Document ID: DOT-OST-2009-0004-0001
Agency: dot
Document Type: Rule
Title: Credit Assistance for Surface Transportation Projects
Posted Date: 2009-01-21T05:00Z

[Federal Register: January 21, 2009 (Volume 74, Number 12)]
[Proposed Rules]               
[Page 3487-3508]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ja09-32]                         

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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Part 180

Office of the Secretary

49 CFR Part 80

Federal Railroad Administration

49 CFR Part 261

Federal Transit Administration

49 CFR Part 640

Maritime Administration

49 CFR Part 1700

[Docket No. DOT-OST-2009-0004]
RIN 2105-AD70

 
Credit Assistance for Surface Transportation Projects

AGENCIES: Federal Highway Administration (FHWA), Federal Railroad 
Administration (FRA), Federal Transit Administration (FTA), Maritime 
Administration (MARAD), Office of the Secretary of Transportation 
(OST), Department of Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: Recent changes to the Transportation Infrastructure Finance 
and Innovation Act (TIFIA) statute require changes in the TIFIA rule. 
In addition, the DOT has gained substantial administrative experience 
since the TIFIA rule was last amended in 2000. The DOT proposes to 
amend the TIFIA rule to implement the recent statutory changes and to 
incorporate certain other changes to the rule that it considers will 
improve the efficiency of the program and its usefulness to borrowers. 
In addition, the DOT seeks comment on policy issues with potentially 
significant impact on the TIFIA project selection process.

DATES: Comments must be received on or before March 23, 2009.

ADDRESSES: Mail or hand deliver comments to the U.S. Department of 
Transportation, Dockets Management Facility, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590, or submit comments 
electronically at http://www.regulations.gov, or fax comments to (202) 
493-2251. Alternatively, comments may be submitted via the Federal 
eRulemaking Portal at http://www.regulations.gov (follow the on-line 
instructions for submitting comments). All comments should include the 
docket number that appears in the heading of this document. All 
comments received will be available for examination and copying at the 
above address from 9 a.m. to 5 p.m., e.t., Monday through Friday, 
except Federal holidays. Those desiring notification of receipt of 
comments must include a self-addressed, stamped postcard or you may 
print the acknowledgment page that appears after submitting comments 
electronically. All comments received into any docket may be searched 
in electronic format by the name of the individual submitting the 
comment (or signing the comment, if submitted on behalf of an 
association, business, labor union, etc.). Persons making comments may 
review DOT's complete Privacy Act Statement in the Federal Register 
published on April 11, 2000 (Volume 65, Number 70, Pages 19477-78), or 
you may view the statement at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Sullivan, TIFIA Joint Program 
Office (202) 366-5785, or Mr. Steven Rochlis, Office of the Chief 
Counsel (202) 366-1395, Federal Highway Administration; Mr. Michael 
Bouril, Office of Budget (202) 366-4587, Mr. Jacob Falk, Office of 
Policy (202) 366-

[[Page 3488]]

8165, or Mr. Terence Carlson, Office of the General Counsel (202) 366-
9152, Office of the Secretary, 1200 New Jersey Avenue, SE., Washington, 
DC 20590. Office hours for the FHWA are from 7:45 a.m. to 4:15 p.m., 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access and Filing

    You may submit or retrieve comments online through the Federal 
eRulemaking portal at: http://www.regulations.gov. The Web site is 
available 24 hours each day, 365 days each year. Electronic submission 
and retrieval help and guidelines are available under the help section 
of the Web site.
    An electronic copy of this document may also be downloaded from 
Office of the Federal Register's home page at: http://www.archives.gov/
federal_register and the Government Printing Office's Web page at: 
http://www.gpoaccess.gov.

Background

    TIFIA was enacted in 1998 as part of the Transportation Equity Act 
for the 21st Century (TEA-21) (Pub. L. 105-178, June 1998). TIFIA 
established a new Federal credit program under which the DOT may 
provide credit assistance to surface transportation investments of 
regional or national significance. To be selected for TIFIA assistance, 
projects must meet a number of statutorily specified criteria. As 
funding for this program is limited, projects obtaining assistance 
under the TIFIA program may be selected on a competitive basis. In 
1999, the DOT promulgated a rule implementing TIFIA (64 FR 29742, June 
2, 1999), and in 2000 amended the rule (65 FR 44936, July 19, 2000). In 
2005, Congress enacted the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub. L. 
109-59, Aug. 10, 2005), which made a number of amendments to TIFIA. The 
DOT proposes to amend the TIFIA rule to implement the changes required 
by the SAFETEA-LU amendments and to incorporate a number of 
programmatic features that the DOT considers, based on its experience 
gained administering the program since the rule was last amended, would 
improve TIFIA.
    In enacting the original TIFIA legislation, Congress found that ``a 
well-developed system of transportation infrastructure is critical'' to 
the nation's economy, and it sought to ``attract new investment 
capital'' to transportation infrastructure projects. Congress further 
found that TIFIA could fill ``market gaps,'' thereby leveraging 
additional capital from the private markets: ``a Federal credit program 
for projects of national significance can complement existing funding 
resources by filling market gaps, thereby leveraging substantial 
private co-investment.'' Based on this initial guidance from Congress, 
the DOT has viewed TIFIA as a means for the Federal Government to 
attract more private investment capital, to accelerate investment, to 
encourage a greater cost-beneficial approach to transportation 
infrastructure investments, and to more efficiently utilize 
infrastructure once constructed.
    This NPRM proposes to amend and partially restate the existing 
rule; it includes both proposed substantive changes and proposed 
changes of an editorial, clarifying, or organizational nature. Proposed 
substantive changes include both those mandated by SAFETEA-LU and those 
determined by the DOT, based upon several years of administrative 
experience with the TIFIA program, to improve the program. The DOT 
seeks comments particularly on proposed changes in the latter category.
    The proposed rule would amend the current TIFIA rule to incorporate 
changes made by SAFETEA-LU to the TIFIA statute. Major changes of this 
nature include a reduction in the minimum project size eligible for 
TIFIA assistance and a broadening of the categories of projects 
eligible to permit TIFIA assistance for private rail facilities 
providing public benefit to highway users, and surface transportation 
infrastructure modifications necessary to facilitate direct intermodal 
transfer and access into and out of a port terminal. Further changes to 
conform the rule to the statute would limit the amount of TIFIA 
assistance in certain instances to the amount of the senior project 
obligations, conform the interest rate setting mechanism for the line 
of credit to that for secured loans, and eliminate the annual 20 
percent cap on line of credit draws.
    In the nature of non-statutory administrative improvements, we 
propose changing the way the DOT will use the term sheet in TIFIA 
transactions and in how we will apply the TIFIA statute's eight 
selection criteria. For example, with regard to the selection criteria, 
the DOT proposes to change ``creditworthiness'' to pass/fail and then 
reallocate weights for the other seven statutory criteria.
    In addition, we propose to reorganize the existing rule to make it 
more understandable to users. The reorganized rule would generally 
follow the steps a potential TIFIA user might follow in evaluating the 
program and applying for assistance.
    While the request for comments applies to the entire NPRM, the DOT 
seeks specific feedback on several key issues noted below.
    In order to accommodate emerging financing scenarios using TIFIA's 
refinancing authority, DOT is seeking comments on the proposed 
definitions of ``refinance,'' the ``maturity date'' (both defined in 
section 80.3) associated with a refinancing, and DOT's proposed 
refinancing procedures (section 80.23), which would require the 
participation of a guaranteed lender receiving a TIFIA loan guarantee.
    To facilitate the financing of projects that may result in 
significant lease payments or concession fees to a public entity, the 
proposed rule would clarify that such payments can be considered 
eligible project costs for the purpose of establishing the maximum 
amount of TIFIA credit assistance. Several provisons would apply: (1) 
Such payments must represent a fair market value of the asset acquired, 
(2) the proceeds of such payments must be dedicated to transportation 
projects eligible under title 23 or chapter 53 of title 49, United 
States Code, and (3) such payments must be part of a project in which 
new capital costs constitute a significant portion of project costs. In 
other words, the concession fee cannot comprise the only eligible 
project cost, as in a transaction seeking only to monetize an existing 
asset. To implement this policy, the DOT proposes to limit its 
consideration of such payments to no more than 25 percent of total 
eligible project costs.
    To improve its internal credit analysis and capital allocation 
process, the proposed rule would require (see section 80.11) each 
applicant and borrower to provide a preliminary rating opinion letter 
and final investment-grade rating from at least two rating agencies.
    Finally, the DOT seeks comment on two additional policy issues with 
potentially significant impact on the TIFIA project selection process. 
These two issues are described immediately below.

Use of Benefit-Cost Analysis in Selecting Projects for TIFIA Assistance

    In the years since TIFIA was enacted, borrowers have made use of 
the legislation's inherent flexibility to accelerate creditworthy, 
public-private projects of regional or national significance. The DOT 
believes that TIFIA should be targeted to projects where the present 
value of benefits to the public that result from project completion 
exceed the costs of delivering the project, and that TIFIA be

[[Page 3489]]

targeted to advance user-financed projects instead of projects that 
rely solely or predominantly on grant assistance. Supporting large-
scale projects that eliminate or reduce reliance on Federal grant 
assistance allows the States to target grant assistance on projects 
that cannot otherwise be financed.
    The National Surface Transportation Policy and Revenue Study 
Commission (Transportation for Tomorrow, 2008), the Government 
Accountability Office (GAO-04-744, 2004; GAO-05-172, 2005; GAO-08-744T, 
2008), the U.S. Department of Transportation (Refocus. Reform. Renew. A 
New Transportation Approach in America, 2008), the Brookings 
Institution (A Bridge to Somewhere, 2008) and other organizations have 
recommended greater use of benefit-cost analysis (BCA) to maximize the 
rate of return on Federal funds invested in transportation projects. 
These recommendations are primarily directed at State and municipal 
project selection, where application of BCA is currently limited. The 
Federal Transit Administration and the Federal Aviation Administration 
already require the use of BCA or similar economic analysis for 
projects with large capital costs that are subject to Federal funding 
discretion.
    Benefit-cost analysis is conducted by assigning monetary values to 
benefits (e.g., travel time saving) and costs, discounting future 
benefits and costs using an appropriate discount rate, and then 
comparing the sum total of discounted benefits to the sum total of 
discounted costs. Discounting benefits and costs transforms gains and 
losses occurring in different time periods to a common unit of 
measurement in the form of present day dollars. The organizations cited 
above recognize that BCA is a useful tool to help decision-makers 
identify projects with the greatest net benefits relative to invested 
public resources. In particular, the systematic process of BCA helps 
decision-makers organize information about, and determine trade-offs 
between, alternative transportation investments.
    The DOT has responsibility under Executive Order 12893, Principles 
for Federal Infrastructure Investments, 59 FR 4233, to evaluate its 
programs using BCA. This requirement has not been construed to apply to 
individual investments made by States of formula funds, but is deemed 
to apply to overall programs and to discretionary Federal commitments 
of budget authority to individual projects. The DOT is considering a 
requirement that TIFIA applicants conduct BCA on their projects. These 
analyses would inform Federal decisions to provide TIFIA support to 
individual projects and would also enable the DOT to establish the 
cost-beneficial status of the overall TIFIA program, thereby providing 
a basis for future funding requests. The application of BCA to support 
TIFIA decisions would be subject to guidance in the Office of 
Management and Budget's Circular A-94, Revised, SUBJECT: Guidelines and 
Discount Rates for Benefit-Cost Analysis of Federal Programs \1\, and 
would follow other guidelines incorporated into the TIFIA application 
process.
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    \1\ http;//www.whitehouse.gov/omb/circulars/a094/a094.html.
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    [cir] The DOT therefore requests comment on the following options 
for applying BCA to TIFIA applications:
    [cir] Require BCA as a threshold condition for TIFIA consideration. 
Under this option, projects must have public benefits that exceed their 
costs by a sufficient threshold level. The DOT seeks comment on the 
application of a threshold in general as well as the appropriate 
minimum sufficient ratio of benefits divided by costs that projects 
should be expected to demonstrate; or
    [cir] Use BCA results to help prioritize projects for TIFIA 
selection by translating the existing TIFIA selection criteria into 
monetary values for purposes of project comparison, while eliminating 
criteria weights. For instance, BCA results could be used to assess the 
costs and benefits related to the project's ``regional or national 
significance'', proposed in this rule as the highest weighted criteria. 
Comments are also requested on how this approach might best be applied 
to other criteria that do not readily lend themselves to such 
monetization.

Interest Rate Policy

    OMB Circular A-129, Policies for Federal Credit Programs and Non-
tax Receivables \2\, states that Federal agencies with credit programs 
should establish interest and fee structures for direct loans and loan 
guarantees and should review these structures at least annually. In 
administering the TIFIA program, the DOT has set the rate, in all 
transactions to date, regardless of the perceived credit quality of the 
loan, at the minimum level allowed by the TIFIA statute: The rate on 
United States Treasury securities of a similar maturity as the loan.
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    \2\ http://www.whitehouse.gov/omb/circulars/a129/a129rev.html.
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    OMB Circular A-129 states that interest and fees should be set at 
levels that minimize default and other subsidy costs of the direct loan 
or loan guarantee, while supporting achievement of the program's policy 
objectives. The OMB guidance goes on to state that, unless inconsistent 
with program purposes, riskier borrowers should be charged more than 
those who pose less risk.
    The DOT seeks comment regarding the use of its authority to offer 
different rates to different borrowers. For instance, the DOT could use 
the selection criteria, including benefit cost analysis, to weight 
applications by the social return to the public, consistent with 
Federal credit policies and TIFIA programmatic goals. Those projects 
with higher scores would receive the lower interest rates. Credit risk 
should also be factored into final interest rate determinations. 
Alternatively, some form of competitive loan pricing such as a reverse 
auction could be used to allocate TIFIA's subsidized credit assistance 
in a manner that maximizes social returns while protecting the 
government's interests.

Section-by-Section Discussion of the Proposed Changes

Section 80.1 Purpose

    The purpose of the proposed rule is to implement the TIFIA statute. 
Readers should refer to the statute as well as the rule for a complete 
understanding of the TIFIA program.

Section 80.3 Definitions

    Definitions in the proposed rule generally follow the statutory 
definitions. Two exceptions are the proposed definitions for 
``guaranteed lender,'' which would replace the statutory ``lender,'' 
and ``borrower,'' which would replace the statutory ``obligor''; the 
DOT believes both of these proposed changes would enhance the rule's 
clarity and more closely conform the regulatory language to industry 
convention.
    Other proposed changes to the definitions in the current rule and 
matters on which the DOT seeks comment include:
    ``Borrower'': For the definition of the newly defined term 
``borrower,'' we propose to use the current rule's definition of 
``obligor,'' which definition closely follows the language in the TIFIA 
statute's definition of ``obligor.'' Additionally, we clarify that only 
non-Federal entities are eligible borrowers.
    ``Conditional term sheet'': We propose to eliminate this definition 
in light of our proposed change in the use of the defined term ``term 
sheet,'' which proposed change is discussed in detail below in this 
section under the heading ``Term sheet.''

