Bill Summary
This legislation establishes the Railroad Rehabilitation and Improvement Financing Program, which provides loans and loan guarantees for transportation projects. The Secretary of Transportation prioritizes projects that enhance public safety and promote economic development, with a maximum of $35 billion in total assistance. Applicants are evaluated based on creditworthiness and must meet certain conditions, including using funds for approved purposes and providing regular status reports. The terms and conditions for loan guarantees, including interest and repayment, are also outlined.
Possible Impacts
1. The establishment of the Railroad Rehabilitation and Improvement Financing Program will provide direct loans and loan guarantees for various entities to improve and develop rail and intermodal infrastructure. This will greatly benefit rural and small communities, as well as promote economic development and improve public safety.
2. The streamlined application process for certain projects and regular status reports required by the Secretary of Transportation will ensure transparency and accountability in the use of loan funds and guarantee criteria, ultimately benefiting the public.
3. The terms and conditions outlined in this segment, such as deferred payments and subordination of direct loans in the event of bankruptcy, will provide necessary protections for both the government and the obligor, ensuring responsible and effective use of loan funds.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 468 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
1st Session
S. 468
To expedite transportation project delivery, facilitate infrastructure
improvement, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 25, 2021
Mr. Thune (for himself and Ms. Hassan) introduced the following bill;
which was read twice and referred to the Committee on Commerce,
Science, and Transportation
_______________________________________________________________________
A BILL
To expedite transportation project delivery, facilitate infrastructure
improvement, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Railroad
Rehabilitation and Financing Innovation Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Railroad Rehabilitation and Improvement Financing Program.
Sec. 3. Conforming amendments.
Sec. 4. Transitional and savings provisions.
Sec. 5. Repeals.
SEC. 2. RAILROAD REHABILITATION AND IMPROVEMENT FINANCING PROGRAM.
(a) Amendment to Title 49, United States Code.--Part B of subtitle
V of title 49, United States Code, is amended by inserting after
chapter 223 the following:
``CHAPTER 224--RAILROAD REHABILITATION AND IMPROVEMENT FINANCING
PROGRAM
``22401. Definitions.
``22402. Direct loans and loan guarantees.
``22403. Administration of direct loans and loan guarantees.
``22404. Employee protection.
``22405. Substantive criteria and standards.
``22406. Funding.
``Sec. 22401. Definitions
``In this chapter:
``(1) Cost.--
``(A) In general.--The term `cost' means the
estimated long-term cost to the Government of a direct
loan or loan guarantee, or modification of the direct
loan or loan guarantee, calculated on a net present
value basis, excluding administrative costs and any
incidental effects on governmental receipts or outlays.
``(B) Cost of direct loans.--
``(i) In general.--The cost of a direct
loan shall be the net present value, at the
time when the direct loan is disbursed, of the
following estimated cash flows:
``(I) Loan disbursements.
``(II) Repayments of principal.
``(III) Payments of interest and
other payments by or to the Government
over the life of the loan.
``(ii) Calculation.--Calculation of the
cost of a direct loan shall include the effects
of changes in loan terms resulting from the
exercise by the borrower of an option included
in the loan contract.
``(C) Cost of loan guarantee.--
``(i) In general.--The cost of a loan
guarantee shall be the net present value, at
the time when the guaranteed loan is disbursed,
of the following estimated cash flows:
``(I) Payments by the Government to
cover defaults and delinquencies,
interest subsidies, or other payments.
``(II) Payments to the Government,
including origination and other fees,
penalties, and recoveries.
``(ii) Calculation.--Calculation of the
cost of a loan guarantee shall include the
effects of changes in loan terms resulting from
the exercise by the guaranteed lender of an
option included in the loan guarantee, or by
the borrower of an option included in the
guaranteed loan contract.
``(D) Cost of modification.--The cost of a
modification is the difference between the current
estimate of the net present value of the remaining cash
flows under the terms of a direct loan or loan
guarantee contract, and the current estimate of the net
present value of the remaining cash flows under the
terms of the contract, as modified.
``(E) Estimation of net present values; discount
rate.--In estimating net present values, the discount
rate shall be the average interest rate on marketable
Treasury securities of similar maturity to the cash
flows of the direct loan or loan guarantee for which
the estimate is being made.
``(F) Estimated cost; basis.--When funds are
obligated for a direct loan or loan guarantee, the
estimated cost shall be based on the current
assumptions, adjusted to incorporate the terms of the
loan contract, for the fiscal year in which the funds
are obligated.
``(2) Current.--The term `current' has the meaning given
such term in section 250(c)(9) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 900(c)(9)).
