Document ID: EPA_FRDOC_0001-20258
Agency: epa
Document Type: Proposed Rule
Title: Funding Availability: Applications for Credit Assistance under the Water Infrastructure Finance and Innovation Act (WIFIA) Program
Posted Date: 2017-01-10T05:00Z

[Federal Register Volume 82, Number 6 (Tuesday, January 10, 2017)]
[Proposed Rules]
[Pages 2933-2938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31828]

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ENVIRONMENTAL PROTECTION AGENCY

[FRL 9957-79-OW]

40 CFR Part 35

Notice of Funding Availability (NOFA) for Applications for Credit 
Assistance Under the Water Infrastructure Finance and Innovation Act 
(WIFIA) Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of funding availability.

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SUMMARY: In the Further Continuing and Security Assistance 
Appropriations Act, 2017, signed by the President on December 10, 2016, 
Congress provided $20 million in budget authority for the Water 
Infrastructure Finance and Innovation Act of 2014 (WIFIA) program. This 
funding covers the Federal government's anticipated cost of providing a 
much larger amount of credit assistance. Environmental Protection 
Agency (EPA) estimates that current budget authority may provide more 
than $1 billion in credit assistance and may finance over $2 billion in 
water infrastructure investment. The purpose of this notice of funding 
availability (NOFA) is to solicit letters of interest (LOIs) from 
prospective borrowers seeking credit assistance from EPA.
    EPA will evaluate and select proposed projects described in the 
LOIs using the selection criteria established in regulation at 40 CFR 
35.10055,\1\ and further described in this NOFA as well as the WIFIA 
program handbook. This NOFA establishes relative weights that will be 
used in the current LOI submittal period for the selection criteria and 
outlines the process that applicants must follow to be considered for 
WIFIA credit assistance.
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    \1\ 81 FR 91822, https://www.federalregister.gov/documents/2016/12/19/2016-30194/credit-assistance-for-water-infrastructure-projects
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    In addition, EPA reserves the right to make additional awards under 
this announcement, consistent with Agency policy and guidance, if 
additional funding is available after the original selections are made.

DATES: EPA will collect LOIs in two selection rounds in FY 2017. The 
first LOI submittal period will begin on January 10, 2017, and end at 
midnight in the time zone of the prospective borrower on April 10, 
2017. The second LOI submittal period, if needed, will begin on August 
1, 2017 and end at midnight in the time zone of the prospective 
borrower on September 29, 2017.

ADDRESSES: Prospective borrowers should submit all LOIs electronically 
via email at: wifia@epa.gov. Prospective borrowers will receive a 
confirmation email and are advised to request a return receipt to 
confirm transmission. Only LOIs received by email, as provided above, 
shall be considered for funding.
    Prospective borrowers can access additional information, including 
the WIFIA program handbook and application materials, on the WIFIA Web 
site: https://www.epa.gov/wifia/.

SUPPLEMENTARY INFORMATION: In the first selection round, EPA will make 
available the full $17 million of budget authority appropriated for the 
WIFIA program to provide credit assistance. This $17 million in Federal 
funding can help finance total project costs of more than $2 billion. 
If funding remains after the first selection round, EPA will hold a 
second round. The second LOI submittal period, if needed, will begin on 
August 1, 2017 and end at midnight in the time zone of the prospective 
borrower on September 29, 2017. Late proposals will not be considered 
for funding.
    EPA will announce the amount available in the second selection 
round through a notice in the Federal Register, as well as on EPA's 
WIFIA program Web site. In the event that EPA changes the application 
or selection process to incorporate best practices from the initial 
round, a new NOFA will be published.
    For a project to be considered during a selection round, EPA must 
receive a complete LOI electronically via email before the 
corresponding deadline listed above. EPA is only able to accept emails 
of 25 MB or smaller with unzipped attachments. If necessary due to size 
restrictions, prospective borrowers may submit attachments separately, 
as long as they are received by the deadline.
    When writing a LOI, prospective borrowers must also fill out the 
form