[[Page 3490]]

    ``Current credit evaluation'': We propose to add a definition of 
current credit evaluation and provide clarification related to project 
monitoring requirements.
    ``Eligible project costs'': We propose to add to the definition of 
``eligible project costs'' explicit language implementing current 
Federal law excluding from eligibility certain project costs incurred 
prior to environmental clearance. (See 23 CFR 771.113). The proposed 
definition clarifies the eligibility of costs during construction 
associated with the operations of a special purpose entity formed 
solely to construct and operate the facility, in an amount not to 
exceed 5 percent of total eligible project costs (see 80.25, 
Limitations of Federal credit assistance). The proposed definition 
clarifies the eligibility of concession payments made to a government 
agency by a non-governmental concessionaire for the lease acquisition 
and right to operate a transportation facility, provided that the 
concessionaire and the State ensure that payments associated with lease 
acquisition represent fair market value and are dedicated to 
transportation projects eligible under title 23 or chapter 53 of title 
49, United States Code (see 80.25, Limitations on Federal credit 
assistance). In addition, lease acquisition payments must be part of a 
project in which new capital costs constitute a significant portion of 
project costs. In other words, the concession payment, in and of 
itself, does not comprise an eligible project cost. In order to 
implement this policy, the DOT proposes to limit such payments to 25 
percent of total eligible project costs and seeks public comment on 
this proposal. Further, the definition is expanded to include 
specifically the costs associated with refinancing long-term project 
obligations under 23 U.S.C. 603(a)(1)(C). In the case of a refinancing, 
eligible project costs must be consistent with eligible project costs 
for any TIFIA project. In the case of a refinancing, existing debt 
would be considered an eligible project cost. Eligible project costs 
must also be consistent with the Federal cost principles applicable to 
the borrower: 2 CFR Part 225 (OMB Circular A-87 (State and local 
governments)), 2 CFR Part 230 (OMB Circular A-122 (non-profit 
organizations)), or 48 CFR Part 31 (commercial organizations). Lobbying 
costs would continue to be excluded under existing law. (See 31 U.S.C. 
1352, 2 CFR Part 225, App. B, 2 CFR Part 230, App. B, 48 CFR 31.205-22, 
and 49 CFR 20.100.)
    ``Guaranteed lender'': The proposed definition is identical to the 
current rule's, and to the TIFIA statute's, definition of ``lender.'' 
Applicants should note that the limitations the TIFIA statute imposes 
on the types of institutions which may qualify to be a ``guaranteed 
lender'' do not affect or limit who may hold project obligations.
    ``Investment-grade rating'': The proposed definition recognizes 
that some projects receiving TIFIA assistance, particularly those with 
private developers using bank financing rather than capital markets 
debt, may not have a public rating, and it makes clear that, although 
the investment-grade rating requirement still is imposed, the actual 
rating would not need to be published. The proposed definition also 
recognizes rating terminology used by rating agencies that have become 
identified by the Securities and Exchange Commission (SEC) as 
Nationally Recognized Statistical Rating Organizations (NRSROs) since 
the TIFIA rule was last published. The SEC engaged in a rulemaking, 
pursuant to the Credit Rating Agency Reform Act of 2006,\3\ which 
modified the regulatory treatment of NRSROs.\4\ The TIFIA statute 
relies on the SEC's determination of qualifications for NRSROs, 
irrespective of the regulatory regime the SEC uses for making such 
determination.
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    \3\ Public Law 109-291 (Sept. 29, 2006).
    \4\ The Credit Rating Agency Reform Act of 2006 mandated that 
firms desiring to be NRSROs register with the SEC and become subject 
to certain record-keeping and financial reporting requirements. The 
SEC's Final Rule implementing the Credit Agency Reform Act of 2006 
is found at 72 FR 33564 (June 8, 2007). See 17 CFR 240.17g-1 through 
240.17g-6.
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    ``Local servicer'': The DOT services the TIFIA loan portfolio 
centrally and does not expect ever to use local servicers for TIFIA 
loans. In response, Congress eliminated the definition of ``local 
servicer'' from the TIFIA statute and further expressed its intent that 
TIFIA loan servicing should be managed by a single entity \5\; 
therefore, we propose to eliminate the definition of local servicer 
from the rule.
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    \5\ House of Representatives Report 109-203 (2005), p. 874.
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    ``Maturity date'': The proposed definition recognizes that tying 
scheduled loan repayments to the date of substantial completion is not 
appropriate for credit assistance used to refinance long-term project 
obligations under 23 U.S.C. 603(a)(1)(C). Therefore, the proposed 
definition establishes the final maturity date for repayment of credit 
assistance used for refinancing purposes as the lesser of not later 
than 35 years after the date the credit agreement is executed, or the 
useful life of the overall asset.
    ``Project'': The proposed rule would expand the current rule's 
definition to reflect the expanded definition contained in 23 U.S.C. 
601(a)(8). In accordance with the SAFETEA-LU amendments, the proposed 
rule would permit TIFIA assistance for private freight-related rail 
facilities that serve a public benefit for highway users, which the 
proposed rule defines as the direct freight interchange between highway 
and rail carriers. In further accordance with the SAFETEA-LU 
amendments, the proposed rule would make eligible a group of such 
freight-related projects (e.g., bridge clearances throughout a rail 
corridor, traffic projects to improve port access) each of which 
separately might not be large enough to meet the threshold 
requirements, and surface transportation infrastructure improvements 
(e.g., road, rail, gate, equipment) necessary to facilitate direct 
intermodal transfer and access into and out of a port terminal.
    ``Project obligation'': We propose to interpret the statutory 
definition contained in 23 U.S.C. 601(a)(9) to include a ``loan'' to 
make clear that a bank loan or other private debt, and not just capital 
markets debt, can be a ``project obligation'' for purposes of the TIFIA 
program. With private entities now more frequently seeking TIFIA 
assistance, the DOT is sometimes presented with plans of finance 
relying on bank debt rather than capital markets debt for some or all 
of the non-TIFIA portion of the financing. Adding ``loan'' to the 
definition would make clear that in such financings bank debt would be 
treated as a project obligation. This is not intended to add any new 
forms of debt not currently available; rather it is intended to reflect 
TIFIA's participation in bank financings.
    ``Project sponsor'': The DOT believes that this definition no 
longer adequately characterizes those seeking or using TIFIA credit 
assistance. Generally, such an entity can be characterized as either an 
applicant or a borrower. If a public agency submits an application on 
behalf of multiple competing concessionaires, it can be characterized 
as an applicant. Therefore, we propose to eliminate this definition 
from the regulation.
    ``Rating agency'': The proposed definition diverges from the 
statute only in its substitution of the word ``organization'' for the 
words ``rating agency'' in order to eliminate the statutory language's 
circularity.
    ``Refinance'': The TIFIA statute at 23 U.S.C. 603(a)(1)(c) uses 
``refinance'' without defining the term; the DOT proffers a defined 
term. The proposed definition permits Borrowers to pay off existing 
project obligations and any

[[Page 3491]]

TIFIA credit assistance owed by the Borrower with funds acquired by the 
same Borrower (or its successor) through the creation of new project 
obligations and TIFIA credit assistance.
    ``Subsidy cost'': The DOT proposes to change the defined term from 
``subsidy amount'' to ``subsidy cost'' to reflect Federal credit 
terminology.
    ``Substantial completion'': At 23 U.S.C. 601(a)(14), the TIFIA 
statute defines this term to be ``the opening of a project.'' The DOT 
believes that the statute's bare simplicity does not, in practice, 
always provide clear guidance, and that the Secretary has discretion to 
define, for a particular project, the circumstances constituting 
``substantial completion.'' The current rule recognizes that 
discretion. Since publication of the current rule, the DOT has often, 
in individual TIFIA credit agreements, found it useful for both the DOT 
and the borrower to state explicitly in the credit agreement the 
precise circumstances the occurrence of which would constitute 
``substantial completion.'' The proposed definition would continue to 
incorporate, with clarifying language changes, this beneficial use of 
Secretarial discretion.
    ``Term sheet'': The proposed change in the definition of ``term 
sheet'' reflects a significant change in the procedure the DOT would 
use for entering into TIFIA agreements with borrowers. The term sheet 
would no longer be executed by both parties, but only by the DOT, and 
it would no longer serve as the instrument that the DOT uses to 
obligate Federal funds. The term sheet provides a transactional 
blueprint between the DOT and the borrower for the purposes of 
developing the credit agreement. The term sheet is subject to 
cancellation at any time for any reason at the discretion of the 
Secretary. Through this proposed administrative change, the DOT would 
create a single point--the execution of a credit agreement--when funds 
would be obligated.

Section 80.5 Federal Requirements

    The current rule enumerates several specific Federal requirements 
set out in the TIFIA statute to which TIFIA funds are subject and adds 
to that list such other ``requirements as applicable.'' While carrying 
forward the statutorily specified requirements, the proposed rule would 
clarify the latter provision by providing that any such additional 
requirements would be imposed by Secretarial determination of 
applicability to a particular project. Each project would adhere to the 
requirements associated with the relevant DOT administration's grant 
program. For example, under the Federal-aid highway program, most 
construction-related requirements apply only to those highway segments 
constructed with Federal assistance. A segment constructed without 
Federal assistance is not subject to these construction requirements. 
Because many TIFIA projects combine Federal grant and TIFIA assistance, 
adhering to the associated grant program requirements provides 
administrative efficiencies to the borrower and the relevant DOT 
administration.

Section 80.7 Threshold Criteria for TIFIA Projects

    Eligibility for TIFIA financial assistance requires that the 
project satisfies the applicable planning and programming requirements 
of 23 U.S.C. 134 and 135 at the time an agreement to make available a 
Federal credit instrument is entered into. 23 U.S.C. 602(a)(1).\6\ 
Prior to the SAFETEA-LU amendments, eligibility required specifically 
that the project be included in an approved State Transportation 
Improvement Program (STIP) at the time an agreement to make available a 
Federal credit instrument was entered into.\7\ The NPRM proposes to 
conform the current threshold eligibility criteria for projects to 
changes mandated by the SAFETEA-LU amendments.
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    \6\ ``To be eligible to receive financial assistance under this 
chapter, a project shall meet the following criteria: Inclusion in 
transportation plans and programs.--The project shall satisfy the 
applicable planning and programming requirements of sections 134 and 
135 at such time as an agreement to make available a Federal credit 
instrument is entered into under this chapter.'' 23 U.S.C 602(a)(1).
    \7\ ``The project--(A) shall be included in the State 
transportation plan required under section 135; and (B) at such time 
as an agreement to make available a Federal credit instrument is 
entered into under this chapter, shall be included in the approved 
State transportation improvement program required under section 
134.'' Public Law 109-59, Sec.  1601(b)(1).
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    The STIP is a multi-year \8\, statewide listing of all 
transportation projects proposed for funding--Federal, State, and 
local. It must include all federally supported transportation 
expenditures within the State. 23 U.S.C. 123(g)(4)(A). Thus, a project 
funded by TIFIA financial assistance must be included in the STIP when 
an agreement to make available a Federal credit instrument is entered.
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    \8\ Each State must develop a STIP that covers a period of 4 
years and is updated at least every 4 years. 23 U.S.C. 135(g)(1).
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    Congress was apparently concerned that this requirement could be 
misinterpreted to constrain TIFIA assistance in the case of a project 
with a construction timetable that extended beyond the typical four-
year approved STIP.\9\ We note that construction timetables for a 
project are not limited to the time horizon of a STIP; and multi-phase, 
large scale projects often appear on updated STIPs. There may be 
circumstances where the Department, on a case-by-case basis, should 
exercise the discretion to determine the applicable planning and 
programming requirements that apply to a TIFIA project at the time a 
credit assistance agreement is entered into, and we interpret the 
SAFETEA-LU amendments as providing this discretionary authority.
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    \9\ While the House Bill does not make any change in threshold 
criteria, the Senate Bill says: ``The change * * * clarifies the 
provision regarding statewide and metropolitan planning 
requirements. The existing provision contained language that could 
be misinterpreted to constrain TIFIA assistance in the case of a 
project with a construction timetable that extended beyond the 
typical three-year approved State Transportation Improvement Program 
(STIP).'' H. Rept. 109-203 (July 28, 2005) at H. 7458. The 
Conference Substitute accepts the Senate amendment without 
additional clarification: ``Subsection (b) amends Section 182 of 
title 23 to clarify the requirements regarding statewide and 
metropolitan planning.'' Id. at H. 7459.
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    The new provisions, mandated by the SAFETEA-LU amendments, would 
permit smaller projects to participate in the TIFIA program. SAFETEA-LU 
provided that the minimum size for TIFIA projects is $50 million or 
one-third of a State's apportionment of Federal-aid funds, whichever is 
less; SAFETEA-LU also provided that the minimum size for TIFIA projects 
principally involving the installation of an intelligent transportation 
system is $15 million.\10\ The proposed rule would amend the current 
TIFIA rule to implement these new, lower minimum size thresholds, as 
applicable.
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    \10\ 23 U.S.C. 602(a)(3).
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    The NPRM also proposes to amend the current rule to elaborate on 
the statutory language with respect to security to make clear that the 
term ``dedicated revenue sources'' encompasses not just user fees, but 
also taxes pledged to secure the TIFIA instrument. The standard by 
which taxes are deemed pledged is the same as for any revenue pledged 
to secure the TIFIA loan, i.e., the legal and commercial terms of the 
credit agreement. The proposed rule essentially would retain the 
provision of the current rule under sections 80.13(a)(4) and 80.13(c) 
permitting use of general obligation pledges or general corporate 
promissory pledges as security or ``collateral'' for TIFIA credit 
assistance. The policy of the Department, however, is that preference 
will be given to user financed projects. The proposed rule would 
continue the

[[Page 3492]]

current rule's bar against securing a TIFIA instrument with a pledge of 
Federal funds from any source, including Federal-aid reimbursements.

