[Federal Register Volume 85, Number 229 (Friday, November 27, 2020)]
[Notices]
[Pages 76174-76177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25274]


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DEPARTMENT OF TRANSPORTATION


Notice of Funding Opportunity for Letters of Interest for the 
RRIF Express Pilot Program Under the Railroad Rehabilitation & 
Improvement Financing Program

AGENCY: Office of the Secretary, Department of Transportation (DOT).

ACTION: Notice of funding opportunity.

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SUMMARY: This Notice of Funding Opportunity (NOFO) for the RRIF Express 
Pilot Program expands eligibility criteria and extends the deadline for 
submission of Letters of Interest. The eligibility criteria in section 
IV. are revised to: Increase the total project size limit to $150 
million, broaden project scope consistent with the RRIF statute, and 
expand the proportion of refinancing allowed to 75%. Prospective RRIF 
borrowers who have been accepted into the RRIF Express program may 
amend their Letters of Interest to reflect the changed criteria. 
Prospective RRIF borrowers who received advice from DOT on issues to 
address in revising and resubmitting Letters of Interest may also take 
advantage of the expanded criteria while also following the advice 
provided. All projects that were previously eligible for RRIF Express 
financing remain eligible under this NOFO.

DATES: Letters of Interest from prospective RRIF borrowers for the RRIF 
Express Program will be accepted on rolling basis until available 
funding is expended or this notice is superseded by another notice.
    Prospective RRIF borrowers that have previously submitted a Letter 
of Interest but that also seek acceptance into the RRIF Express Program 
should resubmit a Letter of Interest following the instructions below. 
Prospective RRIF borrowers who previously submitted Letters of Interest 
under a previous RRIF Express Notice of Funding Opportunity (published 
on December 13, 2019, March 16, 2020, or June 19, 2020), and whose 
Letters of Interest have not been returned as ineligible, do not have 
to re-apply, and may amend their Letter of Interest to take advantage 
of the revised eligibility criteria. Prospective RRIF borrowers whose 
Letter of Interest for RRIF Express was returned by the Bureau with 
advice on issues to address in resubmitting a Letter of Interest may 
also take advantage of the revised eligibility criteria while also 
following the advice provided.
    Irrespective of the above, the Bureau continues to accept Letters 
of Interest on a rolling basis from any prospective RRIF borrower 
interested in receiving RRIF credit assistance only (i.e., without 
participation in the RRIF Express Program).

ADDRESSES: Applicants to the RRIF Express Program must use the latest 
version of the Letter of Interest form available on the Build America 
Bureau website: https://www.transportation.gov/content/build-america-bureau (including applicants who have previously submitted Letters of 
Interest and who are now seeking participation in the RRIF Express 
Program). Letters of Interest must be submitted to the Build America 
Bureau via email at: RRIFexpress@dot.gov using the following subject 
line: ``Letter of Interest for RRIF Express Program.'' Submitters 
should receive a confirmation email, but are advised to request a 
return receipt to confirm transmission. Only Letters of Interest 
received via email at the above email address with the subject line 
listed above shall be deemed properly filed.

FOR FURTHER INFORMATION CONTACT: For further information regarding this 
notice please contact William Resch via email at william.resch@dot.gov 
or via telephone at 202-366-2300. A TDD is available at 202-366-3993.

SUPPLEMENTARY INFORMATION: The original NOFO with modifications 
follows.
    The RRIF Express Program is administered by the DOT's National 
Surface Transportation and Innovative Finance Bureau (the ``Build 
America Bureau'' or ``Bureau''). The overall RRIF program finances 
development of railroad infrastructure, and is authorized to have up to 
$35 billion in outstanding principal amounts from direct loans and loan 
guarantees at any one time.
    The 2018 Consolidated Appropriations Act \1\ appropriated $25 
million in budget authority to the DOT to cover the cost to the Federal 
Government (``the Government'') of RRIF credit assistance (Credit Risk 
Premium (``CRP'') Assistance or ``CRP Assistance''). Additionally, the 
2016 Consolidated Appropriations Act \2\ and the 2018 Consolidated 
Appropriations Act \3\ provided $1.96 million and $350,000, 
respectively (of which approximately $1 million remains available), to 
the DOT to fund certain expenses incurred by prospective RRIF borrowers 
in preparation of their

