined in the 
new section 26106 of Title 49 described above); (3) the term of 
each bond that is part of the issue cannot exceed 20 years; (4) 
the payment of the principal with respect to such bond is the 
obligation solely of the issuer; and (5) the issue meets 
certain spending and arbitrage requirements.
    If any qualified high-speed rail infrastructure bond ceases 
to be such a qualified bond, the issuer is required to 
reimburse the Treasury for all tax credits (including interest) 
that accrued within three years of the date of noncompliance. 
If the issuer fails to make a full and timely reimbursement of 
tax credits, holders of the bonds would be liable for any 
remaining amounts.

            Additional requirements for exempt facility bonds for high-
                    speed intercity rail facilities authorized by 
                    section 142(a)(11) of the Code
    The bill reduces the train speed requirements from 150 
miles per hour to 110 miles per hour for exempt facility bonds 
issued for high-speed intercity rail. In addition, a bond will 
not be treated as an exempt facility bond for high-speed 
intercity rail unless such bond meets the six requirements 
described above for high-speed rail infrastructure bonds (e.g., 
designation by the Secretary of Transportation, and meets 
requirements relating to qualified projects, rights-of-way 
agreements, railway-highway grade crossings, prevailing wage 
standards and labor protection benefits, and an agreement not 
to pay interest or principal using funds derived from the 
Highway Trust Fund except as permitted by law).

                           REASONS FOR CHANGE

    The Committee notes that there are many proposals to expand 
the use of tax-exempt and tax-credit bonds for various 
projects. The Committee believes that such proposals should be 
considered by the Committee in a comprehensive rather than 
piece-meal fashion. Further, the Committee believes that 
legislation involving tax-exempt and tax credit bonds, as with 
any revenue provision, should originate in the Ways and Means 
Committee, after careful consideration by the Committee of such 
proposals.

                        EXPLANATION OF PROVISION

    The Committee strikes sections 2 and 3 of H.R. 1631 from 
the bill.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of the bill, H.R. 1631.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 1631, as amended, was ordered reported, 
without recommendation, by voice vote (with a quorum being 
present).

                           VOTE ON AMENDMENT

    A rollcall vote was conducted on the following amendment:
    An amendment by Chairman Thomas, to strike sections 2 and 3 
of H.R. 1631, as introduced and reported by the Committee on 
Transportation and Infrastructure, was agreed to by a roll call 
vote of 20 yeas to 15 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Shaw.......................        X   ........  .........  Mr. Stark........  ........        X   .........
Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Herger.....................        X   ........  .........  Mr. Cardin.......  ........        X   .........
Mr. McCrery....................  ........  ........  .........  Mr. McDermott....  ........        X   .........
Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........        X   .........
Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........  ........  .........
Mr. English....................        X   ........  .........  Mr. Tanner.......  ........        X   .........
Mr. Hayworth...................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Weller.....................  ........  ........  .........  Mr. Doggett......  ........        X   .........
Mr. Hulshof....................        X   ........  .........  Mr. Pomeroy......  ........        X   .........
Mr. Lewis (KY).................        X   ........  .........  Ms. Tubbs Jones..  ........        X   .........
Mr. Foley......................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Reynolds...................        X   ........  .........  Mr. Emanuel......  ........        X   .........
Mr. Ryan.......................        X   ........  .........
Mr. Cantor.....................        X   ........  .........
Mr. Linder.....................        X   ........  .........
Mr. Beauprez...................        X   ........  .........
Ms. Hart.......................        X   ........  .........
Mr. Chocola....................        X   ........  .........
Mr. Nunes......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of the rule XIII of the 
Rules of the House of Representatives, the following statement 
is made concerning the effects on the budget of the revenue 
provisions of the bill, H.R. 1631 as reported.
    The bill, as reported, is estimated to have the following 
effects on budget receipts for fiscal years 2006-2011:


B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 3, 2005.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1631, the Rail 
Infrastructure Development and Expansion Act for the 21st 
Century.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CB0 staff contact is Gregory 
Waring.
            Sincerely,
                                 Donald B. Marron, Acting Director.
    Enclosure.