Section 80.9 Application Process

    The NPRM proposes to re-organize the existing rule's various 
provisions relating to the TIFIA application and provides greater 
detail than the current rule about the application process.
    The NPRM proposes that, prior to submission of the TIFIA 
application, the applicant must have submitted a letter of interest 
satisfactory to the DOT. Although applications would be accepted only 
during prescribed periods, the DOT would continue to accept letters of 
interest at any time.
    The NPRM maintains the current rule's requirement for the DOT to 
publish an annual Federal Register notice to solicit applications for 
credit assistance. In maintaining this provision, the DOT intends to 
return to the practice of specifying timeframes during which it will 
accept TIFIA applications. This use of application cycles will help DOT 
manage the TIFIA project pipeline and enable consistent use of the 
TIFIA selection criteria. This marks a departure from DOT practice 
since 2001 of accepting applications at any time during the year.
    The NPRM proposes to add a requirement that an applicant must 
submit with its application a working model of the project's 
comprehensive plan of finance. The DOT's current practice is to ask 
applicants to submit such models. As many applicants consider such 
models proprietary in nature, the DOT has not publicly disclosed them, 
and the DOT will continue to treat them as confidential commercial 
information. Applicants should prominently mark the model as 
confidential and proprietary information. Having access to the models 
has greatly enhanced the ability of the DOT and its financial advisors 
to analyze and understand the plans of finance for which TIFIA 
assistance is sought. The DOT believes that requiring applicants to 
include models with their application is necessary to evaluate 
applications, and will ensure our continued ability to conduct 
appropriate analysis of plans of finance for proposed TIFIA projects.
    The proposed rule would make clear that the preliminary rating 
opinion letters must be submitted with the application. The NPRM also 
proposes to include a provision that the Secretary may request such 
additional information as necessary to determine whether TIFIA 
assistance should be provided.

Section 80.11 Preliminary Rating Opinion Letter and Investment-Grade 
Rating

    We propose to add a requirement that each applicant and borrower 
obtain a preliminary rating opinion letter and subsequent investment-
grade rating from at least two rating agencies, and seek public comment 
on this proposal.
    We propose to add a requirement that the preliminary rating opinion 
letters and the subsequent ratings address the credit quality of the 
TIFIA instrument; i.e., the preliminary rating opinion letter must 
address the likely rating category of the TIFIA instrument, and the 
borrower must obtain a rating for the TIFIA instrument when it obtains 
the investment-grade rating for the project obligations. The DOT 
already draws substantially on the credit analysis work of the rating 
agencies, and this requirement would assist the internal capital 
allocation process that results in a subsidy cost estimate for each 
TIFIA transaction.
    To provide flexibility for a governmental agency seeking to make 
TIFIA assistance available to multiple potential borrowers as part of 
its solicitation of a private concession, the DOT is proposing to 
require submission of the credit ratings at a later stage in the 
process. In such an instance, the governmental agency must submit a 
TIFIA application that addresses the seven statutory criteria, and the 
selected concessionaire must provide the preliminary rating opinion 
letters with its submission of the project's finance plan.
    The proposed rule would make clear that all debt senior to the 
TIFIA instrument must receive an investment-grade rating, not just the 
senior project obligations. While the DOT accepts multi-lien debt 
structures, it believes that a non-investment-grade lien senior to the 
TIFIA lien would not comport with the legislative intent underlying the 
investment-grade rating requirement. Thus, the DOT considers this 
proposed change a clarification of the TIFIA statute's requirement.
    The proposed rule would require that the borrower deliver final 
ratings, and other such evidence related to the most current project 
financial plan upon which the rating evidence is based, to the DOT at 
least two weeks before the credit agreement closing in order to give 
the DOT adequate time to analyze any credit issues those ratings 
identify. This requirement will be restated in the project term sheet.
    The DOT believes that implicit in the statute's investment-grade 
rating provision is a requirement that the TIFIA instrument itself 
attain an investment-grade rating if there are no project obligations 
senior to the TIFIA instrument. The statute, at 23 U.S.C. 602(b)(2)(B), 
imposes such a requirement with respect to the preliminary rating 
opinion letter. The proposed rule would make that requirement explicit 
for both the preliminary rating opinion letter and the investment-grade 
rating.
    The proposed rule would elaborate and clarify the current rule's 
specification that all TIFIA program credit rating requirements pertain 
to ``underlying'' ratings.

Section 80.13 Selection Criteria for TIFIA Projects

    As noted above, the DOT seeks comment on potential methods of 
incorporating benefit-cost analysis into the project selection process.
    The statute prescribes eight criteria for project evaluation, 
without specifying any relative weighting or whether any of the 
criteria is mandatory. The current rule assigns weights, ranging from 5 
percent to 20 percent, to each of the 8 statutory criteria. In the 
past, the DOT has assigned scores on a scale of zero to four to each of 
the eight criteria for all projects for which it has received 
applications and then weighted those scores to arrive at a composite 
score.
    The NPRM proposes to make several important changes to this 
framework: First, a project's ``creditworthiness'' would now be 
evaluated separately. For every TIFIA project, the DOT analyzes the 
project economics and legal provisions supporting the Government's 
credit security. This analysis is fundamentally important and should be 
treated separately from the other seven statutory criteria. The 
proposed rule would make creditworthiness a requirement. In order for a 
project to be selected for TIFIA assistance under the proposed rule, 
the Secretary must determine that it is creditworthy. This proposed 
requirement that a project must be determined to be creditworthy does 
not mean that a project's TIFIA instrument, if subordinated to project 
obligations which are investment-grade itself, would be required to be 
investment-grade. Guidelines on how DOT will evaluate and determine 
creditworthiness will be published and updated regularly in the TIFIA 
program guidance.
    In addition, should project selection and ranking continue to 
consist of a weighted scoring of statutory criteria, the DOT proposes 
to realign the weights assigned to the remaining seven criteria to 
match national transportation

[[Page 3493]]

policies and the goals of reducing congestion and improving system 
performance. Because creditworthiness would be evaluated separately, 
the weights attached to these criteria would be changed so that the 
seven weightings, as revised, would total 100 percent. The DOT retains 
the discretion not to advance projects that rate low in these seven 
criteria even if the project is creditworthy.
    Under the current rule, the extent to which a project is nationally 
and regionally significant is weighted at 20 percent of the total 
score, and is scored based on the extent to which a project generates 
economic benefits, supports international commerce, or otherwise 
enhances the national transportation system. The proposed change would 
increase the weight to 40 percent and reorganize the evaluation factors 
by creating 2 subcategories, and assigning each subcategory a 
percentage of the total weight for this criterion. Under the proposed 
revision, national and regional significance would be assessed based 
on: (A) The ability of a project to enhance the national or regional 
transportation system by reducing congestion and improving overall 
system performance on a sustainable basis (30 percent), and (B) the 
extent to which the project generates economic benefits beyond those 
captured under (A) and furthers interstate or international commerce 
(10 percent).
    To accommodate the increased emphasis on national and regional 
significance, the DOT proposes to reassign the weights given to the 
following criteria: Likelihood that Federal credit assistance would 
enable the project to proceed at an earlier date than the project would 
otherwise be able to proceed (5 percent; currently 12.5 percent); 
extent to which the project helps maintain or protect the environment 
(10 percent; currently 20 percent); extent to which the project uses 
new technologies (10 percent; currently 5 percent); and amount of 
budget authority required to fund the Federal credit instrument made 
available (10 percent; currently 5 percent). The DOT proposes to 
evaluate the budget authority criterion by measuring the amount of 
TIFIA budget authority required to fund the Federal credit instrument 
relative to the total project investment.
    Weights for the remaining two criteria--private participation (20 
percent) and reduced Federal grant assistance (5 percent)--would remain 
as under the current rule.
    The proposed rule would clarify the DOT's preference for 
applications for TIFIA loan guarantees over applications for secured 
loans and lines of credit. Such a preference is in accordance with 
Federal credit policies, as expressed in OMB Circular A-129, and is 
further reflected in proposed section 80.23(d)(6) below concerning 
refinancing of existing debt. The DOT seeks comments on how to increase 
the participation of private sector lenders in providing guaranteed 
loans consistent with the TIFIA statute and government-wide credit 
policy.

Section 80.15 Term Sheet

    We propose to add a new section on term sheets that would make 
significant changes in how the DOT uses the TIFIA program term sheet 
and in how we obligate Federal funds for TIFIA projects.
    Currently, the term sheet is a letter contract between the DOT and 
the borrower, and the DOT uses it to obligate budget authority. The DOT 
proposes to streamline loan administration and use the term sheet as an 
expression of the DOT's intent to proceed to negotiation of a credit 
agreement with the borrower. Budget authority would be obligated at the 
time the credit agreement is executed rather than, as is the current 
practice, at the time the term sheet is executed.
    Because the term sheet would no longer be used to obligate current 
year budget authority, we propose to eliminate the ``conditional term 
sheet'' provided for in the current rule. To aid budgetary planning, 
the DOT may issue future-year term sheets which, like current-year term 
sheets, also would be cancellable at any time by the DOT at its own 
discretion.

Section 80.17 Interest Rate on Federal Credit Instruments

    The proposed rule contains language that would implement the TIFIA 
statute's various interest rate provisions. Under the amended TIFIA 
statute, the interest rate on both TIFIA secured loans and TIFIA lines 
of credit is set at the time the credit agreement is executed, and this 
requirement is set forth in the proposed rule. The proposed rule 
provides that the rate on a guaranteed loan would be negotiated between 
the borrower and the guaranteed lender, but in accordance with the 
TIFIA statute, makes such negotiated rate subject to the Secretary's 
approval.
    The proposed rule provides, in accordance with Federal credit 
policies,\11\ that all TIFIA credit agreements impose an interest rate 
penalty on outstanding loan balances in the event of a development 
default. DOT will publish guidelines on development default penalties 
in its program guidance.
---------------------------------------------------------------------------

    \11\ See section V, paragraph 4 of OMB Circular A-129, 
``Managing Federal Credit Programs'' (November 2000). This Circular 
is available at the following URL: http://www.whitehouse.gov/omb/
circulars/a129/a129rev.html.
---------------------------------------------------------------------------

    The TIFIA statute specifies only a lower bound on the interest rate 
for a TIFIA instrument: The rate on United States Treasury securities 
of a similar maturity. The current rule contains no provision 
implementing the statute's rate-setting provisions. Under both the 
statute and the current rule, therefore, the DOT currently has broad 
discretion to set the interest rate so long as the rate is at or above 
the statutory minimum. In administering the TIFIA program, however, the 
DOT has set the rate, in all transactions to date, at the statutory 
minimum. As noted above, the DOT seeks comment regarding the use of its 
authority to charge different interest rates to different borrowers, on 
the basis of program policy goals and guidance in OMB Circular A-129.
    The current rule is silent on the calculation method by which the 
statutory minimum is determined. The DOT has determined the statutory 
minimum for a specific transaction by reference on the closing date to 
the rate table, published daily by the Treasury Department, for State 
and Local Government Series (SLGS) securities, and we have previously 
noted in the TIFIA Program Guide that we use this method of determining 
interest rate minimums. The NPRM proposes to incorporate into the 
regulation the calculation method for interest rate minimums heretofore 
noted in the Program Guide.\12\
---------------------------------------------------------------------------

    \12\ The DOT publishes detailed guidance for TIFIA borrowers in 
a Program Guide. The Program Guide also includes the TIFIA 
application form and the text of both the TIFIA statute and the 
TIFIA rule, and will post a form loan template. The Program Guide 
may be found on the TIFIA Web site at: http://tifia.fhwa.dot.gov/.
---------------------------------------------------------------------------

Section 80.19 Guaranteed Loans; Eligibility Requirements for Guaranteed 
Lenders

    The NPRM proposes to include a new section to provide that the 
terms of a guaranteed loan, including the interest rate, would be 
subject to approval by the Secretary. The proposed new section also 
specifies eligibility requirements for guaranteed lenders and would 
require that the Secretary approve all guaranteed lenders. Currently, 
eligibility standards for guaranteed lenders are set

[[Page 3494]]

forth in the TIFIA Program Guide.\13\ The DOT believes these 
eligibility standards should instead be incorporated in the regulation.
---------------------------------------------------------------------------

    \13\ For information about the TIFIA Program Guide, see the 
preceding note 13 and section 80.35 of the proposed rule.
---------------------------------------------------------------------------

Section 80.21 Draws on Line of Credit

    The proposed rule would move the current rule's line of credit 
provisions, contained in 49 CFR 80.5, into a new section with 
modifications to implement the changes made by the SAFETEA-LU 
amendments to the TIFIA statute. The proposed rule would limit draws 
that are made to pay debt service on project obligations to the payment 
of debt service on those project obligations which financed eligible 
project costs, and it requires that draws for the purpose of paying 
debt service may not be made until any capitalized interest fund is 
exhausted. Consistent with the changes in SAFETEA-LU, the proposed rule 
would make clear that a draw for payment of debt service may be made 
even if a debt service reserve fund is available, thereby enabling 
borrowers to use a line of credit to avoid the default which usually 
arises when a debt service reserve fund is drawn.
    There would be no limitation in the amount that may be drawn under 
a line of credit in any one year, reflecting an amendment to the TIFIA 
statute.

