---
kind: "range"
citation: "49 U.S.C. §§ 22401–22403"
title: "49"
from: "22401"
to: "22403"
count: 3
release: "119-102"
url: "https://uscodex.org/usc/49/22401..22403"
---

# §22401. Definitions


In this chapter:

- (1) **Cost.—**
  - (A) The term “cost” means the estimated long-term cost to the Government of a [direct loan](#3) or [loan guarantee](#7) or [modification](#10) thereof, calculated on a net present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays.
  - (B) The cost of a [direct loan](#3) shall be the net present value, at the time when the [direct loan](#3) 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 after adjusting for estimated defaults, prepayments, fees, penalties, and other recoveries.

    Calculation of the cost of a [direct loan](#3) 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) The cost of a [loan guarantee](#7) 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.

    Calculation of the cost of a [loan guarantee](#7) 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](#7) contract, or by the borrower of an option included in the guaranteed loan contract.

  - (D) The cost of a [modification](#10) is the difference between the [current](#2) estimate of the net present value of the remaining cash flows under the terms of a [direct loan](#3) or [loan guarantee](#7) contract, and the [current](#2) estimate of the net present value of the remaining cash flows under the terms of the contract, as modified.
  - (E) 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](#3) or [loan guarantee](#7) for which the estimate is being made.
  - (F) When funds are obligated for a [direct loan](#3) or [loan guarantee](#7), the estimated cost shall be based on the [current](#2) 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 same meaning as in section 250(c)(9) of the Balanced Budget and Emergency Deficit Control Act of 1985.
- (3) **Direct loan.—** 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 such funds. The term 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. The term 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](#14) to make a [direct loan](#3) 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](/usc/49/13907.md?p=e-2), including all parts of facilities at which such connection is made.
- (6) **Investment-grade rating.—** The term “investment-grade rating” means a rating of BBB minus, Baa 3, bbb minus, BBB(low), or higher assigned by a [rating agency](#13).
- (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](#14) to make a [loan guarantee](#7) 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](#3) or [loan guarantees](#7) at future dates for a program of related projects on terms acceptable to the [Secretary](#14).
- (10) **Modification.—** The term “modification” means any Government action that alters the estimated cost of an outstanding [direct loan](#3) (or [direct loan obligation](#4)) or an outstanding [loan guarantee](#7) (or [loan guarantee commitment](#8)) from the [current](#2) estimate of cash flows. This includes the sale of loan assets, with or without recourse, and the purchase of guaranteed loans. This also includes 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](#3) (or [direct loan obligations](#4)) or [loan guarantees](#7) (or [loan guarantee commitments](#8)) 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](#3) or [loan guarantee](#7) under this chapter.
- (12) **Railroad.—** The term “railroad” includes—
  - (A) any [railroad](#12) or [railroad carrier](/usc/49/20102.md?p=3) (as such terms are defined in [section 20102](/usc/49/20102.md)); and
  - (B) any [rail carrier](/usc/49/24901.md?p=2) (as defined in [section 24102](/usc/49/24102.md)).
- (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)](/usc/15/78c.md?p=a))).
- (14) **Secretary.—** The term “Secretary” means the Secretary of [Transportation](/usc/49/13907.md?p=e-2).
- (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](#14) and specified in the terms of the [direct loan](#3) or [loan guarantee](#7) provided by the [Secretary](#14).

# §22402. Direct loans and loan guarantees

- (a) **General Authority.—** The [Secretary](/usc/49/22401.md?p=14) shall provide [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) to—
  - (1) [State](/usc/49/31132.md?p=8) and local governments;
  - (2) entities implementing interstate compacts consented to by Congress under section 410(a) of the Amtrak Reform and Accountability Act of 1997 ([49 U.S.C. 24101](/usc/49/24101.md) note);
  - (3) government sponsored authorities and corporations;
  - (4) [railroads](/usc/49/22401.md?p=12);
  - (5) entities participating in joint ventures that include at least 1 of the entities described in paragraph [(1)](#a-1), [(2)](#a-2), [(3)](#a-3), [(4)](#a-4), or [(6)](#a-6);
  - (6) limited option freight shippers that own or operate a plant or other facility, solely for the purpose of constructing a rail connection between a plant or facility and a [railroad](/usc/49/22401.md?p=12); and
  - (7) private entities with controlling ownership in 1 or more freight [railroads](/usc/49/22401.md?p=12) other than Class I carriers.