H.R. 1631--Rail Infrastructure Development and Expansion Act for the 
        21st Century

    Implementing H.R. 1631 would have no budgetary impact 
because its provisions were enacted as a part of H.R. 3, the 
Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (Public Law 109-59). As in that act, 
H.R. 1631 would authorize the appropriation of $100 million 
each year over the 2006-2013 period to provide grants to public 
agencies for developing high-speed-rail corridors and for 
improving the technology for high-speed-rail systems. 
Provisions in H.R. 1631 that would expand the Railroad 
Rehabilitation and Improvement Financing program were also 
enacted as a part of Public Law 109-59.
    On May 12, 2005, CBO transmitted a cost estimate for H.R. 
1631 as ordered reported by the House Committee on 
Transportation and Infrastructure on April 27 , 2005. In 
addition to the provisions described above, the Transportation 
Committee version of the bill also would authorize states to 
issue tax-exempt and tax-credit bonds to finance infrastructure 
for highspeed-rail transportation projects. The Joint Committee 
on Taxation estimated that the bond provisions would lower 
federal revenues, and CBO's cost estimate for that version of 
the legislation included those estimates.
    Neither version of the legislation contains 
intergovernmental or private-sector mandates as defined by the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate Gregory Waring. 
This estimate was approved by Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                    D. Macroeconomic Impact Analysis

    Because the bill as reported does not amend the Internal 
Revenue Code of 1986, no macroeconomic impact analysis is 
required under clause 3(h)(2) of rule XIII of the Rules of the 
House of Representatives.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was a result of the Committee's 
oversight review concerning the tax burden on taxpayers that 
the Committee concluded that it is appropriate to report the 
bill as amended to the House of Representatives with no 
recommendation.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)( 1) of rule XIII of the Rules 
of the House of Representatives (relating to Constitutional 
Authority), the Committee states that the Committee's action in 
reporting this bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have Power To lay 
and collect Taxes, Duties, Imposts and Excises . . .''), and 
from the 16th Amendment to the Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (Pub. L. No. 104-4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                E. Applicability of House Rule XXI 5(b)

    (ii) Rule XXI 5(b) of the Rules of the House of 
Representatives provides, in part, that ``A bill or joint 
resolution, amendment, or conference report carrying a Federal 
income tax rate increase may not be considered as passed or 
agreed to unless so determined by a vote of not less than 
three-fifths of the Members voting, a quorum being present.'' 
The Committee has carefully reviewed the provisions of the 
bill, and states that the provisions of the bill do not involve 
any Federal income tax rate increases within the meaning of the 
rule.

                       F. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the 
Joint Committee on Taxation (in consultation with the Internal 
Revenue Service and the Department of the Treasury) to provide 
a tax complexity analysis. The complexity analysis is required 
for all legislation reported by the House Committee on Ways and 
Means, the Senate Committee on Finance, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code and has 
widespread applicability to individuals or small businesses.
    The staff of the Joint Committee on Taxation has determined 
that a complexity analysis is not required under section 
4022(b) of the IRS Reform Act because the bill contains no 
provisions that amend the Internal Revenue Code and that have 
``widespread applicability'' to individuals or small 
businesses.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 49, UNITED STATES CODE

           *       *       *       *       *       *       *



SUBTITLE V--RAIL PROGRAMS

           *       *       *       *       *       *       *


                        PART D--HIGH-SPEED RAIL

                CHAPTER 261--HIGH-SPEED RAIL ASSISTANCE

Sec.
26101.  Corridor development.
     * * * * * * *

Sec. 26101. Corridor development

  (a) Corridor Development Assistance.--(1) The Secretary may 
provide under this section financial assistance to a public 
agency or group of public agencies for corridor development for 
up to 50 percent of the publicly financed costs associated with 
eligible activities.
  (2) No less than 20 percent of the publicly financed costs 
associated with eligible activities shall come from State and 
local sources, which State and local sources may not include 
funds from any Federal program.
  (b) Eligible Activities.--(1) A corridor development activity 
is eligible for financial assistance under subsection (a) if 
the Secretary determines that it is necessary to establish 
appropriate engineering, operational, financial, environmental, 
or socioeconomic projections for the establishment of high-
speed rail service in the corridor and that it leads toward 
development of a prudent financial and institutional plan for 
implementation of specific high-speed rail improvements, or if 
it is an activity described in subparagraph (M), or if it is an 
activity described in subparagraph (M). Eligible corridor 
development activities include--
          (A) * * *

