Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35473 

https://www.regulations.gov, type 

USCG–2022–0222 in the search box and 

click ‘‘Search.’’ Next, look for this 

document in the Search Results column, 

and click on it. Then click on the 

Comment option. In your submission, 

please include the docket number for 

this notice of inquiry and provide a 

reason for each suggestion or 

recommendation. If your material 

cannot be submitted using https://

www.regulations.gov contact the person 

in the FOR FURTHER INFORMATION

CONTACT section of this document for 

alternate instructions. 

To view documents mentioned in this 

proposed rule as being available in the 

docket, find the docket as described in 

the previous paragraph, and then select 

‘‘Supporting & Related Material’’ in the 

Document Type column. Public 

comments will also be placed in our 

online docket and can be viewed by 

following instructions on the https://

www.regulations.gov Frequently Asked 

Questions web page. We review all 

comments received, but we may choose 

not to post off-topic, inappropriate, or 

duplicate comments that we receive. 

Additionally, if you go to the online 

docket and sign up for email alerts, you 

will be notified when comments are 

posted or a final rule is published. 

We accept anonymous comments. 

Comments we post to https://

www.regulations.gov will include any 

personal information you have 

provided. For more about privacy and 

submissions in response to this 

document, see DHS’s eRulemaking 

System of Records notice (85 FR 14226, 

March 11, 2020). 

We may hold a public meeting, if 

necessary, to receive oral comments on 

this Notice of Inquiry and will 

announce the date, time, and location in 

a separate document published in the 

Federal Register. If you signed up for 

docket email alerts mentioned in the 

paragraph above, you will receive an 

email notice when the public meeting 

notice is published and placed in the 

docket. 

This document is issued under 

authority of 5 U.S.C. 552 (a) and 33 

U.S.C. 499. 

Dated: June 6, 2022. 

Jeffrey K. Randall, 

Captain, U.S. Coast Guard, Acting 

Commander, Seventh Coast Guard District. 

[FR Doc. 2022–12509 Filed 6–9–22; 8:45 am] 

BILLING CODE 9110–04–P 

DEPARTMENT OF DEFENSE 

Department of the Army, U.S. Army 

Corps of Engineers 

33 CFR Part 386 

[Docket Number: COE–2022–0004] 

RIN 0710–AB31 

Credit Assistance and Related Fees for 

Water Resources Infrastructure 

Projects 

AGENCY: U.S. Army Corps of Engineers, 

Department of Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: The U.S. Army Corps of 

Engineers (Corps) is soliciting 

comments on a proposed rule 

implementing a new credit assistance 

program consistent with the funding 

provided under Subtitle C of Title V of 

the Water Resources Reform and 

Development Act of 2014 (WRRDA), 

often referred to as the Water 

Infrastructure Finance and Innovation 

Act of 2014 (WIFIA), for safety projects 

to maintain, upgrade, and repair dams 

identified in the National Inventory of 

Dams with a primary owner type of 

state, local government, public utility or 

private and the process by which the 

Corps will administer such credit 

assistance including the assessment of 

fees. The proposed rule sets forth the 

policies and procedures that the Corps 

will use for receiving, evaluating, 

approving applications, and servicing 

and monitoring direct loans and loan 

guarantees. 

DATES: Comments must be received on 

or before August 9, 2022. 

ADDRESSES: Submit your comments, 

identified by Docket Number COE– 

2022–0004, at https://

www.regulations.gov. Follow the online 

instructions for submitting comments. 

Once submitted, comments cannot be 

edited or withdrawn. The Corps may 

publish any comment received to its 

public docket. Do not submit 

electronically any information you 

consider to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

FOR FURTHER INFORMATION CONTACT: 

Aaron Snyder, Corps Water 

Infrastructure Financing Team, 441 G. 

Street NW, CECW–I Attn: Aaron Snyder 

3K87, Washington, DC 20314; telephone 

number: (612) 518–0355; email address: 

CWIFP@usace.army.mil. The phone 

number above may also be reached by 

individuals who are deaf or hard of 

hearing, or who have speech 

disabilities, through the Federal Relay 

Service’s teletype service at 800–877– 

8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

II. Water Resources Infrastructure Needs 

III. Program Information 

A. Funding 

B. Borrower Eligibility 

C. Project Eligibility 

D. Project Cost Eligibility 

E. Statutory Requirements 

F. Application Process 

G. Creditworthiness 

H. Fees 

I. Credit Assistance 

J. Rating Requirement 

K. Federal Requirements 

L. American Iron and Steel Requirements 

M. Labor Standards (Davis-Bacon Act of 

1931) 

N. Reporting Requirements 

O. Selection Criteria 

IV. Statutory and Executive Order Reviews 

I. Background 

The U.S. Army Corps of Engineers 

(Corps) is publishing for public 

comment a proposed rule to implement 

a program authorized under Subtitle C 

of Title V of the Water Resources 

Reform and Development Act of 2014 

(WRRDA), often referred to as the Water 

Infrastructure Finance and Innovation 

Act of 2014 (WIFIA). The program was 

provided funding and further statutory 

direction in Division D Title 1 of the 

Consolidated Appropriations Act of 

2021 and Division J, Title III of the 

Infrastructure Investment and Jobs Act. 

WIFIA authorizes the Corps to provide 

secured (direct) loans and guaranteed 

loans to eligible water resources 

infrastructure projects. The only eligible 

project type—under Division D, Title 1 

of the Consolidated Appropriations Act 

of 2021 and Division J, Title III of the 

Infrastructure Investment and Jobs Act 

are: ‘‘. . . . safety projects to maintain, 

upgrade, and repair dams identified in 

the National Inventory of Dams with a 

primary owner type of state, local 

government, public utility, or private: 

Provided, That no project may be 

funded with amount provided under 

this heading for a dam that is identified 

as jointly owned in the National 

Inventory of Dams and where one of 

those joint owners is the Federal 

Government ..... .’’—and this rule 

would limit implementation to only 

those project types listed in the Acts. 

WIFIA authorizes the Corps to charge 

fees to recover all or a portion of the 

Corps’ cost of providing credit 

assistance and all costs of conducting 

engineering reviews and retaining 

expert firms, including financial and 

legal services, in the field of municipal 

and project finance to assist in the 

underwriting and servicing of Federal 


jspears on DSK121TN23PROD with PROPOSALS1
35474 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

1The White House Briefing Room. ‘‘FACT 

SHEET: The American Jobs Plan’’ at https://

www.whitehouse.gov/briefing-room/statementsreleases/2021/03/31/fact-sheet-the-american-jobsplan. March 13, 2021. 

2U.S. Army Corps of Engineers, ‘‘National 

Inventory of Dams,’’ at https://nid.usace.army.mil. 

2020 partial update. 

3Association of State Dam Safety Officials 

(ASDSO), ‘‘The Cost of Rehabilitating Our Nation’s 

Dams: A Methodology, Estimate, and Proposed 

Funding Mechanisms.’’ revised 2019. 

4Congressional Research Service, ‘‘Dam Safety 

Overview and the Federal Role,’’ October 24, 2019. 

5ASDSO, ‘‘The Cost of Rehabilitating’’. 

credit instruments. WIFIA also 

authorizes the borrower to pay part or 

all of the credit subsidy cost and this 

authority would be implemented under 

this rule. Projects will be evaluated and 

selected by the Secretary of the Army 

(the Secretary) based on the 

requirements and the criteria described 

in this rule. Following the selection of 

projects, individual credit agreements 

will be developed through negotiations 

between the borrowers and the Corps. 

Congress enacted the Water 

Infrastructure Finance and Innovation 

Act of 2014 (WIFIA) (Pub. L. 113–121) 

as part of the Water Resources Reform 

and Development Act of 2014, as 

amended by section 1445 of Public Law 

114–94, section 5008 of Public Law 

114–322, and section 4201 of Public 

Law 115–270 (see 33 U.S.C. 3901–3914). 

These amendments were minor changes 

primarily focused on the Administrator 

of the Environmental Protection Agency 

(EPA) and other changes regarding State 

Infrastructure Financing Authorities, 

removing limitations on use of tax 

exempt funding sources, changes to 

project eligibility for the EPA, and 

allowance of fees as an eligible cost 

which is included elsewhere in this 

proposed rule. Title I, Division D of the 

Consolidated Appropriations Act, 2021 

provided $12 million in budget 

authority for the cost of direct loans and 

guaranteed loans (‘‘credit subsidy cost’’) 

for safety projects to maintain, upgrade, 

and repair dams identified in the 

National Inventory of Dams with a 

primary owner type of State, local 

government, public utility, or private. 

Title 1, Division D also provided that 

the $12 million credit subsidy 

appropriation, is available to subsidize 

gross obligations for the principal 

amount of direct loans, including 

capitalized interest, and total loan 

principal, including capitalized interest, 

any part of which is to be guaranteed 

not to exceed $950,000,000. Division J, 

Title III of the Infrastructure Investment 

and Jobs Act provided for an additional 

amount for Water Infrastructure Finance 

and Innovation Program Account, 

$75,000,000, to remain available until 

expended provided, that of the amounts 

provided under Division J, Title III of 

the Act, $64,000,000 shall be for the cost 

of direct loans and for the cost of 

guaranteed loans, for safety projects to 

maintain, upgrade, and repair dams 

identified in the National Inventory of 

Dams with a primary owner type of 

State, local government, public utility, 

or private: provided further, that no 

project may be funded with amounts 

provided under Division J, Title III for 

a dam that is identified as jointly owned 

in the National Inventory of Dams and 

where one of those joint owners is the 

Federal Government: provided further, 

that of the amounts provided under 

Division J, Title III of the Act, 

$11,000,000 shall be for administrative 

expenses to carry out the direct and 

guaranteed loan programs, 

notwithstanding section 5033 of the 

Water Infrastructure Finance and 

Innovation Act of 2014. The U.S. Army 

Corps of Engineers (Corps) is proposing 

to establish its new WIFIA program 

limited to safety projects to maintain, 

upgrade, and repair dams identified in 

the National Inventory of Dams with a 

primary owner type of State, local 

government, public utility, or private. 

A primary objective for Federal credit 

programs is to help correct a capital 

market imperfection. Municipal, 

regional, state-level and other 

infrastructure project sponsors generally 

do not market debt sales used to fund 

infrastructure projects beyond 30-year 

terms through public bond markets due 

to existing market conventions. 

Proceeds from bond sales are available 

immediately, not according to cash flow 

needs during project construction. In 

addition, debt sold through multiple 

issuances during an infrastructure 

project’s construction period exposes 

project sponsors to debt interest rate 

risk. Congress provided the Corps 

WIFIA program the legal authority to 

help address these factors that otherwise 

may impede affordable infrastructure 

investment through the prospective 

terms of WIFIA credit assistance. 

WIFIA, authorized the Corps to 

provide both loans and loan guarantees 

to eligible entities: corporations; 

partnerships; joint ventures; trusts; State 

or local governmental entities, agencies, 

or instrumentalities; tribal governments 

or consortiums of tribal governments; or 

State infrastructure finance authorities. 

While WIFIA authorizes the Corps to 

provide for a wide variety of eligible 

projects this draft proposed rule is 

implementing a credit assistance 

program for safety projects to maintain, 

upgrade, and repair dams identified in 

the National Inventory of Dams with a 

primary owner type of State, local 

government, public utility, or private 

(referred to here after as ‘‘non-Federal 

dams’’). As applied to credit assistance 

for non-Federal dam projects under 

Title 1, Division D or the Consolidated 

Appropriations Act, 2021, Division J, 

Title III of the Infrastructure Investment 

and Jobs Act, Sections 3902, 3905, and 

3907 of Title 33 of the U.S.C., describe 

the conditions that govern a project’s 

eligibility. Projects must have eligible 

costs of not less than $20 million. 33 

U.S.C. 3907(a)(2)(A). Eligible borrowers, 

eligible projects, and other statutory 

requirements are further described in 

detail in the sections below and 

summarized in 33 CFR part 386 and 85 

FR 39189. As used throughout this 

SUPPLEMENTARY INFORMATION section and 

part 386 of the rule, ‘‘borrower’’ is 

synonymous with ‘‘obligor’’. WIFIA 

defines an ‘‘obligor’’ as ‘‘an eligible 

entity that is primarily liable for 

payment of the principal of, or interest 

on, a Federal credit instrument.’’ 33 

U.S.C. 3901(7). ‘‘Obligor’’ is used in 

place of ‘‘borrower’’ whenever ‘‘obligor’’ 

appears in a corresponding section of 

WIFIA. 

II. Water Resources Infrastructure 

Needs 

The American Jobs Plan estimates that 

in 2020, weather and climate disasters 

cost the United States $95 billion in 

damages to homes, businesses, and 

public infrastructure.1 The 

Administration has made investment in 

U.S. infrastructure a priority to increase 

resiliency in the face of such threats. 

