33 U.S.C. § 3907 — Determination of eligibility and project

Page 1014 TITLE 33—NAVIGATION AND NAVIGABLE WATERS § 3906 § 3906. Activities eligible for assistance For purposes of this chapter, an eligible activ- ity with respect to an eligible project includes the cost of— (1) development-phase activities, including planning, feasibility analysis (including any related analysis necessary to carry out an eli- gible project), revenue forecasting, environ- mental review, permitting, preliminary engi- neering and design work, and other preconstruction activities; (2) construction, reconstruction, rehabilita- tion, and replacement activities; (3) the acquisition of real property or an in- terest in real property (including water rights, land relating to the project, and improve- ments to land), environmental mitigation (in- cluding acquisitions pursuant to section 3905(8) of this title), construction contin- gencies, and acquisition of equipment; and (4) capitalized interest necessary to meet market requirements, reasonably required re- serve funds, capital issuance expenses, and other carrying costs during construction. (Pub. L. 113–121, title V, § 5027, June 10, 2014, 128 Stat. 1335; Pub. L. 114–322, title IV, § 5008(b)(2)(C), Dec. 16, 2016, 130 Stat. 1897.) Editorial Notes AMENDMENTS 2016—Par. (3). Pub. L. 114–322 substituted ‘‘section 3905(8)’’ for ‘‘section 3905(7)’’. § 3907. Determination of eligibility and project selection (a) Eligibility requirements To be eligible to receive financial assistance under this chapter, a project shall meet the fol- lowing criteria, as determined by the Secretary or Administrator, as applicable: (1) Creditworthiness (A) In general The project and obligor shall be credit- worthy, which shall be determined by the Secretary or the Administrator, as applica- ble. (B) Considerations In determining the creditworthiness of a project and obligor, the Secretary or the Ad- ministrator, as applicable, shall take into consideration relevant factors, including— (i) the terms, conditions, financial struc- ture, and security features of the proposed financing; (ii) the dedicated revenue sources that will secure or fund the project obligations; (iii) the financial assumptions upon which the project is based; and (iv) the financial soundness and credit history of the obligor. (C) Security features The Secretary or the Administrator, as ap- plicable, shall ensure that any financing for the project has appropriate security fea- tures, such as a rate covenant, supporting the project obligations to ensure repayment. (D) Rating opinion letters (i) Preliminary rating opinion letter The Secretary or the Administrator, as applicable, shall require each project ap- plicant to provide, at the time of applica- tion, a preliminary rating opinion letter from at least 1 rating agency indicating that the senior obligations of the project (which may be the Federal credit instru- ment) have the potential to achieve an in- vestment-grade rating. (ii) Final rating opinion letters The Secretary or the Administrator, as applicable, shall require each project ap- plicant to provide, prior to final accept- ance and financing of the project, a final rating opinion letter from at least 1 rating agency indicating that the senior obliga- tions of the project have an investment- grade rating. (E) Special rule for certain combined projects The Administrator shall develop a credit evaluation process for a Federal credit in- strument provided to— (i) a State infrastructure financing au- thority for a project under section 3905(9) of this title, which may include requiring the provision of a final rating opinion let- ter from at least one rating agency; or (ii) an entity for a project under section 3905(10) of this title, which may include re- quiring the provision of a final rating opinion letter from at least two rating agencies. (2) Eligible project costs (A) In general Subject to subparagraph (B), the eligible project costs of a project shall be reasonably anticipated to be not less than $20,000,000. (B) Small community water infrastructure projects For a project described in paragraph (2) or (3) of section 3905 of this title that serves a community of not more than 25,000 individ- uals, the eligible project costs of a project shall be reasonably anticipated to be not less than $5,000,000. (3) Dedicated revenue sources The Federal credit instrument for the project shall be repayable, in whole or in part, from dedicated revenue sources that also se- cure the project obligations. (4) Public sponsorship of private entities (A) In general If an eligible project is carried out by an entity that is not a State or local govern- ment or an agency or instrumentality of a State or local government or a tribal gov- ernment or consortium of tribal govern- ments, the project shall be publicly spon- sored. (B) Public sponsorship For purposes of this chapter, a project shall be considered to be publicly sponsored Page 1015 TITLE 33—NAVIGATION AND NAVIGABLE WATERS § 3907 if the obligor can demonstrate, to the satis- faction of the Secretary or the Adminis- trator, as appropriate, that the project ap- plicant has consulted with the affected