           *       *       *       *       *       *       *

          (K) preparation of financing plans and prospectuses;
          (L) creation of public/private partnerships; and
          (M) the acquisition of locomotives, rolling stock, 
        track, and signal equipment.
          (M) the acquisition of locomotives, rolling stock, 
        track, and signal equipment.

           *       *       *       *       *       *       *

  (c) Criteria for Determining Financial Assistance.--Selection 
by the Secretary of recipients of financial assistance under 
this section shall be based on such criteria as the Secretary 
considers appropriate, including--
          (1) * * *
          (2) the extent to which the proposed development 
        focuses on systems which will achieve sustained speeds 
        of 125 mph or greater;

           *       *       *       *       *       *       *


[Sec. 26104. Authorization of appropriations

  [(a) Fiscal Years 2006 Through 2013.--There are authorized to 
be appropriated to the Secretary--
          [(1) $70,000,000 for carrying out section 26101; and
          [(2) $30,000,000 for carrying out section 26102, for 
        each of the fiscal years 2006 through 2013.
  [(b) Funds To Remain Available.--Funds made available under 
this section shall remain available until expended.]

Sec. 26104. Authorization of appropriations

  (a) Fiscal Years 2006 Through 2013.--There are authorized to 
be appropriated to the Secretary--
          (1) $70,000,000 for carrying out section 26101; and
          (2) $30,000,000 for carrying out section 26102,
for each of the fiscal years 2006 through 2013.
  (b) Funds to Remain Available.--Funds made available under 
this section shall remain available until expended.

           *       *       *       *       *       *       *

                              ----------                              


RAILROAD REVITALIZATION AND REGULATORY REFORM ACT OF 1976

           *       *       *       *       *       *       *


TITLE I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


                              definitions

  Sec. 102. As used in this Act, unless the context otherwise 
indicates, the term--
          (1) ``Association'' means the United States Railway 
        Association;

           *       *       *       *       *       *       *

          [(7) ``railroad'' has the meaning given that term in 
        section 20102 of title 49, United States Code; and]
          (7) ``railroad'' has the meaning given that term in 
        section 20102 of title 49, United States Code; and

           *       *       *       *       *       *       *


TITLE V--RAILROAD REHABILITATION AND IMPROVEMENT FINANCING

           *       *       *       *       *       *       *


SEC. 502. DIRECT LOANS AND LOAN GUARANTEES.

  (a) General Authority.--The Secretary shall provide direct 
loans and loan guarantees to--
          (1) State and local governments;
          (2) interstate compacts consented to by Congress 
        under section 410(a) of the Amtrak Reform and 
        Accountability Act of 1997 (49 U.S.C. 24101 note);
          (3) government sponsored authorities and 
        corporations;
          (4) railroads;
          (5) joint ventures that include at least one 
        railroad; and
          (6) solely for the purpose of constructing a rail 
        connection between a plant or facility and a second 
        rail carrier, limited option rail freight shippers that 
        own or operate a plant or other facility that is served 
        by no more than a single railroad.

           *       *       *       *       *       *       *

  (d) Extent of Authority.--The aggregate unpaid principal 
amounts of obligations under direct loans and loan guarantees 
made under this section shall not exceed $35,000,000,000 at any 
one time. Of this amount, not less than $7,000,000,000 shall be 
available solely for projects primarily benefiting freight 
railroads other than Class I carriers. The Secretary shall not 
establish any limit on the proportion of the unused amount 
authorized under this subsection that may be used for 1 loan or 
loan guarantee. The Secretary shall not establish any limit on 
the proportion of the unused amount authorized under this 
subsection that may be used for 1 loan or loan guarantee.

