§20171 Requirements for railroad freight cars placed into service in the United States

Summary

Rail freight cars made after the new rules take effect must meet where and how they are built and where their parts come from before they can run on U.S. tracks. Cars must be made, put together, and changed in ways that count under the trade rules by a manufacturer and factory that are not owned or controlled by a state-owned company. Any onboard “sensitive technology” and the parts needed for it cannot come from a country of concern or from a state-owned enterprise. Other parts of the car (not counting sensitive tech) also cannot come from a country of concern or a state-owned enterprise that a court or similar agency has found to have violated U.S. intellectual property rights. When the rules start, no more than 20% of a car’s content by net cost (excluding sensitive tech) can come from those sources; three years after the rules start, that limit drops to 15%. The Secretary of Transportation must write the rules within two years after the Passenger Rail Expansion and Rail Safety Act of 2021. Car makers must certify every year that their cars follow the rules and must have a current certification before a car begins service. A manufacturer can’t register a noncompliant car in the industry database. Penalties are $100,000 to $250,000 per violating car, and a maker with more than three violations can be stopped from supplying cars until it fixes the problems and pays the fines. Key terms, briefly: component = a part or subassembly; control = the power to direct a company; cost of sensitive technology = total cost of such tech on the car; country of concern = a country flagged by Commerce and U.S. trade reports and monitoring; net cost = as defined in the USMCA trade rules; qualified facility/manufacturer = not owned or controlled by a state-owned enterprise; railroad freight car = any car for freight or rail workers (box cars, tank cars, flat cars, etc.); sensitive technology = electronics, software, sensors, or systems that connect, collect, or share data (like telematics, GPS, firmware, or monitoring sensors); state-owned enterprise = an entity owned or controlled by a government of a country of concern or someone acting under that government; substantially transformed = a change in tariff classification under USMCA; USMCA = the U.S.-Mexico-Canada trade agreement.