Non-Federal dams account for 

roughly 87,000 of the 90,580 dams as 

reported in the National Inventory of 

Dams. Over 14,000 non-Federal dams 

are now classified as ‘‘high hazard 

potential,’’ meaning that they would 

likely result in loss of life if they were 

to fail.2 According to a 2019 cost 

estimate conducted by the Association 

of State Dam Safety Officials (ASDSO), 

the cost to rehabilitate (repair, replace or 

remove) all non-Federal dams is 

estimated at over $66 billion with high 

hazard potential dams accounting for 

over $20 billion.3 Funding requirements 

are only projected to increase as 

infrastructure continues to age, risk 

awareness progresses, and design 

standards evolve.4

While almost half of the States have 

created a state-funded grant or lowinterest revolving loan program to assist 

dam owners with repairs, the ASDSO 

indicates that these programs vary 

significantly in the financial assistance 

available.5 Another Federal 

infrastructure financing program, 

WIFIA, administered by the EPA 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35475 

provides credit financing for nonFederal water and wastewater 

infrastructure project. Similar to the 

Corps WIFIA program, the maximum 

portion of eligible project costs are 49% 

or 80% for small communities. The EPA 

WIFIA program can finance dam 

projects however those projects compete 

against a wide range of water and 

wastewater type projects. In FY 2021 the 

EPA WIFIA program had an 

appropriation of $55 million, allowing 

WIFIA to lend approximately $5.5 

billion. In 2021, the EPA made it 

possible for dam projects to receive 

funding under the Federal Drinking 

Water State Revolving Fund (DWSRF), 

administered by the EPA, provided that 

the dam’s primary purpose is for 

drinking water supply and that the dam 

must be owned by the public water 

system. Through the DWSRF program 

the EPA will make available $1.8 billion 

in capitalization grants for drinking 

water infrastructure needs, a portion of 

which could go towards drinking water 

supply dam projects, depending on the 

priorities of the States. The Federal 

Watershed Rehabilitation Program 

administered by the Natural Resources 

Conservation Service (NRCS) helps 

project sponsors rehabilitate aging dams 

that are reaching the end of their design 

lives. This rehabilitation addresses 

critical public health and safety 

concerns. Division J, Title I of the 

Infrastructure Investment and Jobs Act 

provides $118M for projects under the 

Watershed Rehabilitation Program. The 

Federal Rehabilitation of High Hazard 

Potential Dam (HHPD) Program, 

administered by Federal Emergency 

Management Agency (FEMA), provides 

grants for repair, removal, or 

rehabilitation of eligible non-Federal, 

high hazard potential dams. Projects can 

receive a maximum grant of the lesser 

of $7.5 million or 12.5% of the total 

appropriated amount. The program was 

appropriated $10 million in both FY 

2019 and FY 2020, $12 million in FY 

2021, and $585 million in Division J, 

Title V of the Infrastructure Investment 

and Jobs Act ($75 million of which must 

go to dam removal projects). Despite 

these programs and their funding 

capacity, the available funding for dam 

safety infrastructure falls short of the 

$66 billion need cited by ASDSO. The 

Corps WIFIA program helps to bridge 

that gap by providing non-Federal 

entities with an additional means to 

invest in dam safety infrastructure, 

which will help communities withstand 

future weather and climate events. As 

communities become more resilient, all 

else being equal, this is expected to 

assist in limiting Federal disaster 

spending associated with such events. 

III. Program Information 

A. Funding 

The Federal Credit Reform Act of 

1990 (FCRA), Title V of Public Law 

101–508, codified at 2 U.S.C. 661–661f, 

requires that agencies estimate the longterm cost of providing direct loans and 

loan guarantees on a net present value 

basis and requires that agencies have the 

necessary budget authority appropriated 

before entering into an obligation for a 

loan. To date, $76 million in 

appropriations have been provided to 

the Corps for the cost of credit 

assistance for non-Federal dams under 

WIFIA. 

B. Borrower Eligibility 

Section 3904 of Title 33 of the U.S.C., 

defines entities that are eligible for 

WIFIA assistance. To be eligible under 

this program, a borrower must be one of 

the following: 

1. A corporation; 

2. A partnership; 

3. A joint venture; 

4. A trust; 

5. A State, or local governmental 

entity, agency, or instrumentality; 

6. A tribal government or consortium 

of tribal governments; or 

7. A State infrastructure financing 

authority. 

While Section 3904(5) includes 

‘‘Federal’’ entities in the list of entities 

that are eligible to receive assistance, 

this program will not issue credit 

assistance to ‘‘Federal’’ entities or 

activities because recording credit 

assistance to a Federal entity or activity 

on a net present value basis would be 

inconsistent with 31 U.S.C. 1501, 

existing Government-wide guidance, 

and a cash budget. As required by Title 

1, Division D of the Consolidated 

Appropriations act of 2021 and Division 

J, Title III of the Infrastructure 

Investment and Jobs Act, the credit 

assistance program covered by this 

proposed rule must be administered in 

accordance with the WIFIA criteria 

published on June 30, 2020 (85 FR 

39189). Please review the criteria 

published at 85 FR 39189 for additional 

background and information regarding 

project eligibility. 

C. Project Eligibility 

Section 3905 of Title 33 of the U.S.C. 

defines projects eligible for assistance. 

To be eligible under this program, a 

project must fall under one of the 

following four categories: 

1. Safety projects to maintain, 

upgrade, and repair dams identified in 

the National Inventory of Dams with a 

primary owner type of State, local 

government, public utility, or private; 

and which meet the statutory 

requirements of Title 1, Division D of 

the Consolidated Appropriations Act 

2021 and be in accordance with the 

criteria outlined in 85 FR 39189. 

2. Any project that meets the criteria 

under C.1. above must also be a project 

for flood damage reduction, hurricane 

and storm damage reduction, 

environmental restoration, coastal or 

inland harbor navigation improvement, 

or inland and intracoastal waterways 

navigation improvement that the 

Secretary determines is technically 

sound, economically justified, and 

environmentally acceptable, 

including— 

a. A project to reduce flood damage; 

b. A project to restore aquatic 

ecosystems; 

c. A project to improve the inland and 

intracoastal waterways navigation 

system of the United States; and 

d. A project to improve navigation of 

a coastal inland harbor of the United 

States, including channel deepening 

and construction of associated general 

navigation features. 

3. Acquisition of real property or an 

interest in real property for a project 

that meets the criteria under C.1. 

above— 

a. If the acquisition is integral to a 

project eligible for WIFIA credit 

assistance; or 

b. Pursuant to an existing plan that, in 

the judgment of the Secretary, would 

mitigate the environmental impacts of 

water resources infrastructure projects 

that are otherwise eligible for WIFIA 

credit assistance. 

4. A combination of projects, each of 

which is eligible for WIFIA credit 

assistance, for which a single 

application is submitted and which is 

secured by a common security pledge. 

Title I, Division D of the Consolidated 

Appropriations Act, 2021 and Division 

J, Title III of the Infrastructure 

Investment and Jobs Act limited use of 

the appropriated funding to safety 

projects to maintain, upgrade, and 

repair dams identified in the National 

Inventory of Dams. Dam removal is an 

eligible project under this authorization. 

In addition, as noted above, Title I, 

Division D of the Consolidated 

Appropriations Act, 2021 stipulates that 

‘‘none of the direct loans or loan 

guarantee authority made available 

under this heading shall be available for 

any project unless the Secretary and the 

Director of the Office of Management 

and Budget have certified in advance in 

writing that the direct loan or loan 

guarantee, as applicable, and the project 


jspears on DSK121TN23PROD with PROPOSALS1
35476 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

comply with the criteria. . .’’ published 

in the Federal Register on June 30, 2020 

(85 FR 39189). 

The Corps will closely coordinate 

with the EPA on overlapping project 

eligibility to ensure proposed borrowers 

utilize the program best suited for their 

project considering agency technical 

expertise. The Corps agrees to partner 

closely with EPA during the project 

selection process for eligible projects 

and to work together to ensure that 

funding allocated either by EPA or 

Corps WIFIA programs will use the 

most appropriate program relative to the 

project’s scope, purpose, and benefits. 

The Corps solicits public comment on 

how best to assist applicants to utilize 

the program best suited for a project in 

such instances. 

D. Project Cost Eligibility 

Section 3906 of Title 33 of the U.S.C. 

defines eligible activities with respect to 

eligible projects as the following four 

types of project costs: 

1. The cost of development-phase 

activities, including planning, feasibility 

analysis (including any related analysis 

necessary to carry out an eligible 

project), revenue forecasting, 

environmental review, permitting, 

preliminary engineering and design 

work, and other pre-construction 

activities. 

2. The cost of construction, 

reconstruction, rehabilitation, and 

replacement activities. 

3. The cost of the acquisition of real 

property or an interest in real property 

(including water rights, land relating to 

the project, and improvements to land), 

environmental mitigation, construction 

contingencies, and acquisition of 

equipment; and 

4. The cost of capitalized interest 

necessary to meet market requirements, 

reasonably required reserve funds, 

capital issuance expenses, and other 

carrying costs during construction. 

In addition to the statutory project 

cost eligibility requirements listed 

above, the Corps program allows for fees 

associated with obtaining WIFIA funds 

to be considered as part of eligible 

project costs, as authorized by 33 U.S.C. 

3908(b)(7), limited to the Application, 

Transaction Processing, and Servicing 

fees as described below in Section III.H 

(Fees). Proceeds from the WIFIA credit 

assistance shall not be utilized to 

provide cash contributions to the Corps 

for project-related costs, except for such 

fees as allowed by 33 U.S.C. 3908(b)(7). 

The ‘‘Optional Credit Subsidy Fee’’ is 

not an eligible cost. The Corps solicits 

public comment on whether additional 

clarification is needed on project cost 

eligibility, such as whether a list of what 

costs are expressly ineligible would be 

helpful or whether that may result in 

additional confusion as opposed to 

limiting the list to only include those 

which are eligible, as proposed. 

E. Statutory Requirements 

WIFIA contains the following 

requirements, as paraphrased below, 

which are restated in the proposed rule: 

• Public or private applicants for 

credit assistance would be required to 

submit applications to the Corps in 

order to be considered for approval (33 

U.S.C. 3903). 

• Project financing would be required 

to be repayable, in whole or in part, 

from State or local taxes, user fees, or 

other dedicated revenue sources that 

also secure the senior project obligations 

of the project; to include a rate 

covenant, coverage requirement, or 

similar security feature supporting the 

project obligations; and may have a lien 

on revenues subject to any lien securing 

project obligations (33 U.S.C. 3908 

(b)(3)). 

• In the case of a project that is 

undertaken by an entity that is not a 

State or local government or an agency 

or instrumentality of a State or local 

government, or a tribal government or 

consortium of tribal governments, the 

project that the entity is undertaking 

would be required to be publicly 

sponsored. Public sponsorship means 

that the obligor can demonstrate, to the 

satisfaction of the Secretary, that it has 

consulted with the affected State, local, 

or tribal government in which the 

project is located, or is otherwise 

affected by the project, and that such 

government supports the proposed 

project. Support could be shown by a 

certified letter signed by the approving 

municipal department or similar 

agency, mayor or other similar 

designated authority, local ordinance, or 

any other means by which local 

government approval can be evidenced 

(33 U.S.C. 3907(a)(4)). 

• To be eligible for financing, a 

prospective borrower would be required 

to have developed an operations and 

maintenance plan that identifies 

adequate revenues to operate, maintain, 

and repair the project during its useful 

life (33 U.S.C. 3907(a)(6)). 

Additionally, projects receiving 

WIFIA credit assistance would not be 

able to use that assistance for operations 

and maintenance activities. 

F. Application Process 

For each fiscal year that Congress 

appropriates funds for credit assistance 

under this program, the Corps will 

provide detailed instructions for 

submitting preliminary applications and 

applications, as well as the due dates for 

submissions. It will advise prospective 

borrowers of the estimated amount of 

funding available to support Federal 

credit instruments and information 

required in a preliminary application 

and application not detailed in this rule. 

The application process has two 

steps. The first step requires the 

submission of a preliminary application. 

No fees are established for this 

preliminary application step. The Corps 

will review these preliminary 

applications and determine which 

applicants will be invited to continue in 

the application process and submit 

applications. An invitation to submit an 

application does not imply an obligation 

by the Corps to enter into a Loan 

Agreement or Loan Guarantee 

Agreement. Those applicants that 

choose to submit an application will be 

required to include an application fee, 

if applicable. Consequently, the Corps 

anticipates that the fees established in 

this rule will only apply to those 

projects. See Paragraph III.H. below for 

more information on fees. 

The purpose of the preliminary 

application is to provide the Corps with 

the information necessary to determine 

whether a given project is eligible under 

the WIFIA statute, appropriations, and 

regulations. This serves to provide the 

Corps with sufficient information to 

evaluate preliminary applications and to 

invite prospective borrowers to submit 

applications. 

The purpose of the application is to 

provide the Corps with materials 

necessary to underwrite the proposed 

WIFIA assistance. The application will 

require similar information to the 

preliminary application, but with a 

greater level of detail and more fully 

developed information in support of the 

applicant’s proposal. 

The application must include 

sufficient information to allow the 

Secretary to make the determination 

required by 33 U.S.C. 3905(1) that the 

project is technically sound, 

economically justified, and 

environmentally acceptable. The 

information required to support this 

determination will depend on various 

factors, including but not limited to the 

purpose and scope of the activity 

proposed for WIFIA assistance. 

Applicants for WIFIA assistance should 

refer to any prior analysis that could 

assist the Corps in confirming the 

determination required by 33 U.S.C. 

3905(1). The Corps does not expect the 

application to provide the level of 

analysis required for traditional Corps 

feasibility studies. Applicants should 

provide information to enable the Corps 

to determine that the project will meet 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35477 

all applicable engineering, safety, and 

other technical standards; that it is 

economically justified; and that it will 

satisfy all necessary environmental 

requirements to include requirements 

associated with the Corps Programmatic 

Environmental Assessment prepared for 

this rule under the National 

Environmental Policy Act (NEPA). In 

addition, the application must include a 

description of the extent to which the 

project financing plan includes any 

other form of Federal assistance 

(including grants), in addition to WIFIA 

credit assistance. This information 

directly relates to the total Federal risk 

exposure across all Federal programs 

and will require information on all 

possible sources of Federal support. The 

Corps will also be coordinating with 

other Federal agencies, such as the 

Federal Emergency Management Agency 

(FEMA), on other Federal programs that 

may be used to fund or finance projects 

under this rule. Additional information 

regarding the requirements for an 

applicant’s submittal would be 

described in the application materials. 