[[Page 76175]]

applications for RRIF credit assistance (this approximately $1 million 
assistance, collectively, ``Cost Assistance''). Using existing 
authorities and these new budget authorities, the DOT has established 
the RRIF Express Program.
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    \1\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
    \2\ Public Law 114-113, div. L, tit. I, Sec.  152, 129 Stat. 
2242, 2856.
    \3\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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    Subject to the availability of funds, applicants accepted into the 
RRIF Express Program may benefit from two types of financial 
assistance: (a) Cost Assistance up to $100,000 per application to pay 
for a portion of the Bureau's advisor expenses borne by applicants; and 
(b) for those applicants that ultimately receive RRIF credit 
assistance, CRP Assistance up to 10% of the final RRIF loan amount, not 
to exceed $5 million, to offset the CRP paid by the borrower. Any costs 
beyond $100,000 and any CRP beyond the lower of 10% and $5 million 
would be paid by the prospective RRIF borrower. These funds will be 
made available to benefit applicants accepted into the RRIF Express 
Program on a first come, first served basis until each source of 
funding is expended or this notice is superseded by a new Notice of 
Funding Opportunity. Letters of Interest will be accepted in the order 
received and will be allocated cost assistance based on the date of 
acceptance into the pilot program. CRP assistance will be allocated in 
the order of financial close. For more information about potential 
financial assistance for RRIF Express applicants, see Supplementary 
Information: Section II. Funding of CRP and Cost Assistance.
    This notice solicits Letters of Interest from prospective RRIF 
borrowers seeking acceptance into the RRIF Express Program, establishes 
eligibility criteria and describes the process that prospective 
borrowers must follow when submitting Letters of Interest.
    RRIF Express pilot program information, including any additional 
resources, terms, conditions and requirements when they become 
available, can be found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. For further 
information about the overall RRIF program in general, including 
details about the types of credit assistance available, eligibility 
requirements and the creditworthiness review process, please refer to 
the Build America Bureau Credit Programs Guide (``Programs Guide),'' 
available on the Build America Bureau website: https://www.transportation.gov/buildamerica/programs-services/tifia/program-guide.

Table of Contents

I. Background
II. Funding of CRP Assistance and Cost Assistance
III. Eligibility Requirements for RRIF Credit Assistance
IV. Eligibility Criteria for the RRIF Express Program
V. Letter of Interest Process and Review and Next Steps

I. Background

    The Transportation Equity Act for the 21st Century,\4\ established 
the RRIF program, authorizing the DOT to provide credit assistance in 
the form of direct loans and loan guarantees to public and private 
applicants for eligible railroad projects. The RRIF program is a DOT 
program and final approval of credit assistance is reserved for the 
Secretary of the DOT. The 2005 Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users; \5\ the Rail Safety 
Improvement Act of 2008; \6\ and the 2015 Fixing America's Surface 
Transportation Act \7\ (the ``FAST Act'') each made a number of changes 
to the RRIF program. In addition, the FAST Act authorized the creation 
of the Bureau to consolidate administration of certain DOT credit and 
grant programs, including the RRIF program.
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    \4\ Public Law 105-178, 7203, 112 Stat. 107, 471.
    \5\ Public Law 109-59, 9003, 119 Stat. 1144, 1921.
    \6\ Public Law 110-432, 701(e), 122 Stat. 4848, 4906.
    \7\ Public Law 114-94, Subtitle F, 129 Stat. 1312, 1693.
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II. Funding of CRP Assistance and Cost Assistance

    Through the RRIF program, the DOT is authorized to have, at any one 
time, up to $35 billion in unpaid principal amounts of obligations 
under direct loans and loan guarantees to finance development of 
railroad infrastructure.