- (b) **Eligible Purposes.—**
  - (1) **In general.—** [Direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) authorized under this section shall be used—
    - (A) to acquire, improve, or rehabilitate [intermodal](/usc/49/22401.md?p=5) or rail equipment or facilities, including track, components of track, cuts and fills, stations, tunnels, bridges, yards, buildings, and shops, and to finance costs related to those activities, including pre-construction costs;
    - (B) to develop or establish new [intermodal](/usc/49/22401.md?p=5) or [railroad](/usc/49/22401.md?p=12) facilities;
    - (C) to develop landside port infrastructure for seaports serviced by rail;
    - (D) to refinance outstanding debt incurred for the purposes described in subparagraph [(A)](#b-1-A) , [(B)](#b-1-B), or [(C)](#b-1-C);
    - (E) to reimburse planning, permitting, and design expenses relating to activities described in subparagraph [(A)](#b-1-A), [(B)](#b-1-B), or [(C)](#b-1-C); or
    - (F) to finance economic development, including commercial and residential development, and related infrastructure and activities, that—
      - (i) incorporates private investment of greater than 20 percent of total project costs;
      - (ii) is physically connected to, or is within ½ mile of, a fixed guideway transit station, an intercity bus station, a passenger rail station, or a multimodal station, provided that the location includes service by a [railroad](/usc/49/22401.md?p=12);
      - (iii) demonstrates the ability of the applicant to commence the contracting process for construction not later than 90 days after the date on which the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) is obligated for the project under this chapter; and
      - (iv) demonstrates the ability to generate new revenue for the relevant passenger rail station or service by increasing ridership, increasing tenant lease payments, or carrying out other activities that generate revenue exceeding costs.
  - (2) **Operating expenses not eligible.—** [Direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) under this section shall not be used for [railroad](/usc/49/22401.md?p=12) operating expenses.
- (c) **Priority Projects.—** In granting applications for [direct loans](/usc/49/22401.md?p=3) or guaranteed loans under this section, the [Secretary](/usc/49/22401.md?p=14) 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)](/usc/49/20157.md?p=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 [section 135 of title 23](/usc/23/135.md) or [chapter 227](/usc/49/chstV-ptB-ch227.md) of this title by the [State](/usc/49/31132.md?p=8) or [States](/usc/49/31132.md?p=8) in which they are located;
  - (6) improve [railroad](/usc/49/22401.md?p=12) stations and passenger facilities and increase transit-oriented development;
  - (7) preserve or enhance rail or [intermodal](/usc/49/22401.md?p=5) service to small communities or rural areas;
  - (8) enhance service and capacity in the national rail system; or
  - (9) would materially alleviate rail capacity problems which degrade the provision of service to shippers and would fulfill a need in the national [transportation](/usc/49/13907.md?p=e-2) system.
- (d) **Extent of Authority.—** The aggregate unpaid principal amounts of obligations under [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) made under this section shall not exceed $35,000,000,000 at any one time. Of this amount, not less than $7,000,000,000 shall be available solely for projects primarily benefiting freight [railroads](/usc/49/22401.md?p=12) other than Class I carriers. The [Secretary](/usc/49/22401.md?p=14) 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](/usc/49/22401.md?p=7).
- (e) **Rates of Interest.—**
  - (1) **Direct loans.—** The interest rate on a [direct loan](/usc/49/22401.md?p=3) 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](/usc/49/22401.md?p=14) shall not make a [loan guarantee](/usc/49/22401.md?p=7) under this section if the interest rate for the loan exceeds that which the [Secretary](/usc/49/22401.md?p=14) 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.—** In lieu of or in combination with appropriations of budget authority to cover the costs of [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) as required under section 504(b)(1) of the Federal Credit Reform Act of 1990, including the cost of a [modification](/usc/49/22401.md?p=10) thereof, the [Secretary](/usc/49/22401.md?p=14) may accept on behalf of an applicant for assistance under this section a commitment from a non-Federal source, including a [State](/usc/49/31132.md?p=8) or local government or [agency](/usc/49/114.md?p=n-2-A-i) or public benefit corporation or public authority thereof, to fund in whole or in part credit risk premiums and [modification](/usc/49/22401.md?p=10) costs with respect to the loan that is the subject of the application or [modification](/usc/49/22401.md?p=10). In no event shall the aggregate of appropriations of budget authority and credit risk premiums described in this paragraph with respect to a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) be less than the cost of that [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
  - (2) **Credit risk premium amount.—** The [Secretary](/usc/49/22401.md?p=14) 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](/usc/49/22401.md?p=14) considers relevant.