[[Page 2934]]

and follow the guidelines contained on the WIFIA program Web site: 
https://www.epa.gov/wifia/. Prospective borrowers should provide the 
LOI and any attachments as searchable PDF files, whenever possible, to 
facilitate EPA's review. Additionally, prospective borrowers should 
ensure that financial information, including the pro forma financial 
statement, is in a formula-based Microsoft Excel document whenever 
possible. Section V of this NOFA provides additional details on the 
contents of the LOIs.
    EPA will invite final applications from prospective borrowers whose 
project proposals are selected for continuation in the application 
process. EPA must receive final applications within 365 days of the 
invitation to apply. If EPA does not receive an application within this 
timeframe, it is considered withdrawn and the prospective borrower will 
need to resubmit a LOI to be considered in any subsequent rounds of 
project selection.

Table of Contents

I. Background
II. Program Funding
III. Eligibility Requirements
IV. Types of Credit Assistance
V. Letters of Interest and Applications
VI. Fees
VII. Selection Criteria

I. Background

    Congress enacted WIFIA as part of the Water Resources Reform and 
Development Act of 2014 (WRRDA). Codified at 33 U.S.C. 3901-3914, as 
amended by sec. 5008 of the Water Infrastructure Improvements for the 
Nation (WIIN) Act, signed into law by the President on December 16, 
2016, WIFIA establishes a new federal credit program for water 
infrastructure projects to be administered by EPA. WIFIA authorizes EPA 
to provide federal credit assistance in the form of secured (direct) 
loans or loan guarantees for eligible water infrastructure projects.
    The WIFIA program's mission is to accelerate investment in our 
nation's water and wastewater infrastructure by providing long-term, 
low-cost, supplemental credit assistance under customized terms to 
creditworthy drinking water and wastewater infrastructure projects of 
national and regional significance.

II. Program Funding

    Congress appropriated $20 million in funding to cover the subsidy 
cost of providing WIFIA credit assistance. The subsidy cost represents 
the Federal government's risk that the loan may not be paid back, and 
since EPA anticipates that on average for the water industry, the risk 
is relatively low, this funding can be leveraged into a much larger 
amount of credit assistance. EPA estimates that this appropriation will 
allow it to provide approximately $1 billion \2\ in long-term, low-cost 
financing to water and wastewater projects and accelerate more than $2 
billion in infrastructure investment around the country.
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    \2\ This estimated loan volume is provided for reference only. 
Consistent with the Federal Credit Reform Act of 1990 and the 
requirements of the Office of Management and Budget, the actual 
subsidy cost of providing credit assistance is based on individual 
project characteristics and calculated on a project-by-project 
basis. Thus, actual lending capacity may vary.
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    Recognizing the need that exists in both small and large 
communities to invest in infrastructure, Congress stipulated in WIFIA 
that EPA set aside 15% of the budget authority appropriated each year 
for small communities, defined as systems that serve a population of 
less than 25,000. Of the funds set aside, any amount not obligated by 
June 1 of the fiscal year for which budget authority is set aside may 
be used for any size community. Regardless of whether EPA obligates 
these funds by June 1 of the fiscal year for which budget authority is 
set aside, EPA will endeavor to use 15% of its budget authority for 
small communities.
    In addition to assisting both large and small projects and 
communities, WIFIA will be an attractive borrowing mechanism for a 
variety of different borrower and credit types. EPA anticipates that 
WIFIA's low cost combined with the debt structuring flexibilities 
offered by the program will be of benefit to municipalities, private 
entities, project financings, and to the State Revolving Fund programs.

III. Eligibility Requirements

    The WIFIA statute and implementing rules set forth eligibility 
requirements for prospective borrowers, projects, and project costs. 
The requirements outlined below are described in greater detail in the 
WIFIA program handbook.

A. Eligible Applicants

    Prospective borrowers must be one of the following in order to be 
eligible for WIFIA credit assistance:
    (i) A corporation;
    (ii) A partnership;
    (iii) A joint venture;
    (iv) A trust;
    (v) A Federal, State, or local governmental entity, agency, or 
instrumentality;
    (vi) A tribal government or a consortium of tribal governments; or
    (vii) A State infrastructure financing authority.

