
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 45USC822]

 
                           TITLE 45--RAILROADS
 
        CHAPTER 17--RAILROAD REVITALIZATION AND REGULATORY REFORM
 
    SUBCHAPTER II--RAILROAD REHABILITATION AND IMPROVEMENT FINANCING
 
Sec. 822. Direct loans and loan guarantees


(a) General authority

    The Secretary may provide direct loans and loan guarantees to State 
and local governments, government sponsored authorities and 
corporations, railroads, and joint ventures that include at least 1 
railroad.

(b) Eligible purposes

                           (1) In general

        Direct loans and loan guarantees under this section shall be 
    used to--
            (A) acquire, improve, or rehabilitate intermodal or rail 
        equipment or facilities, including track, components of track, 
        bridges, yards, buildings, and shops;
            (B) refinance outstanding debt incurred for the purposes 
        described in subparagraph (A); or
            (C) develop or establish new intermodal or railroad 
        facilities.

                 (2) Operating expenses not eligible

        Direct loans and loan guarantees under this section shall not be 
    used for railroad operating expenses.

(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;
        (2) enhance the environment;
        (3) promote economic development;
        (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 by the State or States in which they are located; or
        (6) preserve or enhance rail or intermodal service to small 
    communities or rural areas.

(d) Extent of authority

    The aggregate unpaid principal amounts of obligations under direct 
loans and loan guarantees made under this section shall not exceed 
$3,500,000,000 at any one time. Of this amount, not less than 
$1,000,000,000 shall be available solely for projects primarily 
benefiting freight railroads other than Class I carriers.

(e) Rates of interest

                          (1) Direct loans

        The Secretary shall require interest to be paid on a direct loan 
    made under this section at a rate not less than that necessary to 
    recover the cost of making the loan.

                         (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

        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 661c(b)(1) of title 2, the Secretary may 
    accept on behalf of an applicant for assistance under this section a 
    commitment from a non-Federal source to fund in whole or in part 
    credit risk premiums with respect to the loan that is the subject of 
    the application. 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 or loan guarantee 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;
            (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) Payment of premiums

        Credit risk premiums under this subsection shall be paid to the 
    Secretary before the disbursement of loan amounts.

                        (4) Cohorts of loans

        In order to maintain sufficient balances of credit risk premiums 
    to adequately protect the Federal Government from risk of default, 
    while minimizing the length of time the Government retains 
    possession of those balances, the Secretary shall establish cohorts 
    of loans. When all obligations attached to a cohort of loans have 
    been satisfied, credit risk premiums paid for the cohort, and 
    interest accrued thereon, which were not used to mitigate losses 
    shall be returned to the original source on a pro rata basis.

(g) Prerequisites for assistance

    The Secretary shall not make a direct loan or loan guarantee under 
this section unless the Secretary has made a finding in writing that--
        (1) repayment of the obligation is required to be made within a 
    term of not more than 25 years from the date of its execution;
        (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) of this section.

(h) Conditions of assistance

    The Secretary 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, to ensure that, as long as 
any principal or interest is due and payable on such obligation, the 
applicant, and any railroad or railroad partner for whose benefit the 
assistance is intended--
        (1) will not use any funds or assets from railroad or intermodal 
    operations for purposes not related to such operations, if such use 
    would impair the ability of the applicant, railroad, or railroad 
    partner to provide rail or intermodal services in an efficient and 
    economic manner, or would adversely affect the ability of the 
    applicant, railroad, or railroad partner to perform any obligation 
    entered into by the applicant under this section;
        (2) will, consistent with its capital resources, maintain its 
    capital program, equipment, facilities, and operations on a 
    continuing basis; and
        (3) will not make any discretionary dividend payments that 
    unreasonably conflict with the purposes stated in subsection (b) of 
    this section.

(Pub. L. 94-210, title V, Sec. 502, as added Pub. L. 105-178, title VII, 
Sec. 7203(a)(1), June 9, 1998, 112 Stat. 473.)


                            Prior Provisions

    A prior section 822, Pub. L. 94-210, title V, Sec. 502, Feb. 5, 
1976, 90 Stat. 67; Pub. L. 95-620, title VIII, Sec. 803(c)(2)-(4), Nov. 
9, 1978, 92 Stat. 3347, related to the Rail Fund, prior to repeal by 
Pub. L. 105-178, title VII, Sec. 7203(a)(1), June 9, 1998, 112 Stat. 
471.

                  Section Referred to in Other Sections

    This section is referred to in section 823 of this title.