  - (3) **Creditworthiness.—** Upon receipt of a proposal from an applicant under this section, the [Secretary](/usc/49/22401.md?p=14) shall accept as a basis for determining the amount of the credit risk premium under [paragraph (2)](#f-2) any of the following in addition to the value of any collateral described in [paragraph (6)](#f-6):
    - (A) The net present value of a future stream of [State](/usc/49/31132.md?p=8) or local subsidy income or other dedicated revenues to secure the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
    - (B) Adequate coverage requirements to ensure repayment, on a non-recourse 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](/usc/49/13907.md?p=e-2) service providers or [operators](/usc/49/30501.md?p=6) for access to, or the use of, infrastructure, including rail lines, bridges, tunnels, yards, or stations; or
      - (iii) payments owing to the obligor under a public-private partnership.
    - (C) An [investment-grade rating](/usc/49/22401.md?p=6) on the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7), as applicable, except that if the total amount of the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) is greater than $150,000,000, the applicant shall have an [investment-grade rating](/usc/49/22401.md?p=6) from at least 2 [rating agencies](/usc/49/22401.md?p=13) on the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
    - (D) Revenue from projected 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](/usc/49/22401.md?p=14) before the disbursement of loan amounts (and in the case of a [modification](/usc/49/22401.md?p=10), before the [modification](/usc/49/22401.md?p=10) is executed), to the extent appropriations are not available to the [Secretary](/usc/49/22401.md?p=14) to meet the costs of [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7), including costs of [modifications](/usc/49/22401.md?p=10) thereof.
  - (5) **Cohorts of loans.—** Subject to the availability of funds appropriated by Congress under [section 22406(a)(2)](/usc/49/22406.md?p=a-2), for any [direct loan](/usc/49/22401.md?p=3) issued before the date of enactment of the Fixing America’s Surface Transportation Act (Public Law 114–94) pursuant to [sections 501 through 504](/usc/49/501..504.md) of the [Railroad](/usc/49/22401.md?p=12) Revitalization and Regulatory Reform Act of 1976 (Public Law 94–210), the [Secretary](/usc/49/22401.md?p=14) shall repay the credit risk premiums of such loan, with interest accrued thereon, not later than—
    - (A) 60 days after the date of enactment of the Surface [Transportation](/usc/49/13907.md?p=e-2) Investment Act of 2021 if the borrower has satisfied all obligations attached to such loan; or
    - (B) if the borrower has not yet satisfied all obligations attached to such loan, 60 days after the date on which all obligations attached to such loan have been satisfied.
  - (6) **Collateral.—**
    - (A) **Types of collateral.—** An applicant or infrastructure partner may propose tangible and intangible assets as collateral, exclusive of goodwill. The [Secretary](/usc/49/22401.md?p=14), 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 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, motive power, 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](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
    - (B) **Appraisal standards.—** In evaluating appraisals of collateral under [subparagraph (A)](#f-6-A), the [Secretary](/usc/49/22401.md?p=14) 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; and
      - (ii) the qualifications of the appraisers to value the type of collateral offered.
  - (7) **Repayment of credit risk premiums.—** The [Secretary](/usc/49/22401.md?p=14) shall return credit risk premiums paid, and interest accrued on such premiums, to the original source when all obligations of a loan or [loan guarantee](/usc/49/22401.md?p=7) have been satisfied. This paragraph applies to any project that has been granted assistance under this section after the date of enactment of the Surface [Transportation](/usc/49/13907.md?p=e-2) Investment Act of 2021.