Section 80.23 Refinancing

    This proposed rule creates a new section on refinancing to 
implement the new TIFIA refinancing authority created by SAFETEA-LU and 
contained in 23 U.S.C. 603(a)(1). In addition, the current rule's 
provision dealing with refinancing of interim construction financing 
not more than one year after substantial completion is moved into this 
proposed new section.
    SAFETEA-LU amended TIFIA to permit the use of TIFIA secured loans 
and loan guarantees in certain refinancing transactions. In general, 
the new provision authorizes the Secretary to enter into TIFIA secured 
loan agreements, or loan guarantee agreements, to refinance long-term 
project obligations, or Federal credit instruments, if such refinancing 
will provide additional funding capacity that will be used to fund the 
completion, enhancement, or expansion of a project. This proposed new 
section provides guidance on the types of refinancing transactions the 
DOT will consider for TIFIA credit assistance and specifies application 
requirements and certain refinancing terms that the DOT believes are 
consistent with Federal credit policies. In addition, in order to 
minimize displacement of private sector credit markets while achieving 
program goals, the DOT proposes to participate in a qualified 
refinancing only by means of a TIFIA loan guarantee. As noted in the 
section 80.13 discussion above, the DOT seeks comments on how to 
increase the participation of private sector lenders in providing 
guaranteed loans consistent with the TIFIA statute and government-wide 
credit policy.
    The DOT's new refinancing authority continues the TIFIA program's 
principle emphasis: Stimulating investment in new transportation 
infrastructure.
    The DOT will require the applicant to demonstrate that the 
refinancing will increase available funding capacity for the 
completion, enhancement, or expansion of a project that qualifies for 
funding under 23 U.S.C. 602. The new improvement facilitated as part of 
the TIFIA refinancing must cost at least $50 million (in eligible 
project costs) consistent with the SAFETEA-LU statutory minimum 
threshold for a new TIFIA project. The DOT notes that certain selection 
criteria tend to favor a project comprised entirely of new construction 
over one that includes the refinancing of existing project debt. While 
the new transportation project must follow the same Federal 
requirements as any TIFIA project, the DOT believes that an asset 
previously financed with the debt being refinanced under the TIFIA 
program is subject to those Federal requirements to which it was 
previously subject, including applicable Federal requirements 
concerning operations, maintenance, and design standards for future 
construction for a project receiving TIFIA refinancing assistance.
    A borrower will have the flexibility to apply the proceeds of a 
TIFIA guaranteed loan to the refinancing, the new project, or apportion 
an amount to each element of the transaction. It is not required that 
guaranteed loan proceeds be used to build the new project. If the 
guaranteed loan is made available for both the refinancing and the new 
project, the assistance will be structured in two tranches. The 
proposed rule establishes a maximum maturity date of 35 years from the 
date the credit agreement is executed for the portion of credit 
assistance used for the refinancing. The maximum maturity date for the 
new project will be 35 years from the date of substantial completion, 
the same as for any new project receiving TIFIA credit assistance. In 
no case will the term of the loan guarantee exceed the useful life of 
the asset being financed.
    The DOT is proposing to provide credit assistance in connection 
with a refinancing in an amount no greater than the eligible project 
costs of the new transportation investment that is facilitated through 
the additional funding capacity provided by the refinancing. However, 
to provide an incentive to the private sector to invest in 
transportation infrastructure, consistent with the objectives of the 
TIFIA program, DOT may approve an increase in this limit up to an 
amount equal to the amount of equity actually committed at financial 
close. For any refinancing transaction, the maximum amount of credit 
assistance is limited to 33 percent of the combined total of eligible 
project costs of the refunding and new project.
    The DOT considers that generating new investment in transportation 
is the essential purpose of a TIFIA-assisted refinancing transaction. 
For that reason, it will require that construction of the new project 
commence within a reasonable period of time. This requirement will 
apply even if the new construction is financed from sources other than 
TIFIA. To ensure timely advancement and completion of project 
construction, the DOT will require a penalty interest rate in the 
guaranteed loan in the event there is a development default. Guidelines 
on development default penalties for refinancing transactions will be 
published in the TIFIA program guidance.
    An applicant seeking TIFIA refinancing assistance must submit an 
application, including the new transportation asset construction 
project, using the TIFIA application form contained in the DOT's TIFIA 
Program Guide. The application should describe in detail the 
refinancing plan of finance and demonstrate that it conforms to 
statutory and regulatory requirements. The fee for a refinancing 
application is proposed to be the same as the fee for a new TIFIA 
project application.

Section 80.25 Limitations on Federal Credit Assistance

    The proposed rule would impose certain limitations on TIFIA 
assistance.
    Amount of credit assistance: The current rule incorporates the 
statutory limitation of 33 percent of reasonably anticipated eligible 
project costs, and the proposed rule would retain that provision. In 
addition, we propose to incorporate the new statutory provision, 
contained in 23 U.S.C. 603(b)(2), further limiting the amount of TIFIA 
credit assistance to the sum of project obligations senior to the TIFIA 
instrument when the TIFIA instrument

[[Page 3495]]

does not have an investment-grade rating.
    Look-back in determining project costs: The current rule permits 
costs incurred prior to submission of the TIFIA application to be 
included in the calculation of eligible project costs if approved by 
the Secretary. The proposed rule would permit costs incurred up to 
three years prior to the TIFIA application to be used in the 
calculation of eligible project costs, while allowing for further look-
backs only in exceptional circumstances and if approved by the 
Secretary. However, the proposed rule would limit the consideration of 
such total costs to no more than 20 percent of total eligible project 
costs.
    Operating costs during construction: The proposed rule clarifies 
that the operating costs of a special purpose entity formed solely to 
construct and operate the facility for which the TIFIA credit 
assistance is provided would be included in the calculation of eligible 
project costs. The proposed rule would limit the consideration of such 
total costs to no more than 5 percent of total eligible project costs.
    Lease acquisition payments or concession fees: To be considered 
eligible project costs, payments to a public entity associated with the 
lease acquisition or concession fee must be dedicated to transportation 
projects eligible under title 23 or chapter 53 of title 49, United 
States Code. Lease acquisition payments must be part of a project in 
which new capital costs constitute a significant portion of project 
costs and represent fair market value. In other words, the concession 
fee, in and of itself, does not comprise an eligible project cost. In 
order to implement this policy, the DOT proposes to limit its 
consideration of such concession payments to 25 percent of total 
eligible project costs and seeks public comment on this proposal.
    Timing of funding of assistance: The current rule specifies that 
the DOT will fund a secured loan ``based on a project's funding 
needs.'' In practice, the DOT has funded TIFIA loans on a reimbursement 
basis; i.e., borrowers may draw funds only for the payment of costs 
already incurred. This reimbursement practice aligns TIFIA assistance 
with assistance provided to Federal-aid grant-funded projects. In 
addition, the DOT has typically included in the credit agreement a 
provision specifying the maximum frequency (e.g., monthly or quarterly) 
with which draw requests can be submitted. Therefore, we propose to 
incorporate these practices into the regulation.

Section 80.27 Credit Agreement Closing and Obligation of Funds

    The proposed new section states that obligation of Federal funds 
would occur at the closing of the credit agreement, thus making clear 
that the DOT is changing its current practice of obligating funds at 
the time a term sheet is executed.

Section 80.29 Reporting Requirements and Credit Monitoring

    The proposed rule reorganizes the current rule to consolidate 
within a single section all reporting and monitoring requirements. The 
NPRM proposes to provide that the DOT may impose, in a particular 
credit agreement, additional reporting requirements which it considers 
necessary in order to properly monitor the credit performance of the 
specific project.
    The proposed rule moves the current rule's annual credit reporting 
requirement to this section. It would require borrowers to maintain a 
credit rating at their own expense and furnish it annually to the DOT. 
The current rule requires borrowers to provide ongoing credit 
evaluations to the DOT annually. The proposed rule makes clear that 
such credit evaluations must be current credit ratings. It is not the 
intent of this provision to require borrowers with project obligations 
that have published credit ratings to obtain new ratings, but rather 
merely to require that the borrower establish that such ratings are 
still in effect. Borrowers which do not have project obligations with 
published credit ratings, such as borrowers which use bank debt and 
fulfill the statutory investment-grade rating requirement by obtaining 
a private rating, would be required to obtain a credit rating each 
year.
    The current rule provides that the DOT may conduct periodic 
financial and compliance audits of TIFIA borrowers. The proposed rule 
would make clear that such audits conducted by the DOT are at the 
borrower's expense.

Section 80.31 Fees

    Consistent with section 603(b)(7), section 604(b)(9), and 605(b) of 
title 23, United States Code, the proposed rule identifies several fees 
the DOT would assess program participants to recover the program's 
various administrative and transactional costs. The following fees 
cannot be considered eligible project costs for the purpose of 
calculating the maximum amount of credit assistance.
    The proposed rule would not specify amounts for fees that are 
fixed, i.e., fees that are not transaction-based, namely the 
application fee and the servicing fee. The DOT needs to retain the 
flexibility to change these fixed fees from time to time, in response 
to changes in its own costs. Thus, rather than specify the fee amounts 
in the regulation, the DOT would announce changes in these fees by 
notice published from time to time in the Federal Register. A schedule 
of fees currently in effect will also be posted on the TIFIA Web site.
    The current rule prohibits payment of the application fee or the 
processing fee by anyone other than the applicant. The DOT is not aware 
of any circumstance where such fees were not paid by the applicant or 
an affiliated entity; even if a third party were to pay such fees, the 
DOT does not believe the TIFIA program would be adversely affected. The 
DOT has concluded this prohibition is unnecessary, and thus proposes to 
eliminate it.
    The NPRM proposes that the DOT would assess the following fees:
    1. Application fee. The applicant would be required to remit the 
application fee with its application for TIFIA assistance. There would 
be a single application fee for each application, irrespective of the 
number of TIFIA instruments the applicant is seeking. The current rule 
provides that the application fee is non-refundable, and the proposed 
rule would leave that provision unchanged. The purpose of the 
application fee is to cover, in part, the DOT's cost for outside 
consulting services engaged to assist in reviewing the application. The 
amount of the application fee will be posted on the TIFIA Web site. The 
DOT may change the amount of the application fee from time to time, and 
will publish these changes in the Federal Register and post on the 
TIFIA Web site. The application fee is not considered an eligible 
project cost for the purpose of calculating the maximum amount of 
credit assistance.
    2. Subsidy fee. As authorized by section 603(b)(7) and section 
604(b)(9) of Title 23, United States Code, the current rule, in section 
80.17(c), permits the payment of a supplemental fee to reduce the 
subsidy cost of a project. The proposed rule would identify this as a 
``subsidy fee'' and restate the current rule's language. 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 TIFIA, the DOT 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

[[Page 3496]]

that project. Although such a fee has yet to be imposed, the DOT 
anticipates use of this provision as the demand for TIFIA assistance 
increases. The subsidy fee is not considered an eligible project cost 
for the purpose of calculating the maximum amount of credit assistance.
    3. Transaction fee. The transaction fee would be a one-time fee, 
set at an amount sufficient to reimburse the DOT for the actual costs, 
other than Federal employee costs, incurred in evaluating the 
application and negotiating the credit agreement. Such costs consist 
principally of fees the DOT pays to its consultants and outside legal 
advisors. The transaction fee would be due at closing of the credit 
agreement or within 30 days of financial close as specified in the 
credit agreement. The proposed rule provides that the transaction fee 
would be an obligation of the applicant, payable irrespective of 
whether or not the credit agreement was ever executed. The transaction 
fee is not considered an eligible project cost for the purpose of 
calculating the maximum amount of credit assistance.
    4. Servicing fee. The DOT would assess the servicing fee annually 
in accordance with section 605(b)(1)(B) of SAFETEA-LU. There would be a 
servicing fee for each credit instrument so that a single borrower 
could be assessed more than one servicing fee. The servicing fee would 
offset, in part, the DOT's costs in servicing its portfolio of TIFIA 
loans. The amount of the servicing fee will be posted on the TIFIA Web 
site. The DOT may change the amount of the servicing fee from time to 
time, and will publish these changes in the Federal Register and post 
on the TIFIA Web site. The servicing fee is not considered an eligible 
project cost for the purpose of calculating the maximum amount of 
credit assistance.
    5. Monitoring fee. The DOT would include in each credit agreement a 
provision obligating the borrower to reimburse the DOT for costs 
incurred in connection with monitoring the credit performance of a 
project, the enforcement of credit agreement provisions, amendments to 
the credit agreement and related documents, and other performance-
related activities in accordance with section 603(b)(7) of SAFETEA-LU. 
The monitoring fee is not considered an eligible project cost for the 
purpose of calculating the maximum amount of credit assistance.
    The proposed rule provides that the DOT would seek administrative 
offset to recoup the above fees in the event the applicant or borrower 
fails to pay them.

Section 80.33 Use of Administrative Offset

    The proposed rule carries forward the current rule's provision 
making clear that the DOT does not intend to recoup by means of 
administrative offset losses incurred through TIFIA credit instruments 
except under circumstances relating to fraud, misrepresentation, false 
claims or similar acts. It clarifies the DOT's intent, as stated in the 
rule, to recover through administrative offset any fees assessed under 
the TIFIA program and not paid.

Section 80.35 Program Guide; TIFIA Web site

    The proposed rule would establish a new section advising those 
interested in the TIFA program of the TIFIA Program Guide and the TIFIA 
Web site (http://tifia.fhwa.dot.gov). The proposed new section would be 
informational only, intended to notify the public of where to find 
additional program information, including information relating to a fee 
schedule.

Section 80.37 Applicant Information Requirements

    The proposed rule would establish a new section addressing certain 
requirements that apply to all recipients of Federal assistance, 
including entities receiving credit assistance. First, an applicant 
must obtain a Data Universal Number System (DUNS) number. The DUNS 
number, which is a unique nine-character number that identifies an 
organization, is a tool used by the Federal Government to track how 
Federal money is distributed. Second, an applicant must register with 
the Central Contractor Registration (CCR). The Federal Government 
requires that Federal agencies collect certain information from 
recipients of Federal assistance. This information is collected through 
the CCR system, which is the primary registrant database for the 
Federal Government. Registration in the CCR requires a DUNs number.

Distribution and Derivation Tables

    For ease of reference, distribution and derivation tables are 
provided for the current sections of the proposed rule as follows.

                            Derivation Table
------------------------------------------------------------------------
         New section                          Old section
------------------------------------------------------------------------
80.1.........................  80.1.
80.3.........................  80.3 Administrative offset.
80.3 Borrower................     None.
80.3 Budget authority........     None.
    None.....................  80.3 Conditional term sheet.
80.3.........................  80.3 Credit Agreement.
80.3 Current Credit            80.3 None.
 Evaluation.
80.3.........................  80.3 Eligible project costs.
80.3.........................  80.3 Federal credit instrument.
80.3 Guaranteed lender.......     None.
80.3.........................  80.3 Investment-grade rating.
    None.....................  80.3 Lender.
80.3.........................  80.3 Line of credit.
80.3.........................  80.3 Loan guarantee.
    None.....................  80.3 Local servicer.
80.3 Maturity Date...........     None.
    None.....................  80.3 Obligor.
80.3 Preliminary rating           None.
 opinion letter.
80.3.........................  80.3 Project.
80.3.........................  80.3 Project obligation.
    None.....................  80.3 Project sponsor.
80.3.........................  80.3 Rating agency.
80.3 Refinance...............     None.