``(3) Direct loan.--
``(A) In general.--The term `direct loan' means a
disbursement of funds by the Government to a non-
Federal borrower under a contract that requires the
repayment of the funds.
``(B) Inclusions.--The term `direct loan' includes
the purchase of, or participation in, a loan made by
another lender and financing arrangements that defer
payment for more than 90 days, including the sale of a
Government asset on credit terms.
``(C) Exclusion.--The term `direct loan' does not
include the acquisition of a federally guaranteed loan
in satisfaction of default claims.
``(4) Direct loan obligation.--The term `direct loan
obligation' means a binding agreement by the Secretary to make
a direct loan when specified conditions are fulfilled by the
borrower.
``(5) Intermodal.--The term `intermodal' means of or
relating to the connection between rail service and other modes
of transportation, including all parts of facilities at which
the connection is made.
``(6) Investment-grade rating.--The term `investment-grade
rating' means a rating of BBB minus, Baa3, bbb minus, BBB(low),
or higher assigned by a rating agency.
``(7) Loan guarantee.--The term `loan guarantee' means any
guarantee, insurance, or other pledge with respect to the
payment of all or a part of the principal or interest on any
debt obligation of a non-Federal borrower to a non-Federal
lender, but does not include the insurance of deposits, shares,
or other withdrawable accounts in financial institutions.
``(8) Loan guarantee commitment.--The term `loan guarantee
commitment' means a binding agreement by the Secretary to make
a loan guarantee when specified conditions are fulfilled by the
borrower, the lender, or any other party to the guarantee
agreement.
``(9) Master credit agreement.--The term `master credit
agreement' means an agreement to make 1 or more direct loans or
loan guarantees at future dates for a program of related
projects on terms acceptable to the Secretary.
``(10) Modification.--
``(A) In general.--The term `modification' means
any Government action that alters the estimated cost of
an outstanding direct loan (or direct loan obligation)
or an outstanding loan guarantee (or loan guarantee
commitment) from the current estimate of cash flows.
``(B) Inclusions.--The term `modification'
includes--
``(i) the sale of loan assets, with or
without recourse, and the purchase of
guaranteed loans; and
``(ii) any action resulting from new
legislation, or from the exercise of
administrative discretion under existing law,
that directly or indirectly alters the
estimated cost of outstanding direct loans (or
direct loan obligations) or loan guarantee (or
loan guarantee commitment), such as a change in
collection procedures.
``(11) Project obligation.--The term `project obligation'
means a note, bond, debenture, or other debt obligation issued
by a borrower in connection with the financing of a project,
other than a direct loan or loan guarantee under this chapter.
``(12) Railroad.--The term `railroad' has the meaning given
the term `railroad carrier' in section 20102.
``(13) Rating agency.--The term `rating agency' means a
credit rating agency registered with the Securities and
Exchange Commission as a nationally recognized statistical
rating organization (as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
``(14) Secretary.--The term `Secretary' means the Secretary
of Transportation.
``(15) Substantial completion.--The term `substantial
completion' means--
``(A) the opening of a project to passenger or
freight traffic; or
``(B) a comparable event, as determined by the
Secretary and specified in the terms of the direct loan
or loan guarantee.
``Sec. 22402. Direct loans and loan guarantees
``(a) General Authority.--The Secretary shall provide direct loans
and loan guarantees--
``(1) to States and units of local government;
``(2) to interstate compacts consented to by Congress under
section 410(a) of the Amtrak Reform and Accountability Act of
1997 (Public Law 105-134; 49 U.S.C. 24101 note);
``(3) to government-sponsored authorities and corporations;
``(4) to railroads;
``(5) to joint ventures that include at least 1 of the
entities described in paragraph (1), (2), (3), (4), or (6);
``(6) to private entities with controlling ownership in 1
or more freight railraods other than Class 1 carriers; and
``(7) solely for the purpose of constructing a rail
connection between a plant or facility and a railroad, limited
option freight shippers that own or operate a plant or other
facility.
