Document ID: EPA_FRDOC_0001-25613
Agency: epa
Document Type: Notice
Title: Water Infrastructure Finance and Innovation Act Program Criteria Pursuant to the Further Consolidated Appropriations Act, 2020
Posted Date: 2020-06-30T04:00Z

[Federal Register Volume 85, Number 126 (Tuesday, June 30, 2020)]
[Notices]
[Pages 39189-39191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13889]

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ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF MANAGEMENT OF BUDGET

DEPARTMENT OF THE TREASURY

[FRL-10011-02-OW]

Water Infrastructure Finance and Innovation Act Program (WIFIA) 
Criteria Pursuant to the Further Consolidated Appropriations Act, 2020

AGENCY: Environmental Protection Agency (EPA), Office of Management and 
Budget (OMB), and Department of the Treasury (Treasury).

ACTION: Notice.

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SUMMARY: The U.S. Environmental Protection Agency (EPA), the Office of 
Management and Budget (OMB), and the Department of the Treasury 
(Treasury) are providing potential applicants to the Water 
Infrastructure Finance and Innovation Act (WIFIA) Program with 
information about budgetary screening criteria that will be applied to 
projects in accordance with the Further Consolidated Appropriations 
Act, 2020.

DATES: The effective date of the contents of this notice is June 30, 
2020.

FOR FURTHER INFORMATION CONTACT: For additional EPA information related 
to this notice, please contact Jordan Dorfman, Office of Water (mail 
code 4202M), Environmental Protection Agency, 1200 Pennsylvania Avenue 
NW, Washington, DC 20460; telephone number: (202) 564-0614; or email: 
Dorfman.Jordan@epa.gov (preferred). For additional OMB information 
related to this notice, please contact Andrea Grossman, Environment 
Branch, Office of Management and Budget, 757 17th Street NW, 
Washington, DC 20006; telephone number: (202) 395-4756; or email: 
AGrossman@omb.eop.gov. For additional Treasury information related to 
this notice, please contact Colleen Mills, Office of Federal Program 
Finance, Department of the Treasury, 1500 Pennsylvania Avenue NW, 
Washington, DC 20220; telephone number: (202) 622-5447; or email: 
Colleen.Mills@treasury.gov.

SUPPLEMENTARY INFORMATION:

I. Statutory Requirement

    The following criteria are published pursuant to the Water 
Infrastructure Finance and Innovation Program Account (WIFIA Program) 
heading in the Further Consolidated Appropriations Act, 2020 (Pub. L. 
116-94). Proviso 4 under the WIFIA Program heading requires the 
publication of criteria that ``limit Federal participation in a project 
consistent with the requirements for the budgetary treatment provided 
for in section 504 of the Federal Credit Reform Act of 1990 [(FCRA; 2 
U.S.C. 661c)] and based on the recommendations contained in the 1967 
Report of the President's Commission on Budget Concepts [(1967 
Report)].'' Proviso 7 under the WIFIA Program heading requires ``the 
use of direct loans or loan guarantee authority under [the WIFIA 
Program] heading for direct loans or commitments to guarantee loans for 
any project shall be in accordance with the criteria published pursuant 
to this Act.''

II. Background

    The Federal budget is presented on a cash basis. This is driven by 
many considerations, among which is a need to reflect the statutory 
requirement that the Federal Government records full cost at the time 
an obligation is entered into, as required by 31 U.S.C. 1501, known as 
the recording statute. If an activity is determined to be Federal in 
nature, then, consistent with 31 U.S.C. 1501, Federal obligations are 
recorded in the budget at the full value of the activity. The question 
of whether or not to include a project or asset in the budget hinges on 
whether the project or asset in question is Federal or non-Federal in 
nature. When faced with a project or asset where this Federal 
designation is unclear, the 1967 Report recommends ``a comprehensive 
budget, with very few exclusions'' and states that ``borderline 
agencies and transactions should be included in the budget unless there 
are exceptionally persuasive reasons for exclusion.'' \1\ The 1967 
Report notes the inherent difficulty in making a Federal or non-Federal 
determination in many cases and suggests a series of questions, which 
guide the criteria below, yet notes that ``the answer to no one of 
these questions is conclusive'' and decisions involve ``a net weighing 
of as many relevant considerations as possible.'' \2\
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    \1\ The 1967 Report of the President's Commission on Budget 
Concepts, pg. 25.
    \2\ Id.
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    The most significant statutory exception to the cash basis of the 
Federal budget is section 504 of FCRA, 2 U.S.C. 661c, which requires 
the budgetary treatment of direct loans and loan guarantees provided by 
the Government to a non-Federal borrower to be recorded using net 
present value. Regardless of the identity of the borrower, however, 
requiring that a Federal project or asset be recorded in the budget on 
a net present value basis would be inconsistent with 31 U.S.C. 1501, 
existing Government-wide guidance, and a cash budget. Therefore, to 
``limit Federal participation in a project consistent with the 
requirements for the budgetary treatment provided for in section 504 of 
[FCRA] and based on the recommendations contained in the [1967 
Report],'' as required by Proviso 4 under the WIFIA Program heading in 
Public Law 116-94, only non-Federal projects are eligible for WIFIA 
loans and loan guarantees.

