Water Infrastructure Finance and Innovation Act Program (WIFIA) Criteria Pursuant to the Further Consolidated Appropriations Act, 2020
| Published date | 30 June 2020 |
| Citation | 85 FR 39189 |
| Record Number | 2020-13889 |
| Section | Notices |
| Court | Environmental Protection Agency,Management Of Budget Office,Treasury Department,Management And Budget Office |
Federal Register, Volume 85 Issue 126 (Tuesday, June 30, 2020)
[Federal Register Volume 85, Number 126 (Tuesday, June 30, 2020)]
[Notices]
[Pages 39189-39191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13889]
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ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF MANAGEMENT OF BUDGET
DEPARTMENT OF THE TREASURY
[FRL-10011-02-OW]
Water Infrastructure Finance and Innovation Act Program (WIFIA)
Criteria Pursuant to the Further Consolidated Appropriations Act, 2020
AGENCY: Environmental Protection Agency (EPA), Office of Management and
Budget (OMB), and Department of the Treasury (Treasury).
ACTION: Notice.
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SUMMARY: The U.S. Environmental Protection Agency (EPA), the Office of
Management and Budget (OMB), and the Department of the Treasury
(Treasury) are providing potential applicants to the Water
Infrastructure Finance and Innovation Act (WIFIA) Program with
information about budgetary screening criteria that will be applied to
projects in accordance with the Further Consolidated Appropriations
Act, 2020.
DATES: The effective date of the contents of this notice is June 30,
2020.
FOR FURTHER INFORMATION CONTACT: For additional EPA information related
to this notice, please contact Jordan Dorfman, Office of Water (mail
code 4202M), Environmental Protection Agency, 1200 Pennsylvania Avenue
NW, Washington, DC 20460; telephone number: (202) 564-0614; or email:
[email protected] (preferred). For additional OMB information
related to this notice, please contact Andrea Grossman, Environment
Branch, Office of Management and Budget, 757 17th Street NW,
Washington, DC 20006; telephone number: (202) 395-4756; or email:
[email protected]. For additional Treasury information related to
this notice, please contact Colleen Mills, Office of Federal Program
Finance, Department of the Treasury, 1500 Pennsylvania Avenue NW,
Washington, DC 20220; telephone number: (202) 622-5447; or email:
[email protected].
SUPPLEMENTARY INFORMATION:
I. Statutory Requirement
The following criteria are published pursuant to the Water
Infrastructure Finance and Innovation Program Account (WIFIA Program)
heading in the Further Consolidated Appropriations Act, 2020 (Pub. L.
116-94). Proviso 4 under the WIFIA Program heading requires the
publication of criteria that ``limit Federal participation in a project
consistent with the requirements for the budgetary treatment provided
for in section 504 of the Federal Credit Reform Act of 1990 [(FCRA; 2
U.S.C. 661c)] and based on the recommendations contained in the 1967
Report of the President's Commission on Budget Concepts [(1967
Report)].'' Proviso 7 under the WIFIA Program heading requires ``the
use of direct loans or loan guarantee authority under [the WIFIA
Program] heading for direct loans or commitments to guarantee loans for
any project shall be in accordance with the criteria published pursuant
to this Act.''
II. Background
The Federal budget is presented on a cash basis. This is driven by
many considerations, among which is a need to reflect the statutory
requirement that the Federal Government records full cost at the time
an obligation is entered into, as required by 31 U.S.C. 1501, known as
the recording statute. If an activity is determined to be Federal in
nature, then, consistent with 31 U.S.C. 1501, Federal obligations are
recorded in the budget at the full value of the activity. The question
of whether or not to include a project or asset in the budget hinges on
whether the project or asset in question is Federal or non-Federal in
nature. When faced with a project or asset where this Federal
designation is unclear, the 1967 Report recommends ``a comprehensive
budget, with very few exclusions'' and states that ``borderline
agencies and transactions should be included in the budget unless there
are exceptionally persuasive reasons for exclusion.'' \1\ The 1967
Report notes the inherent difficulty in making a Federal or non-Federal
determination in many cases and suggests a series of questions, which
guide the criteria below, yet notes that ``the answer to no one of
these questions is conclusive'' and decisions involve ``a net weighing
of as many relevant considerations as possible.'' \2\
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\1\ The 1967 Report of the President's Commission on Budget
Concepts, pg. 25.