B. Eligible Projects

    The WIFIA statute authorizes EPA to provide credit assistance for a 
wide variety of projects. Projects must be one of the following in 
order to be eligible for WIFIA credit assistance:
    (i) One or more activities that are eligible for assistance under 
section 603(c) of the Federal Water Pollution Control Act (33 U.S.C. 
1383(c)), notwithstanding the public ownership requirement under 
paragraph (1) of that subsection;
    (ii) One or more activities described in section 1452(a)(2) of the 
Safe Drinking Water Act (42 U.S.C. 300j-12(a)(2));
    (iii) A project for enhanced energy efficiency in the operation of 
a public water system or a publicly owned treatment works;
    (iv) A project for repair, rehabilitation, or replacement of a 
treatment works, community water system, or aging water distribution or 
waste collection facility (including a facility that serves a 
population or community of an Indian reservation);
    (iv) A brackish or sea water desalination project, including 
chloride control, a managed aquifer recharge project, a water recycling 
project, or a project to provide alternative water supplies to reduce 
aquifer depletion;
    (v) A project to prevent, reduce, or mitigate the effects of 
drought, including projects that enhance the resilience of drought-
stricken watersheds;
    (vi) Acquisition of real property or an interest in real property--
    (a) If the acquisition is integral to a project described in 
paragraphs (i) through (v); or
    (b) Pursuant to an existing plan that, in the judgment of the 
Administrator, would mitigate the environmental impacts of water 
resources infrastructure projects otherwise eligible for assistance 
under this section;
    (vii) A combination of projects, each of which is eligible under 
paragraph (i) or (ii), for which a State infrastructure financing 
authority submits to the Administrator a single application; or
    (viii) A combination of projects secured by a common security 
pledge, each of which is eligible under paragraph (i), (ii), (iii), 
(iv), (v), or (vi), for which an eligible entity, or a combination of 
eligible entities, submits a single application.

C. Eligible Costs

    As defined under 33 U.S.C. 3906 and described in the WIFIA program 
handbook, eligible project costs are costs associated with the 
following activities:

[[Page 2935]]

    (i) Development-phase activities, including planning, feasibility 
analysis (including any related analysis necessary to carry out an 
eligible project), revenue forecasting, environmental review, 
permitting, preliminary engineering and design work, and other 
preconstruction activities;
    (ii) Construction, reconstruction, rehabilitation, and replacement 
activities;
    (iii) The acquisition of real property or an interest in real 
property (including water rights, land relating to the project, and 
improvements to land), environmental mitigation (including acquisitions 
pursuant to section 5026(7) of the statute), construction 
contingencies, and acquisition of equipment; and
    (iv) Capitalized interest necessary to meet market requirements, 
reasonably required reserve funds, capital issuance expenses, and other 
carrying costs during construction. Capitalized interest on WIFIA 
credit assistance may not be included as an eligible project cost.

D. Threshold Requirements

    In order for a project to be considered for WIFIA credit 
assistance, a project must meet the following six criteria:
    (i) The project and obligor shall be creditworthy;
    (ii) A project shall have eligible project costs that are 
reasonably anticipated to equal or exceed $20 million, or for a project 
eligible under paragraphs (2) or (3) of 33 U.S.C. 3905 serving a 
community of not more than 25,000 individuals, project costs that are 
reasonably anticipated to equal or exceed $5 million;
    (iii) Project financing shall be repayable, in whole or in part, 
from State or local taxes, user fees, or other dedicated revenue 
sources that also secure the senior project obligations of the project; 
shall include a rate covenant, coverage requirement, or similar 
security feature supporting the project obligations; and may have a 
lien on revenues subject to any lien securing project obligations;
    (iv) In the case of a project that is undertaken by an entity that 
is not a State or local government or an agency or instrumentality of a 
State or local government, or a tribal government or consortium of 
tribal governments, the project that the entity is undertaking shall be 
publicly sponsored.
    (v) The applicant shall have developed an operations and 
maintenance plan that identifies adequate revenues to operate, 
maintain, and repair the project during its useful life.