- (g) **Prerequisites for Assistance.—** The [Secretary](/usc/49/22401.md?p=14) shall not make a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this section unless the [Secretary](/usc/49/22401.md?p=14) has made a finding in writing that—
  - (1) repayment of the obligation is required to be made within a term that is not longer than the shorter of—
    - (A) 75 years after the date of [substantial completion](/usc/49/22401.md?p=15) of the project;
    - (B) 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; or
    - (C) for projects determined to have an estimated useful life that is longer than 35 years, the period that is equal to the sum of—
      - (i) 35 years; and
      - (ii) the product of—
        - (I) the difference between the estimated useful life and 35 years; multiplied by
        - (II) 75 percent.
  - (2) the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) is justified by the present and probable future demand for rail services or [intermodal](/usc/49/22401.md?p=5) 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](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) are consistent with [subsection (b)](#b).
- (h) **Conditions of Assistance.—**
  - (1) The [Secretary](/usc/49/22401.md?p=14) shall, before granting assistance under this section, require the applicant to agree to such terms and conditions as are sufficient, in the judgment of the [Secretary](/usc/49/22401.md?p=14), to ensure that, as long as any principal or interest is due and payable on such obligation, the applicant, and any [railroad](/usc/49/22401.md?p=12) or [railroad](/usc/49/22401.md?p=12) partner for whose benefit the assistance is intended—
    - (A) will not use any funds or assets from [railroad](/usc/49/22401.md?p=12) or [intermodal](/usc/49/22401.md?p=5) operations for purposes not related to such operations, if such use would impair the ability of the applicant, [railroad](/usc/49/22401.md?p=12), or [railroad](/usc/49/22401.md?p=12) partner to provide rail or [intermodal](/usc/49/22401.md?p=5) services in an efficient and economic manner, or would adversely affect the ability of the applicant, [railroad](/usc/49/22401.md?p=12), or [railroad](/usc/49/22401.md?p=12) 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)](#b).
  - (2) The [Secretary](/usc/49/22401.md?p=14) shall not require an applicant for a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this section to provide collateral. Any collateral provided or thereafter enhanced 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. The [Secretary](/usc/49/22401.md?p=14) shall not require that an applicant for a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this section have previously sought the financial assistance requested from another source.
  - (3) The [Secretary](/usc/49/22401.md?p=14) shall require recipients of [direct loans](/usc/49/22401.md?p=3) or [loan guarantees](/usc/49/22401.md?p=7) under this section to comply with—
    - (A) the standards of [section 24312](/usc/49/24312.md), as in effect on September 1, 2002, with respect to the project in the same manner that Amtrak is required to comply with such standards for construction work financed under an agreement made under [section 24308(a)](/usc/49/24308.md?p=a); and
    - (B) the protective arrangements established under [section 22404](/usc/49/22404.md), with respect to employees affected by actions taken in connection with the project to be financed by the loan or [loan guarantee](/usc/49/22401.md?p=7).
  - (4) The [Secretary](/usc/49/22401.md?p=14) shall require each recipient of a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this section for a project described in [subsection (b)(1)(F)](#b-1-F) to provide a non-Federal match of not less than 25 percent of the total amount expended by the recipient for such project.
- (i) **Application Processing Procedures.—**
  - (1) **Application status notices.—** Not later than 30 days after the date that the [Secretary](/usc/49/22401.md?p=14) receives an application under this section, or additional information and material under [paragraph (2)(B)](#i-2-B), the [Secretary](/usc/49/22401.md?p=14) shall provide the applicant written notice as to whether the application is complete or incomplete.
  - (2) **Incomplete applications.—** If the [Secretary](/usc/49/22401.md?p=14) determines that an application is incomplete, the [Secretary](/usc/49/22401.md?p=14) 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)](#i-2-A) to complete the application.
  - (3) **Application approvals and disapprovals.—**
    - (A) **In general.—** Not later than 60 days after the date the [Secretary](/usc/49/22401.md?p=14) notifies an applicant that an application is complete under [paragraph (1)](#i-1), the [Secretary](/usc/49/22401.md?p=14) shall provide the applicant written notice as to whether the [Secretary](/usc/49/22401.md?p=14) 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)](#i-3-A), the Office of Management and Budget shall take any action required with respect to the application within that 60-day period.