[[Page 3497]]

80.3 Secretary...............     None.
80.3.........................  80.3 Secured loan.
80.3.........................  80.3 State.
80.3 Subsidy cost............  80.3 Subsidy amount.
80.3.........................  80.3 Substantial completion.
80.3.........................  80.3 Term sheet.
80.3.........................  80.3 TIFIA.
80.5(a)-(e)..................  80.3(a)-(e).
80.7(a)......................  80.13(a).
80.7(a)(1)...................  80.13(a)(1) and (a)(5).
80.7(a)(2) through (a)(2)(i).  80.13(a)(3).
80.7(a)(2)(ii)...............  80.13(b).
80.7(a)(3)...................  80.13(a)(4).
80.7(b) through (c)..........  80.13(c).
80.9(a)......................  80.7(d) Added to new section.
80.9(b)......................     None.
80.9(c)......................  80.7(b).
80.9(c)(1)...................  80.7(b)(1).
80.9(c)(2)...................     None.
80.9(c)(3)...................  80.7(b)(1).
80.9(c)(4)...................  80.7(b)(2).
80.9(c)(5)...................  80.7(b)(3).
80.9(c)(6)...................  80.7(b)(4).
80.9(c)(7)...................  80.7(b)(5).
80.9(c)(8)...................     None.
80.9(c)(9)...................     None.
80.9(c)(10)..................     None.
80.9(d)......................  80.7(c).
80.11(a) through (a)(1)......  80.11(a).
80.11(a)(2)..................     None.
80.11(b).....................     None.
80.11(c)(1) through            80.11(b).
 80.11(c)(1)(i).
80.11(c)(1)(ii)..............     None.
80.11(c)(2)..................     None.
80.11(d).....................     None.
80.11(e).....................  80.11(c).
80.13(a).....................  80.15(a)(2).
80.13(b).....................  80.15(a).
80.13(b)(1)..................  80.15(a)(1).
80.13(b)(2)..................  80.15(a)(3).
80.13(b)(3)..................  80.15(a)(4).
80.13(b)(4)..................  80.15(a)(5).
80.13(b)(5)..................  80.15(a)(6).
80.13(b)(6)..................  80.15(a)(7).
80.13(b)(7)..................  80.15(a)(8).
80.13(c).....................  80.15(c).
80.15(a) through (b).........  80.5(d)(1) through (d)(2).
80.17(a) through (d).........     None.
80.19(a) through (c).........     None.
80.21(a) through (b).........  80.5(e).
80.23(a).....................  80.5(c).
80.23(b) through (e)(7)......     None.
80.25(a) through (a)(1)......  80.5(a).
80.25(a)(2)..................     None.
80.25(b)(1)..................  80.5(b).
80.25(b)(2)..................     None.
80.25(b)(3)..................     None.
80.25(c).....................     None.
80.25(d).....................  80.5(g) in part.
80.27 Heading................     None.
80.27(a).....................     None.
80.27(a)(1)..................  80.13(a)(1).
80.27(a)(2)..................  80.5(f).
80.27(a)(3)..................  80.11(b).
80.27(a)(4)..................     None.
80.27(b).....................  80.5(d)(2).
80.29 Heading................  80.19.
80.29(a).....................  80.11(d).
80.29(b).....................  80.19 First sentence.
80.29(c) through (c)(2)......     None.
80.29(d).....................  80.19 Second sentence.
80.29(e).....................  80.19(d) Last sentence.

[[Page 3498]]

80.31 Heading................  80.17.
80.31........................     None.
80.31(a).....................  80.17(a).
80.31(b).....................  80.17(c).
80.31(c).....................  80.17(a).
80.31(d).....................  80.17(d).
80.31(e).....................     None.
80.33........................  80.21.
80.35........................     None.
80.37........................     None.
------------------------------------------------------------------------

                                               Distribution Table
----------------------------------------------------------------------------------------------------------------
        Old section Part 80                                      New section Part 80
----------------------------------------------------------------------------------------------------------------
80.1 Heading.......................  80.1 Heading text unchanged.
Purpose............................  80.1 Revised.
80.3 Heading.......................  80.3 Heading text unchanged.
Administrative offset..............  Revised.
    None...........................  80.3 Borrower replaced obligor; definition revised.
    None...........................  80.3 Budget authority added.
Conditional term sheet.............  80.3 Removed.
Credit Agreement...................  80.3 Revised.
    None...........................  80.3 Current Credit Evaluation added.
Eligible project costs.............  80.3 Revised.
Federal credit instrument..........  80.3 Revised.
    None...........................  80.3 Guaranteed lender replaces lender.
Investment-grade rating............  80.3 Revised.
Lender.............................  Removed, replaced by Guaranteed lender.
Line of credit.....................  80.3 Revised.
Loan guarantee.....................  80.3 Revised.
Local Servicer.....................  80.3 Removed.
    None...........................  80.3 Maturity date added.
Obligor............................  Removed, replaced by Borrower.
    None...........................  80.3 Preliminary rating opinion letter added.
Project............................  80.3 Revised.
Project obligation.................  80.3 Revised.
Project sponsor....................  80.3 Removed.
Rating agency......................  80.3 Revised.
    None...........................  80.3 Refinance added
    None...........................  80.3 Secretary added.
Secured loan.......................  80.3 Revised.
State..............................  80.3 ``States''capitalized.
Subsidy amount.....................  80.3 Changed to Subsidy cost.
Substantial completion.............  80.3 Revised.
Term sheet.........................  80.3 Revised.
TIFIA..............................  80.3 Revised.
80.5 Heading.......................  80.25 Heading redesignated and revised.
80.5(a)............................  80.25(a) through (a)(1) Redesignated and revised.
    None...........................  80.25(a)(2) Added.
80.5(b)............................  80.25(b)(1) Redesignated and revised.
    None...........................  80.25(b)(2) Added.
    None...........................  80.25(b)(3) Added.
80.5(c)............................  80.23(a) Redesignated and revised.
80.5(d)(1) through (d)(2)..........  80.15(a) through (b) Conditional term sheet deleted; redesignated and
                                      revised with regard to term sheet.
80.5(e)............................  80.21(a) through (b) Redesignated and revised.
80.5(f)............................  80.27(a)(2) Redesignated and revised.
    None...........................  80.25(c) Added.
80.5(g)............................  80.25(d) Redesignated and revised.
80.7 Heading.......................  80.9 Heading redesignated.
80.7(a)............................  Removed.
    None...........................  80.9(a) Added; language from 80.7(d) incorporated.
    None...........................  80.9(b) Added.
80.7(b)............................  80.9(c) Redesignated and revised.
80.7(b)(1).........................  80.9(c)(1) and (c)(3) Redesignated and revised.
    None...........................  80.9(c)(2) Added.
80.7(b)(2).........................  80.9(c)(4) Redesignated and revised.
80.7(b)(3).........................  80.9(c)(5) Redesignated and revised.
80.7(b)(4).........................  80.9(c)(6) Redesignated and revised.
80.7(b)(5).........................  80.9(c)(7) Redesignated and revised.

[[Page 3499]]

80.7(c)............................  80.9(d) Redesignated and revised.
80.7(d)............................  80.9(a) Language incorporated.
80.9 Heading.......................  80.5 Redesignated and heading text unchanged.
80.9...............................  80.5 Redesignated and revised.
80.9(a)............................  80.5(a) Redesignated and revised.
80.9 through (d)...................  80.5(b) through (d) Redesignated and text unchanged.
80.9(e)............................  80.5(e) Redesignated.
80.11 Heading......................  80.11 Heading revised.
80.11(a)...........................  80.11(a) through (a)(1) Revised.
    None...........................  80.11(a)(2) Added.
    None...........................  80.11(b) Added.
80.11(b)...........................  80.11(c)(1) through (c)(1)(i) Redesignated and revised.
    None...........................  80.11(c)(1)(ii) Added.
    None...........................  80.11(c)(2) Added.
    None...........................  80.11(d) Added.
80.11(c)...........................  80.11(e) Redesignated and revised.
80.11(d)...........................  80.29(a) Redesignated and revised.
80.13 Heading......................  80.7 Redesignated and heading revised.
80.13(a)...........................  80.7(a) Redesignated and revised.
80.13(a)(1)........................  80.7(a)(1) Redesignated and revised.
80.13(a)(2)........................  Removed.
80.13(a)(3)........................  80.7(a)(2)(i) Redesignated and revised.
80.13(a)(4)........................  80.7(a)(3) Redesignated and revised.
80.13(a)(5)........................  80.7(a)(1) Redesignated and revised.
80.13(b)...........................  80.7(a)(2)(ii) Redesignated and revised.
80.13(c)...........................  80.7(b) through (c) Redesignated and revised.
80.15 Heading......................  80.13 Redesignated and heading revised.
80.15(a)...........................  80.13(b) Redesignated and revised.
80.15(a)(1)........................  80.13(b)(1) Redesignated
80.15(a)(2)........................  80.13 Redesignated and revised.
80.15(a)(3)........................  80.13(b)(2) Redesignated and revised.
80.15(a)(4)........................  80.13(b)(3) Redesignated and revised.
80.15(a)(5)........................  80.13(b)(4) Redesignated and revised.
80.15(a)(6)........................  80.13(b)(5) Redesignated and revised.
80.15(a)(7)........................  80.13(b)(6) Redesignated and revised.
80.15(a)(8)........................  80.13(b)(7) Redesignated.
80.15(b)...........................  80.11(a) Redesignated and revised.
80.15(c)...........................  80.13(c) Redesignated and revised.
80.17 Heading......................  80.31 Redesignated and revised.
    None...........................  80.31 Added.
80.17(a)...........................  80.31(a) and (c) Redesignated and revised.
80.17(b)...........................  Removed.
80.17(c)...........................  80.31(b) Redesignated.
80.17(d)...........................  80.31(d) Redesignated and revised.
    None...........................  80.31(e) Added.
80.19 Heading......................  80.29 Redesignated and revised.
80.19 First sentence...............  80.29(b) Redesignated and revised.
    None...........................  80.29(c)(1) through (c)(2) Added.
80.19 Second sentence..............  80.29(d) Redesignated and revised.
80.19 Last sentence................  80.29(e) Redesignated and revised.
80.21 Heading......................  80.33 Redesignated.
80.21..............................  80.33 Redesignated and revised.
None...............................  8015 New heading added.
80.5(d)(1) through (d)(2)..........  80.15(a) through (b) Redsignated and revised.
    None...........................  80.17 New heading added.
    None...........................  80.17(a) through (d) Added.
    None...........................  80.19 New heading added.
    None...........................  80.19(a) through (c) Added.
    None...........................  80.21 New heading added
80.5(e)............................  80.21(a) through (b) Redesignated and revised.
    None...........................  80.23 New heading added.
80.5(c)............................  80.23(a) Redesignated and revised.
    None...........................  80.23(b) through (e)(7) Added.
    None...........................  80.27 New heading added.
    None...........................  80.27(a) Added
80.13(a)(1)........................  80.27(a)(1) Redesignated and revised.
80.5(f)............................  80.27(a)(2) Redesignated and revised.
80.11(b)...........................  80.27(a)(3) Redesignated and revised.
    None...........................  80.27(a)(4) Added.
80.5(d)(1) through (d)(2)..........  80.27(b) Redesignated and revised.
    None...........................  80.35 New heading added.
    None...........................  80.35(a) through (c) Added.

[[Page 3500]]

    None...........................  80.37 Added.
----------------------------------------------------------------------------------------------------------------

Rulemaking Analyses and Notices

    All comments received before the close of business on the comment 
closing date indicated above will be considered and will be available 
for examination in the docket at the above address. Comments received 
after the comment closing date will be filed in the docket and will be 
considered to the extent practicable. In addition to late comments, the 
DOT will also continue to file relevant information in the docket as it 
becomes available after the comment period closing date, and interested 
persons should continue to examine the docket for new material. A final 
rule may be published at any time after close of the comment period.

Executive Order 12866 (Regulatory Planning and Review) and U.S. DOT 
Regulatory Policies and Procedures

    The DOT has determined preliminarily that this action would be an 
economically significant regulatory action within the meaning of 
Executive Order 12866, and that it would it be significant within the 
meaning of Department of Transportation regulatory policies and 
procedures because it implements important changes made to statutory 
law and makes a number of substantive changes to the current TIFIA 
regulation. Our determination is based on the activity to date of the 
program, which has had an annual effect on the economy of $100 million 
or more.
    This action proposes to update and streamline the DOT's regulation 
on Credit Assistance for Surface Transportation Projects. It implements 
the changes SAFETEA-LU made to the TIFIA statute, and reorganizes the 
current rule to make it more comprehensible to users.
    As of May 2008, the TIFIA program has provided approximately $4.8 
billion in Federal credit assistance which has supported an aggregate 
of $18.6 billion in combined public and private sector capital 
investment, at a budgetary cost of approximately $346 million.
    The proposed regulation would affect only those entities that elect 
to apply for TIFIA assistance and are selected to receive a Federal 
credit instrument. It would not impose any direct costs on non-
participants.
    Recognizing the significant impact of this program, SAFETEA-LU 
directed the Secretary of Transportation to submit biannually to 
Congress a report summarizing the financial performance of the projects 
receiving assistance under the TIFIA credit program. Two reports have 
been submitted to date, and a June 2008 report was recently submitted. 
The June 2006 report briefly updates financial information originally 
presented in the Department's comprehensive June 2002 report to 
Congress.\14\
---------------------------------------------------------------------------

    \14\ These reports to Congress are available on the TIFIA Web 
site: http://tifia.fhwa.dot.gov.
---------------------------------------------------------------------------

    The DOT and industry research has indicated that there are economic 
productivity gains to be derived from efficient capital investment in 
surface transportation facilities. According to a 2005 GAO report, 
``[t]ransportation improvements also lead to increased productivity and 
economic growth, through improving access to goods and services for 
businesses and individuals and increasing the geographic size of 
potential labor pools for employers and potential jobs for 
individuals.'' \15\ This GAO report cited a September 2003 study, which 
estimated that average annual returns on highway investment of 
approximately 14 percent between 1990 and 2000.\16\ The DOT continues 
research, updating the returns on highway capital investment for 2000-
2005. Preliminary results show positive returns but lower than the 
1990-2000 time period. TIFIA can serve to efficiently allocate public 
and private investment in surface transportation infrastructure and 
encourage de-politicizing investments. In addition to the direct 
returns it produces, transportation capital investment typically 
generates spillover benefits, which may yield financial and non-
financial benefits, such as reduced pollution, increased safety, 
improved international competitiveness, and enhanced accessibility.
---------------------------------------------------------------------------

    \15\ Government Accountability Office, Highway and Transit 
Investments: Options for Improving Information on Projects' Benefits 
and Costs and increasing Accountability for Results (GAO)-05-172), 
Washington, DC, January 2005.
    \16\ Theofanis P. Mamuneas and M. Ishaq Nadiri, ``Production, 
Consumption and the rates of Return to Highway Infrastructure 
Capital,'' (September 2003).
---------------------------------------------------------------------------

    Just as transportation investment produces benefits, failure to 
invest results in cost increases. According to the DOT, 
``transportation system congestion is one of the single largest threats 
to our nation's economic prosperity and way of life.'' \17\ In 2003, 
Americans lost 3.7 billion hours and 2.3 billion gallons of fuel due to 
traffic jams, resulting in an estimated cost of $200 billion per 
year.\18\ According to the Texas Transportation Institute, ``The 
solutions to this problem will require commitment by the public and by 
national, state and local officials to increase investment levels and 
identify projects, programs and policies that can achieve mobility 
goals.'' \19\
---------------------------------------------------------------------------

