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January 16, 2007, 12:00 am ET - Referred to the Committee on Commerce, Science, and Transportation.

Full Text of this Amendment

SA 97. Mr. LAUTENBERG (for himself and Mr. Lott) submitted an amendment intended to be proposed by him to the bill S. 294, to reauthorize Amtrak, and for other purposes; which was referred to the Committee on Commerce, Science, and Transportation; as follows:

On page 3, before line 1, after the item relating to section 416, insert the following:
TITLE V--RAIL BOND AUTHORITY

Sec..501..Intercity rail facility bonds.
TITLE VI--RAIL INFRASTRUCTURE BONDS

Sec..601..Short title.
Sec..602..Tax credit to holders of qualified rail infrastructure bonds.
At the end of the bill, add the following:
TITLE V--RAIL BOND AUTHORITY


SEC. 501. INTERCITY RAIL FACILITY BONDS.
(a) In General.--Chapter 261 is amended by adding at the end the following:``§26106. Rail infrastructure bonds

``(a) Designation.--The Secretary may designate bonds for purposes of section 54A of the Internal Revenue Code of 1986 if--

``(1) the bonds are to be issued by--
``(A) a State, if the entire railroad passenger transportation corridor containing the infrastructure project to be financed is within the State;
``(B) 1 or more of the States that have entered into an agreement or an interstate compact consented to by Congress under section 410(a) of Public Law 105-134 (49 U.S.C. 24101 note);
``(C) an agreement or an interstate compact described in subparagraph (B); or
``(D) Amtrak, for capital projects under its 5-year plan;
``(2) the bonds are for the purpose of financing projects that make a substantial contribution to providing the infrastructure and equipment required to complete or improve a rail transportation corridor (including projects for the acquisition, financing, or refinancing of equipment and other capital improvements, including the introduction of new high-speed technologies such as magnetic levitation systems, track or signal improvements, the elimination of grade crossings, development of intermodal
facilities, improvement of train speeds or safety, or both, and station rehabilitation or construction), but only if the Secretary determines that the projects are part of a viable and comprehensive rail transportation corridor design for intercity passenger service included in a State rail plan under chapter 225 (except for bonds issued under paragraph (1)(D)); and
``(3) for a railroad passenger transportation corridor not operated by Amtrak that includes the use of rights-of-way owned by a freight railroad, a written agreement exists between the applicant and the freight railroad regarding such use and ownership, including compensation for such use and assurances regarding the adequacy of infrastructure capacity to accommodate both existing and future freight and passenger operations, and including an assurance by the freight railroad that collective
bargaining agreements with the freight railroad's employees (including terms regulating the contracting of work) shall remain in full force and effect according to their terms for work performed by the freight railroad on such railroad passenger transportation corridor.
``(b) Bond Amount Limitation.--
``(1) IN GENERAL.--The amount of bonds designated under this section may not exceed in the case of section 54A bonds, $1,300,000,000 for each of the fiscal years 2007 through 2012.
``(2) CARRYOVER OF UNUSED LIMITATION.--If for any fiscal year the limitation amount under paragraph (1) exceeds the amount of section 54A bonds issued during such year, the limitation amount under paragraph (1) for the following fiscal year (through fiscal year 2019) shall be increased by the amount of such excess.
``(c) Project Selection Criteria.--The Secretary shall give preference to the designation under this section of bonds for projects selected using the criteria in chapter 244.
``(d) Timely Disposition of Application.--The Secretary shall grant or deny a requested designation within 9 months after receipt of an application.
``(e) Refinancing Rules.--Bonds designated by the Secretary under subsection (a) may be issued for refinancing projects only if the indebtedness being refinanced (including any obligation directly or indirectly refinanced by such indebtedness) was originally incurred by the issuer--
``(1) after the date of the enactment of this section;
``(2) for a term of not more than 3 years;
``(3) to finance projects described in subsection (a)(2); and
``(4) in anticipation of being refinanced with proceeds of a bond designated under subsection (a).
``(f) Application of Conditions.--Any entity providing railroad transportation (within the meaning of section 20102) that begins operations after the date of the enactment of this section and that uses property acquired pursuant to this section (except as provided in subsection (a)(2)(B)), shall be subject to the conditions under section 24405.
``(g) Issuance of Regulations.--Not later than 6 months after the date of the enactment of the Passenger Rail Investment and Improvement Act of 2007, the Secretary shall issue regulations for carrying out this section.
``(h) Section 54A Defined.--In this section, the term `section 54A bond' means a bond designated by the Secretary under subsection (a) for purposes of section 54A of the Internal Revenue Code of 1986 (relating to credit to holders of qualified rail infrastructure bonds).''.
(b) Conforming Amendment.--The table of sections for chapter 261 is amended by adding after the item relating to section 26105 the following new item:

