Document ID: DOT-OST-2009-0092-0551
Agency: dot
Document Type: Notice
Title: Funding Opportunity: Letters of Interest for the Express Pilot Program under the Railroad Rehabilitation and Improvement Financing Program
Posted Date: 2023-06-01T04:00Z

[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Notices]
[Pages 35995-35998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11576]

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary of Transportation

Notice of Funding Opportunity for Letters of Interest for the 
RRIF Express Pilot Program Under the Railroad Rehabilitation & 
Improvement Financing Program

AGENCY:  Office of the Secretary of Transportation, Department of 
Transportation (the ``DOT'').

ACTION: Notice of funding opportunity.

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SUMMARY: This Notice of Funding Opportunity (``NOFO'') for the RRIF 
Express Pilot Program (``RRIF Express'') expands the ability of 
eligible borrowers to access funds by removing the caps on Cost 
Assistance for advisor fees and Credit Risk Premium (``CRP'') 
Assistance, provides greater flexibility by allowing unaudited 
financial statements in lieu of audited financial statements in certain 
circumstances, and makes other clarifications. The NOFO also implements 
a sunset date of December 1, 2023. Following the sunset date, this NOFO 
will expire, and all benefits made available in this Notice will become 
available to any eligible RRIF borrower, consistent with existing law. 
All projects that were previously eligible for RRIF Express financing 
remain eligible under this NOFO. The original NOFO with modifications 
is in the SUPPLEMENTARY INFORMATION section.

DATES: Letters of Interest from prospective RRIF borrowers for RRIF 
Express will be accepted on rolling basis until available funding is 
expended or this notice is superseded by another notice.
    Prospective RRIF borrowers that have previously submitted a Letter 
of Interest, but that also seek acceptance into the RRIF Express Pilot 
Program should resubmit a Letter of Interest following the instructions 
below. Prospective RRIF borrowers who previously submitted Letters of 
Interest under a preceding RRIF Express Notice of Funding Opportunity 
(published on December 13, 2019, March 16, 2020, June 19, 2020, or 
November 27, 2020), and whose Letters of Interest have not been 
returned as ineligible, do not have to re-apply, and may amend their 
Letter of Interest to take advantage of the provisions of this NOFO. 
Prospective RRIF borrowers whose Letter of Interest for RRIF Express 
was returned by the Bureau with advice on issues to address in 
resubmitting a Letter of Interest may also take advantage of the 
provisions of this NOFO while also following the advice provided.
    Irrespective of the above, the Bureau continues to accept Letters 
of Interest on a rolling basis from any prospective RRIF borrower 
interested in receiving RRIF credit assistance only (i.e., without 
participation in RRIF Express).

ADDRESSES: Applicants to RRIF Express must use the latest version of 
the Letter of Interest form available on the Build America Bureau 
website: https://www.transportation.gov/content/build-america-bureau 
(including applicants who have previously submitted Letters of Interest 
and who are now seeking participation in RRIF Express). Letters of 
Interest must be submitted to the Build America Bureau via email at: 
[email protected] using the following subject line: ``Letter of 
Interest for RRIF Express Program.'' Submitters should receive a 
confirmation email, but are advised to request a return receipt to 
confirm transmission. Only Letters of Interest received via email at 
the above email address with the subject line listed above shall be 
deemed properly filed.

FOR FURTHER INFORMATION CONTACT: For further information regarding this 
notice please contact William Resch via email at [email protected] 
or via telephone at 202-366-2300. A TDD is available at 202-366-3993.