           *       *       *       *       *       *       *

  (f) Infrastructure Partners.--
          (1) * * *
          (2) Credit risk premium amount.--The Secretary shall 
        determine the amount required for credit risk premiums 
        under this subsection on the basis of--
                  (A) the circumstances of the applicant, 
                including the amount of collateral offered, if 
                any, if any;

           *       *       *       *       *       *       *

                  (D) consultation with the Congressional 
                Budget Office;
                  (E) the size and characteristics of the 
                cohort of which the loan or loan guarantee is a 
                member; and
                  [(E)] (F) the size and characteristics of the 
                cohort of which the loan or loan guarantee is a 
                member; and
                  (F) any other factors the Secretary considers 
                relevant.

           *       *       *       *       *       *       *

          (4) Cohorts of loans.--In order to maintain 
        sufficient balances of credit risk premiums to 
        adequately protect the Federal Government from risk of 
        default, while minimizing the length of time the 
        Government retains possession of those balances, the 
        Secretary shall establish cohorts of loans. When all 
        obligations attached to a cohort of loans have been 
        satisfied, credit risk premiums paid for the cohort, 
        and interest accrued thereon, which were not used to 
        mitigate losses shall be returned to the original 
        source on a pro rata basis. A cohort may include loans 
        and loan guarantees. The Secretary shall not establish 
        any limit on the proportion of a cohort that may be 
        used for 1 loan or loan guarantee. A cohort may include 
        loans and loan guarantees. The Secretary shall not 
        establish any limit on the proportion of a cohort that 
        may be used for 1 loan or loan guarantee.

           *       *       *       *       *       *       *

  (h) Conditions of Assistance.--(1) The Secretary shall, 
before granting assistance under this section, require the 
applicant to agree to such terms and conditions as are 
sufficient, in the judgment of the Secretary, to ensure that, 
as long as any principal or interest is due and payable on such 
obligation, the applicant, and any railroad or railroad partner 
for whose benefit the assistance is intended--
          (A) * * *

           *       *       *       *       *       *       *

The Secretary shall not require an applicant for a direct loan 
or loan guarantee under this section to provide collateral. The 
Secretary shall not require that an applicant for a direct loan 
or loan guarantee under this section have previously sought the 
financial assistance requested from another source. The 
Secretary shall require recipients of direct loans or loan 
guarantees under this section to apply the standards of section 
26106(a)(5) of title 49, United States Code, to their projects.

           *       *       *       *       *       *       *

  (i) Time Limit for Approval or Disapproval.--Not later than 
90 days after receiving a complete application for a direct 
loan or loan guarantee under this section, the Secretary shall 
approve or disapprove the application.
  (j) Repayment Schedules.--
          (1) In general.--The Secretary shall establish a 
        repayment schedule requiring payments to commence not 
        later than the sixth anniversary date of the original 
        loan disbursement.
          (2) Accrual.--Interest shall accrue as of the date of 
        disbursement, and shall be amortized over the remaining 
        term of the loan beginning at the time the payments 
        begin.
  (i) Time Limit for Approval or Disapproval.--Not later than 
90 days after receiving a complete application for a direct 
loan or loan guarantee under this section, the Secretary shall 
approve or disapprove the application.

SEC. 503. ADMINISTRATION OF DIRECT LOANS AND LOAN GUARANTEES.

  (a) * * *

           *       *       *       *       *       *       *

  (l) Fees and Charges.--Except as provided in this title, the 
Secretary may not assess any fees, including user fees, or 
charges in connection with a direct loan or loan guarantee 
provided under section 502.
  (l) Fees and Charges.--Except as provided in this title, the 
Secretary may not assess any fees, including user fees, or 
charges in connection with a direct loan or loan guarantee 
provided under section 502.

           *       *       *       *       *       *       *


                                  
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