  - (4) **Streamlined application review process.—**
    - (A) **In general.—** Not later than 180 days after the date of enactment of the Surface [Transportation](/usc/49/13907.md?p=e-2) Investment Act of 2021, the [Secretary](/usc/49/22401.md?p=14) shall implement procedures and measures to economize and make available an streamlined application process or processes at the request of applicants seeking loans or [loan guarantees](/usc/49/22401.md?p=7).
    - (B) **Criteria.—** Applicants seeking loans and [loan guarantees](/usc/49/22401.md?p=7) under this section shall—
      - (i) seek a total loan or [loan guarantee](/usc/49/22401.md?p=7) value not exceeding $150,000,000;
      - (ii) meet eligible project purposes described in subparagraphs [(A)](#b-1-A) and [(B)](#b-1-B) of subsection (b)(1); and
      - (iii) meet other criteria considered appropriate by the [Secretary](/usc/49/22401.md?p=14), in consultation with the Council on Credit and Finance of the Department of [Transportation](/usc/49/13907.md?p=e-2).
    - (C) **Expedited credit review.—** The total period between the submission of an application and the approval or disapproval of an application for a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this paragraph may not exceed 90 days. If an application review conducted under this paragraph exceeds 90 days, the [Secretary](/usc/49/22401.md?p=14) 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) publish the notice on the dashboard described in [paragraph (5)](#i-5).
  - (5) **Dashboard.—** The [Secretary](/usc/49/22401.md?p=14) shall post on the Department of [Transportation](/usc/49/13907.md?p=e-2)’s Internet Web site 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](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) amount;
    - (E) the date on which the [Secretary](/usc/49/22401.md?p=14) provided application status notice under [paragraph (1)](#i-1);
    - (F) the date that the [Secretary](/usc/49/22401.md?p=14) provided notice of approval or disapproval under [paragraph (3)](#i-3); and
    - (G) whether the project utilized the streamlined application process under [paragraph (4)](#i-4).
  - (6) **Creditworthiness review status.—**
    - (A) **In general.—** The [Secretary](/usc/49/22401.md?p=14) shall maintain status information related to each application for a loan or [loan guarantee](/usc/49/22401.md?p=7), which shall be provided to the applicant upon request, including—
      - (i) the total value of the proposed loan or [loan guarantee](/usc/49/22401.md?p=7);
      - (ii) the name of the applicant or applicants submitting the application;
      - (iii) the proposed capital structure of the project to which the loan or [loan guarantee](/usc/49/22401.md?p=7) 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 is new construction, the rehabilitation of existing rail equipment or facilities, or the refinancing an existing loan or [loan guarantee](/usc/49/22401.md?p=7);
      - (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](/usc/42/4321.md) et seq.) and any waivers under [section 5323(j)](/usc/49/5323.md?p=j) (commonly known as the “Buy America Act”);
      - (x) other characteristics of the proposed activity to be financed, borrower, key agreements, or the nature of the credit that the [Secretary](/usc/49/22401.md?p=14) considers to be fundamental to the creditworthiness review;
      - (xi) the status of the application in the pre-application review and selection process;
      - (xii) the cumulative amounts paid by the [Secretary](/usc/49/22401.md?p=14) to outside advisors related to the application, including financial and legal advisors;
      - (xiii) a description of the key rating factors used by the [Secretary](/usc/49/22401.md?p=14) to determine credit risk, including—
        - (I) the 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;
      - (xiv) 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 (xiii)](#i-6-A-xiii); or
        - (II) a justification for why the estimate of the credit risk premium cannot be determined based on available information; and
      - (xv) a description of the key information the [Secretary](/usc/49/22401.md?p=14) needs from the applicant to complete the credit review process and make a final determination of the credit risk premium.
    - (B) **Report upon request.—** The [Secretary](/usc/49/22401.md?p=14) shall provide the information described in [subparagraph (A)](#i-6-A) not later than 30 days after a request from the applicant.
    - (C) **Exception.—** Applications processed using the streamlined application review process under [paragraph (4)](#i-4) are not subject to the requirements under this paragraph.
- (j) **Repayment Schedules.—**
  - (1) **In general.—** The [Secretary](/usc/49/22401.md?p=14) shall establish a repayment schedule requiring payments to commence not later than 5 years after the date of [substantial completion](/usc/49/22401.md?p=15).