SUPPLEMENTARY INFORMATION: RRIF Express is administered by the DOT's 
National Surface Transportation and Innovative Finance Bureau (the 
``Build America Bureau'' or ``Bureau''). The overall RRIF program 
finances development of railroad infrastructure and is authorized to 
have up to $35 billion in outstanding principal amounts from direct 
loans and loan guarantees at any one time.
    The 2018 Consolidated Appropriations Act \1\ appropriated $25 
million in budget authority to the DOT to cover the cost to the Federal 
Government (the ``Government'') of RRIF credit assistance--CRP 
assistance. Additionally, the 2016 Consolidated Appropriations Act \2\ 
and the 2018 Consolidated Appropriations Act \3\ provided $1.96 million 
and $350,000, respectively (of which approximately $1 million remains 
available), to the DOT to fund certain expenses incurred by prospective 
RRIF borrowers in preparation of their applications for RRIF credit 
assistance (this approximately $1 million assistance, collectively, 
``Cost Assistance''). Using existing authorities and these new budget 
authorities, the DOT has established RRIF Express.
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    \1\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
    \2\ Public Law 114-113, div. L, tit. I, Sec.  152, 129 Stat. 
2242, 2856.
    \3\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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    Subject to the availability of funds, applicants accepted into the 
RRIF Express Pilot Program may benefit from two types of financial 
assistance: (a) Cost Assistance to pay for any portion of the Bureau's 
advisor expenses borne by applicants; and (b) for those applicants that 
ultimately receive RRIF credit assistance, CRP Assistance to pay the 
CRP normally paid by the borrower. These funds will be made available 
to benefit applicants accepted into RRIF Express on a first come, first 
served basis until each source of funding is expended or this notice is 
superseded by a new Notice of Funding Opportunity. Letters of Interest 
will be accepted in the order received and will be allocated Cost 
Assistance based on the date of acceptance into RRIF Express. CRP 
Assistance will be allocated in the order of financial close. For more 
information about potential financial assistance for RRIF Express 
applicants, see SUPPLEMENTARY INFORMATION: Section II. Funding of CRP 
and Cost Assistance.
    This notice solicits Letters of Interest from prospective RRIF 
borrowers seeking assistance from RRIF Express, establishes eligibility 
criteria, and describes the process that prospective borrowers must 
follow when submitting Letters of Interest.
    RRIF Express information, including any additional resources, 
terms, conditions and requirements when they become available, can be 
found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. For further 
information about the overall RRIF program in general, including 
details about the types of credit assistance available, eligibility 
requirements and the creditworthiness review process, please refer to 
the Build America Bureau Credit Programs Guide (``Programs Guide),'' 
available on the Build America Bureau website: https://www.transportation.gov/buildamerica/financing/program-guide.

[[Page 35996]]

Table of Contents

I. Background
II. Funding of CRP Assistance and Cost Assistance
III. Eligibility Requirements for RRIF Credit Assistance
IV. Eligibility Criteria for RRIF Express
V. Letter of Interest Process and Review and Next Steps

I. Background

    The Transportation Equity Act for the 21st Century,\4\ established 
the RRIF program, authorizing the DOT to provide credit assistance in 
the form of direct loans and loan guarantees to public and private 
applicants for eligible railroad projects. The RRIF program is a DOT 
program and final approval of credit assistance is reserved for the 
Secretary of the DOT. The 2005 Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users; \5\ the Rail Safety 
Improvement Act of 2008; \6\ and the 2015 Fixing America's Surface 
Transportation Act \7\ (the ``FAST Act'') each made a number of changes 
to the RRIF program. In addition, the FAST Act authorized the creation 
of the Bureau to consolidate administration of certain DOT credit and 
grant programs, including the RRIF program.
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    \4\ Public Law 105-178, Sec.  7203, 112 Stat. 107, 471.
    \5\ Public Law 109-59, Sec.  9003, 119 Stat. 1144, 1921.
    \6\ Public Law 110-432, Sec.  701(e), 122 Stat. 4848, 4906.
    \7\ Public Law 114-94, Subtitle F, 129 Stat. 1312, 1693.
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II. Funding of CRP Assistance and Cost Assistance

    Through the RRIF program, the DOT is authorized to have, at any one 
time, up to $35 billion in unpaid principal amounts of obligations 
under direct loans and loan guarantees to finance development of 
railroad infrastructure.

CRP Assistance

    Prior to the 2018 Consolidated Appropriations Act, the RRIF program 
did not have an appropriation of budget authority to pay the cost to 
the Government of providing RRIF credit assistance. As a result, the 
RRIF borrower or a third party was required to bear this cost through 
the payment of a CRP. The 2018 Consolidated Appropriations Act \8\ 
provided $25 million to the DOT to cover the cost to the Government of 
RRIF credit assistance. The DOT will use this funding to pay any CRP 
that would otherwise be payable by participants in RRIF Express, until 
this funding is expended, or this notice is superseded by a new Notice 
of Funding Opportunity.
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    \8\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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Cost Assistance