The application also should address 

any connection between the proposed 

WIFIA assistance and other Federal 

activities. In order for non-Federal flood 

risk management projects to be eligible 

for future Federal repair or 

rehabilitation assistance following storm 

events under 33 U.S.C. 701n, applicants 

would need to satisfy requirements from 

that program. Applicants can consult 

with the Corps WIFIA office to assist in 

understanding whether activities 

proposed for WIFIA assistance might 

implicate other Federal authorities and 

funding. 

G. Creditworthiness 

As provided in WIFIA, the Secretary 

must determine that every funded 

project is creditworthy. 33 U.S.C. 

3907(a)(1). An overarching goal of the 

creditworthiness determination process 

is to ensure that each project that is 

ultimately offered credit assistance 

advances the WIFIA program’s mission 

while providing a level of risk exposure 

that is acceptable to the Corps. 

Therefore, the WIFIA program will 

evaluate applications for financial 

assistance based on credit risks over the 

repayment period of the WIFIA credit 

assistance. As required by 33 U.S.C. 

3907(a)(1), the creditworthiness 

determination will be based on a review 

of the following: 

• Terms, conditions, financial 

structure, and security features of the 

proposed financing; 

• Dedicated revenue source(s) 

securing the financing; 

• Financial assumptions upon which 

the project is based; and 

• Financial soundness and credit 

history and outlook of the borrower. 

H. Fees 

Sections 3908(b)(7), 3909(b), and 

3909(c)(3) of 33 U.S.C. allow the Corps 

to collect user fees from applicants to 

cover some or all of the costs associated 

with administering the program. The 

Corps is proposing to establish fees 

associated with the provision of Federal 

credit assistance under the WIFIA 

program. As specified under 33 U.S.C. 

3908(b)(7), 3909(b), and 3909(c)(3), 

Congress authorizes the Corps to charge 

fees to recover all or a portion of the 

Corps’ cost of providing credit 

assistance and the costs of conducting 

engineering reviews and retaining 

expert firms, including financial and 

legal services in the field of municipal 

and project finance to assist in the 

underwriting and servicing of Federal 

credit instruments. The Corps is 

proposing to establish an application 

fee, transaction processing fee, annual 

servicing fee, optional credit subsidy 

fee, and enhanced monitoring fee to 

cover these costs to the extent not 

covered by Congressional 

appropriations. As described in greater 

detail below, the types of fees the Corps 

is proposing to establish are consistent 

with other Federal credit programs. 

The rationale for establishing fees 

associated with the provision of credit 

assistance is to cover the Corps’ cost of 

administering the program to the extent 

these costs are not covered by 

appropriations. To effectively 

administer the program, the Corps will 

incur both internal administrative costs 

(staffing, program support contracts, and 

other costs) as well as costs associated 

with conducting engineering reviews 

and retaining expert firms, including 

financial and legal services in the field 

of municipal and project finance, to 

assist in the underwriting of the Federal 

credit instrument. 

The Water Infrastructure 

Improvements for the Nation Act of 

2016, Public Law 114–332, in section 

5008(c), amended WIFIA to allow, at the 

request of an applicant, the financing of 

some fees as eligible costs as defined 

below. Borrowers are permitted to 

finance eligible fees as part of the WIFIA 

credit assistance. The Corps is soliciting 

public comment on all aspects of the 

fees discussed below as well as the 

associated assumptions. 

1. Application Fee 

The Corps will require a nonrefundable application fee for each 

project that is invited to submit an 

application (second step following 

submission of a preliminary 

application) for credit assistance under 

WIFIA, if applicable. The application 

fee will be due upon submission of the 

application. This application fee 

supports the Corps’ planning efforts by 

helping to ensure that the program 

invites only the appropriate number of 

applicants that it has the capacity to 

fund. In the event that the prospective 

borrower has not completed and 

submitted a full application within oneyear of the Corps’ invitation to apply for 

credit assistance, the prospective 

borrower must submit to the Corps a 

request for extension prior to the 

expiration year that sets forth the 

prospective borrower’s rationale for an 

extension, summarizes the prospective 

borrower’s progress achieved on the 

project to date, and provides an updated 

schedule of project development 

activities, including submission of the 

WIFIA application. The Corps may grant 

this extension after evaluating the 

progress of the prospective borrower’s 

application and its readiness to apply. 

The application fee will be waived for 

applications from public entities for 

projects serving small communities or 

economically disadvantaged 

communities. See Paragraph III.I. below 

for the definitions of small communities 

and economically disadvantaged 

communities for the purpose of this 

credit assistance program. For all other 

project applications, the application fee 

is $25,000. This $25,000 application fee 

represents an amount equal to 0.125 

percent of the minimum threshold 

project cost ($20 million, 33 U.S.C. 

3907(a)(2)(A)), which the Corps 

considers to be sufficient to begin the 

financial, engineering, and legal 

analysis of the project while providing 

assurance that the applicant intends to 

proceed to closing. The Corps will 

undertake significant costs to evaluate 

applications and hire expert firms for 

underwriting and considers an 

application fee essential for applicants 

to show good faith in applying for credit 

assistance, to help cover the agency’s 

administrative costs in processing 

applications, and to ensure effective 

administration of the program. The 

application will not be reviewed 

without fee payment. The Corps will 

only invite projects to submit an 

application and application fee if the 

Corps believes there is a reasonable 

expectation that the project could 

receive financing. However, an 

invitation to submit an application does 

not guarantee that a project will proceed 

to financial close. 


jspears on DSK121TN23PROD with PROPOSALS1
35478 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

2. Transaction Processing Fees 

For projects invited to submit an 

application, the Corps will require 

payment of transaction processing fees 

at the time of closing, or at the time the 

application is withdrawn or denied (in 

the event the project does not proceed 

to closing). The proceeds of any such 

fees will be used to pay the remaining 

portion of the Corps’ cost of processing 

the application for credit assistance, 

including the costs of conducting 

engineering reviews and retaining 

expert firms to assist in underwriting, 

drafting and negotiating the terms of the 

Federal credit instrument. In procuring 

the services of third-party firms, the 

Corps may issue task orders with $0 

funding (i.e., no Federal funds). In such 

situations, at the direction of the Corps, 

payments to the contractor for services 

will be paid (i) by or on behalf of the 

Corps or (ii) directly by the applicant for 

services rendered in accordance with 

the terms of a sponsor payment letter/ 

agreement executed by the applicant (or 

its affiliate) and the contractor. In all 

instances, when a contractor is engaged 

to represent the Corps or its 

representative on a WIFIA matter and is 

paid by the applicant (or its affiliate), 

the Corps or its representative, as 

applicable, will remain the client of the 

contractor. 

The Corps estimates these costs 

would generally be in the range of 

approximately $125,000 to $300,000 per 

project, with the expectation that more 

complex projects could exceed this 

range. However, prior to the transaction 

processing fees being incurred, the 

Corps will develop a more precise 

estimate based on its understanding of 

the project and associated financial and 

legal structure. The application fee 

described above will be credited to the 

transaction processing fee. For example, 

if the total transaction processing fees 

are $300,000 and the applicant pays 

$25,000 with the application, $275,000 

will be due at closing, or earlier if the 

project does not proceed to closing, e.g., 

if the application is withdrawn or 

denied. The total transaction processing 

fee for each project will be set based on 

the costs incurred by the Corps for that 

specific project. Due to the nature of the 

transaction processing, the amount is 

expected to vary among applicants. This 

variation reflects the amount of time 

taken to process a loan, which may not 

directly correlate with the size of the 

loan. More complex transactions with 

lengthy negotiations will have higher 

costs. 

The Corps may waive a portion of the 

fee for public applicants if 

appropriations are available to pay for 

the Corps’ cost of administering the 

WIFIA program and to pay for loan 

processing. Funds appropriated to the 

program may pay for the administration 

of the program, including internal 

administrative costs of staffing, program 

support contracts (separate from the 

expert services described previously), 

and other internal administrative needs. 

To the extent appropriations are 

available in excess of those needed for 

the Corps’ internal administrative costs, 

the Corps may use the remaining 

available administrative allowance (less 

any amount needed for future years’ 

administration) to reduce fees. The 

Corps may allocate additional 

administrative funds by reducing fees 

by an equal amount per loan for those 

projects serving economically 

disadvantaged communities, with 

public applicants. If additional 

administrative funds remain, the Corps 

may reduce fees by an equal amount for 

each remaining loan, with public 

applicants. 

3. Servicing Fee 

The Corps will charge an annual 

servicing fee after closing of the loan. 

The fee will be dependent upon the 

costs of servicing the credit instrument 

(e.g., collecting and processing loan 

principal and interest payments) as 

determined by the Secretary. Such fees 

will be set at a level to enable the Corps 

to recover all or a portion of the costs 

to the Federal Government of servicing 

WIFIA credit instruments and will be 

determined at the time of closing. The 

Corps expects such fees to range from 

$10,000 to $50,000 annually per loan 

and to be adjusted for inflation. 

4. Optional Credit Subsidy Fee 

The Corps may charge a fee, with 

agreement of the applicant, to reduce 

the budget authority required to fund 

the credit instrument. The Corps 

anticipates scenarios where assessing 

such a fee will provide flexibility to 

allow an applicant to ‘‘buy down’’ the 

budget authority required for the credit 

instrument. This could allow an 

applicant to proceed to approval if 

sufficient budget authority would not 

otherwise be available. Such a fee will 

only be charged upon agreement by an 

applicant and shall not be considered an 

eligible project cost. Utilization of this 

fee will only be in rare instances. 

5. Enhanced Monitoring Fee 

The Corps may charge a fee to cover 

extraordinary expenses if a borrower 

experiences difficulty relating to 

technical, financial, or legal matters or 

other events (e.g., engineering failures or 

financial workouts) that require the 

Corps to incur time or expenses beyond 

standard monitoring. The Corps will be 

entitled to payment in full from the 

borrower of additional fees in an 

amount determined by the Corps and of 

related fees and expenses of its 

independent consultants and outside 

counsel that are incurred directly by the 

Corps and not paid directly by the 

borrower. Such fees shall not be 

considered an eligible project cost. 

I. Credit Assistance 

Two types of credit instruments are 

permitted under WIFIA secured (direct) 

loans and loan guarantees. The second 

credit instrument under 33 U.S.C. 3908 

(e), referred to as loan guarantees are 

defined under the Federal Credit Reform 

Act of 1991 as a binding agreement by 

a Federal agency to make a loan 

guarantee when specified conditions are 

fulfilled by the borrower, the lender, or 

any other party to the guarantee 

agreements. 

Statutory requirements applicable to 

this credit instrument appear at 33 

U.S.C. 3908 and 3909. Additional Terms 

and conditions for loans and loan 

guarantees will be negotiated between 

the Corps and successful applicants. 

In general, WIFIA limits the amount 

of credit assistance that may be 

provided to a project to 49% or less of 

reasonably-anticipated eligible project 

costs. However, the statute authorizes 

the Corps to use up to 25% of its budget 

authority to provide credit assistance to 

one or more projects of up to 80% 

(statutory cap on Federal participation) 

of the total costs of any given project. 

The 80% statutory cap on Federal 

participation would be determined by 

adding the total loan proceeds, direct 

appropriations, grants, or other 

applicable Federal funding. Following 

credit assistance issuance, future direct 

appropriations, grants, or other 

applicable Federal funding may be 

modified to maintain compliance with 

the 80% statutory cap. Note, however, 

that projects receiving direct Federal 

appropriations or other Federal funding 

may not be eligible to receive WIFIA 

credit assistance based on the eligibility 

criteria outlined in this rule as well as 

at 85 FR 39189, as they may be 

determined to be Federal in nature. The 

Corps would limit its budget authority 

to extending credit assistance to eligible 

entities for those entities’ use in directly 

carrying out activities eligible for 

assistance under 33 U.S.C. 3906. The 

Corps would not extend credit 

assistance or allow loan proceeds to be 

used by any entity to provide cash 

contributions to the Corps for project 

related costs, except for such fees as 

allowed by 33 U.S.C. 3908(b)(7). The 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35479 

6At the time of publication of this rule, the OMB 

circular may be accessed electronically at https:// 

www.whitehouse.gov/sites/whitehouse.gov/files/ 

omb/circulars/A129/a-129.pdf. 

Corps would generally use its budget 

authority to provide credit assistance for 

greater than 49% of eligible project costs 

to projects serving economically 

disadvantaged communities that would 

otherwise not be able to obtain WIFIA 

credit assistance. For the purposes of 

this program, the Corps is proposing to 

preliminarily define economically 

disadvantaged communities as those 

that experience low-income, persistent 

poverty, or high unemployment. The 

implementation of this definition may 

be modified as appropriate in response 

to updated tools and resources as they 

become available. The Corps is 

soliciting comment on whether this is 

the most appropriate criteria to use to 

identify economically disadvantaged 

communities. 

Additionally, the Corps may use its 

budget authority to provide credit 

assistance for greater than 49% of 

eligible project costs when a project 

would be unable to proceed to closing 

without such additional assistance due 

to unforeseen events. 33 U.S.C. 3912. 