CRP Assistance

    Prior to the 2018 Consolidated Appropriations Act, the RRIF program 
did not have an appropriation of budget authority to pay the cost to 
the Government of providing RRIF credit assistance. As a result, the 
RRIF borrower or a third party was required to bear this cost through 
the payment of a CRP. The 2018 Consolidated Appropriations Act \8\ 
provided $25 million to the DOT to cover the cost to the Government of 
RRIF credit assistance. The DOT will use this funding to pay or offset 
the CRP (up to 10% of the RRIF loan amount, not to exceed $5 million) 
payable by participants in the RRIF Express Program, until this funding 
is expended or this notice is superseded by a new Notice of Funding 
Opportunity.
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    \8\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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Cost Assistance

    As described in the Programs Guide, RRIF borrowers are required to 
pay (or reimburse the DOT) for costs incurred by the Bureau in 
connection with the review of Letters of Interest and applications for 
RRIF credit assistance. The 2016 Consolidated Appropriations Act \9\ 
and the 2018 Consolidated Appropriations Act \10\ collectively provided 
$2.31 million to the DOT to be used to fund expenses incurred by 
prospective RRIF borrowers in preparation to apply for RRIF credit 
assistance. A portion of these funds have already been allocated for 
prior RRIF projects. The DOT is reserving approximately $1 million of 
remaining funds from these appropriations to offset the cost of DOT 
advisors (up to $100,000 per application) that would be payable by 
participants in the RRIF Express Program, until this funding is 
expended or this notice is superseded by a new Notice of Funding 
Opportunity.
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    \9\ Public Law 114-113, div. L, tit. I, Sec.  152, 129 Stat. 
2242, 2856.
    \10\ Public Law 115-141, div. L, tit. I, H.R. 1625 at 646 (as 
enrolled Mar. 23, 2018).
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III. Eligibility Requirements for RRIF Credit Assistance

    The RRIF statute and implementing rules set forth eligibility 
requirements for applicants and projects. These requirements as well as 
other applicable federal requirements are described in detail in the 
Programs Guide and apply to all applicants and projects, including 
those seeking acceptance into the RRIF Express Program. In addition, 
for prospective borrowers seeking RRIF Express Program benefits, the 
requirements set forth in section IV (Eligibility Criteria for the RRIF 
Express Program) of this notice also apply.

IV. Eligibility Criteria for the RRIF Express Program

    The DOT has identified the following strategic objectives for the 
RRIF Express Program: Encouraging increased utilization of RRIF credit 
assistance by Class II and Class III railroads; reducing transaction 
costs for Class II and Class III railroads; and streamlining the 
underwriting process for Class II and Class III railroads. These 
priorities are reflected in the eligibility criteria below. Generally, 
projects most suitable for the RRIF Express Program are rail line 
modernization projects where the borrower has a well-documented 
financial history and easily identified revenue stream(s) for loan 
repayment.

[[Page 76176]]