    As described in the Programs Guide, RRIF borrowers are required to 
pay (or reimburse the DOT) for costs incurred by the Bureau in 
connection with the review of Letters of Interest and applications for 
RRIF credit assistance. The 2016 Consolidated Appropriations Act \9\ 
and the 2018 Consolidated Appropriations Act \10\ collectively provided 
$2.31 million to the DOT to be used to fund expenses incurred by 
prospective RRIF borrowers in preparation to apply for RRIF credit 
assistance. A portion of these funds have already been allocated for 
prior RRIF projects. The DOT is reserving approximately $1 million of 
remaining funds from these appropriations to offset the cost of DOT 
advisors that would be payable by participants in RRIF Express, until 
this funding is expended, or this notice is superseded by a new Notice 
of Funding Opportunity.
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    \9\ Public Law 114-113, div. L, tit. I, Sec.  152, 129 Stat. 
2242, 2856.
    \10\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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III. Eligibility Requirements for RRIF Credit Assistance

    The RRIF statute and implementing rules set forth eligibility 
requirements for applicants and projects. These requirements as well as 
other applicable federal requirements are described in detail in the 
Programs Guide and apply to all applicants and projects, including 
those seeking acceptance into RRIF Express. In addition, for 
prospective borrowers seeking RRIF Express benefits, the requirements 
set forth in section IV (Eligibility Criteria for RRIF Express) of this 
notice also apply.

IV. Eligibility Criteria for RRIF Express

    The DOT has identified the following strategic objectives for RRIF 
Express: encouraging increased utilization of RRIF credit assistance by 
Class II and Class III railroads; reducing transaction costs for Class 
II and Class III railroads; and streamlining the underwriting process 
for Class II and Class III railroads. These priorities are reflected in 
the eligibility criteria below. Generally, projects most suitable for 
RRIF Express are rail line modernization projects where the borrower 
has a well-documented financial history and easily identified revenue 
stream(s) for loan repayment.
    To differentiate among Letters of Interest received for projects 
under this NOFO, the DOT will consider whether the project satisfies 
the following eligibility criteria as demonstrated by the Letter of 
Interest:
    (i) Applicant: The applicant must be a Class II railroad, a Class 
III railroad, a commuter railroad or a joint venture with a Class II, 
III, or commuter railroad.
    (ii) Project Size: The project must have eligible project costs of 
$150 million or less with no minimum amount.
    (iii) Project Scope: The project scope, as described in Section B4 
of the Letter of Interest, must be limited to the support of railroad 
activities that are otherwise eligible for RRIF financing and as 
outlined below:
    (a) Acquire, improve, or rehabilitate intermodal or rail equipment 
or facilities, including track, components of track, bridges, yards, 
buildings, and shops, and costs related to these activities, including 
pre-construction costs. Note that this category of eligible activities 
includes the installation of positive train control systems;
    (b) Develop or establish new intermodal or railroad facilities;
    (c) Reimburse planning and design expenses relating to activities 
listed above;
    (d) Refinancing of non-federal debt incurred at least three years 
prior to the date of acceptance into RRIF Express and for the purpose 
of one or more of the following activities: (1) acquire, improve, or 
rehabilitate intermodal or rail equipment or facilities, including 
track, components of track, bridges, yards, buildings, and shops, and 
costs related to these activities, including pre- construction costs; 
and (2) develop or establish new intermodal or railroad facilities; 
Refinancing is limited to up to 75% of the final RRIF loan amount.
    Letters of Interest including refinancing must demonstrate with 
specificity in Section D5 how the refinancing would improve the 
creditworthiness of the applicant and document how such improvement 
would facilitate the activities referenced in items (a) and (b) above 
and would increase the applicant's ability to repay a RRIF loan and the 
overall financial health of the applicant.
    (iv) Applicant Financial History and Projections: Attachment D-1 of 
the Letter of Interest must \11\ include audited financial statements 
(by a qualified third party, e.g., a certified public accountant) for 
the two (2) most recent consecutive years preceding the year of 
application and that have no significant unresolved findings (e.g., 
fiscal years 2018 and

[[Page 35997]]