E. Federal Requirements

    All projects receiving WIFIA assistance must comply with Federal 
requirements and regulations, including (but not limited to):
    (i) American Iron and Steel Requirement, 33 U.S.C. 3914, https://www.epa.gov/cwsrf/state-revolving-fund-american-iron-and-steel-ais-requirement;
    (ii) Labor Standards, 33 U.S.C. 1372, https://www.dol.gov/whd/govcontracts/dbra.htm;
    (iii) National Environmental Policy Act of 1969, 42 U.S.C. 4321 et 
seq., https://www.epa.gov/nepa;
    (iv) Floodplain Management, Executive Order 11988, 42 FR 26951, May 
24, 1977, as amended by Executive Order 13690, 80 FR 6425, February 4, 
2015, https://www.archives.gov/federal-register/codification/executive-order/11988.html, https://www.whitehouse.gov/the-press-office/2015/01/30/executive-order-establishing-federal-flood-risk-management-standard-and-https://www.fema.gov/media-library/assets/documents/110377;
    (v) Archeological and Historic Preservation Act, 16 U.S.C. 469-
469c, https://www.nps.gov/archeology/tools/laws/ahpa.htm;
    (vi) Clean Air Act, 42 U.S.C. 7401 et seq., https://www.epa.gov/clean-air-act-overview;
    (vii) Clean Water Act, 33 U.S.C. 1251 et seq., https://www.epa.gov/aboutepa/about-office-water;
    (viii) Coastal Barrier Resources Act, 16 U.S.C. 3501 et seq., 
https://www.fws.gov/ecological-services/habitat-conservation/cbra/Act/index.html;
    (ix) Coastal Zone Management Act, 16 U.S.C. 1451 et seq., https://coast.noaa.gov/czm/about/;
    (x) Endangered Species Act, 16 U.S.C. 1531 et seq., https://www.fws.gov/endangered/;
    (xi) Federal Actions to Address Environmental Justice in Minority 
Populations and Low-Income Populations, Executive Order 12898, 59 FR 
7629, February 16, 1994, https://www.archives.gov/files/federal-register/executive-orders/pdf/12898.pdf;
    (xii) Protection of Wetlands, Executive Order 11990, 42 FR 26961, 
May 25, 1977, as amended by Executive Order 12608, 52 FR 34617, 
September 14, 1987, https://www.epa.gov/cwa-404;
    (xiii) Farmland Protection Policy Act, 7 U.S.C. 4201 et seq., 
https://www.nrcs.usda.gov/wps/portal/nrcs/detail/?cid=nrcs143_008275;
    (xiv) Fish and Wildlife Coordination Act, 16 U.S.C. 661-666c, as 
amended, https://www.fws.gov/;
    (xv) Magnuson-Stevens Fishery Conservation and Management Act, 16 
U.S.C. 1801 et seq., http://www.nmfs.noaa.gov/sfa/laws_policies/msa/;
    (xvi) National Historic Preservation Act, 16 U.S.C. 470 et seq., 
https://www.nps.gov/archeology/tools/laws/NHPA.htm;
    (xvii) Safe Drinking Water Act, 42 U.S.C. 300f et seq., https://www.epa.gov/ground-water-and-drinking-water;
    (xviii) Wild and Scenic Rivers Act, 16 U.S.C. 1271 et seq., https://rivers.gov/;
    (xix) Debarment and Suspension, Executive Order 12549, 51 FR 6370, 
https://www.archives.gov/federal-register/codification/executive-order/12549.html;
    (xx) Demonstration Cities and Metropolitan Development Act, 42 
U.S.C. 3301 et seq., as amended, and Executive Order 12372, 47 FR 
30959, http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning;
    (xxi) Drug-Free Workplace Act, 41 U.S.C. 8101 et seq., https://webapps.dol.gov/elaws/asp/drugfree/screen4.htm;
    (xxii) New Restrictions on Lobbying, 31 U.S.C. 1352, https://www.epa.gov/grants/lobbying-and-litigation-information-federal-grants-cooperative-agreements-contracts-and-loans;
    (xxiii) Prohibitions relating to violations of the Clean Water Act 
or Clean Air Act with respect to Federal contracts, grants, or loans 
under 42 U.S.C. 7606 and 33 U.S.C. 1368, and Executive Order 11738, 38 
FR 25161, September 12, 1973, https://www.archives.gov/federal-register/codification/executive-order/11738.html;
    (xxiv) The Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, 42 U.S.C. 4601 et seq., https://www.gpo.gov/fdsys/pkg/FR-2005-01-04/pdf/05-6.pdf;
    (xxv) Age Discrimination Act, 42 U.S.C. 6101 et seq., https://www.eeoc.gov/laws/statutes/adea.cfm;
    (xxvi) Equal Employment Opportunity, Executive Order 11246, 30 FR 
12319, September 28, 1965, https://www.dol.gov/ofccp/regs/compliance/ca_11246.htm;
    (xxvii) Section 13 of the Clean Water Act, Pub. L. 92-500, codified 
in 42 U.S.C. 1251, https://www.epa.gov/ocr/section-13-federal-water-pollution-control-act-amendments-1972;
    (xxviii) Section 504 of the Rehabilitation Act, 29 U.S.C. 794, 
supplemented by Executive Orders 11914, 41 FR 17871, April 29, 1976 and