State, local, or tribal government in which the project is located, or is otherwise af- fected by the project, and that such govern- ment supports the proposed project. (5) Use of existing financing mechanisms (A) Notification For each eligible project for which the Ad- ministrator has authority under paragraph (2) or (3) of section 3902(b) of this title and for which the Administrator has received an application for financial assistance under this chapter, the Administrator shall notify, not later than 30 days after the date on which the Administrator receives a complete application, the applicable State infrastruc- ture financing authority of the State in which the project is located that such appli- cation has been submitted. (B) Determination If, not later than 60 days after the date of receipt of a notification under subparagraph (A), a State infrastructure financing author- ity notifies the Administrator that the State infrastructure financing authority intends to commit funds to the project in an amount that is equal to or greater than the amount requested under the application, the Admin- istrator may not provide any financial as- sistance for that project under this chapter unless— (i) by the date that is 180 days after the date of receipt of a notification under sub- paragraph (A), the State infrastructure fi- nancing authority fails to enter into an as- sistance agreement to provide funds for the project; or (ii) the financial assistance to be pro- vided by the State infrastructure financ- ing authority will be at rates and terms that are less favorable than the rates and terms for financial assistance provided under this chapter. (6) Operation and maintenance plan (A) In general The Secretary or the Administrator, as ap- plicable, shall determine whether an appli- cant for assistance under this chapter has developed, and identified adequate revenues to implement, a plan for operating, main- taining, and repairing the project over the useful life of the project. (B) Special rule An eligible project described in section 3905(1) of this title that has not been specifi- cally authorized by Congress shall not be eli- gible for Federal assistance for operations and maintenance. (b) Selection criteria (1) Establishment The Secretary or the Administrator, as ap- plicable, shall establish criteria for the selec- tion of projects that meet the eligibility re- quirements of subsection (a), in accordance with paragraph (2). (2) Criteria The selection criteria shall include the fol- lowing: (A) The extent to which the project is na- tionally or regionally significant, with re- spect to the generation of economic and pub- lic benefits, such as— (i) the reduction of flood risk; (ii) the improvement of water quality and quantity, including aquifer recharge; (iii) the protection of drinking water, in- cluding source water protection; and (iv) the support of international com- merce. (B) The extent to which the project financ- ing plan includes public or private financing in addition to assistance under this chapter. (C) The likelihood that assistance under this chapter would enable the project to pro- ceed at an earlier date than the project would otherwise be able to proceed. (D) The extent to which the project uses new or innovative approaches. (E) The amount of budget authority re- quired to fund the Federal credit instrument made available under this chapter. (F) The extent to which the project— (i) protects against extreme weather events, such as floods or hurricanes; or (ii) helps maintain or protect the envi- ronment. (G) The extent to which a project serves regions with significant energy exploration, development, or production areas. (H) The extent to which a project serves regions with significant water resource chal- lenges, including the need to address— (i) water quality concerns in areas of re- gional, national, or international signifi- cance; (ii) water quantity concerns related to groundwater, surface water, or other water sources; (iii) significant flood risk; (iv) water resource challenges identified in existing regional, State, or multistate agreements; or (v) water resources with exceptional rec- reational value or ecological importance. (I) The extent to which the project ad- dresses identified municipal, State, or re- gional priorities. (J) The readiness of the project to proceed toward development, including a demonstra- tion by the obligor that there is a reasonable expectation that the contracting process for construction of the project can commence by not later than 90 days after the date on which a Federal credit instrument is obli- gated for the project under this chapter. (K) The extent to which assistance under this chapter reduces the contribution of Fed- eral assistance to the project. (3) Special rule for certain combined projects For a project described in section 3905(9) of this title, the Administrator shall only con- sider the criteria described in subparagraphs (B) through (K) of paragraph (2). Page 1016 TITLE 33—NAVIGATION AND NAVIGABLE WATERS § 3908 (c) Federal requirements Nothing in this section supersedes the applica- bility of other requirements of Federal law (in- cluding regulations). (Pub. L. 113–121, title V, § 5028, June 10, 2014, 128 Stat. 1335; Pub. L. 114–94, div. A, title I, § 1445, Dec. 4, 2015, 129 Stat. 1437; Pub. L. 114–322, title IV, § 5008(b)(2)(D), Dec. 16, 2016, 130 Stat. 1897; Pub. L. 115–270, title IV, § 4201(a)(2), Oct. 23, 2018, 132 Stat. 3877; Pub. L. 117–58, div. E, title II, § 50214, Nov. 15, 2021, 135 Stat. 1173.) Editorial Notes AMENDMENTS 2021—Subsec. (a)(1)(D)(ii). Pub. L. 117–58 substituted ‘‘a final rating opinion letter from at least 1 rating agency’’ for ‘‘final rating opinion letters from at least 2 rating agencies’’. 