2019). Interim unaudited financial statements may be submitted with a 
letter pledging to provide these audited statements within 60 days of 
submitting of the LOI and supporting materials. Failure to provide the 
audited financial statements within 60 days will disqualify the LOI. 
Applicants choosing this option must still provide unaudited financial 
statements for the previous five years and prospective financial 
projections (pro-forma) for the term of the loan. In lieu of providing 
audited financial statements as documentation of historical financial 
information in Attachment D-1 of the Letter of Interest, an applicant 
meeting the size standard for small business concerns established under 
section 3(a)(2) of the Small Business Act (15 U.S.C. 632(a)(2)) may 
provide unaudited financial statements if such statements are 
accompanied by the applicant's Federal tax returns and Internal Revenue 
Service tax verifications for the corresponding years. Borrowers 
exercising this option should note that it may impact the time required 
to process their application.
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    \11\ Certain applicants may not need to provide audited 
financial statements, as explained in more detail below.
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    (v) Collateral: If collateral will be pledged for the RRIF loan, 
Section D9 of the Letter of Interest must be supported with an 
independent appraisal of the collateral that must have been completed 
within the past 12 months preceding submission of an LOI. Section D9 of 
the Letter of Interest must demonstrate that the collateral will be 
unencumbered at time of closing, including a description of any lien 
release process that would occur prior to closing on the RRIF loan to 
render currently pledged collateral unencumbered.
    (vi) Environmental Documentation: Section B6 and Attachment B-6 of 
the Letter of Interest must demonstrate that either NEPA review is 
complete or the project is likely to qualify for a Categorical 
Exclusion (CE) or Finding of No Significant Impact (FONSI) under NEPA. 
If a NEPA review has not been completed, Attachment B-6 must include a 
Federal Railroad Administration (FRA) CE worksheet with its Letter of 
Interest. Where appropriate, the CE worksheet must include substantive 
analysis of potential impacts to environmental resources and indicate 
the sources of the information or data used to reach conclusions. For 
some project types, the CE worksheet will satisfy NEPA review and 
documentation requirements; however, for other project types, the CE 
worksheet will inform FRA with sufficient details about the project 
scope and potential environmental impacts to determine if an 
Environmental Assessment (EA) is required. The Applicant would be 
responsible for providing sufficient information and funding for the 
preparation of an EA, which would also extend the duration of project 
development activities. FRA may require the use of a third-party 
contractor consistent with 23 CFR 771.109 (e) for the preparation of an 
EA. In the event that an EA is necessary, eligible projects must 
receive a FONSI to qualify for RRIF Express.
    To help address compliance with Section 106 of the National 
Historic Preservation Act, supporting documentation must be submitted 
for projects involving reconstruction or replacement of existing 
railroad bridges, tunnels, culverts, stations, or depots that assesses 
the eligibility of these architectural properties for listing in the 
National Register of Historic Places. Supporting documentation must 
also be provided for projects involving ground-disturbing site 
preparation and construction activities in areas that have not been 
previously disturbed (such as by prior land development, agricultural 
activities, or the placement of fill), that assesses the archaeological 
sensitivity of the project area.
    (vii) Domestic Preference: Section B4(a) of the Letter of Interest 
must demonstrate that the steel, iron, manufactured goods, and 
construction materials used in the project will be produced in the 
United States in accordance with the Build America, Buy America Act 
(BABA), Public Law 117-58, 70914 and the Federal Railroad 
Administration RRIF Buy America policy, which follows 49 U.S.C. 
22905(a). Projects that require a waiver are not eligible for RRIF 
Express, however, prospective borrowers can seek a loan from the 
overall RRIF program for projects that require a waiver.
    (viii) Project Readiness: Section B4(c) of the Letter of Interest 
must demonstrate the prospective borrower's ability to commence the 
contracting process for construction of the project (e.g., issuance of 
a final RFP) by not later than 90 days after the date on which a RRIF 
credit instrument is obligated for the project.