Unforeseen events that could prevent a 

project from going to closure may 

include: unexpected loss of other 

sources of financing, increased cost of 

capital, or acts of nature. In such an 

event, the Corps would reexamine the 

creditworthiness of the project and only 

provide funding if the project can still 

meet all requirements of the program. 

Costs incurred, and the value of any 

integral in-kind contributions made 

before receipt of credit assistance may 

be considered in calculating eligible 

project costs upon approval of the 

Secretary. Such costs and integral inkind contributions must be directly 

related to the development or execution 

of the project and must be eligible 

project costs per 33 U.S.C. 3907(a)(2). In 

addition, such costs, excluding the 

value of any integral in-kind 

contributions, are payable from the 

proceeds of the Federal credit 

instrument and would be considered 

incurred costs. Capitalized interest on 

the Federal credit instrument would not 

be eligible for calculating eligible 

project costs. 

The Corps would not obligate funds 

for a project that has not received an 

environmental Categorical Exclusion, 

Finding of No Significant Impact, or 

Record of Decision under the NEPA. 

The credit agreement would include 

the anticipated schedule for loan 

disbursements. However, actual 

disbursements would be based on costs 

incurred in accordance with the 

approved construction plan. This 

requirement would protect the Corps in 

the event of non-performance. 

As required by section 3908(b)(4) of 

Title 33 of the U.S.C., the interest rate 

on a secured loan would be equal to or 

greater than the yield on U.S. Treasury 

securities of comparable maturity on the 

date of execution of the credit 

agreement. The base interest rate can be 

identified through use of the daily rate 

tables published by the Bureau of the 

Fiscal Service for the State and Local 

Government Series (SLGS) investments. 

The WIFIA program would estimate the 

yield on comparable Treasury securities 

by adding one basis point to the SLGS 

daily rate with a maturity that is closest 

to the weighted average loan life of the 

WIFIA credit assistance. 

As allowed by statute at 33 U.S.C. 

3908(c)(2), scheduled loan repayments 

of principal and interest on a secured 

loan or loan guarantee shall commence 

not later than 5 years after the projected 

date of substantial completion of the 

project at the time of execution of the 

Loan Agreement or Loan Guarantee 

Agreement, as determined by the 

Secretary. However, scheduled loan 

repayments of principal and interest on 

a secured loan or loan guarantee to a 

State infrastructure financing authority 

would commence not later than 5 years 

after the date on which amounts are first 

disbursed. The final maturity of the 

credit agreement shall be in no instance 

later than 35 years after the projected 

date of substantial completion of the 

project at the time of execution of the 

Loan Agreement or Loan Guarantee 

Agreement. 

As required by section 3908(b)(5) of 

Title 33 of the U.S.C., the final maturity 

date of a secured loan would be the 

earlier of the date that is (1) 35 years 

after the date of substantial completion 

of the project, as determined by the 

Secretary, or (2) the useful life of the 

project, as determined by the Secretary. 

However, the final maturity date of a 

secured loan to a State infrastructure 

financing authority would be not later 

than 35 years after the date on which 

amounts are first disbursed. In 

determining the useful life of the 

project, for the purposes of establishing 

the final maturity date of the Federal 

credit instrument, the Secretary would 

consider the useful economic life of the 

asset(s) being financed, as required 

under Office of Management and Budget 

(OMB) Circular A–129.6

As required by statute, the Corps’ 

Federal credit instrument may have a 

junior claim to other debt issued by the 

obligor in terms of its priority interest in 

the project’s pledged security. However, 

the Corps’ claim on pledged security 

would not be subordinated to the claims 

of any holder of the project obligations 

in the event of a bankruptcy, 

insolvency, or liquidation of the obligor 

of the project. The Corps’ interest may 

include collateral other than pledged 

revenues. 

J. Rating Requirement 

The Corps, as required by 33 U.S.C. 

3907(a)(1)(D)(i), would require each 

applicant to furnish a preliminary rating 

opinion letter as part of the application 

process. The applicant would be 

responsible for identifying and 

approaching one or more Nationally 

Recognized Statistical Rating 

Organizations (NRSROs) to obtain such 

a letter. This letter must indicate that 

the applicant project’s senior obligations 

(which may be the Federal credit 

instrument), have the potential of 

attaining an investment-grade rating. As 

required by Section 3907(a)(1)(D)(ii) of 

the WIFIA, 33 U.S.C. 3901 et seq., the 

Corps would require each applicant to 

provide, prior to final acceptance and 

financing of the project, final rating 

opinion letters from at least two rating 

agencies indicating that the senior 

obligations of the project have an 

investment-grade rating. If the Federal 

credit instrument is the project’s senior 

obligation, these ratings must apply to 

all project obligations with claims at 

parity to that of the Federal credit 

instrument on the security pledged to 

the Federal credit instrument, including 

the Federal credit instrument. The 

Corps would also require as a matter of 

policy, prior to final execution of the 

loan agreement or loan guarantee 

agreement, that the applicant provide at 

least one final rating opinion letter 

which provides a credit rating on the 

final negotiated direct loan or loan 

guarantee that does not include 

consideration of the full faith and credit 

of the United States of America. 

K. Federal Requirements 

Recipients of WIFIA credit assistance 

would be required to comply with 

Federal requirements applicable to all 

federally-financed projects. The 

proposed rule provides a nonexhaustive list of these requirements in 

Section IV (Statutory and Executive 

Order Reviews). 

L. American Iron and Steel 

Requirements 

Recipients of WIFIA credit assistance 

would be required to comply, per 33 

U.S.C. 3914(a), with American Iron and 

Steel (AIS) requirements, which 

requires that if any WIFIA assistance is 


jspears on DSK121TN23PROD with PROPOSALS1
35480 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

7Executive Order 13985 of January 20, 2021. 

Advancing Racial Equity and Support for 

Underserved Communities Through the Federal 

Government. 

Executive Order 13990 of Jan 20, 2021. Protecting 

Health and the Environment and Restoring Science 

to Tackle the Climate Crisis. 

Executive Order 14008 of January 27, 2021. 

Tackling the Climate Crisis at Home and Abroad. 

provided for construction, alteration, 

maintenance, or repair of a project, all 

of the iron and steel products used in 

the project must be produced in the 

United States. These products include 

lined or unlined pipes and fittings, 

manhole covers and other municipal 

castings, hydrants, tanks, flanges, pipe 

clamps and restraints, valves, structural 

steel, reinforced precast concrete, and 

construction materials. 33 U.S.C. 

3914(b). This requirement applies to all 

iron and steel products used in the 

project, not only those paid for with 

proceeds from the WIFIA credit 

assistance. 

M. Labor Standards (Davis-Bacon Act of 

1931) 

The WIFIA requires recipients of 

WIFIA credit assistance to pay all 

laborers and mechanics employed by 

contractors or subcontractors’ wages at 

rates not less than those prevailing for 

the same type of work on similar 

construction in the immediate locality, 

as determined by the Secretary of Labor. 

33 U.S.C. 3909(h) (cross-referencing 

Title VI of the Federal Water Pollution 

Control Act); 33 U.S.C. 1372. This is 

commonly referred to as Davis-Bacon 

wage requirements. This requirement 

applies to all laborers and mechanics 

working on a project, not only those 

paid from proceeds of the WIFIA credit 

assistance. 

N. Reporting Requirements 

The Corps proposes to require, at a 

minimum, that any recipient of WIFIA 

credit assistance must make available to 

the Corps an annual project 

performance report and audited 

financial statements to the Corps within 

the time period stated in the credit 

agreement following the recipient’s 

fiscal year-end for each year during 

which the recipient’s obligation to the 

Federal Government remains in effect. 

The Corps proposes that they may 

conduct periodic financial and 

compliance audits of the recipient, as 

determined necessary by the Corps. The 

specific credit agreement between the 

recipient of credit assistance and the 

Corps may contain additional reporting 

requirements. This would be a 

necessary and important requirement in 

order to allow the Corps to provide 

proper and sufficient oversight of 

federally-financed projects. 

O. Selection Criteria 

Congress enacted WIFIA with the goal 

of accelerating investment in our 

nation’s water infrastructure by 

providing credit assistance to 

creditworthy projects of major 

importance to the water sector. Only 

eligible projects will be selected. The 

project priorities as proposed under this 

rule are as follows: Projects serving 

small, rural communities and 

economically disadvantaged 

communities and projects serving Tribal 

communities. 

The program’s goal is to enable local 

investment in projects that enhance 

community resilience to flooding, while 

supporting the Corps’ policy initiatives 

by prioritizing the projects listed above. 

Section 3907(b)(2) of Title 33 of the 

U.S. Code establishes 11 criteria, at a 

minimum, for selecting among eligible 

projects to receive credit assistance, but 

does not prohibit the Corps from 

identifying additional selection criteria 

and requirements. As such, the Corps is 

proposing the following 12 selection 

criteria. 

1. The extent to which the project is 

nationally or regionally significant, with 

respect to the generation of public 

benefits, such as— 

a. The reduction of flood risk; 

b. The improvement of water quality 

and quantity, including aquifer 

recharge; 

c. The protection of drinking water, 

including source water protection; 

d. The support of domestic and 

international commerce; and 

e. The restoration of degraded aquatic 

ecosystem structures. 

2. The extent to which the project 

financing plan includes public or 

private financing, in addition to WIFIA 

credit assistance. 

3. The likelihood that WIFIA credit 

assistance would enable the project to 

proceed at an earlier date than the 

project would otherwise be able to 

proceed. 

4. The extent to which the project 

uses new or innovative approaches. 

5. The amount of budget authority 

required to fund the WIFIA Federal 

credit instrument. 

6. The extent to which the project— 

a. Protects against extreme weather 

event, such as floods or hurricanes; or 

b. Helps maintain or protect the 

environment. 

7. The extent to which a project serves 

regions with significant clean energy 

exploration, development, or 

production areas. 

8. The extent to which a project serves 

regions with significant water resource 

challenges, including the need to 

address— 

a. Water quality concerns in areas of 

regional, national, or international 

significance; 

b. Water quantity concerns related to 

groundwater, surface water, or other 

water sources; 

c. Significant flood risk; 

d. Water resource challenges 

identified in existing regional, State, or 

multistate agreements; or 

e. Water resources with exceptional 

recreational value or ecological 

assistance. 

9. The extent to which the project 

addresses identified municipal, State, or 

regional priorities. 

10. The readiness of the project to 

proceed toward development, including 

a demonstration by the obligor that 

there is a reasonable expectation that 

the contracting process for construction 

of the project can commence not later 

than 90 days after the date on which a 

Federal credit instrument is obligated 

for the project under WIFIA. 

11. The extent to which WIFIA credit 

assistance reduces overall Federal 

contributions to the project. 

12. The extent to which the project 

serves economically disadvantaged 

communities and spurs economic 

opportunity for, and minimally 

adversely impacts, disadvantaged 

communities and their populations. 

Criterion (5) is directly related to a 

project’s creditworthiness, financial 

viability, and the Corps’ capacity to 

make a loan. This criterion would be 

used to assess projects separate from the 

assessment under the other selection 

criteria. In particular, it would inform 

the Corps’ ability to provide funding in 

an equitable manner to prospective 

borrowers seeking financing. The 

amount of budget authority used by a 

project would be an important 

consideration when selecting projects. 

The greater the budget authority used by 

a project, which is a function of both 

project size and creditworthiness, the 

less budget authority is available to 

finance other projects. Selecting projects 

would be at the discretion of the 

Secretary who may decide that a project 

that uses a disproportionally high level 

of budget authority provides essential 

public safety benefits and deserves 

greater consideration. 

The Corps added criterion (12) to 

reflect the Corps’ intention to address 

the needs of economically 

disadvantaged communities where 

obtaining financing for critical water 

resources infrastructure presents 

additional difficulties and to further 

current Administration priorities as 

expressed in E.O. 13985, E.O. 13990, 

and E.O. 14008.7 While the 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35481 

creditworthiness requirement, as well as 

the requirement to obtain an 

investment-grade rating on senior 

obligations, may be a challenge for 

economically disadvantaged 

communities, the flexibility and low 

interest rates of the Federal credit 

instrument may improve overall 

financial feasibility and burden to the 

community. 

IV. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review & Executive Order 

13563: Improving Regulation and 

Regulatory Review 

Executive Order 12866, ‘‘Regulatory 

Planning and Review,’’ and Executive 

Order 13563, ‘‘Improving Regulation 

and Regulatory Review,’’ require that 

significant regulatory actions be 

submitted for review to the Office of 

Information and Regulatory Affairs 

(OIRA) in the Office of Management and 

Budget (OMB). These orders also direct 

agencies to assess the costs and benefits 

of available regulatory alternatives and, 

if the regulation is necessary, to select 

regulatory approaches that maximize 

net benefits. This rule has been 

determined significant under Executive 

Order 12866. In accordance with 

Executive Order 12866 and Executive 

Order 13563, this significant regulatory 

action was submitted to OMB for 

review. The costs to the public of 

implementing the Corps WIFIA program 

include: the fees charged to applicants 

and loan recipients, as well as any 

remaining costs of administering the 

program that are not fully covered by 

the user fees and instead require 

support by Federal appropriations. The 

benefits of implementing the Corps 

WIFIA program include: (1) the value of 

the benefits provided by non-Federal 

dam safety projects enabled by future 

the Corps WIFIA credit assistance (for 

example, flood damages prevented by 

dam safety improvement projects), and 

(2) the savings realized by the borrowers 

from the lower lending rates of the 

Corps WIFIA credit assistance. 