    \17\ See http://www.fightgridlocknow.gov.
    \18\ United States Department of Transportation, http://
www.fightgridlocknow.gov.
    \19\ ``Urban Traffic Congestion Costs the USA $63 Billion per 
Annum,'' September 14, 2004, Texas Transportation Institute. (http:/
/www.citymayors.com/transport/congestion_usa.html;).
---------------------------------------------------------------------------

    According to a recent study by the American Association of State 
Highway and Transportation Officials (AASHTO), the U.S. population will 
grow at a more rapid pace in the next 50 years than during the previous 
50 years when the nation's modern highway system was first being 
constructed. As a result of this growth, the number of vehicles on U.S. 
highways, estimated at 246 million in 2007 (compared to 65 million cars 
and trucks in 1955), could rise to nearly 400 million by 2055. The 
AASHTO report also estimated that between 2004 and 2035 truck tonnage 
could increase 114 percent and rail tonnage could increase 63 percent; 
truck traffic, measured in trucks per day, per mile, is expected to 
more than double in the same period.\20\
---------------------------------------------------------------------------

    \20\ ``Transportation Investment in our Future Needs of the U.S. 
Transportation System'' by the American Association of State Highway 
and Transportation Officials, http://www.transportationl.org/
tiflreport/, March 2007.
---------------------------------------------------------------------------

    The TIFIA program was established to provide fractional credit 
assistance to major transportation infrastructure projects--such as 
highway, transit, passenger rail, certain freight facilities, and 
certain port projects--that have the potential of generating 
substantial economic benefits both regionally and nationally. In many 
cases, such projects are capable of being supported through direct user 
charges or dedicated revenue streams that can be used to access private 
capital and other non-Federal funding sources. The TIFIA program is 
designed to fill market gaps through providing supplemental and/or 
subordinate capital to such projects,

[[Page 3501]]

facilitating access to the capital markets or other financing sources 
for the majority of project funding needs. Through the TIFIA program's 
leverage of limited Federal funds with private capital, these capital-
intensive projects can be advanced without displacing smaller, more 
traditional grant-supported projects. Federal risk exposure is 
mitigated by substantial co-investment from non-Federal parties and the 
use of objective, market-based credit evaluation criteria.
    Through SAFETEA-LU, Congress authorized $122 million for each 
Federal Fiscal Year (FFY) from 2005 through 2009. Under TEA-21, 
Congress had authorized up to a total of $530 million for FFY 1999 
through FFY 2003. These funds pay the subsidy cost to the Federal 
Government of providing credit assistance, and are available until 
expended by the DOT or reprogrammed by Congress. Based on experience, 
this funding amount can support more than $2 billion of average annual 
credit assistance. Under the terms of the legislation, the Federal 
share is limited to 33 percent of total eligible project costs. In many 
cases, however, the actual share of TIFIA assistance is considerably 
less. For example, the average request for TIFIA assistance by 
applicants to the TIFIA program between October 1998 and March 2007 was 
approximately 26 percent of total project cost.
    Under the Federal Credit Reform Act of 1990 (FCRA), the amount of 
budget authority necessary to support a Federal credit instrument 
depends upon the subsidy cost (i.e., the estimated present value cost 
of estimated losses that will be incurred as a result of defaults, net 
of any fee income or recoveries on default). Each project is assigned a 
subsidy cost based upon an evaluation of its creditworthiness and the 
specific terms and conditions of the loan or loan guarantee agreement. 
As noted previously, since the inception of the TIFIA program, total 
subsidy costs have amounted to nearly $346 million, supporting 
approximately $4.8 billion in Federal credit with an aggregate of $18.6 
billion in public and private capital investment.
    The TIFIA program can promote the efficient functioning of project 
delivery and the private markets, and can generate both direct and 
indirect benefits, including reduced congestion, greater mobility, 
improved safety, an enhanced environment, and greater economic growth, 
all of which further interstate commerce.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 
5 U.S.C. 601-612) the DOT has evaluated the effects of this proposed 
action on small entities and has determined preliminarily that the 
proposed action would not have a significant economic impact on a 
substantial number of small entities.
    The TIFIA program is generally intended to assist large 
transportation projects and large entities and has little effect on 
small entities. This action proposes to extend availability of TIFIA 
credit assistance to smaller projects than those heretofore eligible; 
thus, to the degree they affect small entities, the changes will have a 
positive effect on small entities by making it possible for such 
smaller projects to obtain Federal credit assistance. The DOT expects, 
nevertheless, that the bulk of TIFIA assistance will go to large 
projects and that most small entities will be unaffected by the 
proposed action.

Unfunded Mandates Reform Act of 1995

    This proposed rule would not impose unfunded mandates as defined by 
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 
1995, 109 Stat. 48). The proposed updates are applicable only to 
Federal and federally-assisted programs. This proposed rule will not 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $128.1 million or more in 
any one year (2 U.S.C. 1532).

Executive Order 13132 (Federalism)

    This proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132, and the DOT 
has determined that this proposed action would not have a substantial 
direct effect or sufficient federalism implications on States that 
would limit the policymaking discretion of the States. The DOT has also 
determined that this proposed action would not preempt any State law or 
State regulation or affect the States' ability to discharge traditional 
State governmental functions.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Federal Domestic Assistance Program Number 20.205, 
Highway Planning and Construction. The regulations implementing 
Executive Order 12372 regarding intergovernmental consultation on 
Federal programs and activities apply to this program.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et 
seq.), Federal Agencies must obtain approval from the Office of 
Management and Budget (OMB) for each collection of information they 
conduct, sponsor, or require through regulations. This proposed rule 
does not contain information collection requirements for the purpose of 
the PRA. Since the inception of the TIFIA program, the DOT has never 
received 10 or more applications for Federal credit assistance in a 
single year. During the years the program has been in existence, the 
DOT has received an average of three TIFIA applications per year. 
Preparing a TIFIA application requires a significant commitment of 
resources on the part of the applicant, and even with the lower 
project-size thresholds enacted by the SAFETEA-LU amendments, the DOT 
does not expect to receive 10 or more applications for TIFIA assistance 
in a single year. If in the future it appears that there will be 10 or 
more applications in a year, the DOT will take immediate steps to seek 
approval from OMB for an information collection control number, as 
required under the PRA.

National Environmental Policy Act

    This proposed rule would make a number of changes in the way the 
TIFIA Federal credit assistance program is administered. As specified 
under 23 U.S.C. 602(c)(2), each project obtaining such assistance under 
the TIFIA program is required to adhere to the National Environmental 
Policy Act of 1969, as amended (42 U.S.C. 4321 et seq.) (NEPA). None of 
the changes this NPRM proposes would affect the applicability of NEPA 
to TIFIA projects. Therefore, this proposed rule would not have any 
effect on the quality of the environment.

Executive Order 12630 (Taking of Private Property)

    This proposed action would not affect a taking of private property 
or otherwise have taking implications under Executive Order 12630, 
Government Actions and Interface with Constitutionally Protected 
Property Rights.

Executive Order 12988 (Civil Justice Reform)

    This proposed action meets applicable standards in sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden.

[[Page 3502]]

Executive Order 13045 (Protection of Children)

    We have analyzed this proposed action under Executive Order 13045, 
Protection of Children from Environmental Health Risks and Safety 
Risks. This proposed action does not concern an environmental risk to 
health or safety that may disproportionately affect children.

Executive Order 13175 (Tribal Consultation)

    The DOT has analyzed this proposal under Executive Order 13175, 
dated November 6, 2000, and believes that the proposed action will not 
have substantial direct effects on one or more Indian tribes; will not 
impose substantial direct compliance costs on Indian tribal 
governments; and will not preempt tribal law. Therefore, a tribal 
summary impact statement is not required.

Executive Order 13211 (Energy Effects)

    We have analyzed this proposed rule under Executive Order 13211, 
Actions Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. We have determined that it is not a significant 
energy action under that order because although it is a significant 
regulatory action under Executive Order 12866, it is not likely to have 
a significant adverse effect on the supply, distribution, or use of 
energy. Therefore, a Statement of Energy Effects under Executive Order 
13211 is not required.

Regulation Identification Number

    A regulation identification number (RIN) is assigned to each 
regulatory action listed in the Unified Agenda of Federal Regulations. 
The Regulatory Information Service Center publishes the Unified Agenda 
in April and October of each year. The RIN contained in the heading of 
this document can be used to cross reference this action with the 
Unified Agenda.

List of Subjects

23 CFR Part 180

    Credit programs--transportation, Highways and roads, Investments.

49 CFR Part 80

    Credit programs--transportation, Highways and roads, Investments, 
Public transportation, Railroads, Reporting and recordkeeping 
requirements.

49 CFR Part 261

    Credit programs--transportation, Investments, Railroads.

49 CFR Part 640

    Credit programs--transportation, Investments, Mass transit.

49 CFR Part 1700

    Credit programs--transportation.

    Issued on: January 13, 2009.
Mary E. Peters,
Secretary of Transportation.
    For the reasons set forth in the preamble, and under the authority 
of 23 U.S.C. 601-609 it is proposed to amend Chapter I of Title 23, 
Code of Federal Regulations by amending part 180, and to amend Title 
49, Code of Federal Regulations, by revising part 80, and amending 
parts 261 and 640, and adding Chapter XIII consisting of part 1700 
respectively as set forth below:

Title 23--Highways

CHAPTER I

PART 180--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS

    1. Revise the authority citation for part 180 to read as follows:

    Authority: Secs. 1501 et seq., Pub. L. 105-178, 112 Stat. 107, 
241, as amended; sec. 1601, 1602 Pub. L. 109-59, 119 Stat. 1144; 23 
U.S.C. 601-609 and 315; 49 CFR 1.48.

Title 49--Transportation

Subtitle A--Office of the Secretary of Transportation

    2. Revise Part 80 to read as follows:

PART 80--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS

Sec.
80.1 Purpose.
80.3 Definitions.
80.5 Federal requirements.
80.7 Threshold criteria for TIFIA projects.
80.9 Application process.
80.11 Preliminary rating opinion letter and investment-grade rating.
80.13 Selection criteria for TIFIA projects.
80.15 Term sheet.
80.17 Interest rate on Federal credit instruments.
80.19 Guaranteed loans; eligibility requirements for guaranteed 
lenders.
80.21 Draws on line of credit.
80.23 Refinancing.
80.25 Limitations on Federal credit assistance.
80.27 Credit agreement closing and obligation of funds.
80.29 Reporting requirements and credit monitoring.
80.31 Fees.
80.33 Use of administrative offset.
80.35 Program Guide; TIFIA Web site.
80.37 Applicant Information Requirements.

    Authority: Secs. 1501 et seq., Pub. L. 105-178, 112 Stat. 107, 
241, as amended; Sec. 1601, 1602, Pub. L. 109-59. 119 Stat. 1144; 23 
U.S.C. 601-609 and 315; 49 CFR 1.4, 1.48, 1.49, and 1.51.

Sec.  80.1  Purpose.

    This part implements TIFIA (as defined within), a statute 
establishing a Federal credit assistance program for surface 
transportation projects.

Sec.  80.3  Definitions.

    The following definitions apply to this part:
    Administrative offset means the withholding of funds, otherwise 
payable by the government, to satisfy a claim due the government from a 
debtor.
    Borrower means an obligor primarily liable for payment of the 
principal of or interest on a Federal credit instrument, which obligor 
may be a corporation, partnership, joint venture, trust, or a non-
Federal governmental entity, agency, or instrumentality.
    Budget authority means the authority provided by Federal law for 
the government to incur financial obligations.
    Credit agreement means the definitive agreement between the DOT and 
the borrower (or between the DOT and the guaranteed lender, for the 
benefit of the borrower) pursuant to which the DOT provides a Federal 
credit instrument to, or for the benefit of, the borrower.
    Current credit evaluation means:
    (1) In the case of a project with a published rating, either a 
current rating or the borrower's certification stating the rating and 
outlook then in effect, and;
    (2) In the case of a project without a published rating, a current 
rating of the project obligations and the Federal credit instrument.
    Eligible project costs mean amounts substantially all of 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, technical studies, revenue forecasting, environmental review 
and related engineering studies, preliminary engineering and 
preliminary design work, and other pre-construction activities that are 
eligible for funding consistent with 23 CFR 771.113 and 771.117;
    (2) Final design, construction (including the associated operating 
costs during construction of a special purpose entity formed solely to 
construct and operate the facility), reconstruction, rehabilitation, 
replacement, permitting, acquisition of real property (including land 
related to the project and improvements to land), lease acquisition

[[Page 3503]]