[[Page 2936]]

11250, 30 FR 13003, October 13, 1965, https://www.epa.gov/ocr/section-504-rehabilitation-act-1973;
    (xxix) Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et 
seq., https://www.epa.gov/environmentaljustice/title-vi-and-environmental-justice;
    (xxx) Participation by Disadvantaged Business Enterprises in 
Procurement under Environmental Protection Agency (EPA) Financial 
Assistance Agreements, 73 FR 15904, https://www.epa.gov/resources-small-businesses.
    Detailed information about some of these requirements is outlined 
in the WIFIA program handbook. Further information can be found at the 
links above.

IV. Types of Credit Assistance

    Under WIFIA, EPA is permitted to provide credit assistance in the 
form of secured (direct) loans or loan guarantees. The maximum amount 
of WIFIA credit assistance to a project is 49 percent of eligible 
project costs. Each prospective borrower will list the estimated total 
capital costs of the project, broken down by activity type and 
differentiating between eligible project costs and ineligible project 
costs in the LOI and application.

V. Letters of Interest and Applications

    Each prospective borrower will be required to submit a LOI and, if 
invited, an application to EPA in order to be considered for approval. 
This section describes the LOI submission and application submission.

A. Letter of Interest

    Applicants seeking a WIFIA loan must submit a LOI describing the 
project fundamentals and addressing the WIFIA selection criteria.
    The primary purpose of the LOI is to provide adequate information 
to EPA to: (i) Validate the eligibility of the prospective borrower and 
the prospective project, (ii) perform a preliminary creditworthiness 
assessment, (iii) perform a preliminary engineering feasibility 
assessment, and (iv) evaluate the project against the selection 
criteria and identify which projects EPA will invite to submit 
applications. Prospective borrowers are encouraged to review the WIFIA 
program handbook to help create the best justification possible for the 
project and a cohesive and comprehensive LOI submittal.
    Prospective applicants should utilize the LOI form on the WIFIA Web 
site and ensure that sufficient detail about the project is provided 
for EPA's review. EPA will notify a prospective applicant if a project 
is deemed ineligible as described in Section III of this NOFA and based 
on the information provided in the LOI.
    Below is guidance on what should be included in the LOI.
    A. Prospective Borrower Information. In this section, the 
prospective borrower describes its project's organizational structure, 
financial condition and experience, and project's readiness to proceed. 
Also, the prospective borrower provides basic information such as its 
address, Web site, Dun and Bradstreet Data Universal Number System 
(DUNS) number, and employer/taxpayer identification number numbers. As 
part of the description of its financial condition, the prospective 
borrower should include the year-end audited financial statements for 
the past three years, as available.
    In the case of a project that is undertaken by an entity that is 
not a State or local government or an agency or instrumentality of a 
State or local government, or a tribal government or consortium of 
tribal governments, the project that the entity is undertaking must be 
publicly sponsored. Public sponsorship means that the recipient can 
demonstrate, to the satisfaction of the EPA, that the project applicant 
has consulted with the affected State, local, or tribal government in 
which the project is located, or is otherwise affected by the project 