    To differentiate among Letters of Interest received for projects 
under this notice of funding opportunity, the DOT will consider whether 
the project satisfies the following eligibility criteria as 
demonstrated by the Letter of Interest:
    (i) Applicant: The applicant must be a Class II railroad, a Class 
III railroad, a commuter railroad or a joint venture with a Class II, 
III, or commuter railroad.
    (ii) Project Size: The project must have eligible project costs of 
$150 million or less with no minimum amount.
    (iii) Project Scope: The project scope, as described in Section B4 
of the Letter of Interest, must be limited to the support of railroad 
activities that are otherwise eligible for RRIF financing and as 
outlined below:
    (a) Acquire, improve, or rehabilitate intermodal or rail equipment 
or facilities, including track, components of track, bridges, yards, 
buildings, and shops, and costs related to these activities, including 
pre-construction costs. Note that this category of eligible activities 
includes the installation of positive train control systems;
    (b) Develop or establish new intermodal or railroad facilities;
    (c) Reimburse planning and design expenses relating to activities 
listed above;
    (d) Refinancing of non-federal debt (incurred at least three years 
prior to November 27, 2020) and for the purpose of one or more of the 
activities listed in 45 U.S.C. 822(b)(1)(A) or (C). Refinancing is 
limited to up to 75% of the final RRIF loan amount. Letters of Interest 
including refinancing must demonstrate with specificity in Section D5 
how the refinancing would improve the creditworthiness of the applicant 
and document how such improvement would facilitate the activities 
referenced in items (a) and (b) above and would increase the 
applicant's ability to repay a RRIF loan and the overall financial 
health of the applicant.
    (iv) Applicant Financial History and Projections: Attachment D-1 of 
the Letter of Interest must include audited financial statements (by a 
qualified third party, e.g., a certified public accountant) for the two 
(2) most recent consecutive years preceding the year of application and 
that have no significant unresolved findings (e.g., fiscal years 2018 
and 2019). Interim unaudited financial statements may be submitted with 
a letter pledging to provide these audited statements within 60 days of 
submitting of the LOI and supporting materials. Failure to provide the 
audited financial statements within 60 days will disqualify the LOI. 
Applicants choosing this option must still provide unaudited financial 
statements for the previous five years and prospective financial 
projections (pro-forma) for the term of the loan.
    (v) Collateral: If collateral will be pledged for the RRIF loan, 
Section D9 of the Letter of Interest must be supported with an 
independent appraisal of the collateral that must have been completed 
within the past 12 months preceding submission of an LOI. Section D9 of 
the Letter of Interest must demonstrate that the collateral will be 
unencumbered at time of closing, including a description of any lien 
release process that would occur prior to closing on the RRIF loan to 
render currently pledged collateral unencumbered.
    (vi) Environmental Documentation: Section B6 and Attachment B-6 of 
the Letter of Interest must demonstrate that either NEPA review is 
complete or the project is likely to qualify for a Categorical 
Exclusion (CE) or Finding of No Significant Impact (FONSI) under NEPA. 
If a NEPA review has not been completed, Attachment B-6 must include a 
Federal Railroad Administration (FRA) CE worksheet with its Letter of 
Interest. Where appropriate, the CE worksheet must include substantive 
analysis of potential impacts to environmental resources and indicate 
the sources of the information or data used to reach conclusions. For 
some project types, the CE worksheet will satisfy NEPA review and 
documentation requirements; however, for other project types, the CE 
worksheet will inform FRA with sufficient details about the project 
scope and potential environmental impacts to determine if an 
Environmental Assessment (EA) is required. The Applicant would be 
responsible for providing sufficient information and funding for the 
preparation of an EA, which would also extend the duration of project 
development activities. FRA may require the use of a third-party 
contractor consistent with 23 CFR 771.109 (e) for the preparation of an 
EA. In the event that an EA is necessary, eligible projects must 
receive a FONSI to qualify for RRIF Express.
    To help address compliance with Section 106 of the National 
Historic Preservation Act, supporting documentation must be submitted 
for projects involving reconstruction or replacement of existing 
railroad bridges, tunnels, culverts, stations, or depots that assesses 
the eligibility of these architectural properties for listing in the 
National Register of Historic Places. Supporting documentation must 
also be provided for projects involving ground-disturbing site 
preparation and construction activities in areas that have not been 
previously disturbed (such as by prior land development, agricultural 
activities, or the placement of fill), that assesses the archaeological 
sensitivity of the project area.
    (vii) Domestic Preference: Section B4(a) of the Letter of Interest 
must demonstrate that the steel, iron, and manufactured goods used in 
the project will be produced in the United States in accordance with 
the Federal Railroad Administration RRIF Buy America policy, which 
follows 49 U.S.C. 24405(a). Projects that require a waiver are not 
eligible for the RRIF Express Program, however, prospective borrowers 
can seek a loan from the overall RRIF program for projects that require 
a waiver.
    (viii) Project Readiness: Section B4(c) of the Letter of Interest 
must demonstrate the prospective borrower's ability to commence the 
contracting process for construction of the project (e.g., issuance of 
a final RFP) by not later than 90 days after the date on which a RRIF 
credit instrument is obligated for the project.

V. Letter of Interest Process and Review and Next Steps

A. Submission of Letters of Interest

    All prospective borrowers seeking acceptance into the RRIF Express 
Program should submit a Letter of Interest following the instructions 
described in this notice of funding opportunity. The Letter of Interest 
should be annotated with ``RRIF EXPRESS'' immediately following the 
Applicant Name in the Summary Information section on page one of the 
Letter of Interest. The Letter of Interest must, among other things:
    (i) Describe the project and its components, location, and purpose 
in Section B, and include as Attachment B-2 the project budget 
organized according to construction elements from preliminary 
engineering estimates, and including costs as appropriate for property, 
vehicles, professional services, allocated and unallocated contingency, 
and finance charges;
    (ii) Outline the proposed financial plan in Section C, and include 
the financial model, that addresses such aspects as model assumptions, 
annual cash flows, balance sheets, income statements and repayment 
schedules for the duration of the loan, as well as coverage ratios and 
debt metrics. The model should allow reviewers the flexibility to 
evaluate scenarios in the native spreadsheet (Microsoft Excel, or