B. Executive Order 11988: Floodplain 

Management 

Projects funded under this rule will 

meet or exceed applicable State, local, 

tribal, and territorial standards for flood 

risk and floodplain management, as well 

as Executive Order 11988, which directs 

Federal agencies to avoid, to the extent 

possible, long-and short-term adverse 

impacts associated with the occupancy 

and modification of the floodplain as 

well as to avoid direct and indirect 

support of floodplain development 

wherever there is a practicable 

alternative. 

All projects under this rule are 

considered Federal actions under E.O. 

11988 and thus, project applicants shall 

determine whether the proposed project 

will occur in the floodplain. If the 

project is located within the floodplain, 

the applicant must determine whether 

the action is critical or not and what 

floodplain standard to follow. Further 

guidance on implementation of E.O. 

11988 can be found in the Corps 

Engineer Regulation 1165–2–26 (30 

March 1984). 

C. Paperwork Reduction Act (PRA) 

The information collection activities 

in this final rule have been submitted 

for approval to the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act (PRA). Per 

the PRA, the agency cannot collect any 

information until the information 

collection request has been approved by 

OMB. 

D. Regulatory Flexibility Act (RFA) 

The RFA requires Federal agencies to 

consider the impact of regulations on 

small entities (small businesses, small 

organizations, or small government 

jurisdictions) in developing the 

proposed and final regulations. The 

RFA applies to the Corps WIFIA 

program rule since notice and comment 

are required as part of this rulemaking 

process. 

Congress has provided authority and 

funding required for the Corps to make 

direct loans and loan guarantees for 

safety projects to maintain, upgrade, and 

repair dams identified in the National 

Inventory of Dams with a primary 

owner type of State, local government, 

public utility, or private. The Corps is 

proposing to establish its new WIFIA 

program within the limitations set by 

Congress. The proposed rule sets forth 

the policies and procedures that the 

Corps will use for receiving, evaluating, 

approving applications, and servicing 

and monitoring direct loans and loan 

guarantees. 

Small entities that would be impacted 

by this rule will be non-Federal dam 

owners who own dams that require 

loans in excess of $20,000,000. This 

includes small government jurisdictions 

and organizations who voluntarily 

submit a preliminary application and 

are subsequently invited to submit a full 

application. The Corps will only invite 

potential borrowers to submit an 

application and application fee if the 

Corps believes there is a reasonable 

expectation that the project could 

receive financing. The application fee 

will be waived for small communities 

and economically disadvantaged 

communities. Based on data derived 

from the EPA’s WIFIA program since its 

implementation in 2017, the Corps 

anticipates receiving approximately 50 

preliminary applications each year from 

eligible entities per year, and of these 

entities, the Corps estimates five will be 

considered small entities. 

There are approximately 87,000 nonfederally owned dams in the US (some 

of which are owned by the same entity). 

Of the NAICS classifications, the most 

applicable industry classification for 

these entities is the ‘‘Water Supply and 

Irrigation Systems’’ industry subsector. 

Information on this industry is provided 

in the tables below. Based on the Small 

Business Administration’s (SBA) Size 

Standard/Small Entity Threshold and 

the average annual receipts, the Water 

Supply and Irrigation Systems industry 

has 684 firms that qualify as small 

entities. 

NAICS code Industry subsector description SBA size standard/small entity threshold 

(average annual receipts) 

Total small 

businesses 

221310 ..................................................... Water Supply and Irrigation Systems ..... $36.0 M ................................................... 684 

Enterprise size 

($1,000) Firms Establishments Employment Annual payroll ($1,000) 

Receipts 

($1,000) 

01: Total ....................................................................... 3,334 4,131 36,836 2,346,769 11,712,605 

02: <100 ....................................................................... 684 684 1,088 9,494 35,768 

03: 100–499 ................................................................. 1,30 1,300 3,420 87,118 336,983 

04: 500–999 ................................................................. 569 570 2,676 106,172 402,485 

05: 1,000–2,499 ........................................................... 448 455 3,492 165,793 694,133 

06: 2,500–4,999 ........................................................... 143 151 1,968 104,614 482,800 


jspears on DSK121TN23PROD with PROPOSALS1
35482 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

Enterprise size 

($1,000) Firms Establishments Employment Annual payroll ($1,000) 

Receipts 

($1,000) 

07: 5,000–7,499 ........................................................... 54 67 1,208 67,701 322,787 

08: 7,500–9,999 ........................................................... 29 38 705 40,656 219,741 

09: 10,000–14,999 ....................................................... 25 40 1,035 58,494 277,199 

10: 15,000–19,999 ....................................................... 12 17 416 29,630 166,138 

11: 20,000–24,999 ....................................................... 9 19 501 25,101 99,781 

12: 25,000–29,999 ....................................................... 5 14 424 27,005 84,788 

13: 30,000–34,999 ....................................................... 5 9 282 15,409 117,611 

14: 35,000–39,999 ....................................................... 5 30 701 36,112 123,970 

15: 40,000–49,999 ....................................................... 6 11 678 60,553 179,170 

16: 50,000–74,999 ....................................................... 8 68 1,605 96,580 392,037 

17: 75,000–99,999 ....................................................... 5 24 904 76,175 303,054 

18: 100,000+ ................................................................ 27 634 15,733 1,340,162 7,474,160 

Eligible small entities that qualify for 

WIFIA credit assistance and plan to 

utilize debt financing such as bank 

loans, bonds, or a WIFIA credit 

assistance to fund an eligible project, 

will incur compliance costs associated 

with any such debt instrument. As such, 

the compliance costs to obtain a WIFIA 

credit assistance noted below in most 

instances represents a meaningful 

savings compared to alternative capital 

market debt financing options. WIFIA 

compliance costs likely include the 

following: 

• Fees: The WIFIA application fee of 

$25,000 will be waived for small and/ 

or disadvantaged communities. All 

WIFIA credit assistance recipients will 

be charged a transaction processing fee, 

likely between $125,000 and $300,000, 

at the time of loan closing to cover the 

costs incurred by the Corps for the 

processing each loan. The cost of the fee 

will depend on the complexity of the 

transaction (more complex transactions 

will have higher transaction processing 

fees). If administrative funds are 

available, this fee may be refunded to 

the borrower(s). Additionally, all WIFIA 

credit assistance recipients will be 

charged an annual servicing fee, likely 

between $10,000 and $50,000. This cost 

of this fee will depend on the costs of 

servicing the credit instrument. The 

transaction processing fee and the 

annual servicing fee will be determined 

at the time of loan closing. To facilitate 

access to the funding, all applicants 

have the option to use loan proceeds to 

pay for all consulting reports and 

application fees. This amount is less 

than the underwriting fees incurred for 

alternative debt financings, which are 

usually 1.0% of the borrowed amount. 

• Rating letters: The Corps WIFIA 

program will require borrowers to 

provide credit rating letters before 

closing on the WIFIA credit assistance. 

Credit ratings typically cost 

approximately $50,000 to obtain. Credit 

ratings are a standard practice for 

alternative debt financings and as such, 

the cost to obtain one for Corps 

financing does not materially change the 

costs for small entities. 

• Reading the regulation: The 

regulation other related documents are 

not expected to take more than a typical 

8-hour workday to read and 

comprehend. Assuming an average 

hourly rate of $100/hour, reading the 

regulation would cost approximately 

$1,600 for 2 employees to read the 

regulation. 

• Consulting fees: Consultants are not 

required to participate in the WIFIA 

program. However, eligible entities may 

opt to utilize support from consultants 

to prepare financial, legal, and technical 

documents required to support an 

application. The Corps estimates that 

should an entity opt to utilize such 

support, the cost is anticipated to be less 

than $75,000. This amount is less than 

the consulting fees incurred for 

alternative debt financings, which are 

usually in excess of $100,000. 

• Reporting: WIFIA requires that 

borrowers submit financial audit or 

financial condition reports, so that the 

program can monitor the status of the 

project and identify any changes to the 

credit risk posed to the Federal 

Government. These reports are already 

produced regularly by borrowers, so the 

added cost to borrowers is anticipated to 

be less than $5,000 per year. 

• Record-keeping: It is anticipated 

that record-keeping costs for WIFIA 

credit assistance will not exceed $5,000 

per year. 

The estimated costs to small business 

associated with the program are 

summarized in the table below. 

Fees $125,000–$350,000 plus $10,000–$50,000 annually 

Rating letters ............................................................................................. $50,000. 

Loan interest ............................................................................................. Based on loan amount and duration. 

Reading the regulation .............................................................................. $800–$1,600. 

Consulting fees ......................................................................................... $0–$75,000. 

Reporting ................................................................................................... $0–$5,000. 

Record-keeping ......................................................................................... $5,000 annually. 

Total ................................................................................................... $175,800–$481,600 Plus $15,000–$55,000 annually. 

These costs do not represent a 

significant economic impact. The only 

reason entities would proceed with the 

program is if there is a benefit compared 

to other alternative debt financings. The 

total estimated costs are anticipated to 

be between approximately $175,000 and 

$500,000, plus an annual cost between 

$10,000 and $50,000. For the affected 

industries, the maximum of these costs 

represents less than 2% of the revenue 

threshold for small entities. Further, 

participation in the WIFIA program is 

voluntary and the Corps anticipates 

inviting approximately 5 small, nonFederal entities to apply for Federal 

credit assistance through the program. 

Because (1) participating in the 

program is voluntary and undertaken by 

small entities to affordably finance 

eligible projects, and (2) the cost of 

obtaining a WIFIA credit assistance is 

likely lower than the alternative forms 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35483 

of debt financing necessary to undertake 

a project, of the small entities that seek 

a WIFIA credit assistance through the 

program, none will experience a 

significant economic impact. Further, 

because the WIFIA program expects to 

invite approximately five small entities 

per year to apply for Federal credit 

assistance through the program, the rule 

is not anticipated to have a significant 

or adverse impact on small entities. 

E. Unfunded Mandates Reform Act 

(UMRA) 

This action does not contain an 

unfunded mandate of $100 million or 

more as described in UMRA, 2 U.S.C. 

1531–1538, and does not significantly or 

uniquely affect small governments. The 

action imposes no enforceable duty on 

any State, local, or tribal governments or 

the private sector. 

F. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the States, on the 

relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. 

G. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications as specified in E.O. 13175. 

While a tribal government, or a 

consortium of tribal governments, may 

apply for WIFIA credit assistance, this 

action does not have substantial direct 

effects on one or more Indian tribes, on 

the relationship between the Federal 

Government and Indian tribes, or on the 

distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

H. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

This action is not subject to E.O. 

13045 because it is not economically 

significant as defined in E.O. 12866, and 

because this action does not address 

environmental health or safety risks. 

This rulemaking provides the procedure 

to apply for credit assistance and 

establishes the fees related to the 

provision of Federal credit assistance 

under the WIFIA. The selection criteria 

used for evaluating and selecting among 

eligible projects to receive credit 

assistance contained in this 

SUPPLEMENTARY INFORMATION section of 

the preamble includes the extent to 

which the project generates public 

safety benefits. 

I. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not a ‘‘significant 

energy action’’ because it is not likely to 

have a significant adverse effect on the 

supply, distribution, or use of energy. 

This rulemaking simply provides the 

procedure to apply for credit assistance 

and establishes the fees related to the 

provision of Federal credit assistance 

under the Corps WIFIA program. 

J. National Technology Transfer and 

Advancement Act of 1995 (NTTAA) 

This action is not subject to the 

NTTAA, Public Law 104–113, because it 

does not establish an environmental 

health or safety standard. 

K. National Environmental Policy Act 

(NEPA) 

This action of promulgating this rule 

will not have a significant effect on the 

human environment. Each project 

obtaining assistance under this program 

is required to adhere to the National 

Environmental Policy Act of 1969 

(NEPA), as amended (42 U.S.C. 4321 et 

seq.). These requirements apply at the 

time of application for assistance. The 

Corps has completed a Programmatic 

Environmental Assessment and 

associated Finding of No Significant 

Impact in support of this rule. These 

documents are available at https://

www.usace.army.mil/Missions/CivilWorks/Infrastructure/revolutionize/ 

CWIFP/. 

L. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898 directs Federal 

agencies to identify and address the 

disproportionately high and adverse 

human health or environmental effects 

of their actions on minority and lowincome populations. This action does 

not cause disproportionately high and 

adverse human health environmental 

effects on minority or low-income 

populations. 

M. Congressional Review Act (CRA) 

This action is subject to the CRA, and 

the Corps will submit a rule report to 

each House of the Congress and to the 

Comptroller General of the United 

States. Pursuant to the CRA (5 U.S.C. 

801 et seq.), the Office of Information 

and Regulatory Affairs designated this 

rule as not a ‘‘major rule’’, as defined by 

5 U.S.C. 804(2). 

List of Subjects in 33 CFR Part 386 

Administrative practice and 

procedure, Intergovernmental relations, 

Waterways. 

■ For the reasons stated in the preamble, 

the Corps proposes to amend 33 CFR 

chapter II by adding part 386 to read as 

follows: 

PART 386—CREDIT ASSISTANCE FOR 

WATER RESOURCES 

INFRASTRUCTURE PROJECTS 

Sec. 

386.1 Purpose and scope. 

386.2 Definitions. 

386.3 Limitations on assistance. 

386.4 Application process. 

386.5 Federal requirements. 

386.6 Federal flood risk management 

standard. 

386.7 American iron and steel. 

386.8 Labor standards. 

386.9 Investment-grade ratings. 

386.10 Threshold criteria. 

386.11 Selection criteria. 

386.12 Term sheets and approvals. 

386.13 Closing on the Loan Agreement or 

Loan Guarantee Agreement. 

386.14 Reporting requirements. 

386.15 Fees. 

Authority: 33 U.S.C. 3901 et seq. 