payments (including concession payments acceptable to the Secretary) 
made under an acquisition agreement, environmental mitigation, 
construction contingencies, and acquisition of equipment after the 
project has completed the National Environmental Policy Act (NEPA) 
process and the DOT has made an environmental finding, unless the cost 
activity is eligible for a categorical exclusion under 23 CFR 771.117;
    (3) Capitalized interest necessary to meet market requirements, 
reasonably required reserve funds, capital issuance expenses, other 
carrying costs during construction; and
    (4) Refinancing of long-term project obligations or Federal credit 
instruments pursuant to 23 U.S.C. 603(a)(1)(C).
    Federal credit instrument means Federal credit assistance in the 
form of a secured loan, loan guarantee, or line of credit authorized to 
be made available under TIFIA with respect to a project.
    Guaranteed 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.
    Investment-grade rating means a rating, published or unpublished, 
not lower than BBB minus, Baa3, bbb minus, BBB (low), or an equivalent 
assigned by a rating agency.
    Line of credit means an agreement entered into by the Secretary 
with a borrower under section 604 of Title 23, United States Code to 
provide a secured loan at a future date upon the occurrence of certain 
events.
    Loan guarantee means an agreement by the Secretary under section 
603 of Title 23, United States Code 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 guaranteed lender.
    Maturity date means the final maturity date of the Federal credit 
instrument which shall be the lesser of not later than 35 years after 
the date of substantial completion of the project, or the remaining 
useful life of the project. For a refinancing pursuant to 23 U.S.C. 
603(a)(1)(C), the final maturity date for the repayment of that portion 
of the TIFIA credit assistance applied to the refinancing of long-term 
obligations shall not be later than 35 years after the date the credit 
agreement is executed.
    Preliminary rating opinion letter is a letter from an NRSRO that 
assigns a preliminary rating opinion of the project's creditworthiness 
as described in section 80.11 of this Part.
    Project means:
    (1) Any surface transportation project eligible for Federal 
assistance under Title 23, United States Code or under chapter 53 of 
Title 49, United States Code;
    (2) An international bridge or tunnel for which an international 
entity authorized under Federal or State law is responsible;
    (3) Intercity passenger bus or rail facilities and vehicles, 
including facilities and vehicles owned by the National Railroad 
Passenger Corporation, and components of magnetic levitation 
transportation systems; and
    (4) A project that:
    (i) Is a project:
    (A) For a public freight rail facility or a private facility 
providing public benefit for highway users via direct freight 
interchange between highway and rail carriers
    (B) For an intermodal freight transfer facility
    (C) For a means of access to a facility described in subparagraph 
(A) or (B);
    (D) For a service improvement for a facility described in 
subparagraph (A) or (B) (including a capital investment for an 
intelligent transportation system); or
    (E) That comprises a series of projects described in subparagraphs 
(A) through (D) with the common objective of improving the flow of 
goods;
    (ii) May involve the combining of private and public sector funds, 
including investments of public funds in private sector facility 
improvements;
    (iii) If located within the boundaries of a port terminal, includes 
only such surface transportation infrastructure modifications as are 
necessary to facilitate direct intermodal interchange, transfer, and 
access into and out of the port.
    Project obligation means any note, bond, debenture, loan, or other 
debt issued by a borrower in connection with the financing of a 
project, other than a Federal credit instrument.
    Rating agency means an organization identified by the Securities 
and Exchange Commission as a Nationally Recognized Statistical Rating 
Organization.
    Refinance means to pay off existing project obligations and any 
TIFIA credit assistance owed by the Borrower with funds acquired by the 
same Borrower (or its successor) through the creation of new project 
obligations and TIFIA credit assistance, pursuant to section 603(a)(1) 
of Title 23, United States Code.
    Secretary means the United States Secretary of Transportation.
    Secured loan means a direct loan or other debt obligation issued to 
a borrower and funded by the Secretary in connection with the financing 
of a project under section 603 of Title 23, United States Code.
    State means any one of the fifty States, the District of Columbia, 
or Puerto Rico.
    Subsidy cost means the amount of budget authority sufficient to 
cover the estimated long-term 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 
governmental receipts or outlays in accordance with the provisions of 
the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
    Substantial completion means the opening of a project to vehicular 
or passenger traffic or, if determined by the Secretary and specified 
in the Credit Agreement, the occurrence of a comparable event.
    Term sheet means a letter from the Secretary or the Secretary's 
designee to the borrower (and the guaranteed lender, if applicable) 
that sets forth the essential terms and conditions of a Federal credit 
instrument. A term sheet may be cancelled at any time by the Secretary 
for any reason, and does not obligate budget authority.
    TIFIA means the Transportation Infrastructure Finance and 
Innovation Act of 1998, Pub. L. 105-178, 112 Stat. 107, 241 (1998), as 
amended by the Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users, Pub. L. 109-59, 119 Stat. 1239 (2005).

Sec.  80.5  Federal requirements.

    All projects receiving Federal credit assistance must comply with:
    (a) The relevant requirements of Title 23, United States Code, for 
highway projects; chapter 53 of Title 49, United States Code, 
specifically including, without limitation, section 5333(b) dealing 
with employee protective arrangements, for transit projects; and 
section 5333(a) of Title 49, United States Code, for rail projects, as 
appropriate;
    (b) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d, et 
seq.);
    (c) The National Environmental Policy Act of 1969 (42 U.S.C. 4321, 
et seq.);

[[Page 3504]]

    (d) The Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970 (42 U.S.C. 4601, et seq.); and
    (e) Other Federal and compliance requirements as may be applicable.

Sec.  80.7  Threshold criteria for TIFIA projects.

    (a) To be eligible to receive a Federal credit instrument, a 
project must meet the following threshold criteria:
    (1) The project must have satisfied the applicable planning and 
programming requirements of section 134 and 135 of Title 23 of the 
United States Code;
    (2) The project must have eligible project costs that are 
reasonably anticipated to equal or exceed the lesser of $50 million or 
one-third of the amount of Federal-aid highway funds apportioned for 
the most recently completed fiscal year to the State in which the 
project is located, provided that:
    (i) In the case of a project principally involving the installation 
of Intelligent Transportation Systems (ITS), eligible project costs 
shall be reasonably anticipated to equal or exceed $15 million; and
    (ii) In the case of a project located in more than one State, 
eligible project costs must be reasonably anticipated to equal or 
exceed the lesser of $50 million or one-third of the amount of Federal-
aid highway funds apportioned for the most recently completed fiscal 
year to the participating State that receives the least amount of such 
funds; and
    (3) The proposed Federal credit instrument must be secured by and 
payable from, in whole or in part, tolls, user fees, rentals, taxes, or 
other dedicated revenue sources. In order to fulfill the requirements 
of Sec.  80.11, any of these dedicated revenue sources that secure any 
project obligations senior to or on a parity with the Federal credit 
instrument must also secure, in similar proportion, the Federal credit 
instrument.
    (b) In addition to or in lieu of the dedicated revenue sources 
specified in paragraph (a)(3) of this section, the Secretary may accept 
municipal general obligation pledges, general corporate promissory 
pledges, or other pledges and forms of collateral as security for a 
Federal credit instrument.
    (c) A pledge of Federal funds, regardless of source, may not be 
used to secure a Federal credit instrument.

Sec.  80.9  Application process.

    (a) Letter of interest. Prior to submission of an application for 
Federal credit assistance, the applicant must have submitted to the DOT 
a letter of interest and been notified by the DOT that the letter of 
interest adequately addresses threshold criteria discussed in this 
paragraph. The letter of interest required by this section should 
describe the project, the project's plan of finance, and the amount and 
type of Federal credit instrument(s) sought. An applicant who has been 
notified by the DOT that its letter of interest is satisfactory may 
apply for Federal credit assistance in accordance with the schedule set 
forth by the DOT.
    (b) At least once each fiscal year for which Federal assistance is 
available under this part, the DOT shall publish a Federal Register 
notice to solicit applications for credit assistance. Such notice will 
specify the relevant due dates, the estimated amount of funding 
available to support TIFIA credit instruments for the current and 
future fiscal years, contact name(s), and other details for that cycle 
of application submissions and funding approvals.
    (c) Application. An application for Federal credit assistance must 
provide:
    (1) Documentation sufficient to demonstrate that the project 
satisfies each of the threshold criteria in 49 CFR 80.7;
    (2) The applicant's confirmation that it has complied with the 
environmental clearance requirement of 49 CFR 80.9(a);
    (3) A description of the extent to which the project satisfies each 
of the selection criteria in 49 CFR 80.13;
    (4) A description of the project for which Federal credit 
assistance is sought, status of environmental and other major 
governmental permits and approvals, and the construction schedule;
    (5) A description of the applicant and borrower;
    (6) Historical information, if applicable, concerning the 
applicant's financial condition, including, for example, independently 
audited financial statements and certifications concerning bankruptcies 
or delinquencies on other debt;
    (7) Current financial information concerning both the project and 
the applicant, and a comprehensive project plan of finance, including 
sources and uses of funds for the project and a forecast of cash flows 
available to service all project obligations and the Federal credit 
instrument(s). Spreadsheets and cash flows must be submitted in both 
hard copy and in the form of a working computer model. Computer models 
should include among other things intact logic functions and assumption 
drivers, all business cases considered by the borrower and project 
sponsors, and an analysis of expected returns for each source of 
capital;
    (8) If the Federal credit assistance applied for is not a loan 
guarantee, a statement as to why a loan guarantee would not be as 
useful as the Federal credit assistance sought;
    (9) Preliminary rating opinion letters from at least two rating 
agencies; and
    (10) Such additional information as the Secretary may from time to 
time prescribe.
    (d) An application for a project located in or sponsored by more 
than one State or other entity may be submitted to the DOT. The 
sponsoring States or entities must designate a single borrower for 
purposes of receiving and repaying the Federal credit instrument.

Sec.  80.11  Preliminary rating opinion letter and investment-grade 
rating.

    (a) An applicant must submit with its application preliminary 
rating opinion letters from at least two rating agencies. The letters 
must be current and based on the same project plan of finance that is 
submitted as part of the TIFIA application per Sec.  80.9(b)(7). Each 
preliminary rating opinion letter must provide a conditional credit 
assessment of the project's overall creditworthiness and must 
specifically address:
    (1) The potential of all project obligations having a lien senior 
to that of the Federal credit instrument on the pledged security to 
achieve an investment-grade rating; and,
    (2) The likely credit rating category of the Federal credit 
instrument.
    (b) If a governmental agency is submitting an application on behalf 
of potential borrowers in connection with a concession procurement 
process, the governmental entity does not need to submit a preliminary 
rating opinion letter. Rather, the DOT will require the selected 
concessionaire seeking TIFIA assistance to provide the preliminary 
rating opinion letters, which meet all of the requirements of Sec.  
80.11(a), with its submission of its comprehensive financial plan.
    (c) Not later than 14 days prior to the closing of the credit 
agreement, the borrower must cause to be delivered to the DOT:
    (1) Satisfactory evidence, such as a rating letter or rating 
confirmation letter, that at least two rating agencies have assigned 
ratings:
    (i) To all project obligations that have a lien senior to that of 
the Federal credit instrument on the pledged security, which ratings 
must be investment-grade; and
    (ii) To the Federal credit instrument.
    (2) Other such evidence related to the most current project 
financial plan upon which the rating evidence is based.
    (d) If no project obligations have a lien senior to that of the 
Federal credit

[[Page 3505]]

instrument, then the requirements of paragraphs (a) and (b) of this 
section apply to the Federal credit instrument.
    (e) The ratings required by this section are underlying ratings. 
Neither the preliminary rating opinion letter, nor the investment-grade 
rating, may reflect the effect of bond insurance or other private 
credit enhancement, unless such private credit enhancement secures the 
Federal credit instrument.

Sec.  80.13  Selection criteria for TIFIA projects.

    (a) For a project to be selected for Federal credit assistance, the 
Secretary must have determined that it is creditworthy. The Secretary's 
determination will ensure that any financing for the project has 
appropriate security features, such as a rate covenant, to ensure 
repayment. Notwithstanding the creditworthiness of the project, the 
Secretary retains the discretion not to advance a project that is not 
highly rated under the criteria discussed below.
    (b) In addition to making a determination with respect to 
creditworthiness, the Secretary will consider the degree to which a 
project advances the policy objectives embodied in the following seven 
criteria. The Secretary will assign weights as indicated in evaluating 
and selecting which eligible projects will receive Federal credit 
assistance:
    (1) The extent to which the project is nationally or regionally 
significant, in terms of:
    (i) The ability of the project to enhance the national or regional 
transportation system by reducing congestion and improving overall 
system performance (30 percent); and
    (ii) The extent to which the project generates economic benefits 
not accounted for above in 80.13(b)(1)(i), and supports interstate and 
international commerce (10 percent). (Total: 40 percent);
    (2) The extent to which Federal credit assistance would foster 
innovative public-private partnerships and attract private debt or 
equity investment (20 percent);
    (3) The likelihood that Federal credit assistance would enable the 
project to proceed at an earlier date than the project would otherwise 
be able to proceed (5 percent);
    (4) The extent to which the project uses new technologies, 
including Intelligent Transportation Systems (ITS), that enhances the 
efficiency of the project (10 percent);
    (5) The amount of budget authority, relative to total dollars 
invested in the project, required to fund the Federal credit instrument 
made available (10 percent);
    (6) The extent to which the project helps maintain or protect the 
environment (10 percent); and
    (7) The extent to which such assistance would reduce the 
contribution of Federal grant assistance to the project (5 percent).
    (c) The Secretary will give preference to applications for loan 
guarantees rather than other forms of Federal credit instruments. Such 
preference is consistent with Federal credit policies under OMB 
Circular A-129 that state when Federal credit assistance is necessary 
to meet a Federal objective, loan guarantees should be favored over 
loans, unless attaining the Federal objective requires a subsidy, as 
defined by the Federal Credit Reform Act of 1990 (2 U.S.C. 661, et 
seq.), deeper than can be provided by a loan guarantee.

Sec.  80.15  Term sheet.

    (a) When the Secretary has approved the project for Federal credit 
assistance processing, the Secretary will issue a term sheet to the 
approved applicant. Although the term sheet will be used to 
administratively reserve the requisite budget authority, it is subject 
to cancellation at the discretion of the Secretary.
    (b) Subject to the limitation of 33 percent of eligible project 
costs, the Secretary may make a future-year administrative reservation 
of budget authority and the associated commitment of Federal credit 
assistance. This reservation will ensure that a project with a future 
reservation will have a priority (along with the priority of any other 
projects receiving such future reservations) on budget authority 
becoming available in the specified year(s).

Sec.  80.17  Interest rate on Federal credit instruments.

    (a) Except as described in section (b) below, the interest rate on 
secured loans and lines of credit will be set at the discretion of the 
Secretary.
    (b) The minimum interest rate on secured loans and lines of credit 
will be set as follows:
    (1) The interest rate on a secured loan will be not less than the 
yield on United States Treasury securities of a similar maturity to the 
final maturity of the secured loan on the date of execution of the 
credit agreement.
    (2) The interest rate on any draw made on a line of credit will be 
not less than the yield on United States Treasury securities of a 30-
year maturity on the date of execution of the credit agreement.
    (c) The interest rate on a guaranteed loan is the rate agreed to by 
the borrower and the guaranteed lender, subject to approval by the 
Secretary.
    (d) For purposes of this section, the DOT may determine the ``yield 
on United States Treasury securities'' by reference to the published 
rate for State and Local Government Series (``SLGS'') securities, 
adjusted as appropriate to reflect the market yield of publicly traded 
United States Treasury securities.
    (e) Consistent with Section V, Paragraph 4, of OMB Circular A-129, 
and 31 U.S.C. 3717, the DOT will include in the credit agreement a 
provision imposing a default interest rate.

Sec.  80.19  Guaranteed loans; eligibility requirements for guaranteed 
lenders.

    (a) Terms of a guaranteed loan must be approved by the Secretary.
    (b) To participate in this program, a guaranteed lender must be 
approved by the Secretary and must:
    (1) Not be debarred or suspended from participation in any Federal 
program;
    (2) Not be delinquent on any Federal debt or loan;
    (3) Be duly organized and legally authorized to enter into the 
transaction;
    (4) Demonstrate experience in originating and servicing loans for 
large-scale developments; and
    (5) Have sufficient capital to originate the loan and disburse its 
own portfolio.
    (c) The Secretary will periodically review lender eligibility, 
consistent with Federal credit policies under OMB Circular A-129.

Sec.  80.21  Draws on line of credit.

    (a) Use of proceeds. A borrower may draw on a line of credit to pay 
debt service on project obligations, extraordinary repair and 
replacement costs, operation and maintenance expenses, and costs 
associated with unexpected Federal or State environmental restrictions 
imposed after credit agreement closing; provided, however, that when 
the line of credit is drawn to pay debt service, it may be applied only 
to debt service on project obligations which were used to finance 
eligible project costs.
    (b) Eligibility to draw. A draw on the line of credit may be made 
only if net revenues from the project are insufficient to pay the costs 
specified in the preceding paragraph. With respect to any shortfall in 
the sufficiency of net revenues to pay debt service, a draw on the line 
of credit may be made only after application of any funds in a 
capitalized interest account. The borrower may draw on the line of 
credit before

[[Page 3506]]

drawing on a debt service reserve fund. A draw on the line of credit 
may not be made to replenish a debt service reserve fund.