\2\ Id.
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The most significant statutory exception to the cash basis of the
Federal budget is section 504 of FCRA, 2 U.S.C. 661c, which requires
the budgetary treatment of direct loans and loan guarantees provided by
the Government to a non-Federal borrower to be recorded using net
present value. Regardless of the identity of the borrower, however,
requiring that a Federal project or asset be recorded in the budget on
a net present value basis would be inconsistent with 31 U.S.C. 1501,
existing Government-wide guidance, and a cash budget. Therefore, to
``limit Federal participation in a project consistent with the
requirements for the budgetary treatment provided for in section 504 of
[FCRA] and based on the recommendations contained in the [1967
Report],'' as required by Proviso 4 under the WIFIA Program heading in
Public Law 116-94, only non-Federal projects are eligible for WIFIA
loans and loan guarantees.
III. Federal Asset Screening Criteria and Process
The following criteria are published pursuant to Proviso 4 under
the WIFIA Program heading in Public Law 116-94 and apply only to loans
and loan guarantees issued under the Water Infrastructure Finance and
Innovation Act of 2014 (Public Law 113-121, title
[[Page 39190]]
V, subtitle C (33 U.S.C. Chapter 52)). The criteria and procedures
identified in this notice do not apply to any Notices of Funding
Availability (NOFA) published by the WIFIA Program prior to the
publication of this notice. In order to comply with Proviso 7 under the
WIFIA heading in Public Law 116-94, a proposed WIFIA-financed activity
will be evaluated using the two initial screening questions and the
sixteen criteria listed below as a guide. The criteria will be
considered cumulatively and individually when evaluating project
eligibility. In addition to the criteria listed below, the U.S.
Environmental Protection Agency (EPA) and the Office of Management and
Budget (OMB) will consider any additional information that may bear on
the Federal Government's current and future expected involvement in a
WIFIA project. Finally, as required by the Proviso 10 of Public Law
116-94, none of the direct loans or loan guarantee authority made
available under Public Law 116-94 shall be available for any project
unless the Administrator and the Director of OMB have certified in
advance in writing that the direct loan or loan guarantee, as
applicable, and the project comply with the criteria developed and
published pursuant to Public Law 116-94.
EPA will continue to implement existing elements of the WIFIA
program consistent with prior practice, supplemented by the criteria
and procedures provided in this notice. EPA will publish a NOFA that
will include the Administrator's targeted priorities for each new round
of WIFIA financing and will invite prospective borrowers to submit
letters of interest to EPA. EPA will review those letters for statutory
eligibility and, in coordination with OMB, apply the screening criteria
and procedures provided in the NOFA and this notice to determine
funding eligibility before formally inviting prospective applicants to
apply for WIFIA funding.
Prospective projects will be evaluated by EPA based on the
selection process articulated in each NOFA. EPA will then engage with
OMB to review how the criteria in this notice were applied to the
potential projects. EPA and OMB must reach preliminary agreement that
each of the projects is non-Federal before EPA formally invites such
projects to apply for WIFIA financing.
EPA will also inform OMB of any new information or changes to this
preliminary assessment of the screening questions and criteria listed
below for individual projects that are progressing through the full
WIFIA evaluation process following receipt of complete project
financing applications, and will terminate the process if projects are
determined not to comply with FCRA based on that new information.
EPA and OMB encourage prospective WIFIA Program borrowers to
evaluate the screening questions and criteria in this notice and
provide sufficient information in letters of interest and formal
applications that address any federal asset questions or concerns,
including the type of project seeking WIFIA funding under 33 U.S.C.
3907(b) and whether or not the loan will satisfy EPA's template term
sheet and standard loan agreement provisions.
IV. Initial Federal Asset Screening Questions
A. Is the project, in whole or in part, a project currently
authorized by Congress for the Army Corps of Engineers or Bureau of
Reclamation to construct? \3\
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\3\ A project authorized by an Act of Congress to be built by
the Army Corps of Engineers or Bureau of Reclamation is ineligible
for WIFIA financing. However, a project that may connect to, or be
tangentially related to, such a project, may be eligible depending
on the factual circumstances (e.g., a project to upgrade a water
distribution system that is connected to an Army Corps of Engineers-
or Bureau of Reclamation-constructed water source may be eligible
for WIFIA financing in some circumstances). Furthermore, a project
at a local municipal facility might not be deemed ineligible simply
because it was originally built by the Army Corps of Engineers or
Bureau of Reclamation. Such questions will need to be resolved on a
case-by-case basis.
