49 U.S.C. § 20171 — Requirements for railroad freight cars placed into service in the United States

(a) Definitions. This section defines several terms it uses. "Component" means a part or subassembly of a freight car. "Control" means having power over an entity, through owning a majority or a dominant minority stake, board seats, proxy votes, a special share, a contract, an informal arrangement to act together, or any other means, to make or direct that entity's decisions. "Cost of sensitive technology" means the total cost of the sensitive technology on a freight car. "Country of concern" means a country that the Commerce Department calls a nonmarket economy, as defined in the Tariff Act of 1930, as of the enactment of the Passenger Rail Expansion and Rail Safety Act of 2021; that the U.S. Trade Representative's most recent report put on its priority watch list for intellectual-property concerns; and that the Trade Representative is monitoring under section 306 of the Trade Act of 1974. "Net cost" has the meaning given in chapter 4 of the USMCA, or any later U.S.-Mexico-Canada trade deal. "Qualified facility" means a facility not owned or controlled by a state-owned enterprise. "Qualified manufacturer" means a freight car maker not owned or controlled by a state-owned enterprise. "Railroad freight car" means a car built to carry freight or railroad workers by rail, including box cars, refrigerator cars, ventilator cars, intermodal well cars, gondola cars, hopper cars, auto rack cars, flat cars, special cars, caboose cars, tank cars, and yard cars. "Sensitive technology" means any device with electronics, software, or sensors that connects to or exchanges data with another device, including onboard telematics, remote monitoring software, firmware, analytics, GPS and cellular tracking, event sensors, and predictive condition or performance sensors, plus similar technology built into freight car parts. "State-owned enterprise" means an entity owned or controlled by a national, provincial, or local government, or an agency, of a country of concern, or a person acting under that government's direction. "Substantially transformed" means a car component that changed tariff classification through manufacturing, as described in USMCA chapter 4. "USMCA" has the meaning given in the United States-Mexico-Canada Agreement Implementation Act.

(b) Requirements for Railroad Freight Cars. A freight car built entirely on or after a date 1 year after the Secretary issues the required regulations may only run on the U.S. general rail system if: it was made, assembled, and, where relevant, substantially transformed by a qualified manufacturer at a qualified facility; none of its sensitive technology, or parts needed to make that technology work, comes from a country of concern or a state-owned enterprise; and none of the rest of its content comes from a country of concern or a state-owned enterprise that a court or agency has found to have violated someone else's U.S. intellectual property rights, including a federal court ruling under patent law or an International Trade Commission finding under Tariff Act section 337.

There's also a content percentage limit. Starting 1 year after the regulations are issued, no more than 20 percent of a car's content, measured by net cost and not counting sensitive technology, may come from a country of concern or state-owned enterprise. Starting 3 years after the regulations, that limit drops to 15 percent. These percentages apply even if they conflict with USMCA chapter 4.

(c) Regulations and Penalties. Within 2 years after the Passenger Rail Expansion and Rail Safety Act of 2021, the Secretary of Transportation must issue the regulations needed to carry out this section, including on monitoring and sensitive technology. Each car manufacturer must certify to the Secretary every year that its cars meet these requirements. When a car starts running on the U.S. system, its manufacturer must have a valid certification for that year. A manufacturer can't register a non-compliant car in the Association of American Railroads' Umler system.

The Secretary may fine a manufacturer between $100,000 and $250,000 per violation, per car, under section 21301. If the Secretary has issued more than 3 such fines to one manufacturer, the Secretary can block that manufacturer from providing more freight cars until it's back in compliance and has paid all its penalties in full.