V. Letter of Interest Process and Review and Next Steps

A. Submission of Letters of Interest

    All prospective borrowers seeking acceptance into RRIF Express 
should submit a Letter of Interest following the instructions described 
in this notice of funding opportunity. The Letter of Interest should be 
annotated with ``RRIF EXPRESS'' immediately following the Applicant 
Name in the Summary Information section on page one of the Letter of 
Interest. The Letter of Interest must, among other things:
    (i) Describe the project and its components, location, and purpose 
in Section B, and include as Attachment B-2 the project budget 
organized according to construction elements from preliminary 
engineering estimates, and including costs as appropriate for property, 
vehicles, professional services, allocated and unallocated contingency, 
and finance charges;
    (ii) Outline the proposed financial plan in Section C, and include 
the financial model, that addresses such aspects as model assumptions, 
annual cash flows, balance sheets, income statements and repayment 
schedules for the duration of the loan, as well as coverage ratios and 
debt metrics. The model should allow reviewers the flexibility to 
evaluate scenarios in the native spreadsheet (Microsoft Excel, or 
equivalent) format and be included in the application as Attachment C-
1;
    (iii) Provide information regarding satisfaction of other statutory 
eligibility requirements of the RRIF credit program; and
    (iv) Provide information regarding satisfaction of RRIF Express 
eligibility criteria (as described in Section IV above).
    Prospective RRIF Express borrowers should describe in Letter of 
Interest Section D8 if the project will (1) decrease transportation 
costs and improve access, especially for rural communities or 
communities in Opportunity Zones,\12\ through reliable and timely 
access to employment centers and job opportunities; (2) improve long-
term efficiency, reliability or costs in the movement of workers or 
goods; (3) increase the economic productivity of land, capital, or 
labor, including assets in Opportunity Zones; (4) result in long-term 
job creation and other economic opportunities; or (5) help the United 
States compete in a global economy by facilitating efficient and 
reliable freight movement. Projects that bridge gaps in service in 
rural areas, and projects that attract private economic development, 
all support local or regional economic competitiveness.
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    \12\ See https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx 
for more information on Opportunity Zones.
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    Letters of Interest must be submitted using the latest form on the 
Build America Bureau website: https://www.transportation.gov/content/build-america-bureau. Other RRIF Express information including any 
additional terms, conditions, and requirements can

[[Page 35998]]

be found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. The Bureau may 
contact a prospective borrower for clarification of specific 
information included in the Letter of Interest. The Bureau will review 
all Letters of Interest properly filed and received in the submission 
time window provided herein.

B. Review and Evaluation

    Each Letter of Interest that is properly filed and received will be 
evaluated for completeness and eligibility for RRIF Express using the 
criteria in this notice. This initial step of the review process will 
include (1) an evaluation as to whether the proposed project and 
applicant satisfy RRIF statutory eligibility requirements, and (2) an 
evaluation as to whether the proposed project and applicant satisfy 
RRIF Express eligibility criteria. In addition, the Bureau will conduct 
a high- level feasibility assessment of the proposed project and the 
applicant's plan of finance before a Letter of Interest is accepted 
into RRIF Express and before a Letter of Interest enters the 
creditworthiness process. With respect to the project, factors that 
will be considered include, but are not limited to, (1) the completion 
of the project being financed is not necessary to repay the proposed 
RRIF loan; (2) the project budget is in year of expenditure and 
includes contingencies to account for potential project risks; and (3) 
the maturity of the proposed RRIF loan does not extend beyond the 
project's anticipated useful life. With respect to the applicant's plan 
of finance, factors that will be considered include, but are not 
limited to, (1) a maximum loan size that, when added to the proposed 
borrower's existing outstanding and undrawn available debt, does not 
substantially exceed an earnings before interest, taxes, depreciation, 
and amortization multiple that would be market appropriate in a similar 
circumstance, for the most recent trailing twelve month period and for 
any period of the applicant's forecast; and (2) consistent levels of 
revenue and operating profitability demonstrated by the proposed 
borrower over the most recent fiscal year.
    The Letters of Interest determined to be eligible for RRIF Express 
will then be advanced to the Bureau's creditworthiness review process, 
which is an in-depth creditworthiness review of the project sponsor and 
the revenue stream proposed to repay the RRIF credit assistance as 
described in the Programs Guide. The Secretary reserves the right to 
limit the number of applications from a single entity or subordinates 
of a single parent or holding company. Prospective RRIF borrowers whose 
RRIF Express Letters of Interest are determined to be ineligible, but 
whose projects are otherwise statutorily eligible for standard RRIF 
credit assistance, have the option to be considered under the overall 
RRIF program.

    Issued in Washington, DC.
Peter Paul Montgomery Buttigieg,
Secretary of Transportation.
[FR Doc. 2023-11576 Filed 5-31-23; 8:45 am]
BILLING CODE 4910-9X-P