``(b) Eligible Purposes.--
``(1) In general.--Direct loans and loan guarantees
provided under this section shall be used--
``(A)(i) to acquire, improve, or rehabilitate
intermodal or rail equipment or facilities, including
track, components of track, civil works such as cuts
and fills, bridges, yards, buildings, and shops; and
``(ii) to finance costs related to the activities
described in clause (i), including preconstruction
costs;
``(B) to develop or establish new intermodal or
railroad facilities;
``(C) to refinance outstanding debt incurred for
the purposes described in subparagraph (A) or (B);
``(D) to reimburse planning, permitting, and design
expenses relating to activities described in
subparagraph (A) or (B); or
``(E) to finance economic development, including
commercial and residential development, and related
infrastructure and activities that--
``(i) incorporates private investment;
``(ii) is physically or functionally
related to a passenger rail station or
multimodal station that includes rail service;
``(iii) has a high probability of the
applicant commencing the contracting process
for construction not later than 90 days after
the date on which the direct loan or loan
guarantee is obligated for the project under
this chapter; and
``(iv) has a high probability of reducing
the need for financial assistance under any
other Federal program for the relevant
passenger rail station or service by increasing
ridership, tenant lease payments, or other
activities that generate revenue exceeding
costs.
``(2) Operating expenses not eligible.--Direct loans and
loan guarantees under this section may not be used for railroad
operating expenses.
``(3) Sunset.--The Secretary may provide a direct loan or
loan guarantee under this section for a project described in
paragraph (1)(E) only during the 4-year period beginning on
December 4, 2015.
``(c) Priority Projects.--In granting applications for direct loans
or guaranteed loans under this section, the Secretary shall give
priority to projects that--
``(1) enhance public safety, including projects for the
installation of a positive train control system (as defined in
section 20157(i));
``(2) promote economic development;
``(3) enhance the environment;
``(4) enable United States companies to be more competitive
in international markets;
``(5) are endorsed by the plans prepared under chapter 227
of this title or section 135 of title 23 by the State or States
in which the projects are located;
``(6) improve railroad stations and passenger facilities
and increase transit-oriented development;
``(7) preserve or enhance rail or intermodal service to
small communities or rural areas;
``(8) enhance service and capacity in the national rail
system; or
``(9)(A) would materially alleviate rail capacity problems
that degrade the provision of service to shippers; and
``(B) would fulfill a need in the national transportation
system.
``(d) Extent of Authority.--
``(1) Limitation on aggregate unpaid principal amounts of
obligations.--The aggregate unpaid principal amounts of
obligations under direct loans and loan guarantees made under
this section may not exceed $35,000,000,000 at any time.
``(2) Minimum amount for freight railroads.--Of the amount
referred to in paragraph (1), not less than $7,000,000,000
shall be available solely for projects primarily benefitting
freight railroads other than Class I carriers.
``(3) Proportion of unused amount.--The Secretary shall not
establish any limit on the proportion of the unused amount
authorized under this subsection that may be used for 1 loan or
loan guarantee.
``(e) Rates of Interest.--
``(1) Direct loans.--The interest rate on a direct loan
under this section shall be not less than the yield on United
States Treasury securities of a similar maturity to the
maturity of the secured loan on the date of execution of the
loan agreement.
``(2) Loan guarantees.--The Secretary shall not make a loan
guarantee under this section if the interest rate for the loan
exceeds that which the Secretary determines to be reasonable,
taking into consideration the prevailing interest rates and
customary fees incurred under similar obligations in the
private capital market.
``(f) Infrastructure Partners.--
``(1) Authority of secretary.--
``(A) In general.--In lieu of or in combination
with appropriations of budget authority to cover the
costs of direct loans and loan guarantees as required
under section 504(b)(1) of the Federal Credit Reform
Act of 1990 (2 U.S.C. 661c(b)(1)), including the cost
of a modification of a direct loan or loan guarantee,
the Secretary may accept on behalf of an applicant for
assistance under this section a commitment from a non-
Federal source, including a State or local government
or agency, or public benefit corporation or public
authority of a State or local government, to fund, in
whole or in part, credit risk premiums and modification
costs with respect to the loan that is the subject of
the application or modification.
``(B) Limitation.--The aggregate of appropriations
of budget authority and credit risk premiums described
in this paragraph with respect to a direct loan or loan
guarantee shall not be less than the cost of that
direct loan or loan guarantee.
``(2) Credit risk premium amount.--The Secretary shall
determine the amount required for credit risk premiums under
this subsection on the basis of--
``(A) the circumstances of the applicant, including
the amount of collateral offered, if any;
``(B) the proposed schedule of loan disbursements;
``(C) historical data on the repayment history of
similar borrowers;
``(D) consultation with the Congressional Budget
Office; and
``(E) any other factors the Secretary considers
relevant.
``(3) Creditworthiness.--Upon receipt of a proposal from an
applicant for assistance under this section, the Secretary
shall accept, as a basis for determining the amount of the
credit risk premium under paragraph (2), in addition to the
value of any collateral described in paragraph (5), any of the
following :
``(A) The net present value of a future stream of
State or local subsidy income or other dedicated
revenues to secure the direct loan or loan guarantee.