§ 386.1 Purpose and scope. 

The Water Infrastructure Finance and 

Innovation Act of 2014 (WIFIA) 

authorized a new Federal credit 

program for water resources 

infrastructure projects to be 

administered by the U.S. Army Corps of 

Engineers (Corps). Title 1, Division D of 

the Consolidated Appropriations Act, 

2021, and Division J, Title III of the 

Infrastructure Investment and Jobs Act 

limits the program to safety projects to 

maintain, upgrade, and repair dams 

identified in the National Inventory of 

Dams with a primary owner type of 

State, local government, public utility or 

private. 

§ 386.2 Definitions. 

The following definitions apply to 

this part: 

(a) Application means the form and 

attachments submitted by prospective 

borrowers that have been selected to 

apply for credit assistance after the 

review of letters of interest. 

(b) Borrower means any entity that 

enters into a direct loan or Loan 

Guarantee Agreement with the Corps 

that is primarily liable for payment of 

the principal or interest on a Federal 

credit instrument. ‘‘Borrower’’ is 

synonymous with ‘‘obligor.’’ ‘‘Obligor’’ 

is used in place of borrower in this part 

whenever ‘‘obligor’’ appears in a 

corresponding section of WIFIA. 

(c) Clean energy means systems, 

processes, and best practices for 


jspears on DSK121TN23PROD with PROPOSALS1
35484 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

producing, converting, storing, 

transmitting, distributing, and 

consuming energy that avoid, reduce, or 

sequester the amount of greenhouse gas 

(GHG) emitted to, or concentrated in, 

the atmosphere. 

(d) Community means a collection of 

people in a geographic area having one 

or more characteristic in common. The 

geographic area may be contained 

within or cross political subdivisions of 

States. 

(e) Credit assistance means a secured 

loan or loan guarantee under 33 U.S.C. 

3908. 

(f) Credit agreement means a 

contractual agreement (or agreements) 

between the Corps and a borrower (and 

the lender, if applicable) establishing 

the terms and conditions, rules, and 

requirements of a secured loan or loan 

guarantee. 

(g) Credit subsidy shall have the same 

meaning as ‘‘cost’’ under section 502(5) 

of the Federal Credit Reform Act of 1990 

(2 U.S.C. 661a(5)), which is the net 

present value at the time the Loan 

Agreement or Loan Guarantee 

Agreement is executed. The credit 

subsidy cost for a given project is the 

net present value, at the time the Loan 

Agreement or Loan Guarantee 

Agreement is executed of the following 

estimated cash flows, discounted to the 

point of disbursement: 

(1) Payments by the Government to 

cover defaults and delinquencies, 

interest subsidies, or other payments; 

less 

(2) Payments to the Government 

including origination and other fees, 

penalties, and recoveries including the 

effects of changes in loan or debt terms 

resulting from the exercise by the 

borrower, eligible lender, or other 

holder of an option included in a Loan 

Agreement or Loan Guarantee 

Agreement. 

(h) Economically disadvantaged 

community refers to a community that 

experiences low-income, persistent 

poverty, or high unemployment. 

(i) Economically justified means that 

the anticipated benefits to the 

community(ies) will exceed the costs. 

(j) Eligible entity means one of the 

following: 

(1) A corporation; 

(2) A partnership; 

(3) A joint venture; 

(4) A trust; 

(5) A State, or local government 

entity, agency, or instrumentality; 

(6) A tribal government or consortium 

of tribal governments; or 

(7) A State infrastructure financing 

authority. 

(k) Eligible project costs means the 

amounts, which are paid by, or for the 

account of, a borrower in connection 

with a project, including the cost of: 

(1) Development-phase activities, 

including planning, feasibility analysis 

(including any related analysis 

necessary to carry out an eligible 

project), revenue forecasting, 

environmental review, permitting, 

preliminary engineering and design 

work, and other pre-construction 

activities. 

(2) Construction, reconstruction, 

rehabilitation, and replacement 

activities. 

(3) Acquisition of real property or an 

interest in real property (including 

water rights, land relating to the project, 

and improvements to land), 

environmental mitigation, construction 

contingencies, and acquisition of 

equipment; and 

(4) Capitalized interest necessary to 

meet market requirements, reasonably 

required reserve funds, capital issuance 

expenses, and other carrying costs 

during construction. Capitalized interest 

on the Federal credit instrument is not 

an eligible project cost. 

(l) Environmentally acceptable means 

the project satisfies all necessary 

environmental requirements, including 

requirements associated with the Corps 

Programmatic Environmental 

Assessment prepared for this program 

under the National Environmental 

Policy Act (NEPA). 

(m) Federal credit instrument means a 

secured loan or loan guarantee 

authorized to be made available under 

33 U.S.C. 3901–3914 with respect to a 

project. 

(n) High unemployment means the 

unemployment rate in a community is, 

for the most recent 24-month period for 

which data is available, at least 1% 

greater than the national average 

unemployment rate. 

(o) Investment-grade rating means a 

rating category of BBB minus, Baa3, bbb 

minus, BBB (low), or higher assigned by 

a nationally recognized statistical rating 

organization (NRSRO) to project 

obligations offered into the capital 

markets. 

(p) Iron and steel products means the 

following products made primarily of 

iron or steel: lined or unlined pipes and 

fittings, manhole covers and other 

municipal castings, hydrants, tanks, 

flanges, pipe clamps and restraints, 

valves, structural steel, reinforced 

precast concrete, and construction 

materials. 

(q) Low-income community means a 

community in a geographic area that 

meets any of the following criteria: 

(1) Individuals whose household 

income is at or below 200 percent of the 

poverty line, as defined by the Bureau 

of the Census, constitute more than 50 

percent of the population; 

(2) The percentage of individuals 

whose household income is at or below 

200 percent of the poverty line, as 

defined by the Bureau of the Census, in 

the community is twice that as the 

county or State as a whole; or 

(3) The community or territory has a 

per capita income of 80 percent or less 

of the national average. 

(4) For U.S. territories for which 

Bureau of the Census American 

Community Survey data is not available, 

low-income community means a 

community in a geographic area that is 

located within a territory that has a 

poverty rate greater than 20%. 

(r) Loan guarantee means any 

guarantee or other pledge by the 

Secretary of the Army (Secretary) to pay 

all or part of the principal of and 

interest on a loan or other debt 

obligation issued by a borrower and 

funded by a lender. 

(s) Lender means any non-Federal 

qualified institutional buyer (as defined 

in 17 CFR 230.144A(a), known as Rule 

144A(a) of the Securities and Exchange 

Commission and issued under the 

Securities Act of 1933 (15 U.S.C. 77a et 

seq.)), including: 

(1) A qualified retirement plan (as 

defined in section 4974(c) of the 

Internal Revenue Code of 1986, 26 

U.S.C. 4974(c)) that is a qualified 

institutional buyer; and 

(2) A governmental plan (as defined 

in section 414(d) of the Internal 

Revenue Code of 1986, 26 U.S.C. 414(d)) 

that is a qualified institutional buyer. 

(t) Nationally recognized statistical 

rating organization (NRSRO) means a 

credit rating agency identified and 

registered by the Office of Credit Ratings 

in the Securities and Exchange 

Commission under 15 U.S.C. 78c. 

(u) Non-Federal means an 

organization that is not an agency or 

instrumentality of the Federal 

Government, including State, interstate, 

Indian tribal, or local government, as 

well as private organizations. 

(v) Persistent poverty means that 20% 

or more of the population has been 

living in poverty over the prior two 

decennial censuses for which data is 

available and the most recent Small 

Area Income and Poverty Estimates. 

(w) Preliminary application means the 

form and attachments prospective 

borrowers submit to the Corps to be 

considered for credit assistance 

following the announcement of 

available funding. 

(x) Project means: 

(1) Safety projects to maintain, 

upgrade, and repair dams (including 

dam removal) identified in the National 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35485 

Inventory of Dams with a primary 

owner type of State, local government, 

public utility, or private; and which 

meets the statutory requirements of Title 

1, Division D of the Consolidated 

Appropriations Act 2021, meet the 

criteria outlined in 85 FR 39189 (see 

division D of the Further Consolidated 

Appropriations Act, 2020 (Pub. L. 116– 

94)). 

(2) Any project that meets the criteria 

in paragraph (x)(1) of this section must 

also be a project for flood damage 

reduction, hurricane and storm damage 

reduction, aquatic environmental 

restoration, coastal or inland harbor 

navigation improvement, or inland and 

intracoastal waterways navigation 

improvement that the Secretary 

determines is technically sound, 

economically justified, and 

environmentally acceptable, 

including— 

(i) A project to reduce flood damage; 

(ii) A project to restore aquatic 

ecosystems; 

(iii) A project to improve the inland 

and intracoastal waterways navigation 

system of the United States; and 

(iv) A project to improve navigation of 

a coastal inland harbor of the United 

States, including channel deepening 

and construction of associated general 

navigation features. 

(3) Acquisition of real property or an 

interest in real property for a project 

that meets the criteria under paragraph 

(x)(1) of this section— 

(i) If the acquisition is integral to a 

project eligible for WIFIA credit 

assistance; or 

(ii) Pursuant to an existing plan that, 

in the judgment of the Secretary, would 

mitigate the environmental impacts of 

water resources infrastructure projects 

otherwise eligible for WIFIA credit 

assistance. 

(4) A combination of projects secured 

by a common security pledge, each of 

which is eligible for WIFIA credit 

assistance, for which an eligible entity, 

or a combination of eligible entities, 

submits a single application. 

(y) Project obligation means any note, 

bond, debenture, or other debt 

obligation issued by a borrower in 

connection with the financing of a 

project, other than a Federal credit 

instrument. 

(z) Prospective borrower means an 

eligible entity seeking credit assistance. 

(aa) Projected substantial completion 

date means the expected date as 

determined by the Secretary, at which 

the stage in the progress of the project 

when the project or designated portion 

thereof is sufficiently complete in 

accordance with the contract documents 

so that the project or designated portion 

thereof can be used for its intended use. 

(bb) Publicly sponsored means the 

obligor can demonstrate, to the 

satisfaction of the Secretary, that it has 

consulted with the affected State, local, 

or tribal government in which the 

project is located, or is otherwise 

affected by the project, and that such 

government supports the proposed 

project. Support can be shown by a 

certified letter signed by the approving 

municipal department or similar 

agency, mayor or other similar 

designated authority, local ordinance, or 

any other means by which local 

government approval can be evidenced. 

(cc) Secured loan means a direct loan 

or other debt obligation (including a 

note, bond, debenture, and sale or lease 

financing arrangement) issued by a 

borrower funded by the Secretary in 

connection with the financing of a 

project under 33 U.S.C. 3908. 

(dd) Small community means a 

community of not more than 25,000 

individuals. 

(ee) State means any of the fifty 

States, the District of Columbia, Puerto 

Rico, or any other territory or possession 

of the United States. 

(ff) State infrastructure financing 

authority means the State entity 

established or designated by the 

Governor of a State to receive a 

capitalization grant provided by, or 

otherwise carry out the requirements of, 

title VI of the Federal Water Pollution 

Control Act (33 U.S.C. 1381 et seq.) or 

section 1452 of the Safe Drinking Water 

Act (42 U.S.C. 300j–12). 

(gg) Subsidy amount means the dollar 

amount of budget authority that is 

sufficient to cover the estimated longterm cost to the Federal Government of 

a Federal credit instrument, calculated 

on a net present value basis, excluding 

administrative costs and any incidental 

effects on the governmental receipts or 

outlays in accordance with the 

provisions of the Federal Credit Reform 

Act of 1990 (2 U.S.C. 661 et seq.). 

(hh) Substantial completion means 

the stage in the progress of the project 

when the project or designated portion 

thereof is sufficiently complete in 

accordance with the contract documents 

so that the project or designated portion 

thereof can be used for its intended use. 

(ii) Technically sounds means the 

project will meet all applicable 

engineering, safety, and other technical 

standards. 

(jj) Term sheet means a contractual 

agreement between the Corps and the 

borrower (and the lender, if applicable) 

that sets forth the key business terms 

and conditions of a Federal credit 

instrument. 

(kk) Territory means each of the 

commonwealths, territories, and 

possessions of the United States 

established in Title 48 of the U.S.C. 

(ll) Treatment works has the meaning 

given the term in section 212 of the 

Federal Water Pollution Control Act (33 

U.S.C. 1292). 

(mm) WIFIA means the Water 

Infrastructure Finance and Innovation 

Act of 2014 (Pub. L. 113–121), as 

amended. 

§ 386.3 Limitations on assistance. 

(a) The total amount of credit 

assistance offered to any project under 

this part shall not exceed 49% of the 

reasonably anticipated eligible project 

costs, or, if the secured loan does not 

receive an investment grade rating, the 

total amount of credit assistance shall 

not exceed the amount of the senior 

project obligations of the project (33 

U.S.C. 3908(b)(2)(B)). 

(b) Notwithstanding paragraph (a) of 

this section, the Secretary may offer 

credit assistance in excess of 49% of the 

reasonably anticipated eligible project 

costs as long as such excess assistance 

combined for all projects does not 

require greater than 25% of the subsidy 

amount made available for the fiscal 

year, per 33 U.S.C. 3912(d). 

(1) Use of the authority to offer credit 

assistance in excess of 49% of the 

anticipated eligible project costs shall be 

considered on a case by case basis. 

(2) In the event this authority is used, 

all other criteria and requirements 

described in this part must be met and 

adhered to. 