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B. Is the project, in whole or in part, a local cost share
requirement for an Army Corps of Engineers or Bureau of Reclamation
project? \4\
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\4\ WIFIA authorizes loans to support local cost-sharing
requirements. See 33 U.S.C. 3908(b)(8) (``The proceeds of a secured
loan under this section may be used to pay any non-Federal share of
project costs required if the loan is repayable from non-Federal
funds.''). However, such a loan that would finance a project that is
in whole, or in part, a project authorized by Congress for the Army
Corps of Engineers or the Bureau of Reclamation to construct would
not meet the Federal asset screening process. Project applicants are
encouraged to review all applicable statutory requirements before
seeking WIFIA financing.
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V. Federal Asset Screening Criteria
Structure of the Project
1. To what degree does the Federal Government comprise the WIFIA
project's user base?
2. Does the project involve the use of the Federal Government's
sovereign power (excluding, e.g., National Environmental Policy Act
(NEPA) review)?
3. Does the WIFIA project require the construction or acquisition
of an asset for the special purpose of or use by the Federal
Government?
4. To what degree does the Federal Government direct the
contracting process for the WIFIA project?
5. Is there a specific authority provided to the WIFIA project by
an Act of Congress without which the WIFIA project could not proceed?
6. What is the Federal Government's role in the governance of the
project? In other words, what is the role of the Federal Government in
selecting management or overseeing the project (including, but not
limited to, approval of contract scope and step-in rights, or as a
member of a board of directors), both during construction as well as in
terms of operations and ongoing maintenance?
7. Is this project part of a larger Federally authorized project
(not limited to but consistent with the initial screening criteria) and
if so, does the project under consideration for a loan or loan
guarantee constitute a useful segment--either a planning segment or a
useful asset--as defined in the Capital Programming Guide (supplement
to OMB Circular A-11)?
Financing of the Project
8. Does the Federal Government provide resources for the WIFIA
Federal loan repayment?
9. Will the WIFIA project meet the nonsubordination requirement
provided in 33 U.S.C. 3908(b)(6)?
10. Does the WIFIA project depend on the Federal Government making
other in-kind contributions (land, real estate, right-of-way, etc.)?
11. Is non-Federal financing available for the project?
12. If the project is required to obtain an investment-grade rating
opinion letter, per 33 U.S.C. 3901(4) and 3908(a)(3), to what extent
does the rating opinion letter consider Federal support as a credit
enhancement?
Project Liabilities
13. To what degree will the Federal Government bear funding
liabilities associated with the WIFIA project not otherwise
appropriated by Congress or captured in the loan subsidy?
14. Is the risk to the Federal Government low relative to the
private sector for the financing of the WIFIA project?
15. To what degree does the Federal Government own or is the
Federal Government contractually obligated to complete, maintain, or
repair damage to the WIFIA project?
16. Is the Federal Government liable for unforeseen costs (e.g.,
environmental impacts, damage from natural disasters, or cost overruns)
either before, during,
[[Page 39191]]
or after completion of the WIFIA project?
VI. Certification
The Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94)
requires that the Administrator of EPA, the Secretary of the Treasury,
and the Director of OMB certify that criteria developed for project
eligibility for direct loans and loan guarantees authorized by the
Water Infrastructure Finance and Innovation Act of 2014 are compliant
with the first paragraph found under the ``Water Infrastructure
Financing and Innovation Program Account'' heading in the Further
Consolidated Appropriations Act, 2020. The Administrator, the
Secretary, and the Director certify that the criteria developed meet
the aforementioned requirement.
Andrew Wheeler,
Administrator, Environmental Protection Agency.
Russell Vought,
Acting Director, Office of Management and Budget.
Steven Mnuchin,
Secretary, Department of the Treasury.
[FR Doc. 2020-13889 Filed 6-26-20; 4:15 pm]
BILLING CODE 6560-50-P