``(B) Adequate coverage requirements to ensure
repayment, on a nonrecourse basis, from cash flows
generated by the project or any other dedicated revenue
source, including--
``(i) tolls;
``(ii) user fees, including operating or
tenant charges, facility rents, or other fees
paid by transportation service providers or
operators for access to, or the use of,
infrastructure, including rail lines, bridges,
tunnels, yards, or stations; and
``(iii) payments owing to the obligor under
a public-private partnership.
``(C) An investment-grade rating on the direct loan
or loan guarantee, as applicable, unless the total
amount of the direct loan or loan guarantee is greater
than $150,000,000, in which case the applicant shall
have an investment-grade rating from not fewer than 2
rating agencies regarding the direct loan or loan
guarantee.
``(D) A projection of freight or passenger demand
for the project based on regionally developed economic
forecasts, including projections of any modal diversion
resulting from the project.
``(4) Payment of premiums.--Credit risk premiums under this
subsection shall be paid to the Secretary before the
disbursement of loan amounts (and in the case of a
modification, before the modification is executed), to the
extent appropriations are not available to the Secretary to
meet the costs of direct loans and loan guarantees, including
costs of modifications of direct loans and loan guarantees.
``(5) Collateral.--
``(A) Types of collateral.--An applicant or
infrastructure partner may propose tangible and
intangible assets as collateral, exclusive of goodwill.
The Secretary, after evaluating each such asset--
``(i) shall accept a net liquidation value
of collateral; and
``(ii) shall consider and may accept--
``(I) the market value of
collateral; or
``(II) in the case of a blanket
pledge or assignment of an entire
operating asset or basket of assets as
collateral, the net liquidation value,
the market value of assets, or, the
market value of the going concern,
considering--
``(aa) inclusion in the
pledge of all the assets
necessary for independent
operational utility of the
collateral, including tangible
assets such as real property,
track and structure, equipment
and rolling stock, stations,
systems and maintenance
facilities and intangible
assets such as long-term
shipping agreements, easements,
leases and access rights such
as for trackage and haulage;
``(bb) interchange
commitments; and
``(cc) the value of the
asset as determined through the
cost or market approaches, or
the market value of the going
concern, with the latter
considering discounted cash
flows for a period not to
exceed the term of the direct
loan or loan guarantee.
``(B) Appraisal standards.--In evaluating
appraisals of collateral under subparagraph (A), the
Secretary shall consider--
``(i) adherence to the substance and
principles of the Uniform Standards of
Professional Appraisal Practice, as developed
by the Appraisal Standards Board of the
Appraisal Foundation;
``(ii) performance of the appraisal by
licensed or certified appraisers as may be
required by the State of jurisdiction for the
type of asset being appraised; and
``(iii) the qualifications of the
appraisers to value the type of collateral
offered.
``(g) Prerequisites for Assistance.--The Secretary may not make a
direct loan or loan guarantee under this section unless the Secretary
has made a written finding that--
``(1) repayment of the obligation is required to be made
within a term of the lesser of--
``(A) 35 years after the date of substantial
completion of the project; or
``(B) with regard to rail equipment or facilities
with estimated useful lives that exceed the term
described in subparagraph (A)--
``(i) 50 years after the date of
substantial completion of the project; or
``(ii) the estimated useful life of the
rail equipment or facilities to be acquired,
rehabilitated, improved, developed, or
established, subject to an adequate
determination of long-term risk;
``(2) the direct loan or loan guarantee is justified by the
present and probable future demand for rail services or
intermodal facilities;
``(3) the applicant has given reasonable assurances that
the facilities or equipment to be acquired, rehabilitated,
improved, developed, or established with the proceeds of the
obligation will be economically and efficiently utilized;
``(4) the obligation can reasonably be repaid, using an
appropriate combination of credit risk premiums and collateral
offered by the applicant to protect the Federal Government; and
``(5) the purposes of the direct loan or loan guarantee are
consistent with subsection (b).
``(h) Conditions of Assistance.--
``(1) In general.--Before granting assistance under this
section, the Secretary shall require the applicant to agree to
such terms and conditions as are sufficient, in the judgment of
the Secretary, to ensure that, as long as any principal or
interest is due and payable on the obligation, the applicant,
and any railroad or railroad partner for whose benefit the
assistance is intended--
``(A) will not use any funds or assets from
railroad or intermodal operations for purposes not
related to the operations, if the use--
``(i) would impair the ability of the
applicant, railroad, or railroad partner to
provide rail or intermodal services in an
efficient and economic manner; or
``(ii) would adversely affect the ability
of the applicant, railroad, or railroad partner
to perform any obligation entered into by the
applicant under this section;
``(B) will, consistent with its capital resources,
maintain its capital program, equipment, facilities,
and operations on a continuing basis; and
``(C) will not make any discretionary dividend
payments that unreasonably conflict with the purposes
stated in subsection (b).