2018—Subsec. (a)(1)(E). Pub. L. 115–270 amended sub- par. (E) generally. Prior to amendment, text read as follows: ‘‘The Administrator shall develop a credit evaluation process for a Federal credit instrument pro- vided to a State infrastructure financing authority for a project under section 3905(9) of this title or an entity for a project under section 3905(10) of this title, which may include requiring the provision of a final rating opinion letter from at least 2 rating agencies.’’ 2016—Subsec. (a)(1)(E). Pub. L. 114–322, § 5008(b)(2)(D)(i), substituted ‘‘section 3905(9)’’ for ‘‘sec- tion 3905(8)’’ and ‘‘section 3905(10)’’ for ‘‘section 3905(9)’’. Subsec. (b)(3). Pub. L. 114–322, § 5008(b)(2)(D)(ii), sub- stituted ‘‘section 3905(9)’’ for ‘‘section 3905(8)’’. 2015—Subsec. (a)(5) to (7). Pub. L. 114–94 redesignated pars. (6) and (7) as (5) and (6), respectively, and struck out former par. (5). Prior to amendment, text of par. (5) read as follows: ‘‘No project receiving Federal credit as- sistance under this chapter may be financed (directly or indirectly), in whole or in part, with proceeds of any obligation— ‘‘(A) the interest on which is exempt from the tax imposed under chapter 1 of title 26; or ‘‘(B) with respect to which credit is allowable under subpart I or J of part IV of subchapter A of chapter 1 of title 26.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2015 AMENDMENT Amendment by Pub. L. 114–94 effective Oct. 1, 2015, see section 1003 of Pub. L. 114–94, set out as a note under section 5313 of Title 5, Government Organization and Employees. ‘‘SECRETARY’’ DEFINED Secretary means the Secretary of the Army, see sec- tion 2 of Pub. L. 113–121, set out as a note under section 2201 of this title. § 3908. Secured loans (a) Agreements (1) In general Subject to paragraphs (2) and (3), the Sec- retary or the Administrator, as applicable, may enter into agreements with 1 or more ob- ligors to make secured loans, the proceeds of which shall be used to finance eligible project costs of any project selected under section 3907 of this title. (2) Financial risk assessment Before entering into an agreement under this subsection for a secured loan, the Sec- retary or the Administrator, as applicable, in consultation with the Director of the Office of Management and Budget and each rating agency providing a rating opinion letter under section 3907(a)(1)(D) of this title, shall deter- mine an appropriate capital reserve subsidy amount for the secured loan, taking into ac- count each such rating opinion letter. (3) Investment-grade rating requirement The execution of a secured loan under this section shall be contingent on receipt by the senior obligations of the project of an invest- ment-grade rating. (b) Terms and limitations (1) In general A secured loan provided for a project under this section shall be subject to such terms and conditions, and contain such covenants, rep- resentations, warranties, and requirements (including requirements for audits), as the Secretary or the Administrator, as applicable, determines to be appropriate. (2) Maximum amount The amount of a secured loan under this sec- tion shall not exceed the lesser of— (A) an amount equal to 49 percent of the reasonably anticipated eligible project costs; and (B) if the secured loan does not receive an investment-grade rating, the amount of the senior project obligations of the project. (3) Payment A secured loan under this section— (A) shall be payable, in whole or in part, from State or local taxes, user fees, or other dedicated revenue sources that also secure the senior project obligations of the relevant project; (B) shall include a rate covenant, coverage requirement, or similar security feature sup- porting the project obligations; and (C) may have a lien on revenues described in subparagraph (A), subject to any lien se- curing project obligations. (4) Interest rate The interest rate on a secured 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 agree- ment. (5) Maturity date (A) In general The final maturity date of a secured loan under this section shall be the earlier of— (i) the date that is 35 years after the date of substantial completion of the relevant project (as determined by the Secretary or the Administrator, as applicable); and (ii) if the useful life of the project (as de- termined by the Secretary or Adminis- trator, as applicable) is less than 35 years, the useful life the project. (B) Special rule for State infrastructure fi- nancing authorities The final maturity date of a secured loan to a State infrastructure financing author-