The U.S. Transportation Department may consider supporting a tax credit sought by freight railroads if carriers agree to invest in "long-term equipment" and projects that benefit passenger rail, the head of the agency said.

Large U.S. railroads including No. 1 Union Pacific Corp. are pushing Congress to back the 25 percent tax credit for shippers that add tracks and terminals. The Bush administration hasn't taken a position on the plan.

"Under the right circumstances, it would be worth looking at," Transportation Secretary Mary Peters said in an interview Monday, while traveling to Salt Lake City to talk about the agency's plan for changing highway funding. "What we don't want to do is substitute public investment for what the private market is willing to do."

Peters is on a five-city U.S. tour this week to promote her framework for changing how the nation pays for highways and transit. The current funding legislation expires in September 2009, after the Bush administration's term ends in January.

She met this year with the Association of American Railroads, a Washington-based trade association, and the board of Amtrak, the U.S. passenger railroad, to urge them to work together to improve on-time performance for both passenger and freight rail.

Amtrak, which said July ridership rose 14 percent to 2.75 million passengers, runs on track owned by freight railroads in most parts of the U.S.

The Bush administration is focused on "significantly reducing subsidies" for Washington-based Amtrak, which has never turned a profit, Peters said.

Peters, who previously ran the Transportation Department's Federal Highway Administration, is pushing for more private investment in transportation projects and to let states make more decisions about how federal highway and transit money is spent.

The approach of the presidential election in November and new administration in January diminishes chances of Peters' proposal being signed into law, said Peter Peyser, a senior principal with Blank Rome LLC Government Relations who lobbies for Democratic clients on transportation issues.

Peyser represents a joint effort of Democratic Gov. Ed Rendell of Pennsylvania, Independent New York Mayor Michael Bloomberg and Republican Gov. Arnold Schwarzenegger of California. They are calling for the federal government to invest billions of dollars in infrastructure projects.

Peters, who pitched her plan Monday to Utah Gov. Jon Huntsman, said the Bush administration's approach will advance if she garners support among state and local officials and business leaders.