  - (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 after the date of [substantial completion](/usc/49/22401.md?p=15) the obligor is unable to pay the scheduled loan repayments of principal and interest on a [direct loan](/usc/49/22401.md?p=3) provided under this section, the [Secretary](/usc/49/22401.md?p=14), subject to [subparagraph (B)](#j-3-B), may allow, for a maximum aggregate time of 1 year over the duration of the [direct loan](/usc/49/22401.md?p=3), the obligor to add unpaid principal and interest to the outstanding balance of the [direct loan](/usc/49/22401.md?p=3).
    - (B) **Interest.—** A payment deferred under [subparagraph (A)](#j-3-A) shall—
      - (i) continue to accrue interest under [paragraph (2)](#j-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](/usc/49/22401.md?p=3) provided by the [Secretary](/usc/49/22401.md?p=14) under this section, any excess revenues that remain after satisfying scheduled debt service requirements on the [project obligations](/usc/49/22401.md?p=11) and [direct loan](/usc/49/22401.md?p=3) and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing [project obligations](/usc/49/22401.md?p=11) may be applied annually to prepay the [direct loan](/usc/49/22401.md?p=3) without penalty.
    - (B) **Use of proceeds of refinancing.—** The [direct loan](/usc/49/22401.md?p=3) 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)](#k-2) and as soon as practicable after [substantial completion](/usc/49/22401.md?p=15) of a project, the [Secretary](/usc/49/22401.md?p=14), after notifying the obligor, may sell to another entity or reoffer into the capital markets a [direct loan](/usc/49/22401.md?p=3) for the project if the [Secretary](/usc/49/22401.md?p=14) 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)](#k-1), the [Secretary](/usc/49/22401.md?p=14) may 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)](#l-2), a [direct loan](/usc/49/22401.md?p=3) provided by the [Secretary](/usc/49/22401.md?p=14) under this section shall not be subordinated to the claims of any holder of [project obligations](/usc/49/22401.md?p=11) in the event of bankruptcy, insolvency, or liquidation of the obligor.
  - (2) **Preexisting indentures.—**
    - (A) **In general.—** The [Secretary](/usc/49/22401.md?p=14) may waive the requirement under [paragraph (1)](#l-1) for a public [agency](/usc/49/114.md?p=n-2-A-i) borrower that is financing ongoing capital programs and has outstanding senior bonds under a preexisting indenture if—
      - (i) the [direct loan](/usc/49/22401.md?p=3) is rated in the A category or higher;
      - (ii) the [direct loan](/usc/49/22401.md?p=3) 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](/usc/49/22401.md?p=14) may impose limitations for the waiver of the nonsubordination requirement under this paragraph if the [Secretary](/usc/49/22401.md?p=14) determines that such limitations would be in the financial interest of the Federal Government.
- (m) **Master Credit Agreements.—**
  - (1) **In general.—** Subject to [subsection (d)](#d) and paragraph (2) of this subsection, the [Secretary](/usc/49/22401.md?p=14) may enter into a [master credit agreement](/usc/49/22401.md?p=9) that is contingent on all of the conditions for the provision of a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7), as applicable, under this chapter and other applicable requirements being satisfied prior to the issuance of the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
  - (2) **Conditions.—** Each [master credit agreement](/usc/49/22401.md?p=9) shall—
    - (A) establish the maximum amount and general terms and conditions of each applicable [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7);
    - (B) identify 1 or more dedicated non-Federal revenue sources that will secure the repayment of each applicable [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7);
    - (C) provide for the obligation of funds for the [direct loans](/usc/49/22401.md?p=3) or [loan guarantees](/usc/49/22401.md?p=7) contingent on and after all requirements have been met for the projects subject to the [master credit agreement](/usc/49/22401.md?p=9); and
    - (D) provide 1 or more dates, as determined by the [Secretary](/usc/49/22401.md?p=14), before which the [master credit agreement](/usc/49/22401.md?p=9) results in each of the [direct loans](/usc/49/22401.md?p=3) or [loan guarantees](/usc/49/22401.md?p=7) or in the release of the [master credit agreement](/usc/49/22401.md?p=9).
- (n) **Non-Federal Share.—** The proceeds of a loan provided under this section may be used as the non-Federal share of project costs for any grant program administered by the [Secretary](/usc/49/22401.md?p=14) if such loan is repayable from non-Federal funds.