``(2) Collateral and request for assistance from another
source not required.--
``(A) Collateral.--
``(i) In general.--The Secretary may not
require an applicant for a direct loan or loan
guarantee under this section to provide
collateral.
``(ii) Valuation.--Any collateral provided
or enhanced after being provided shall be
valued as a going concern after giving effect
to the present value of improvements
contemplated by the completion and operation of
the project, if applicable.
``(B) Request for assistance from another source.--
The Secretary may not require an applicant for a direct
loan or loan guarantee under this section to have
previously sought the financial assistance requested
from another source.
``(3) Required compliance.--The Secretary shall require
recipients of direct loans or loan guarantees under this
section to comply with--
``(A) the standards of section 24312, as in effect
on September 1, 2002, with respect to the project in
the same manner that Amtrak is required to comply with
the standards for construction work financed under an
agreement made under section 24308(a); and
``(B) the protective arrangements established under
section 22404, with respect to employees affected by
actions taken in connection with the project to be
financed by the direct loan or loan guarantee.
``(4) Matching funds.--The Secretary shall require each
recipient of a direct loan or loan guarantee under this
section, for a project described in subsection (b)(1)(E), to
provide a non-Federal match of not less than 25 percent of the
total amount expended by the recipient for the project.
``(i) Application Processing Procedures.--
``(1) Application status notices.--Not later than 30 days
after the date on which the Secretary receives an application
under this section, or additional information and material
under paragraph (2)(B), the Secretary shall provide the
applicant written notice as to whether the application is
complete or incomplete.
``(2) Incomplete applications.--If the Secretary determines
that an application is incomplete, the Secretary shall--
``(A) provide the applicant with a description of
all of the specific information or material that is
needed to complete the application, including any
information required by an independent financial
analyst; and
``(B) allow the applicant to resubmit the
application with the information and material described
under subparagraph (A) to complete the application.
``(3) Application approvals and disapprovals.--
``(A) In general.--Not later than 45 days after the
date on which the Secretary notifies an applicant that
an application is complete under paragraph (1), the
Secretary shall provide the applicant written notice as
to whether the Secretary has approved or disapproved
the application.
``(B) Actions by the office of management and
budget.--In order to enable compliance with the time
limit under subparagraph (A), the Office of Management
and Budget shall take any action required with respect
to the application within such 45-day period.
``(4) Streamlined application review process.--
``(A) In general.--Consistent with section 116, and
not later than 180 days after date of the enactment of
the Railroad Rehabilitation and Financing Innovation
Act, the Secretary shall make available an expedited
application process or processes at the request of
applicants seeking loans or loan guarantees.
``(B) Criteria.--Applicants seeking loans and loan
guarantees issued under this subsection shall--
``(i) seek a total loan or loan guarantee
value not exceeding $100,000,000;
``(ii) meet eligible project purposes
included in subparagraphs (A)(i), (A)(ii), and
(B) of subsection (b)(1); and
``(iii) meet other criteria considered
appropriate by the Secretary, in consultation
with the Department of Transportation Council
on Credit and Finance.
``(C) Expedited credit review.--The total period
between the submission of a draft application and the
approval or disapproval of a loan or loan guarantee for
an applicant under this paragraph may not exceed 90
days. If an application review conducted under this
paragraph exceeds 90 days, the Secretary shall--
``(i) provide written notice to the
applicant, including a justification for the
delay and updated estimate of the time needed
for approval or disapproval; and
``(ii) post the notice on the dashboard
described in paragraph (5).
``(5) Dashboard.--The Secretary shall post, on the
Department of Transportation's internet website, a monthly
report that includes, for each application--
``(A) the applicant type;
``(B) the location of the project;
``(C) a brief description of the project, including
its purpose;
``(D) the requested direct loan or loan guarantee
amount;
``(E) the date on which the Secretary provided
application status notice under paragraph (1);
``(F) the date that the Secretary provided notice
of approval or disapproval under paragraph (3); and
``(G) whether the project utilized the expedited
application process under paragraph (4).