[[Page 76177]]

equivalent) format and be included in the application as Attachment C-
1;
    (iii) Provide information regarding satisfaction of other statutory 
eligibility requirements of the RRIF credit program; and
    (iv) Provide information regarding satisfaction of the RRIF Express 
Program eligibility criteria (as described in Section IV above).
    Prospective RRIF Express borrowers should describe in Letter of 
Interest Section D8 if the project will (1) decrease transportation 
costs and improve access, especially for rural communities or 
communities in Opportunity Zones,\11\ through reliable and timely 
access to employment centers and job opportunities; (2) improve long-
term efficiency, reliability or costs in the movement of workers or 
goods; (3) increase the economic productivity of land, capital, or 
labor, including assets in Opportunity Zones; (4) result in long-term 
job creation and other economic opportunities; or (5) help the United 
States compete in a global economy by facilitating efficient and 
reliable freight movement. Projects that bridge gaps in service in 
rural areas, and projects that attract private economic development, 
all support local or regional economic competitiveness.
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    \11\ See https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx 
for more information on Opportunity Zones.
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    Letters of Interest must be submitted using the latest form on the 
Build America Bureau website: https://www.transportation.gov/content/build-america-bureau. Other RRIF Express pilot program information 
including any additional terms, conditions, and requirements can be 
found on the Build America Bureau website at: https://www.transportation.gov/buildamerica/rrif-express. The Bureau may 
contact a prospective borrower for clarification of specific 
information included in the Letter of Interest. The Bureau will review 
all Letters of Interest properly filed and received in the submission 
time window provided herein.

B. Review and Evaluation

    Each Letter of Interest that is properly filed and received will be 
evaluated for completeness and eligibility for the RRIF Express Program 
using the criteria in this notice. This initial step of the review 
process will include (1) an evaluation as to whether the proposed 
project and applicant satisfy RRIF statutory eligibility requirements, 
and (2) an evaluation as to whether the proposed project and applicant 
satisfy the RRIF Express Program eligibility criteria. In addition, the 
Bureau will conduct a high-level feasibility assessment of the proposed 
project and the applicant's plan of finance before a Letter of Interest 
is accepted into the RRIF Express Program and before a Letter of 
Interest enters the creditworthiness process. With respect to the 
project, factors that will be considered include, but are not limited 
to, (1) the completion of the project being financed is not necessary 
to repay the proposed RRIF loan; (2) the project budget is in year of 
expenditure and includes contingencies to account for potential project 
risks; and (3) the maturity of the proposed RRIF loan does not extend 
beyond the project's anticipated useful life. With respect to the 
applicant's plan of finance, factors that will be considered include, 
but are not limited to, (1) a maximum loan size that, when added to the 
proposed borrower's existing outstanding and undrawn available debt, 
does not substantially exceed an earnings before interest, taxes, 
depreciation, and amortization multiple that would be market 
appropriate in a similar circumstance, for the most recent trailing 
twelve month period and for any period of the applicant's forecast; and 
(2) consistent levels of revenue and operating profitability 
demonstrated by the proposed borrower over the most recent fiscal year.
    The Letters of Interest determined to be eligible for the RRIF 
Express Program will then be advanced to the Bureau's creditworthiness 
review process, which is an in-depth creditworthiness review of the 
project sponsor and the revenue stream proposed to repay the RRIF 
credit assistance as described in the Programs Guide. The Secretary 
reserves the right to limit the number of applications from a single 
entity or subordinates of a single parent or holding company. 
Prospective RRIF borrowers whose RRIF Express Program Letters of 
Interest are determined to be ineligible, but whose projects are 
otherwise statutorily eligible for standard RRIF credit assistance, 
have the option to be considered under the overall RRIF program.

    Issued in Washington, DC, on October 22, 2020.
Elaine L. Chao,
Secretary of Transportation.
[FR Doc. 2020-25274 Filed 11-25-20; 8:45 am]
BILLING CODE 4910-9X-P