# §22403. Administration of direct loans and loan guarantees

- (a) **Applications.—**
  - (1) **In general.—** The [Secretary](/usc/49/22401.md?p=14) shall prescribe the form and contents required of applications for assistance under [section 22402](/usc/49/22402.md), to enable the [Secretary](/usc/49/22401.md?p=14) to determine the eligibility of the applicant’s proposal, and shall establish terms and conditions for [direct loans](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7) 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)](/usc/15/632.md?p=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](/usc/49/22401.md?p=14) under [section 22402](/usc/49/22402.md) shall constitute general obligations of the United States of America backed by the full faith and credit of the United States of America.
- (c) **Assignment of Loan Guarantees.—** The holder of a [loan guarantee](/usc/49/22401.md?p=7) made under [section 22402](/usc/49/22402.md) may assign the [loan guarantee](/usc/49/22401.md?p=7) in whole or in part, subject to such requirements as the [Secretary](/usc/49/22401.md?p=14) may prescribe.
- (d) **Modifications.—** The [Secretary](/usc/49/22401.md?p=14) may approve the [modification](/usc/49/22401.md?p=10) of any term or condition of a [direct loan](/usc/49/22401.md?p=3), [loan guarantee](/usc/49/22401.md?p=7), [direct loan obligation](/usc/49/22401.md?p=4), or [loan guarantee commitment](/usc/49/22401.md?p=8), including the rate of interest, time of payment of interest or principal, or security requirements, if the [Secretary](/usc/49/22401.md?p=14) finds in writing that—
  - (1) the [modification](/usc/49/22401.md?p=10) 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](/usc/49/22401.md?p=7) or [loan guarantee commitment](/usc/49/22401.md?p=8), the holder of the obligation; and
  - (3) the [modification](/usc/49/22401.md?p=10) cost has been covered under [section 22402(f)](/usc/49/22402.md?p=f).
- (e) **Compliance.—** The [Secretary](/usc/49/22401.md?p=14) shall assure compliance, by an applicant, any other party to the loan, and any [railroad](/usc/49/22401.md?p=12) or [railroad](/usc/49/22401.md?p=12) partner for whose benefit assistance is intended, with the provisions of this chapter, regulations issued hereunder, and the terms and conditions of the [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7), including through regular periodic inspections.
- (f) **Commercial Validity.—** For purposes of claims by any party other than the [Secretary](/usc/49/22401.md?p=14), a [loan guarantee](/usc/49/22401.md?p=7) or [loan guarantee commitment](/usc/49/22401.md?p=8) shall be conclusive evidence that the underlying obligation is in compliance with the provisions of this chapter, and that such obligation has been approved and is legal as to principal, interest, and other terms. Such a guarantee or commitment shall be valid and incontestable in the hands of a holder thereof, including the original lender or any other holder, as of the date when the [Secretary](/usc/49/22401.md?p=14) granted the application therefor, except as to fraud or material misrepresentation by such holder.
- (g) **Default.—** The [Secretary](/usc/49/22401.md?p=14) shall prescribe regulations setting forth procedures in the event of default on a loan made or guaranteed under [section 22402](/usc/49/22402.md). The [Secretary](/usc/49/22401.md?p=14) shall ensure that each [loan guarantee](/usc/49/22401.md?p=7) made under that section contains terms and conditions that provide that—
  - (1) if a payment of principal or interest under the loan is in default for more than 30 days, the [Secretary](/usc/49/22401.md?p=14) shall pay to the holder of the obligation, or the holder’s agent, the amount of unpaid guaranteed interest;
  - (2) if the default has continued for more than 90 days, the [Secretary](/usc/49/22401.md?p=14) shall pay to the holder of the obligation, or the holder’s agent, 90 percent of the unpaid guaranteed principal;
  - (3) after final resolution of the default, through liquidation or otherwise, the [Secretary](/usc/49/22401.md?p=14) shall pay to the holder of the obligation, or the holder’s agent, any remaining amounts guaranteed but which were not recovered through the default’s resolution;
  - (4) the [Secretary](/usc/49/22401.md?p=14) shall not be required to make any payment under [paragraphs (1) through (3)](#g-1..g-3) if the [Secretary](/usc/49/22401.md?p=14) finds, before the expiration of the periods described in such paragraphs, that the default has been remedied; and
  - (5) the holder of the obligation shall not receive payment or be entitled to retain payment in a total amount which, together with all other recoveries (including any recovery based upon a security interest in equipment or facilities) exceeds the actual loss of such holder.