III. Federal Asset Screening Criteria and Process

    The following criteria are published pursuant to Proviso 4 under 
the WIFIA Program heading in Public Law 116-94 and apply only to loans 
and loan guarantees issued under the Water Infrastructure Finance and 
Innovation Act of 2014 (Public Law 113-121, title

[[Page 39190]]

V, subtitle C (33 U.S.C. Chapter 52)). The criteria and procedures 
identified in this notice do not apply to any Notices of Funding 
Availability (NOFA) published by the WIFIA Program prior to the 
publication of this notice. In order to comply with Proviso 7 under the 
WIFIA heading in Public Law 116-94, a proposed WIFIA-financed activity 
will be evaluated using the two initial screening questions and the 
sixteen criteria listed below as a guide. The criteria will be 
considered cumulatively and individually when evaluating project 
eligibility. In addition to the criteria listed below, the U.S. 
Environmental Protection Agency (EPA) and the Office of Management and 
Budget (OMB) will consider any additional information that may bear on 
the Federal Government's current and future expected involvement in a 
WIFIA project. Finally, as required by the Proviso 10 of Public Law 
116-94, none of the direct loans or loan guarantee authority made 
available under Public Law 116-94 shall be available for any project 
unless the Administrator and the Director of OMB have certified in 
advance in writing that the direct loan or loan guarantee, as 
applicable, and the project comply with the criteria developed and 
published pursuant to Public Law 116-94.
    EPA will continue to implement existing elements of the WIFIA 
program consistent with prior practice, supplemented by the criteria 
and procedures provided in this notice. EPA will publish a NOFA that 
will include the Administrator's targeted priorities for each new round 
of WIFIA financing and will invite prospective borrowers to submit 
letters of interest to EPA. EPA will review those letters for statutory 
eligibility and, in coordination with OMB, apply the screening criteria 
and procedures provided in the NOFA and this notice to determine 
funding eligibility before formally inviting prospective applicants to 
apply for WIFIA funding.
    Prospective projects will be evaluated by EPA based on the 
selection process articulated in each NOFA. EPA will then engage with 
OMB to review how the criteria in this notice were applied to the 
potential projects. EPA and OMB must reach preliminary agreement that 
each of the projects is non-Federal before EPA formally invites such 
projects to apply for WIFIA financing.
    EPA will also inform OMB of any new information or changes to this 
preliminary assessment of the screening questions and criteria listed 
below for individual projects that are progressing through the full 
WIFIA evaluation process following receipt of complete project 
financing applications, and will terminate the process if projects are 
determined not to comply with FCRA based on that new information.
    EPA and OMB encourage prospective WIFIA Program borrowers to 
evaluate the screening questions and criteria in this notice and 
provide sufficient information in letters of interest and formal 
applications that address any federal asset questions or concerns, 
including the type of project seeking WIFIA funding under 33 U.S.C. 
3907(b) and whether or not the loan will satisfy EPA's template term 
sheet and standard loan agreement provisions.