Sec.  80.23  Refinancing.

    (a) Proceeds of a secured loan provided under 23 U.S.C. 603 may be 
used to refinance interim construction financing of eligible project 
costs, provided that such refinancing is completed not later than one 
year after substantial completion. Otherwise secured loans used for 
this purpose are generally made available under the same provisions as 
loans under 23 U.S.C. 603(a)(1)(A).
    (b) Except for the purpose described in section (a) above, proceeds 
of a secured loan provided under section 603 of Title 23, United States 
Code may not be used to refinance long-term project obligations or 
Federal credit instruments.
    (c) Proceeds of a loan provided by a guaranteed lender receiving a 
TIFIA loan guarantee may be used to refinance long-term project 
obligations or Federal credit instruments if the project applicant 
demonstrates to the DOT's satisfaction that such refinancing will 
provide at least $50 million of additional funding capacity and that 
such capacity will be used to fund the completion, enhancement, or 
expansion of a project that:
    (1) Is selected under section 602 of Title 23, United States Code, 
or
    (2) Otherwise meets the requirements of section 602 of Title 23, 
United States Code.
    (d) The fee for a refinancing application is the same as the fee 
for a new TIFIA project application.
    (e) The following special provisions, terms, and limitations are 
applicable to the Federal loan guarantee for a refinancing made 
available under 23 U.S.C. 603(a)(1)(C):
    (1) The borrower will have the flexibility to apply the guaranteed 
loan proceeds to the refinancing, the new project, or apportion an 
amount to each element of the transaction. It is not required that the 
guaranteed loan proceeds be used to build the new project. However, 
Federal requirements (see Sec.  80.5) will apply to the new project.
    (2) The loan guarantee made available in connection with a 
refinancing under this paragraph will be in an amount not larger than 
the greater of:
    (i) The amount applied to funding the completion, enhancement, or 
expansion of the project; and
    (ii) The amount of equity invested in the project, provided that in 
no event will the amount of the secured loan exceed 33 percent of the 
amount of the financing.
    (3) Returns and payouts on equity investments in a financing 
transaction under this paragraph must be subordinated to the Federal 
credit instrument for so long as the TIFIA debt is outstanding, 
consistent with OMB Circular A-129 requirements that business borrowers 
have equity at risk. (Appendix A, section II, 3a. (2)).
    (4) If the guaranteed loan proceeds are disbursed to fund both the 
refinancing of the long-term obligations and the completion, 
enhancement, or expansion of the project, the following provisions 
apply to the repayment:
    (i) The guaranteed loan will be structured in two tranches. The 
first tranche will be that portion funding the refinancing of the long-
term obligations and the second tranche will be that portion funding 
the project.
    (ii) Repayments of principal or interest on the first tranche shall 
be scheduled to commence six months following the first disbursement of 
funds and to conclude, with full repayment of principal and interest, 
by the date that is the lesser of not later than 35 years after the 
date the credit agreement is executed, or the remaining useful life of 
the asset.
    (iii) Repayments of principal or interest on the second tranche 
shall be scheduled based on project cash flow and shall commence not 
later than five years after substantial completion of the capital 
improvement. The final maturity of the tranche shall be the lesser of 
no later than 35 years after substantial completion of the project, or 
the remaining useful life of the asset.
    (5) For improvements financed with guaranteed loan proceeds under 
this section, terms and conditions will be incorporated into the 
guaranteed loan agreement to ensure that the completion, enhancement, 
or expansion of the refinanced facility will commence and be completed 
within a reasonable period after the closing of the transaction. The 
DOT will require a binding commitment assuring the project will be 
completed and shall require a penalty interest rate on the guaranteed 
loan in the event of a development default.
    (6) An applicant seeking a TIFIA loan guarantee under this section 
must submit an application that addresses the proposed refinancing and 
the improvement(s) facilitated by the refinancing using the TIFIA 
application form contained in the DOT's TIFIA Program Guide, describing 
in detail the plan of finance associated with the refinancing, and 
demonstrate conformance with TIFIA requirements, and how the 
refinancing will increase the funding capacity and enable the 
completion, enhancement, or expansion of the facility.
    (7) The improvement being financed with proceeds of a guaranteed 
loan must adhere to the requirements in Sec.  80.5.

Sec.  80.25  Limitations on Federal credit assistance.

    (a) The total dollar amount of Federal credit assistance offered to 
a project in the form of Federal credit instruments will not exceed the 
lesser of:
    (1) 33 percent of the reasonably anticipated eligible project 
costs, as measured on an aggregate cash (year-of-expenditure) basis; or
    (2) If the Federal credit instrument does not receive an 
investment-grade rating, the amount of project obligations senior to 
the Federal credit instrument.
    (b) The costs used to calculate eligible project costs may not 
include:
    (1) Costs incurred more than three years prior to the submission of 
an application for a Federal credit instrument unless exceptional 
circumstances exist, and inclusion of such costs is approved by the 
Secretary.
    (2) Costs incurred prior to submission of an application for a 
Federal credit instrument that are in excess of 20 percent of total 
eligible project costs.
    (3) Operating costs incurred prior to substantial completion of the 
project by a special purpose entity formed solely to construct and 
operate the facility that are in excess of 5 percent of total eligible 
project costs.
    (c) To be considered eligible project costs, payments to a public 
entity associated with the lease acquisition or concession fee must 
reflect fair market value and be dedicated to transportation projects 
eligible under title 23 or chapter 53 of title 49, United States Code. 
Further, the eligibility of such payments is limited to 25 percent of 
total eligible project costs. The final amount of eligible project 
costs associated with such payments is subject to the approval of the 
Secretary.
    (d) Any loan made in connection with a credit agreement, whether a 
secured loan, a guaranteed loan, or a loan made by drawing on a line of 
credit, will be funded on a reimbursement basis, at such intervals as 
specified in the credit agreement. In the case of a secured loan or a 
guaranteed loan, the credit agreement will include the anticipated 
schedule for such loan disbursements, which schedule the parties may 
amend from time to time.

Sec.  80.27  Credit agreement closing and obligation of funds.

    (a) Closing conditions. The DOT will enter into a credit agreement 
only when

[[Page 3507]]

the project to receive Federal credit assistance meets the following 
requirements:
    (1) The project or project elements, as appropriate, comply with 
applicable planning and programming requirements in 23 U.S.C. 134 and 
135;
    (2) The project has received an environmental Categorical 
Exclusion, Finding of No Significant Impact, or Record of Decision;
    (3) The requirements of 49 CFR 80.11 with respect to the 
investment-grade rating must have been satisfied; and
    (4) The project, if eligible pursuant to Section 5302 of 49 U.S.C., 
Chapter 53, has complied with 49 U.S.C. 5333(b) as evidenced by a 
letter from the U.S. Department of Labor.
    (b) Obligation of Federal funds. The DOT will obligate the subsidy 
amount at the time it executes the credit agreement.

Sec.  80.29  Reporting requirements and credit monitoring.

    (a) Credit rating maintenance. Throughout the life of the Federal 
credit instrument, the borrower must obtain annually, at no cost to the 
Federal government, current credit evaluations of the project, the 
project obligations, and the Federal credit instrument. The current 
credit evaluations must be performed by a rating agency. In the case of 
an unpublished rating, the credit evaluation must consist of a formal 
credit rating letter.
    (b) Annual financial plan. Each recipient of Federal credit 
assistance must submit an annual financial plan, elements of which may 
be specified in the credit agreement, and audited financial statements 
to the DOT not later than 180 days following the recipient's fiscal 
year-end for each year during which the Federal credit instrument 
remains outstanding. The annual financial plan must include a current 
credit evaluation, as described in the preceding paragraph 80.29(a).
    (c) The borrower will furnish the DOT with:
    (1) Any information it submits to any rating agency; and
    (2) Any report of which the borrower has knowledge relating to the 
project credit, whether prepared by a rating agency or other 
institution and irrespective of whether prepared at the direction of 
the borrower or otherwise.
    (d) Periodic audits. The DOT may periodically conduct, so long as a 
Federal credit instrument is outstanding, such financial and compliance 
audits as it deems necessary. Such audits will be at the borrower's 
expense.
    (e) Additional reporting requirements. The DOT may require 
additional reporting requirements in the credit agreement which it 
deems necessary to enable it properly to monitor the credit performance 
of the project.

Sec.  80.31  Fees.

    Section 603(b)(7) and section 604(b)(9) of Title 23, United States 
Code, and Appendix A, Part II, Section 3b of OMB Circular A-129 
authorize the Secretary to establish fees at a level sufficient to 
recover all or a portion of the cost of making credit assistance 
available under the TIFIA program. The following fees are not 
considered eligible project costs for the purpose of calculating the 
maximum amount of credit assistance.
    (a) Application fee. An applicant must remit with its application 
for Federal credit assistance a non-refundable application fee. The 
amount of the application fee will be posted on the TIFIA Web site. The 
DOT may change the application fee from time to time by notice 
published in the Federal Register.
    (b) 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 TIFIA, the DOT 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 
credit agreement to reduce the subsidy cost of that project. No such 
fee may be included among eligible project costs for the purpose of 
calculating the maximum 33 percent credit amount referenced in Sec.  
80.25(a).
    (c) Transaction fee. The DOT will assess each borrower a 
transaction fee to reimburse the DOT for its actual costs incurred in 
evaluating the application and processing the transaction, which 
transaction fee the borrower must pay not later than thirty days after 
closing. In the event a transaction does not result in a credit 
agreement closing, the approved applicant must pay the transaction fee 
not later than 30 days after notifying the DOT that it will no longer 
seek credit assistance, or if the approved applicant fails to give the 
DOT such notice, the Secretary establishes by objective evidence that 
the approved applicant is no longer seeking credit assistance and so 
notifies the approved applicant, not later than 30 days after such 
notification.
    (d) Servicing fee. The DOT will assess each borrower a servicing 
fee for each Federal credit instrument to reimburse the DOT for the 
costs of servicing Federal credit instruments. The amount of the 
servicing fee will be posted on the TIFIA Web site. The DOT may change 
the servicing fee from time to time by notice published in the Federal 
Register.
    (e) Monitoring fee. The DOT will include in each credit agreement 
terms and conditions obligating the borrower to reimburse the DOT for 
costs incurred in connection with monitoring the credit performance of 
a project, the enforcement of credit agreement provisions, amendments 
to the credit agreement and related documents, and other performance-
related activities.

Sec.  80.33  Use of administrative offset.

    (a) The DOT will not apply an administrative offset to recover any 
losses to the Federal Government resulting from project risk the DOT 
has assumed under a Federal credit instrument.
    (b) The DOT will employ an administrative offset to recover fees 
assessed under 49 CFR 80.31 and also in cases of fraud, 
misrepresentation, false claims, or similar criminal acts or acts of 
malfeasance or wrongdoing.

Sec.  80.35  Program Guide; TIFIA Web site.

    (a) Program Guide. The DOT will from time to time publish updates 
to a TIFIA Program Guide, which will include updated information, a 
loan template, and may reflect modifications to the application process 
to provide more flexibility to project sponsors who are advancing 
projects as private concessions. Reference should be made to the 
Program Guide for additional information about the TIFIA program.
    (b) Web site. The DOT maintains a Web site for the TIFIA program: 
http://tifia.fhwa.dot.gov. The DOT will post on the TIFIA Web site:
    (1) Amounts of application fee and monitoring fee assessed under 49 
CFR 80.31;
    (2) Promptly after execution, each term sheet, and;
    (3) Promptly after closing of each credit agreement, the credit 
agreement for such transaction to the extent that the credit agreement 
does not contain confidential commercial information.
    (c) Additional information. Additional DOT records related to the 
TIFIA program may be requested through a Freedom of Information Act 
request pursuant to 49 CFR Part 7.

Sec.  80.37  Applicant Information Requirements.

    An applicant must obtain a Data Universal Number System (DUNS) 
number and register on the Central Contractor Registration (CCR) site. 
These requirements apply to all recipients of Federal assistance, 
including entities receiving credit

[[Page 3508]]

assistance. If an applicant does not have a DUNS number, it can be 
obtained free of charge through the Dun & Bradstreet (D&B) online Web 
process at http://fedgov.dnb.com/webform. Information on CCR's on-line 
registration can be found at http://www.ccr.gov. Additional information 
on these requirements can be found at http://www.grants.gov/applicants/
register_your_organization.jsp.

CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF 
TRANSPORTATION

PART 261--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS

    3. Revise the authority citation for part 261 to read as follows:

    Authority: secs. 1501, et seq., Pub. L. 105-178, 112 Stat. 107, 
241, as amended; sec. 1601, 1602, Pub. L. 109-59, 119 Stat.1144; 23 
U.S.C. 601-609 and 315; 49 CFR 1.49.

CHAPTER VI--FEDERAL TRANSIT ADMINISTRATION, DEPARTMENT OF 
TRANSPORTATION

PART 640--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS

    4. Revise the authority for Part 640 to read as follows:

    Authority: secs. 1501, et seq., Pub. L. 105-178, 112 Stat. 107, 
241, as amended; sec. 1601, 1602, Pub. L. 109-59, 119 Stat.1144; 23 
U.S.C. 601-609 and 315; 49 CFR 1.51.

    5. Add 49 CFR Chapter XIII to read as follows:

CHAPTER XIII--MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION

PART 1700--CREDIT ASSISTANCE FOR SURFACE TRANSPORTATION PROJECTS

Sec.
1700.1 Cross-reference to credit assistance.

    Authority: secs. 1501, et seq., Pub. L. 105-178, 112 Stat. 107, 
241, as amended; sec. 1601, 1602, Pub. L. 109-59, 119 Stat. 1144; 23 
U.S.C. 601-609 and 315; 49 CFR 1.66.

Sec.  1700.1  Cross-reference to credit assistance.

    The regulations in 49 CFR Part 80 shall be followed in complying 
with the requirements of this part. Title 49, CFR Part 80 implements 
the Transportation Infrastructure Finance and Innovation Act of 1998, 
secs. 1501, et seq., (Pub. L. 105-178, 112 Stat. 107, 241), as amended; 
sec. 1601, 1602, Pub. L. 109-59, 119 Stat. 1144; 23 U.S.C. 601-609.

 [FR Doc. E9-1117 Filed 1-16-09; 8:45 am]

BILLING CODE 4910-62-P