- (h) **Rights of the Secretary.—**
  - (1) **Subrogation.—** If the [Secretary](/usc/49/22401.md?p=14) makes payment to a holder, or a holder’s agent, under [subsection (g)](#g) in connection with a [loan guarantee](/usc/49/22401.md?p=7) made under [section 22402](/usc/49/22402.md), the [Secretary](/usc/49/22401.md?p=14) 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](/usc/49/22401.md?p=14) 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](/usc/49/22401.md?p=14) shall not be subject to any Federal or [State](/usc/49/31132.md?p=8) regulatory requirements when carrying out this paragraph.
- (i) **Action Against Obligor.—** The [Secretary](/usc/49/22401.md?p=14) 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](/usc/49/22401.md?p=3) made under [section 22402](/usc/49/22402.md), 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](/usc/49/22402.md). The holder of a guarantee shall make available to the [Secretary](/usc/49/22401.md?p=14) all records and evidence necessary to prosecute the civil action. The [Secretary](/usc/49/22401.md?p=14) may accept property in full or partial satisfaction of any sums owed as a result of a default. If the [Secretary](/usc/49/22401.md?p=14) receives, through the sale or other disposition of such property, an amount greater than the aggregate of—
  - (1) the amount paid to the holder of a guarantee under [subsection (g)](#g) of this section; and
  - (2) any other cost to the United States of remedying the default,

  the [Secretary](/usc/49/22401.md?p=14) shall pay such excess to the obligor.

- (j) **Breach of Conditions.—** The Attorney General shall commence a civil action in an appropriate Federal court to enjoin any activity which the [Secretary](/usc/49/22401.md?p=14) finds is in violation of this chapter, regulations issued hereunder, or any conditions which were duly agreed to, and to secure any other appropriate relief.
- (k) **Attachment.—** No attachment or execution may be issued against the [Secretary](/usc/49/22401.md?p=14), or any property in the control of the [Secretary](/usc/49/22401.md?p=14), prior to the entry of final judgment to such effect in any [State](/usc/49/31132.md?p=8), Federal, or other court.
- (l) **Charges and Loan Servicing.—**
  - (1) **Purposes.—** The [Secretary](/usc/49/22401.md?p=14) may collect from each applicant, obligor, or loan party a reasonable charge for—
    - (A) the cost of evaluating the application, amendments, [modifications](/usc/49/22401.md?p=10), 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](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) is sought, and for making necessary determinations and findings;
    - (B) the 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](/usc/49/22401.md?p=3) and [loan guarantees](/usc/49/22401.md?p=7); 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](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7).
  - (2) **Standards.—** The [Secretary](/usc/49/22401.md?p=14) may charge different amounts under this subsection based on the different costs incurred under [paragraph (1)](#l-1).
  - (3) **Servicer.—**
    - (A) **In general.—** The [Secretary](/usc/49/22401.md?p=14) may appoint a financial entity to assist the [Secretary](/usc/49/22401.md?p=14) in servicing a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this chapter.
    - (B) **Duties.—** A servicer appointed under [subparagraph (A)](#l-3-A) shall act as the agent of the [Secretary](/usc/49/22401.md?p=14) in servicing a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) under this chapter.
    - (C) **Fees.—** A servicer appointed under [subparagraph (A)](#l-3-A) shall receive a servicing fee from the obligor or other loan party, subject to approval by the [Secretary](/usc/49/22401.md?p=14).
  - (4) **National surface transportation and innovative finance bureau account.—** Amounts collected under this subsection shall—
    - (A) be credited directly to the National Surface [Transportation](/usc/49/13907.md?p=e-2) 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](/usc/49/22401.md?p=14) may not assess any fees, including user fees, or charges in connection with a [direct loan](/usc/49/22401.md?p=3) or [loan guarantee](/usc/49/22401.md?p=7) provided under [section 22402](/usc/49/22402.md).