(c) For each project receiving credit 

assistance, total Federal assistance may 

not exceed 80% of the total project 

costs, except for certain rural water 

projects authorized to be carried out by 

the Secretary of the Interior that 

includes among its beneficiaries a 

federally recognized Indian tribe and for 

which the authorized Federal share of 

the total project costs is greater than 

80%, and in accordance with 85 FR 

39189 (see division D of the Further 

Consolidated Appropriations Act, 2020 

(Pub. L. 116–94)). 

(d) Proceeds from the credit assistance 

shall not be utilized to provide cash 

contributions to the Corps for project 

related costs, except for such fees as 

allowed by 33 U.S.C. 3908(b)(7), limited 

to the application, transaction 

processing, and servicing fees as 

described in § 386.15. 

(e) Costs incurred, and the value of 

any integral in-kind contributions made, 

before receipt of credit assistance may 

be considered in calculating eligible 

project costs only upon approval of the 

Secretary. Such costs and integral inVerDate Sep<11>2014 17:06 Jun 09, 2022 Jkt 256001 PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 E:\FR\FM\10JNP1.SGM 10JNP1

jspears on DSK121TN23PROD with PROPOSALS1
35486 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

kind contributions must be directly 

related to the development or execution 

of the project and must be eligible 

project costs as defined in § 386.2. In 

addition, such costs, excluding the 

value of any integral in-kind 

contributions, are payable from the 

proceeds of the Federal credit 

instrument and shall be considered 

incurred costs for purposes of paragraph 

(h) of this section. Capitalized interest 

on the Federal credit instrument is not 

eligible for calculating eligible project 

costs. 

(f) No costs financed internally or 

with interim funding may be refinanced 

under this part later than a year 

following substantial completion of the 

project. 

(g) The Secretary shall not obligate 

funds for a project that has not received 

an environmental Categorical Exclusion, 

Finding of No Significant Impact, or 

Record of Decision under the National 

Environmental Policy Act (NEPA), 42 

U.S.C. 4321 et seq. 

(h) The Secretary shall fund a secured 

loan based on the project’s financing 

needs. The credit agreement shall 

include the anticipated schedule for 

such loan disbursements. Actual 

disbursements will be based on incurred 

costs, and in accordance with the 

approved construction plan, as 

evidenced by invoices or other 

documentation acceptable to the 

Secretary. 

(i) The interest rate on a secured loan 

will be equal to or greater than the yield 

on U.S. Treasury securities of 

comparable maturity on the date of 

execution of the credit agreement as 

identified through use of the daily rate 

tables published by the Bureau of the 

Fiscal Service for the State and Local 

Government Series (SLGS) investments. 

The yield on comparable Treasury 

securities will be estimated by adding 

one basis point to the SLGS daily rate 

with a maturity that is closest to the 

weighted average loan life of the Federal 

credit instrument, per 33 U.S.C. 

3908(b)(4). 

(j) The final maturity date of a secured 

loan will be the earlier of the date that 

is 35 years after the date of substantial 

completion of the project, as determined 

by the Secretary and identified in the 

credit agreement, or if the useful life of 

the project, as determined by the 

Secretary, is less than 35 years, the 

useful life of the project; however, the 

final maturity date of a secured loan to 

a State infrastructure financing 

authority will be not later than 35 years 

after the date on which amounts are first 

disbursed. In determining the useful life 

of the project, for the purposes of 

establishing the final maturity date of 

the Federal credit instrument, the 

Secretary will consider the useful 

economic life of the asset(s) being 

financed. 

(k) A secured loan will not be 

subordinated to the claims of any holder 

of project obligations in the event of 

bankruptcy, insolvency, or liquidation 

of the borrower of the project (33 U.S.C. 

3908(b)(6)). 

(l) The Corps will establish a 

repayment schedule for a secured loan 

or loan guarantee based on the projected 

cash flow from project revenues and 

other repayment sources. Scheduled 

loan or loan guarantee repayments of 

principal and interest on a secured loan 

or loan guarantee will commence not 

later than 5 years after the projected 

date of substantial completion of the 

project at the time of execution of the 

Loan Agreement or Loan Guarantee 

Agreement, as determined by the 

Secretary (33 U.S.C. 3908(c)(A)); 

however, scheduled loan or loan 

guarantee repayments of principal and 

interest on a secured loan to a State 

infrastructure financing authority will 

commence not later than 5 years after 

the date on which amounts are first 

disbursed. The final maturity of the 

credit agreement shall be in no instance 

later than 35 years after the projected 

date of substantial completion of the 

project at the time of execution of the 

Loan Agreement or Loan Guarantee 

Agreement. 

§ 386.4 Application process. 

(a) Each fiscal year for which budget 

authority is made available by Congress, 

the Corps shall publish a solicitation to 

announce the availability of credit 

assistance. It will specify how to 

electronically submit a preliminary 

application, the estimated amount of 

funding available to support Federal 

credit instruments, contact name(s), and 

other details for submissions and 

funding approvals. 

(b) Prospective borrowers seeking 

credit assistance under this part will be 

required to follow an application 

process requiring submission of the 

preliminary application as designated in 

the solicitation to announce the 

availability of credit assistance. In 

addition, the extent to which the project 

financing plan includes any other form 

of Federal assistance (including grants), 

in addition to WIFIA credit assistance, 

will be required to be provided in the 

application. 

(c) Following approval of the term 

sheet, and/or negotiation of satisfactory 

terms and conditions of the Federal 

credit instrument, the prospective 

borrower will proceed to closing, as 

described in § 386.13. 

§ 386.5 Federal requirements. 

All projects receiving credit assistance 

under this part shall comply, where 

applicable, with: 

(a) Environmental authorities. (1) The 

National Environmental Policy Act of 

1969, 42 U.S.C. 4321 et seq.; 

(2) Archeological and Historic 

Preservation Act, 16 U.S.C. 469–469c; 

(3) Clean Air Act, 42 U.S.C. 7401 et 

seq.; 

(4) Clean Water Act, 33 U.S.C. 1251 et 

seq.; 

(5) Coastal Barrier Resources Act, 16 

U.S.C. 3501 et seq.; 

(6) Coastal Zone Management Act, 16 

U.S.C. 1451 et seq.; 

(7) Endangered Species Act, 16 U.S.C. 

1531 et seq.; 

(8) Federal Actions to Address 

Environmental Justice in Minority 

Populations and Low-Income 

Populations, Executive Order 12898, 3 

CFR, 1994 Comp., p. 859; 

(9) Floodplain Management, 

Executive Order 11988, 3 CFR, 1977 

Comp., p. 117; 

(10) Protection of Wetlands, Executive 

Order 11990, 3 CFR, 1977 Comp., p. 

121, as amended by Executive Order 

12608, 3 CFR, 1987 Comp., p. 245; 

(11) Farmland Protection Policy Act, 

7 U.S.C. 4201 et seq.; 

(12) Fish and Wildlife Coordination 

Act, 16 U.S.C. 661–666c, as amended; 

(13) Magnuson-Stevens Fishery 

Conservation and Management Act, 16 

U.S.C. 1801 et seq.; 

(14) National Historic Preservation 

Act, 16 U.S.C. 470 et seq.; 

(15) Safe Drinking Water Act, 42 

U.S.C. 300f et seq.; and 

(16) Wild and Scenic Rivers Act, 16 

U.S.C. 1271 et seq. 

(b) Economic and miscellaneous 

authorities. (1) Debarment and 

Suspension, Executive Order 12549, 3 

CFR, 1986 Comp., p. 189; 

(2) New Restrictions on Lobbying, 31 

U.S.C. 1352; 

(3) Prohibitions relating to violations 

of the Clean Water Act or Clean Air Act 

with respect to Federal contracts, grants, 

or loans under 42 U.S.C. 7606 and 33 

U.S.C. 1368, and Executive Order 

11738, 3 CFR, 1971–1975 Comp., p. 799; 

and 

(4) The Uniform Relocation 

Assistance and Real Property 

Acquisition Policies Act of 1970, 42 

U.S.C. 4601 et seq. 

(c) Civil rights, nondiscrimination, 

equal employment opportunity 

authorities. (1) Age Discrimination Act, 

42 U.S.C. 6101 et seq.; 

(2) Equal Employment Opportunity, 

Executive Order 11246, 3 CFR, 1964– 

1965 Comp., p. 339; 

(3) Section 504 of the Rehabilitation 

Act, 29 U.S.C. 794, supplemented by 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35487 

Executive Orders 11914, 3 CFR, 1976 

Comp., p. 117, and 11250, 3 CFR, 1964– 

1965 Comp., p. 351; and 

(4) Title VI of the Civil Rights Act of 

1964, 42 U.S.C. 2000d et seq. 

(d) Others authorities. Other Federal 

and compliance requirements as may be 

applicable. 

§ 386.6 Federal flood risk management 

standard. 

(a) In making WIFIA funding 

decisions under this part, the Corps will 

follow the requirements of Executive 

Order (E.O.) 11988 and Engineering 

Regulation (ER) 1165–2–26, 

‘‘Implementation of E.O. 11988 on 

Floodplain Management’’. Applicants 

shall submit information regarding the 

project that is sufficient for the Corps to 

determine that the project is in 

compliance with the requirements of 

E.O. 11988 and ER 1165–2–26. 

(b) Projects funded under this part 

will meet or exceed applicable State, 

local, tribal, and territorial standards for 

flood risk and floodplain management, 

as well as E.O. 11988. 

(c) All projects under this part are 

considered Federal actions under E.O. 

11988 and thus, project applicants shall 

determine whether the proposed project 

will occur in the floodplain. If the 

project is located within the floodplain, 

the applicant must determine whether 

the action is critical or not and what 

floodplain standard to follow. Further 

guidance on implementation of E.O. 

11988 can be found in the Corps ER 

1165–2–26 (30 March 1984). 

§ 386.7 American iron and steel. 

(a) All projects receiving credit 

assistance under this part for 

construction, alteration, maintenance, or 

repair of a project shall use only iron 

and steel products produced in the 

United States, unless waiver of the 

requirement in this paragraph (a) is 

granted by an official authorized to do 

so. 

(b) Consistent with 33 U.S.C. 3914(b), 

‘‘iron and steel products’’ means the 

following products made primarily of 

iron or steel: lined or unlined pipes and 

fittings, manhole covers and other 

municipal castings, hydrants, tanks, 

flanges, pipe clamps and restraints, 

valves, structural steel, reinforced 

precast concrete and construction 

materials. Equipment employed in 

construction that does not become part 

of the project is not an ‘‘iron and steel 

product’’ for the purpose of this section. 

§ 386.8 Labor standards. 

All laborers and mechanics employed 

by contractors or subcontractors on 

projects receiving credit assistance 

under this part shall be paid wages at 

rates not less than those prevailing for 

the same type of work on similar 

construction in the immediate locality, 

as determined by the Secretary of Labor. 

§ 386.9 Investment-grade ratings. 

(a) At the time a prospective borrower 

submits an application, the Corps shall 

require a preliminary rating opinion 

letter. The letter is a conditional credit 

assessment from a NRSRO that provides 

a preliminary indication of the project’s 

overall creditworthiness and that 

specifically addresses the potential of 

the project’s senior debt obligations, 

which may include, or be limited to, the 

Federal credit instrument to achieve an 

investment-grade rating, and address the 

rating of obligations similar to those 

proposed for the Federal credit 

instrument when the Federal credit 

instrument is not a senior debt 

obligation. The requirement of this 

paragraph (a) may be met, on a case-bycase basis, by accepting a recent credit 

rating of obligations that have a lien on 

the revenues pledged for repayment. 

This rating should be based on an 

unenhanced analysis of the underlying 

pledged source of repayment and not 

give any credit to any prospective loan 

guarantee provided by the U.S. 

Government. 

(b) Consistent with 33 U.S.C. 

3907(a)(D)(ii), the full funding of a 

Federal credit instrument shall be 

contingent on: 

(1) The assignment of investmentgrade ratings by NRSROs to all project 

obligations that have a lien on the 

pledged security senior to that of the 

Federal credit instrument on the 

pledged security; or 

(2)(i) In the event that the Federal 

credit instrument is: 

(A) A senior debt obligation; 

(B) Pari passu with the senior project 

obligations; or 

(C) A general obligation of the 

prospective borrower, to the Federal 

credit instrument. 

(ii) The applicant must provide at 

least one final rating opinion letter 

which provides a credit rating on the 

direct loan or the unenhanced Federal 

credit instrument. This rating should be 

based on an unenhanced analysis of the 

underlying pledged source of repayment 

and not give any credit to the loan or 

loan guarantee provided by the U.S. 

Government. 

(c) Neither the preliminary rating 

opinion letter nor the final ratings 

should reflect the effect of bond 

insurance, unless that insurance 

provides credit enhancement that 

secures WIFIA obligation. 

§ 386.10 Threshold criteria. 

(a) To be eligible to receive Federal 

credit assistance under this part, a 

project shall meet the following 

threshold criteria: 

(1) The project and prospective 

borrower shall be creditworthy. 

(2) A project shall have eligible 

project costs that are reasonably 

anticipated to equal or exceed $20 

million. 

(3) A Federal credit instrument: 

(i) Shall be repayable, in whole or in 

part, from State or local taxes, user fees, 

or other dedicated revenue sources that 

also secure the senior project obligations 

of the project; 

(ii) Shall include a rate covenant, 

coverage requirement, or similar 

security feature supporting the project 

obligations; and 

(iii) May have a lien on revenues 

subject to any lien securing project 

obligations. 