and that such government supports the proposed project. A prospective 
borrower can show support by including a certified letter signed by the 
approving municipal department or similar agency, mayor or other 
similar designated authority, local ordinance, or any other means by 
which local government approval can be evidenced.
    B. Project Plan. The prospective borrower provides a general 
description of the project, including its location, population served, 
purpose, design features, estimated capital cost, and development 
schedule. The prospective borrower describes how the project can be 
categorized as one of the project types eligible for WIFIA assistance 
as described in the program handbook. The prospective borrower includes 
other relevant information that could affect the development of the 
project, such as community support, pending legislation, or litigation. 
In this section, the prospective borrower summarizes the status of the 
project's environmental review, engineering report, and other approvals 
or analyses that are integral to the project's development.
    C. Project Operations and Maintenance Plan. The prospective 
borrower describes its plan for operating, maintaining, and repairing 
the project post-completion, discusses the sources of revenue used to 
finance these activities, and provides an estimate of the useful life 
of the project.
    D. Financing Plan. The prospective borrower details the proposed 
sources and uses of funds for the project and states the type and 
amount of credit assistance it is seeking from the WIFIA program. The 
discussion of proposed financing should identify the source(s) of 
revenue or other security that would be pledged to the WIFIA 
assistance. Additionally, the prospective borrower describes the credit 
characteristics of the project and how the senior obligations of the 
project will achieve an investment-grade rating as well as the 
anticipated rating on the WIFIA instrument. It also includes a summary 
financial pro forma as well as revenue and expense projections for the 
life of the WIFIA debt.
    E. Selection Criteria. The prospective borrower describes the 
potential policy benefits achieved through the use of WIFIA assistance 
with respect to each of the WIFIA program selection criteria. These 
criteria and their weights are enumerated in Section VII of this NOFA 
and further explained in the program handbook.
    F. Contact Information.The prospective borower identifies the point 
of contact with whom the WIFIA program should communicate regarding the 
LOI. For the purpose of completing its evaluation, WIFIA program staff 
may contact a prospective borrower regarding specific information in 
the LOI.
    G. Certifications. The prospective borrower certifies that it will 
abide by all applicable laws and regulations, including NEPA, the 
Federal Water Pollution Control Act, the American Iron and Steel 
requirements, and Federal labor standards, among others if selected to 
receive funding.
    H. SRF Notification. The prospective borrower acknowledges that EPA 
will notify the State infrastructure financing authority in the State 
in which the project is located that it submitted a LOI and provide the 
submitted LOI and source documents to that authority. The prospective 
borrower may opt out of having its LOI and source documents shared.

B. Application

    After the EPA concludes its evaluation of the LOIs, a selection 
committee will invite prospective borrowers to apply based on 
preliminary engineering feasibility findings, the preliminary 
creditworthiness assessment, the amount of budget authority necessary 
to

[[Page 2937]]