``(6) Regular creditworthiness review status reports.--
``(A) In general.--The Secretary shall provide to
the applicant a regular report containing information
related to the application for a loan or loan
guarantee, including--
``(i) a summary of the proposed
transaction, including--
``(I) the total value of the
proposed loan or loan guarantee;
``(II) the name of the applicant or
applicants submitting an application;
``(III) the proposed capital
structure of the project to which the
loan or loan guarantee would be
applied, including the proposed Federal
and non-Federal shares of the total
project cost;
``(IV) the type of activity to
receive credit assistance, including
whether the project--
``(aa) is new construction
or rehabilitation of existing
rail equipment or facilities;
``(bb) is a refinancing an
existing loan or loan
guarantee; and
``(V) if a deferred payment is
proposed, the length of such deferment;
``(VI) the credit rating or ratings
provided for the applicant;
``(VII) if other credit instruments
are involved, the proposed
subordination relationship and a
description of such other credit
instruments;
``(VIII) a schedule for the
readiness of proposed investments for
financing;
``(IX) a description of any Federal
permits required, including under the
National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.) and any
waivers under section 5323(j) of title
49, United States Code (commonly
referred to as the `Buy America Act');
and
``(X) other characteristics of the
proposed activity to be financed,
borrower, key agreements, or the nature
of the credit that the Secretary
considers to be fundamental to the
creditworthiness review;
``(ii) the status of the application in the
pre-application review and selection process;
``(iii) the cumulative amounts paid by the
Secretary to outside advisors related to the
application, including financial and legal
advisors;
``(iv) a description of the key rating
factors used by the Secretary to determine
credit risk, including--
``(I) the qualitative and
quantitative factors used to determine
risk for the proposed application;
``(II) an adjectival risk rating
for each identified factor, ranked as
either low, moderate, or high; and
``(v) a nonbinding estimate of the credit
risk premium, which may be in the form of--
``(I) a range, based on the
assessment of risk factors described in
clause (iv); or
``(II) a justification for why the
estimate of the credit risk premium
cannot be determined based on available
information; and
``(vi) a description of key information the
Secretary needs from the applicant to complete
the credit review process and make a final
determination of the credit risk premium.
``(B) Report.--The Secretary shall submit the
report described in subparagraph (A) not less
frequently than every 45 days after the date on which
the Secretary presents the first request to the
applicant for funding to pay fees for advisors
described in subparagraph (A)(iii).
``(C) Exception.--The report required under this
paragraph may not be applied to applications processed
using the expedited credit review process under
paragraph (5)(B).
``(j) Repayment Schedules.--
``(1) In general.--The Secretary shall establish a
repayment schedule requiring payments to commence not later
than 5 years after the date of substantial completion.
``(2) Accrual.--Interest shall accrue as of the date of
disbursement, and shall be amortized over the remaining term of
the loan, beginning at the time the payments begin.
``(3) Deferred payments.--
``(A) In general.--If, at any time the date of
substantial completion, the obligor is unable to pay
the scheduled loan repayments of principal and interest
on a direct loan provided under this section, the
Secretary, subject to subparagraph (B), may allow, for
a maximum aggregate time of 1 year over the duration of
the direct loan, the obligor to add unpaid principal
and interest to the outstanding balance of the direct
loan.
``(B) Interest.--A payment deferred under
subparagraph (A) shall--
``(i) continue to accrue interest under
paragraph (2) until the loan is fully repaid;
and
``(ii) be scheduled to be amortized over
the remaining term of the loan.
``(4) Prepayments.--
``(A) Use of excess revenues.--With respect to a
direct loan provided by the Secretary under this
section, any excess revenues that remain after
satisfying scheduled debt service requirements on the
project obligations and direct loan and all deposit
requirements under the terms of any trust agreement,
bond resolution, or similar agreement securing project
obligations may be applied annually to prepay the
direct loan without penalty.
``(B) Use of proceeds of refinancing.--The direct
loan may be prepaid at any time without penalty from
the proceeds of refinancing from non-Federal funding
sources.
``(k) Sale of Direct Loans.--
``(1) In general.--Subject to paragraph (2) and as soon as
practicable after substantial completion of a project, the
Secretary, after notifying the obligor, may sell to another
entity or reoffer into the capital markets a direct loan for
the project if the Secretary determines that the sale or
reoffering has a high probability of being made on favorable
terms.
``(2) Consent of obligor.--In making a sale or reoffering
under paragraph (1), the Secretary shall not change the
original terms and conditions of the secured loan without the
prior written consent of the obligor.
``(l) Nonsubordination.--
``(1) In general.--Except as provided in paragraph (2), a
direct loan provided by the Secretary under this section shall
not be subordinated to the claims of any holder of project
obligations in the event of bankruptcy, insolvency, or
liquidation of the obligor.