(4) In the case of a project that is 

undertaken by an entity that is not a 

State or local government or an agency 

or instrumentality of a State or local 

government, or a tribal government or 

consortium of tribal governments, the 

project that the entity is undertaking 

shall be publicly sponsored. 

(5) The prospective borrower shall 

have developed an operations and 

maintenance plan that identifies 

adequate revenues to operate, maintain, 

and repair the project during its useful 

life. If the borrower is a State 

infrastructure financing authority, it 

shall have ensured and will ensure that 

its borrowers have a plan for the eligible 

projects they are undertaking that 

identifies adequate revenues to operate, 

maintain and repair such projects 

during the useful life of such projects. 

The requirement in this paragraph (a)(5) 

may be met through the development of 

a written plan or a financial model. 

(b) With respect to paragraph (a)(3) of 

this section, the Secretary may accept 

general obligation pledges or general 

corporate promissory pledges and will 

determine the acceptability of other 

pledges and forms of collateral as 

dedicated revenue sources on a case-bycase basis. The Secretary shall not 

accept a pledge of Federal funds, 

regardless of source, as security for the 

Federal credit instrument. 

(c) The provision at 33 U.S.C. 3907(c) 

provides that nothing in section 3907(c) 

(which includes eligibility requirements 

and selection criteria for projects and 

entities receiving WIFIA assistance) is 

intended to supersede the applicability 

of other requirements of Federal law, 

including regulations. 


jspears on DSK121TN23PROD with PROPOSALS1
35488 Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 

§ 386.11 Selection criteria. 

The selection criteria in paragraphs 

(a) through (l) of this section will be 

used for evaluating and selecting among 

eligible projects to receive credit 

assistance: 

(a) The extent to which the project is 

nationally or regionally significant, with 

respect to the generation of economic 

and public benefits, such as– 

(1) The reduction of flood risk; 

(2) The improvement of water quality 

and quantity, including aquifer 

recharge; 

(3) The protection of drinking water, 

including source water protection; 

(4) The support of domestic and 

international commerce; and 

(5) The restoration of degraded 

aquatic ecosystem structures. 

(b) The extent to which the project 

financing plan includes public or 

private financing, in addition to WIFIA 

credit assistance. 

(c) The likelihood that WIFIA credit 

assistance would enable the project to 

proceed at an earlier date than the 

project would otherwise be able or 

likely to proceed. 

(d) The extent to which the project 

uses new or innovative approaches. 

(e) The amount of budget authority 

required to fund the WIFIA Federal 

credit instrument. 

(f) The extent to which the project— 

(1) Protects against an extreme 

weather event, such as a flood or 

hurricane; or 

(2) Helps maintain or protect the 

environment. 

(g) The extent to which a project 

serves regions with significant clean 

energy exploration development, or 

production areas. 

(h) The extent to which a project 

serves regions with significant water 

resource challenges, including the need 

to address— 

(1) Water quality concerns in areas of 

regional, national, or international 

significance; 

(2) Water quantity concerns related to 

groundwater, surface water, or other 

water sources; 

(3) Significant flood risk; 

(4) Water resource challenges 

identified in existing regional, State, or 

multistate agreements; or 

(5) Water resources with exceptional 

recreational value or ecological 

assistance. 

(i) The extent to which the project 

addresses identified municipal, State, or 

regional priorities. 

(j) The readiness of the project to 

proceed toward development, including 

a demonstration by the obligor that 

there is a reasonable expectation that 

the contracting process for construction 

of the project can commence not later 

than 90 days after the date on which a 

Federal credit instrument is obligated 

for the project under WIFIA. 

(k) The extent to which WIFIA credit 

assistance reduces the overall Federal 

contributions to the project. 

(l) The extent to which the project 

serves economically disadvantaged 

communities and spurs economic 

opportunity for, and minimally 

adversely impacts, economically 

disadvantaged communities and their 

populations. 

§ 386.12 Term sheets and approvals. 

(a) The Corps, after review and 

evaluation of an application, and all 

other required documents submitted by 

a prospective borrower, may offer to 

such prospective borrower a written 

term sheet and/or a credit agreement, 

including detailed terms and conditions 

that must be met. 

(b) The issuance of a term sheet, upon 

execution by the Secretary, does not 

constitute a commitment by the 

Secretary to enter into the Loan 

Agreement or Loan Guarantee 

Agreement. Execution of the Loan 

Agreement or Loan Guarantee 

Agreement represents obligation by the 

Secretary. 

§ 386.13 Closing on the Loan Agreement 

or Loan Guarantee Agreement. 

(a) Only a Loan Agreement or Loan 

Guarantee Agreement executed by the 

Secretary can obligate the Corps to issue 

a loan or loan guarantee. The Corps is 

not bound by oral representations. Each 

Loan Agreement or Loan Guarantee 

Agreement shall contain the following 

requirements and conditions, and shall 

not be executed until the Corps 

determines that the following 

requirements and conditions are 

satisfied: 

(1) Except if explicitly authorized by 

an Act of Congress, no Federal funds, 

proceeds of Federal loans, or proceeds 

of loans guaranteed by the Federal 

Government may be used by a borrower 

to pay for credit subsidy costs, 

administrative fees, or other fees 

charged by or paid to the Corps relating 

to the WIFIA program; however, 

proceeds of the Federal credit 

instrument may be used to pay for such 

administrative or other fees but may not 

be used to pay an ‘‘Optional Credit 

Subsidy Fee’’. 

(2) At closing, the Corps will ensure 

that the following requirements and 

conditions are or will be satisfied 

pursuant to the credit agreement or 

otherwise: 

(i) The project qualifies as an eligible 

project under WIFIA; 

(ii) The face value of the credit 

agreement is limited to no more than 49 

percent of reasonably anticipated 

eligible project costs, or if credit 

assistance in excess of 49 percent has 

been approved, no more than the 

percentage of eligible project costs 

agreed upon, not to exceed 80 percent 

of total project costs; 

(iii) If the credit instrument is a loan 

guarantee, the loan guarantee does not 

finance, either directly or indirectly, tax 

exempt debt obligations, consistent with 

the requirements of section 149(b) of the 

Internal Revenue Code; 

(iv) The amount of the credit 

agreement, when combined with other 

funds, will be sufficient to carry out the 

project, including adequate contingency 

funds; 

(v) The borrower is pledging collateral 

and/or providing a general obligation 

pledge, determined by the Corps to be 

necessary to secure the repayment of the 

credit agreement; 

(vi) The credit agreement and related 

documents include detailed terms and 

conditions necessary and appropriate to 

protect the interest of the United States 

in the case of default; 

(vii) There is satisfactory evidence 

that the applicant is willing, competent, 

and capable of performing the terms and 

conditions of the credit agreement, and 

will diligently pursue the project; 

(viii) The applicant has taken and is 

obligated to continue to take those 

actions necessary to perfect and 

maintain liens on assets which are 

pledged as security for the credit 

agreement, as allowed under State or 

local law; 

(ix) The Corps or its representatives 

have access to the project site at all 

reasonable times in order to monitor the 

performance of the project; 

(x) The Corps and the applicant agree 

as to the information that will be made 

available to the Corps and the 

information that will be made publicly 

available; 

(xi) The applicant will file or has filed 

applications for or obtained any 

required regulatory approvals for the 

project and is in compliance, or 

promptly will be in compliance, where 

appropriate, with all Federal, State, and 

local regulatory requirements; 

(xii) The applicant has no delinquent 

Federal debt, including tax liabilities, 

unless the delinquency has been 

resolved with the appropriate Federal 

agency in accordance with the standards 

of the Debt Collection Improvement Act 

of 1996; 

(xiii) Loan proceeds provided under 

the agreement shall not be utilized by 

the applicant to provide cash 

contributions to the Corps for project 


jspears on DSK121TN23PROD with PROPOSALS1
Federal Register / Vol. 87, No. 112 / Friday, June 10, 2022 / Proposed Rules 35489 

related costs, except for such fees as 

allowed by 33 U.S.C. 3908(b)(7), limited 

to the application, transaction 

processing, and servicing fees as 

described in § 386.15; 

(xiv) Costs incurred with loan 

proceeds under the agreement shall not 

be eligible for reimbursement or for the 

transfer of credit toward the non-Federal 

cost share of another federally 

authorized project; 

(xv) The credit agreement and related 

agreements contain such other terms 

and conditions as the Corps deems 

reasonable and necessary to protect the 

interests of the United States, including 

without limitation provisions for: 

(A) Such collateral and other credit 

support for the credit agreement; and 

(B) Such collateral sharing, priorities 

and voting rights among creditors and 

other intercreditor arrangements as, in 

each case, the Corps deems reasonable 

and necessary to protect the interests of 

the United States; and 

(3) The credit agreement must contain 

audit provisions which provide, in 

substance, as follows: 

(i) The applicant must keep such 

records concerning the project as are 

necessary to facilitate an effective and 

accurate audit and performance 

evaluation of the project; and 

(ii) The Corps and the Inspector 

General, or their duly authorized 

representatives, must have access, for 

the purpose of audit and examination, 

to any pertinent books, documents, 

papers, and records of the applicant. 

Examination of records may be made 

during the regular business hours of the 

applicant, or at any other time mutually 

convenient. 

(4) OMB has reviewed and approved 

the Corps calculation of the Credit 

Subsidy Cost of the Loan or Loan 

Guarantee. 

(b) The Corps will set a closing date. 

By the closing date, the prospective 

borrower must have satisfied all of the 

detailed terms and conditions required 

by the Corps and all other contractual, 

statutory, and regulatory requirements. 

In addition, the prospective borrower 

must have provided at least one final 

rating opinion letter which provides a 

credit rating on the final negotiated 

direct loan or Loan Guarantee 

Agreement that does not take into 

account the full faith and credit of the 

United States of America. The 

prospective borrower must submit this 

final credit rating letter to the Corps 

prior to closing. If the prospective 

borrower has not satisfied all such terms 

and conditions by the closing date, the 

Secretary may set a new closing date or 

reject the application. 

(c) The execution of a Loan 

Agreement or Loan Guarantee shall 

represent approval of the application for 

credit assistance and shall represent the 

legal obligation of budget authority. 

§ 386.14 Reporting requirements. 

The borrower will provide annual 

audited financial statements, a public 

benefits report, and other reports to the 

Corps in the form and manner agreed 

upon in the credit agreement. These 

other reports may include, but are not 

limited to, an updated financial model 

and construction reports. The Corps 

may conduct periodic financial and 

compliance reviews or audits of the 

borrower and its project, as determined 

necessary by the Corps. 

§ 386.15 Fees. 

(a) Application fee. The Corps will 

require a non-refundable application fee 

for each project applying for credit 

assistance under the WIFIA program. 

The application fee will be due upon 

submission of the application. For 

public applicants with projects serving 

small communities or economically 

disadvantaged communities, the total 

application fee will be $0. For all other 

applications, the total application fee 

will be $25,000. The total application 

fee will be credited to the transaction 

processing fee required under paragraph 

(b) of this section. 

(b) Transaction processing fee. Except 

as otherwise provided in paragraph (f) 

of this section, the Corps will require an 

additional transaction processing fee for 

projects selected to receive WIFIA 

assistance upon closing, or if the project 

does not proceed to closing, e.g., if the 

application is withdrawn or denied. The 

proceeds of any such fees will be used 

to pay the remaining portion of the 

Corps’ cost of providing credit 

assistance and the costs of conducting 

engineering reviews and retaining 

expert firms, including financial and 

legal services, to assist in the 

underwriting of the Federal Credit 

instrument. 

(c) Servicing fee. The Corps will 

require borrowers to pay a servicing fee 

for each credit instrument approved for 

funding. Separate fees may apply for 

each type of credit instrument (e.g., a 

secured loan with a single 

disbursement, or a secured loan with 

multiple disbursements), depending 

upon the costs of servicing the credit 

instrument as determined by the 

Secretary. Such fees will be set at a level 

sufficient to enable the Corps to recover 

all or a portion of the costs to the 

Federal Government of servicing WIFIA 

credit instruments. 

(d) Optional credit subsidy fee. If, in 

any given year, there is insufficient 

budget authority to fund the credit 

instrument for a qualified project that 

has been selected to receive assistance 

under WIFIA, the Corps and the 

approved applicant may agree upon a 

supplemental fee to be paid by or on 

behalf of the approved applicant at the 

time of execution of the term sheet to 

reduce the subsidy cost of that project. 

No such fee may be included among 

eligible project costs. 

(e) Reduced fees. To the extent that 

Congress appropriates funds in any 

given year beyond those needed to cover 

internal administrative costs, the Corps 

may utilize such appropriated funds to 

reduce fees for a State or local 

governmental entity, agency, or 

instrumentality, a tribal government or 

consortium of tribal governments that 

would otherwise be charged under 

paragraph (c) of this section. 

(f) Enhanced monitoring fee. The 

Corps may require payment in full by 

the borrower of additional fees, in an 

amount determined by the Corps, and of 

related fees and expenses of its 

independent consultants and outside 

counsel, to the extent that such fees and 

expenses are incurred by or on behalf of 

the Corps and to the extent such third 

parties are not paid directly by the 

borrower, in the event the borrower 

experiences difficultly relating to 

technical, financial, or legal matters or 

other events (e.g., engineering failure or 

financial workouts) which require the 

Corps to incur time or expenses beyond 

standard monitoring. No such fee may 

be included among eligible project 

costs. 

Approved by: 

Michael L. Connor, 

Assistant Secretary of the Army (Civil Works). 

[FR Doc. 2022–12050 Filed 6–9–22; 8:45 am] 

BILLING CODE 3720–58–P 


jspears on DSK121TN23PROD with PROPOSALS1