IV. Initial Federal Asset Screening Questions

    A. Is the project, in whole or in part, a project currently 
authorized by Congress for the Army Corps of Engineers or Bureau of 
Reclamation to construct? \3\
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    \3\ A project authorized by an Act of Congress to be built by 
the Army Corps of Engineers or Bureau of Reclamation is ineligible 
for WIFIA financing. However, a project that may connect to, or be 
tangentially related to, such a project, may be eligible depending 
on the factual circumstances (e.g., a project to upgrade a water 
distribution system that is connected to an Army Corps of Engineers- 
or Bureau of Reclamation-constructed water source may be eligible 
for WIFIA financing in some circumstances). Furthermore, a project 
at a local municipal facility might not be deemed ineligible simply 
because it was originally built by the Army Corps of Engineers or 
Bureau of Reclamation. Such questions will need to be resolved on a 
case-by-case basis.
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    B. Is the project, in whole or in part, a local cost share 
requirement for an Army Corps of Engineers or Bureau of Reclamation 
project? \4\
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    \4\ WIFIA authorizes loans to support local cost-sharing 
requirements. See 33 U.S.C. 3908(b)(8) (``The proceeds of a secured 
loan under this section may be used to pay any non-Federal share of 
project costs required if the loan is repayable from non-Federal 
funds.''). However, such a loan that would finance a project that is 
in whole, or in part, a project authorized by Congress for the Army 
Corps of Engineers or the Bureau of Reclamation to construct would 
not meet the Federal asset screening process. Project applicants are 
encouraged to review all applicable statutory requirements before 
seeking WIFIA financing.
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V. Federal Asset Screening Criteria

Structure of the Project

    1. To what degree does the Federal Government comprise the WIFIA 
project's user base?
    2. Does the project involve the use of the Federal Government's 
sovereign power (excluding, e.g., National Environmental Policy Act 
(NEPA) review)?
    3. Does the WIFIA project require the construction or acquisition 
of an asset for the special purpose of or use by the Federal 
Government?
    4. To what degree does the Federal Government direct the 
contracting process for the WIFIA project?
    5. Is there a specific authority provided to the WIFIA project by 
an Act of Congress without which the WIFIA project could not proceed?
    6. What is the Federal Government's role in the governance of the 
project? In other words, what is the role of the Federal Government in 
selecting management or overseeing the project (including, but not 
limited to, approval of contract scope and step-in rights, or as a 
member of a board of directors), both during construction as well as in 
terms of operations and ongoing maintenance?
    7. Is this project part of a larger Federally authorized project 
(not limited to but consistent with the initial screening criteria) and 
if so, does the project under consideration for a loan or loan 
guarantee constitute a useful segment--either a planning segment or a 
useful asset--as defined in the Capital Programming Guide (supplement 
to OMB Circular A-11)?

Financing of the Project

    8. Does the Federal Government provide resources for the WIFIA 
Federal loan repayment?
    9. Will the WIFIA project meet the nonsubordination requirement 
provided in 33 U.S.C. 3908(b)(6)?
    10. Does the WIFIA project depend on the Federal Government making 
other in-kind contributions (land, real estate, right-of-way, etc.)?
    11. Is non-Federal financing available for the project?
    12. If the project is required to obtain an investment-grade rating 
opinion letter, per 33 U.S.C. 3901(4) and 3908(a)(3), to what extent 
does the rating opinion letter consider Federal support as a credit 
enhancement?

Project Liabilities

    13. To what degree will the Federal Government bear funding 
liabilities associated with the WIFIA project not otherwise 
appropriated by Congress or captured in the loan subsidy?
    14. Is the risk to the Federal Government low relative to the 
private sector for the financing of the WIFIA project?
    15. To what degree does the Federal Government own or is the 
Federal Government contractually obligated to complete, maintain, or 
repair damage to the WIFIA project?
    16. Is the Federal Government liable for unforeseen costs (e.g., 
environmental impacts, damage from natural disasters, or cost overruns) 
either before, during,

[[Page 39191]]

or after completion of the WIFIA project?

VI. Certification

    The Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94) 
requires that the Administrator of EPA, the Secretary of the Treasury, 
and the Director of OMB certify that criteria developed for project 
eligibility for direct loans and loan guarantees authorized by the 
Water Infrastructure Finance and Innovation Act of 2014 are compliant 
with the first paragraph found under the ``Water Infrastructure 
Financing and Innovation Program Account'' heading in the Further 
Consolidated Appropriations Act, 2020. The Administrator, the 
Secretary, and the Director certify that the criteria developed meet 
the aforementioned requirement.

Andrew Wheeler,
Administrator, Environmental Protection Agency.
Russell Vought,
Acting Director, Office of Management and Budget.
Steven Mnuchin,
Secretary, Department of the Treasury.
[FR Doc. 2020-13889 Filed 6-26-20; 4:15 pm]
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