``(2) Preexisting indentures.--
``(A) In general.--The Secretary may waive the
requirement under paragraph (1) for a public agency
borrower that is financing ongoing capital programs and
has outstanding senior bonds under a preexisting
indenture if--
``(i) the direct loan is rated in the A
category or higher;
``(ii) the direct loan is secured and
payable from pledged revenues not affected by
project performance, such as a tax-based
revenue pledge or a system-backed pledge of
project revenues; and
``(iii) the program share, under this
chapter, of eligible project costs is 50
percent or less.
``(B) Limitation.--The Secretary may impose
limitations for the waiver of the nonsubordination
requirement under this paragraph if the Secretary
determines that the limitations would be in the
financial interest of the Federal Government.
``(m) Master Credit Agreements.--
``(1) In general.--Subject to paragraph (2) and to
subsection (d), the Secretary may enter into a master credit
agreement that is contingent on all of the conditions for the
provision of a direct loan or loan guarantee, as applicable,
under this chapter and other applicable requirements being
satisfied prior to the issuance of the direct loan or loan
guarantee.
``(2) Conditions.--Each master credit agreement shall--
``(A) establish the maximum amount and general
terms and conditions of each applicable direct loan or
loan guarantee;
``(B) identify 1 or more dedicated non-Federal
revenue sources that will secure the repayment of each
applicable direct loan or loan guarantee;
``(C) provide for the obligation of funds--
``(i) for the direct loans or loan
guarantees contingent on the meeting of all
applicable requirements and after all
requirements have been met, for the projects
subject to the master credit agreement; and
``(D) provide 1 or more dates, as determined by the
Secretary, before which the master credit agreement
results in the disbursement issuance of each of the
direct loans or loan guarantees or in the release of
the master credit agreement.
``Sec. 22403. Administration of direct loans and loan guarantees
``(a) Applications.--
``(1) In general.--The Secretary shall prescribe the form
and contents required of applications for assistance under
section 22402, to enable the Secretary to determine the
eligibility of the applicant's proposal, and shall establish
terms and conditions for direct loans and loan guarantees made
under that section, including a program guide, a standard term
sheet, and specific timetables.
``(2) Documentation.--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 as documentation of
historical financial information if such statements are
accompanied by the applicant's Federal tax returns and Internal
Revenue Service tax verifications for the corresponding years.
``(b) Full Faith and Credit.--All guarantees entered into by the
Secretary under section 22402 shall constitute general obligations of
the United States of America and shall be backed by the full faith and
credit of the United States of America.
``(c) Assignment of Loan Guarantees.--The holder of a loan
guarantee made under section 22402 may assign the loan guarantee in
whole or in part, subject to such requirements as the Secretary may
prescribe.
``(d) Modifications.--The Secretary may approve the modification of
any term or condition of a direct loan, loan guarantee, direct loan
obligation, or loan guarantee commitment, including the rate of
interest, time of payment of interest or principal, or security
requirements, if the Secretary finds in writing that--
``(1) the modification is equitable and is in the overall
best interests of the United States;
``(2) consent has been obtained from the applicant and in
the case of a loan guarantee or loan guarantee commitment, the
holder of the obligation; and
``(3) the modification cost has been covered under section
22402(f).
``(e) Compliance.--The Secretary shall ensure compliance by an
applicant, any other party to the loan, and any railroad or railroad
partner for whose benefit assistance is intended, with the provisions
of this chapter, regulations issued under this chapter, and the terms
and conditions of the direct loan or loan guarantee, including through
regular periodic inspections.
``(f) Commercial Validity.--
``(1) In general.--For purposes of claims by any party
other than the Secretary, a loan guarantee or loan guarantee
commitment shall be conclusive evidence that the underlying
obligation is in compliance with the provisions of this
chapter, and that the obligation has been approved and is legal
as to principal, interest, and other terms.
``(2) Valid and incontestable.--A guarantee or commitment
under paragraph (1) shall be valid and incontestable in the
hands of a holder of the guarantee or commitment, including the
original lender or any other holder, as of the date when the
Secretary granted the application for the guarantee or
commitment, except as to fraud or material misrepresentation by
the holder.
``(g) Default.--
``(1) In general.--The Secretary shall prescribe
regulations setting forth procedures in the event of default on
a loan made or guaranteed under section 22402.