``26106..Rail infrastructure bonds.''.
TITLE VI--RAIL INFRASTRUCTURE BONDS


SEC. 601. SHORT TITLE.
This title may be cited as the ``Passenger Rail Investment and Improvement Financing Act of 2007''.
SEC. 602. TAX 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..54A..Credit to holders of qualified rail infrastructure bonds.
``SEC. 54A. 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) CREDITS MAY BE STRIPPED.--Under regulations prescribed by the Secretary--
``(1) IN GENERAL.--There may be a separation (including at issuance) of the ownership of a qualified rail infrastructure bond and the entitlement to the credit under this section with respect to such bond. In case of any such separation, the credit under this section shall be allowed to the person who on the credit allowance date holds the instrument evidencing the entitlement to the credit and not to the holder of the bond.
``(2) CERTAIN RULES TO APPLY.--In the case of a separation described in paragraph (1), the rules of section 1286 shall apply to the qualified rail infrastructure bond as if it were a stripped bond and to the credit under this section as if it were a stripped coupon.
``(f) 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 issuer certifies that the Secretary of Transportation has designated the bond for purposes of this section under section 26106(a) of title 49, United States Code, as in effect on the date of the enactment of this section,
``(2) 95 percent or more of the proceeds from the sale of such issue are to be used for expenditures incurred after the date of the enactment of this section for any project described in section 26106(a)(2) of title 49, United States Code,
``(3) the term of each bond which is part of such issue does not exceed 20 years,
``(4) the payment of principal with respect to such bond is the obligation solely of the issuer, and
``(5) the issue meets the requirements of subsection (f) (relating to arbitrage).
``(g) Special Rules Relating to Arbitrage.--
``(1) IN GENERAL.--Subject to paragraph (2), an issue shall be treated as meeting the requirements of this subsection if as of the date of issuance, the issuer reasonably expects--
``(A) to spend at least 95 percent of the proceeds from the sale of the issue for 1 or more qualified projects within the 3-year period beginning on such date,
``(B) to incur a binding commitment with a third party to spend at least 10 percent of the proceeds from the sale of the issue, or to commence construction, with respect to such projects within the 6-month period beginning on such date, and
``(C) to proceed with due diligence to complete such projects and to spend the proceeds from the sale of the issue.
``(2) RULES REGARDING CONTINUING COMPLIANCE AFTER 3-YEAR DETERMINATION.--If at least 95 percent of the proceeds from the sale of the issue is not expended for 1 or more qualified projects within the 3-year period beginning on the date of issuance, but the requirements of paragraph (1) are otherwise met, an issue shall be treated as continuing to meet the requirements of this subsection if either--
``(A) the issuer uses all unspent proceeds from the sale of the issue to redeem bonds of the issue within 90 days after the end of such 3-year period, or
``(B) the following requirements are met:
``(i) The issuer spends at least 75 percent of the proceeds from the sale of the issue for 1 or more qualified projects within the 3-year period beginning on the date of issuance.
``(ii) Either--
``(I) the issuer spends at least 95 percent of the proceeds from the sale of the issue for 1 or more qualified projects within the 4-year period beginning on the date of issuance, or
``(II) the issuer pays to the Federal Government any earnings on the proceeds from the sale of the issue that accrue after the end of the 3-year period beginning on the date of issuance and uses all unspent proceeds from the sale of the issue to redeem bonds of the issue within 90 days after the end of the 4-year period beginning on the date of issuance.
``(h) 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 under subsection (c) shall be appropriately adjusted.
``(B) NO CREDITS AGAINST TAX.--Any increase in tax under paragraph (2) shall not be treated as a tax imposed by this chapter for purposes of determining--
``(i) the amount of any credit allowable under this part, or
``(ii) the amount of the tax imposed by section 55.
``(i) Other Definitions and Special Rules.--For purposes of this section--
``(1) BOND.--The term `bond' includes any obligation.
``(2) QUALIFIED PROJECT.--The term `qualified project' means any project described in section 26106(a)(2) of title 49, United States Code.
``(3) TREATMENT OF CHANGES IN USE.--For purposes of subsection (e)(2), the proceeds from the sale of an issue shall not be treated as used for a qualified project to the extent that the issuer takes any action within its control which causes such proceeds not to be used for a qualified project. The Secretary shall prescribe regulations specifying remedial actions that may be taken (including conditions to taking such remedial actions) to prevent an action described in the preceding sentence
from causing a bond to fail to be a qualified rail infrastructure bond.
``(4) PARTNERSHIP; S CORPORATION; AND OTHER PASS-THRU ENTITIES.--Under regulations prescribed by the Secretary, in the case of a partnership, trust, S corporation, or other pass-thru entity, rules similar to the rules of section 41(g) shall apply with respect to the credit allowable under subsection (a).
``(5) BONDS HELD BY REGULATED INVESTMENT COMPANIES.--If any qualified 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 54A(d) and such amounts shall be treated as paid on the credit allowance date (as defined in section 54A(b)(4)).
``(B) REPORTING TO CORPORATIONS, ETC.--Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A), subsection (b)(4) shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i) of such subsection.
``(C) REGULATORY AUTHORITY.--The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.''.
(2) TREATMENT FOR ESTIMATED TAX PURPOSES.--
(A) INDIVIDUAL.--Section 6654 of such Code (relating to failure by individual to pay estimated income tax) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:
``(m) Special Rule for Holders of Qualified Rail Infrastructure Bonds.--For purposes of this section, the credit allowed by section 54A 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 54A 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''.
(2) Section 6401(b)(1) is amended by striking ``and G'' and inserting ``G, and H''.
(d) Issuance of Regulations.--Not later than 6 months after the date of the enactment of this section, the Secretary of the Treasury shall issue regulations for carrying out this section and the amendments made by this section.
(e) Intercity Rail Facilities.--Section 142(i) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
``(4) ADDITIONAL REQUIREMENTS.--A bond issued as part of an issue described in subsection (a)(11) shall not be considered an exempt facility bond unless the requirements of paragraphs (1) through (4) of section 26106(a) of title 49, United States Code, are met.''.
(f) Effective Date.--The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.
(As printed in the Congressional Record for the Senate on Jan 16, 2007.)