provide WIFIA credit assistance, and the scoring of the selection 
criteria in accordance with Section VII of this NOFA.
    Applications must be submitted using the form provided on the WIFIA 
Web site: https://www.epa.gov/wifia/. The purpose of the application is 
to provide the WIFIA program with the materials necessary to underwrite 
the loan. Underwriting performed by the WIFIA team will include a 
thorough evaluation of the project's plan of finance and underlying 
economics, including a detailed assessment of the project's cash flow 
and proposed credit terms. The WIFIA team will review the inputs and 
assumptions in the financing plan, the revenue and expenditures in the 
financing plan, the project's ability to meet WIFIA loan repayment 
obligations, and project risks and mitigants, among other things. An 
application fee may be required, as determined by the final fee rule.
    EPA will require a preliminary rating opinion letter indicating 
that the project's senior debt obligations have the potential to attain 
an investment-grade rating, prior to approving a project for credit 
assistance. To demonstrate this potential, each application must 
include a preliminary rating opinion letter from a Nationally 
Recognized Statistical Rating Organization (NRSRO) that addresses the 
creditworthiness of the senior debt obligations funding the project 
(i.e., debt obligations which have a lien senior to that of the WIFIA 
credit instrument on the pledged security) and the default risk of the 
WIFIA loan. The preliminary rating opinion letter must be based on the 
financing structure proposed by the prospective borrower, must conclude 
that there is a reasonable probability for the senior debt obligations 
to receive an investment grade rating, and should opine on the default 
risk of the WIFIA credit assistance itself. If the WIFIA credit 
assistance is proposed as the senior obligation, then it must receive 
the investment grade rating. A project that does not demonstrate the 
potential for its senior obligations to receive an investment grade 
rating will not be considered for a WIFIA loan.
    Finally, prior to execution of a WIFIA loan agreement, each 
prospective borrower must obtain two investment grade ratings on its 
project's senior debt obligations (which may be the WIFIA credit 
instrument) and revised opinions on the default risk of the WIFIA loan.
    Detailed information requirements for the application are listed in 
the application form, and are described in the WIFIA program handbook.

VI. Fees

    There is no fee to submit a LOI. EPA has proposed in ``Fees for 
Water Infrastructure Project Applications under WIFIA'', found at 
Docket ID No. EPA-HQ-OW-2016-0568 at http://www.regulations.gov, that 
each invited applicant must submit, concurrent with its application, a 
non-refundable Application Fee of $25,000 for projects serving 
communities of not more than 25,000 individuals or $100,000 for all 
other projects. Applications will not be evaluated until the 
Application Fee is paid. For successful applicants, this fee will be 
credited toward final payment of a Credit Processing Fee, assessed 
following financial close, to reimburse the EPA for actual engineering, 
financial, and legal costs. In the event a final credit agreement is 
not executed, the borrower is still required to reimburse EPA for the 
costs incurred. Typically, the amount of this credit processing fee is 
expected to range between $350,000 and $700,000, although it can be 
greater for projects that require complex financial structures and 
extended negotiations or lower for projects that require simpler 
financial structures and shorter negotiations.
    Borrowers may finance any of the fees described above with WIFIA 
credit assistance, in accordance with recent amendments to WIFIA found 
in section 5008 of the Water Infrastructure Improvements for the Nation 
(WIIN) Act. Borrowers may not finance any other expenses associated 
with the application process, such as charges associated with obtaining 
the required preliminary rating opinion letter, with WIFIA credit 
assistance.