``(2) Loan guarantees.--The Secretary shall ensure that
each loan guarantee made under section 22402 contains terms and
conditions that provide that--
``(A) if a payment of principal or interest under
the loan is in default for more than 30 days, the
Secretary shall pay to the holder of the obligation, or
the holder's agent, the amount of unpaid guaranteed
interest;
``(B) if the default has continued for more than 90
days, the Secretary shall pay to the holder of the
obligation, or the holder's agent, 90 percent of the
unpaid guaranteed principal;
``(C) after final resolution of the default,
through liquidation or otherwise, the Secretary shall
pay to the holder of the obligation, or the holder's
agent, any remaining amounts guaranteed but that were
not recovered through the default's resolution;
``(D) the Secretary shall not be required to make
any payment under subparagraphs (A) through (C) if the
Secretary finds, before the expiration of the periods
described in such subparagraphs, that the default has
been remedied; and
``(E) the holder of the obligation shall not
receive payment or be entitled to retain payment in a
total amount that, together with all other recoveries
(including any recovery based upon a security interest
in equipment or facilities) exceeds the actual loss of
the holder.
``(h) Rights of the Secretary.--
``(1) Subrogation.--If the Secretary makes payment to a
holder, or a holder's agent, under subsection (g) in connection
with a loan guarantee made under section 22402, the Secretary
shall be subrogated to all of the rights of the holder with
respect to the obligor under the loan.
``(2) Disposition of property.--The Secretary may complete,
recondition, reconstruct, renovate, repair, maintain, operate,
charter, rent, sell, or otherwise dispose of any property or
other interests obtained pursuant to this section. The
Secretary shall not be subject to any Federal or State
regulatory requirements when carrying out this paragraph.
``(i) Action Against Obligor.--
``(1) In general.--The Secretary may bring a civil action
in an appropriate Federal court in the name of the United
States in the event of a default on a direct loan made under
section 22402 or in the name of the United States or of the
holder of the obligation in the event of a default on a loan
guaranteed under section 22402.
``(2) Records and evidence.--The holder of a guarantee
shall make available to the Secretary all records and evidence
necessary to prosecute the civil action.
``(3) Property as satisfaction of sums owed.--The Secretary
may accept property in full or partial satisfaction of any sums
owed as a result of a default.
``(4) Excess amount.--
``(A) Payment to obligor.--If the Secretary
receives, through the sale or other disposition of the
property described in paragraph (3), an excess amount
described in subparagraph (B), the Secretary shall pay
to the obligor the excess amount.
``(B) Amount.--An excess amount under this
subparagraph is an amount the exceeds the aggregate
of--
``(i) the amount paid to the holder of a
guarantee under subsection (g); and
``(ii) any other cost to the United States
of remedying the default.
``(j) Breach of Conditions.--The Attorney General shall commence a
civil action in an appropriate Federal court to enjoin any activity
that the Secretary finds is in violation of this chapter, regulations
issued under this chapter, or any conditions that were agreed to, and
to secure any other appropriate relief.
``(k) Attachment.--No attachment or execution may be issued against
the Secretary, or any property in the control of the Secretary, prior
to the entry of final judgment to that effect in any Federal, State, or
other court.
``(l) Charges and Loan Servicing.--
``(1) Purposes.--The Secretary may collect from each
applicant, obligor, or loan party a reasonable charge for--
``(A) the cost of evaluating the application,
amendments, modifications, and waivers, including for
evaluating project viability, applicant
creditworthiness, and the appraisal of the value of the
equipment or facilities for which the direct loan or
loan guarantee is sought, and for making necessary
determinations and findings;
``(B) to cost of award management and project
management oversight;
``(C) the cost of services from expert firms,
including counsel, and independent financial advisors
to assist in the underwriting, auditing, servicing, and
exercise of rights with respect to direct loans and
loan guarantees; and
``(D) the cost of all other expenses incurred as a
result of a breach of any term or condition or any
event of default on a direct loan or loan guarantee.
``(2) Charge different amounts.--The Secretary may charge
different amounts under this subsection based on the different
costs incurred under paragraph (1).
``(3) Servicer.--
``(A) In general.--The Secretary may appoint a
financial entity to assist the Secretary in servicing a
direct loan or loan guarantee under this chapter.
``(B) Duties.--A servicer appointed under
subparagraph (A) shall act as the agent of the
Secretary in servicing a direct loan or loan guarantee
under this chapter.
``(C) Fees.--A servicer appointed under
subparagraph (A) shall receive a servicing fee from the
obligor or other loan party, subject to approval by the
Secretary.
``(4) National surface transportation and innovative
finance bureau account.--Amounts collected under this
subsection shall--
``(A) be credited directly to the National Surface
Transportation and Innovative Finance Bureau Account;
and