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:

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.

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.

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.

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(B)remain available until expended to pay for the costs described in this subsection.(m)

Fees and charges

Except as provided in this chapter, the Secretary may not assess fees, including user fees, or charges in connection with a direct loan or loan guarantee provided under section 22402.

22404.

Employee protection

(a)

In general

(1)

Fair and equitable arrangements

Fair and equitable arrangements shall be provided, in accordance with this section, to protect the interests of any employees who may be affected by actions taken pursuant to authorizations or approval obtained under this chapter.(2)

Arrangements by agreements

The arrangements under paragraph (1) shall be determined by the execution of an agreement between the representatives of the railroads and the representatives of their employees not later than June 4, 1976.(3)

Prescribed arrangements

In the absence of an executed agreement under paragraph (2), the Secretary of Labor shall prescribe the applicable protective arrangements not later than July 4, 1976.(b)

Terms

(1)

Applicability to existing employees

The arrangements required under subsection (a) shall apply to each employee who has an employment relationship with a railroad on the date on which the railroad first applies for financial assistance under this chapter.(2)

Inclusions

Such arrangements shall include such provisions as may be necessary for the negotiation and execution of agreements as to the manner in which the protective arrangements shall be applied, including notice requirements.(3)

Execution prior to implementation of work

The agreements shall be executed prior to implementation of work funded from financial assistance under this chapter.(4)

Arbitration

(A)

In general

If an agreement described in subsection (a)(2) is not reached within 30 days after the date on which an application for the assistance is approved, either party to the dispute may submit the issue for final and binding arbitration.(B)

Decision

(i)

When decision is to be rendered

The decision on any arbitration under this paragraph shall be rendered within 30 days after the submission.(ii)

Effect

The arbitration decision—(I)shall not modify the protection afforded in the protective arrangements established pursuant to this section;(II)shall be final and binding on the parties to the arbitration; and(III)shall become a part of the agreement.(5)

Other inclusions

The arrangements shall also include such provisions as may be necessary—(A)for the preservation of compensation (including subsequent general wage increases, vacation allowances, and monthly compensation guarantees), right, privileges, and benefits (including fringe benefits such as pensions, hospitalization, and vacations, under the same conditions and so long as the benefits continue to be accorded to other employees of the employing railroad in active service or on furlough, as the case may be) to the employees under existing collective-bargaining agreements or otherwise;(B)to provide for final and binding arbitration of any dispute that cannot be settled by the parties with respect to the interpretation, application, or enforcement of the provisions of the protective arrangements;(C)to provide that an employee who is unable to secure employment by the exercise of the employee’s seniority rights, as a result of actions taken with financial assistance obtained under this chapter, shall be offered reassignment and, where necessary, retraining to fill a position comparable to the position held at the time of the adverse effect and for which the employee is, or by training and retraining can become, physically and mentally qualified, so long as the offer is not in contravention of collective bargaining agreements relating to the provisions in this paragraph; and(D)to provide that the protection afforded pursuant to this section shall not be applicable to employees benefitted solely as a result of the work that is financed by funds provided pursuant to this chapter.(c)

Subcontracting

The arrangements that are required to be negotiated by the parties or prescribed by the Secretary of Labor, pursuant to subsections (a) and (b), shall include provisions regulating subcontracting by the railroads of work that is financed by funds provided pursuant to this chapter.

22405.

Substantive criteria and standards

The Secretary shall publish in the Federal Register and post on the Department of Transportation website the substantive criteria and standards used by the Secretary to determine whether to approve or disapprove applications submitted under section 22404. The Secretary shall ensure adequate procedures and guidelines are in place to permit the filing of complete applications not later than 30 days after such publication.

22406.

Funding

(a)

Authorization of appropriations

(1)

In general

There are authorized to be appropriated out of the General Fund for credit assistance under this chapter—(A)$30,000,000 for fiscal year 2022;(B)$31,000,000 for fiscal year 2023;(C)$32,000,000 for fiscal year 2024;(D)$33,000,000 for fiscal year 2025; and(E)$34,000,000 for fiscal year 2026.(2)

Availability

Amounts appropriated pursuant to this subsection shall remain available until expended.(b)

Use of funds

(1)

In general

Except as provided in paragraph (2), amounts appropriated pursuant to this section shall be used for loans and loan guarantees with a total value of not more than $200,000,000.(2)

Administrative costs

In each fiscal year, not less than $3,000,000 of the amounts appropriated pursuant to subsection (a) shall be made available for the Secretary for use in lieu of charges collected under section 22403(l)(1) for freight railroads other than Class I carriers and passenger railroads. (3)

Short line set-aside

In each fiscal year, not less than 50 percent of the amounts appropriated pursuant to subsection (a) that remain available after the set aside described in paragraph (2) shall be set aside for freight railroads other than Class I carriers.(4)

Passenger rail set-aside

Any amounts appropriated pursuant to subsection (a) that remain available after the set-asides described in paragraphs (2) and (3) shall be set aside for passenger railroads.

(b)

Clerical amendment

The table of chapters for title 49, United States Code, is amended by inserting after the item relating to chapter 223 the following:

Chapter 224—Railroad Rehabilitation and Improvement Financing Program