VII. Selection Process and Criteria

    This section specifies the criteria and process that EPA will use 
to evaluate and award applications for WIFIA assistance.
    After EPA concludes its evaluation of the LOIs, a selection 
committee will invite prospective borrowers to apply based on the 
scoring of the selection criteria, the initially estimated amount of 
budget authority consumed by the project, the preliminary 
creditworthiness assessment, and the preliminary engineering 
feasibility assessment. In addition, the selection committee will take 
into consideration geographic and project diversity when identifying 
which projects should be invited to submit complete applications.
    To maintain consistency throughout the evaluation process, the 
criteria will receive a score on the rating scale of 1-5, 1 being the 
lowest. Each criterion is weighted based upon EPA's mission and 
priorities as well as factors influencing the successful implementation 
of the WIFIA program. There is no threshold score that must be achieved 
in order to be selected. Rather, the selection committee will weigh 
each of the factors outlined above in making final determinations.
    An invitation to apply for WIFIA credit assistance does not 
guarantee EPA's approval, which remains subject to a project's 
continued eligibility, including creditworthiness, the successful 
negotiation of terms acceptable to EPA, and the availability of funds 
at the time at which all necessary recommendations and evaluations have 
been completed. However, the purpose of EPA's LOI review is to pre-
screen prospective borrowers to the extent practicable. In doing this, 
it is expected that EPA will only invite projects to apply if it 
anticipates that those projects are able to obtain WIFIA credit 
assistance.
    The selection criteria incorporate statutory eligibility 
requirements as well as EPA priorities. EPA has identified the 
following project priorities for the LOI submittal period:
    (i) Adaptation to extreme weather and climate change including 
enhanced infrastructure resiliency, water recycling and reuse, and 
managed aquifer recovery;
    (ii) Enhanced energy efficiency of treatment works, public water 
systems, and conveyance systems, including innovative, energy efficient 
nutrient treatment;
    (iii) Green infrastructure; and
    (iv) Repair, rehabilitation, and replacement of infrastructure and 
conveyance systems.
    EPA's priorities reflect water sector challenges that require 
innovative tools to assist municipalities in managing and adapting to 
our most pressing public health and environmental challenges. These 
priorities are reflected in the relative weights of the thirteen 
selection criteria below, described in greater detail in the WIFIA 
program handbook.
    Listed in order of relative weight for this LOI submittal period, 
the WIFIA selection criteria are as follows:
    (i) The extent to which the project is nationally or regionally 
significant, with respect to the generation of economic and public 
health benefits: 10 percent.
    (ii) The likelihood that assistance under WIFIA would enable the 
project to proceed at an earlier date than the project would otherwise 
be able to proceed: 5 percent.
    (iii) The extent to which the project uses new or innovative 
approaches such as the use of energy efficient parts and

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systems, or the use of renewable or alternate sources of energy; green 
infrastructure; and the development of alternate sources of drinking 
water through desalination, aquifer recharge or water recycling: 10 
percent.
    (iv) The extent to which the project protects against extreme 
weather events, such as floods or hurricanes, as well as the impacts of 
climate change: 10 percent.
    (v) The extent to which the project helps maintain or protect the 
environment or public health: 10 percent.
    (vi) The extent to which the project serves regions with 
significant energy exploration, development, or production areas: 5 
percent.
    (vii) The extent to which the project serves regions with 
significant water resource challenges, including the need to address 
water quality concerns related to groundwater, surface water, or other 
resources, significant flood risk, water resource challenges identified 
in existing regional, state, or multistate agreements, and water 
resources with exceptional recreational value or ecological importance: 
10 percent.
    (viii) The extent to which the project addresses identified 
municipal, state, or regional priorities: 5 percent.
    (ix) The readiness of the project to proceed towards development, 
including a demonstration by the prospective borrower that there is 
reasonable expectation that the contracting process for construction of 
the project can commence by not later than ninety days after the date 
on which a Federal credit instrument is obligated: 5 percent.
    (x) The extent to which the project financing plan includes public 
or private financing in addition to assistance under WIFIA: 5 percent.
    (xi) The extent to which assistance under WIFIA reduces the 
contribution of Federal assistance to the project: 5 percent.
    (xii) The extent to which the project addresses needs for repair, 
rehabilitation, or replacement of a treatment works, community water 
system, or aging water distribution or wastewater collection system: 10 
percent.
    (xiii) The extent to which the project serves economically stressed 
communities, or pockets of economically stressed rate payers within 
otherwise non- communities: 10 percent.
    The scoring scales and guidance used to evaluate each project 
against the selection criteria are available in the WIFIA program 
handbook. Prospective borrowers considering WIFIA should review the 
WIFIA program handbook and discuss how the project addresses each of 
these selection criteria in the LOI submission.
    In the event that EPA changes the application or selection process 
to incorporate best practices from the initial round, a new NOFA will 
be published. Any updates will also be available on the WIFIA Web site: 
https://www.epa.gov/wifia/.

    Authority:  33 U.S.C. 3901-3914; 40 CFR part 35.

    Dated: December 22, 2016.
Gina McCarthy,
Administrator.
[FR Doc. 2016-31828 Filed 1-9-17; 8:45 am]
 BILLING CODE 6560-50-P