§ 386.2 Definitions.

The following definitions apply to this part:

(a) Application means the form and attachments submitted by prospective borrowers that have been selected to apply for credit assistance after the review of letters of interest.

(b) Borrower means any entity that enters into a direct loan or Loan Guarantee Agreement with the Corps that is primarily liable for payment of the principal or interest on a Federal credit instrument. “Borrower” is synonymous with “obligor.” “Obligor” is used in place of borrower in this part whenever “obligor” appears in a corresponding section of WIFIA.

(c) Clean energy means systems, processes, and best practices for producing, converting, storing, transmitting, distributing, and consuming energy that avoid, reduce, or sequester the amount of greenhouse gas (GHG) emitted to, or concentrated in, the atmosphere.

(d) Community means a collection of people in a geographic area having one or more characteristic in common. The geographic area may be contained within or cross political subdivisions of States.

(e) Credit agreement means a contractual agreement (or agreements) between the Corps and a borrower (and the lender, if applicable) establishing the terms and conditions, rules, and requirements of a secured loan or loan guarantee.

(f) Credit assistance means a secured loan or loan guarantee under 33 U.S.C. 3908.

(g) Credit subsidy shall have the same meaning as “cost” under section 502(5) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)), which is the net present value at the time the Loan Agreement or Loan Guarantee Agreement is executed. The credit subsidy cost for a given project is the net present value, at the time the Loan Agreement or Loan Guarantee Agreement is executed of the following estimated cash flows, discounted to the point of disbursement:

(1) Payments by the Government to cover defaults and delinquencies, interest subsidies, or other payments; less

(2) Payments to the Government including origination and other fees, penalties, and recoveries including the effects of changes in loan or debt terms resulting from the exercise by the borrower, eligible lender, or other holder of an option included in a Loan Agreement or Loan Guarantee Agreement.

(h) Economically disadvantaged community refers to a community that meets one of the following criteria:

(1) Low-income;

(2) Unemployment rate above national average;

(3) Indian country as defined in 18 U.S.C. 1151 or in the proximity of an Alaska Native Village;

(4) U.S. Territories; or

(5) Identified as disadvantaged by the Climate and Economic Justice Screening Tool (developed by the Council on Environmental Quality).^[1]

(i) Economically justified means that the anticipated benefits will exceed the costs.

(j) Eligible entity means one of the following:

(1) A corporation;

(2) A partnership;

(3) A joint venture;

(4) A trust;

(5) A State, or local government entity, agency, or instrumentality;

(6) A Tribal government or consortium of Tribal governments; or

(7) A State infrastructure financing authority.

(k) Eligible project costs means the amounts, which are paid by, or for the account of, a borrower in connection with a project, including the cost of:

(1) Development-phase activities, including planning, feasibility analysis (including any related analysis necessary to carry out an eligible project), revenue forecasting, environmental review, permitting, preliminary engineering and design work, and other pre-construction activities.

(2) Construction, reconstruction, rehabilitation, and replacement activities.

(3) Acquisition of real property or an interest in real property (including water rights, land relating to the project, and improvements to land), environmental mitigation, construction contingencies, and acquisition of equipment; and

(4) Capitalized interest necessary to meet market requirements, reasonably required reserve funds, capital issuance expenses, and other carrying costs during construction. Capitalized interest on the Federal credit instrument is not an eligible project cost.

(l) Environmentally acceptable means the project will satisfy all applicable and necessary environmental requirements to include those identified in Sec. 386.5(a), such as the National Environmental Policy Act (NEPA).

(m) Federal credit instrument means a secured loan or loan guarantee authorized to be made available under 33 U.S.C. 3901–3914 with respect to a project.

(n) Investment-grade rating means a rating category of BBB minus, Baa3, bbb minus, BBB (low), or higher assigned by a nationally recognized statistical rating organization (NRSRO) to project obligations offered into the capital markets.

(o) Iron and steel products means the following products made primarily of iron or steel: lined or unlined pipes and fittings, manhole covers and other municipal castings, hydrants, tanks, flanges, pipe clamps and restraints, valves, structural steel, reinforced precast concrete, and construction materials.

(p) Lender means any non-Federal qualified institutional buyer (as defined in 17 CFR 230.144A(a), known as Rule 144A(a) of the Securities and Exchange Commission and issued under the Securities Act of 1933 (15 U.S.C. 77a et seq.)), including:

(1) A qualified retirement plan (as defined in section 4974(c) of the Internal Revenue Code of 1986, 26 U.S.C. 4974(c)) that is a qualified institutional buyer;

(2) A governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986, 26 U.S.C. 414(d)) that is a qualified institutional buyer; and

(3) The Federal Financing Bank.

(q) Loan guarantee means any guarantee or other pledge by the Secretary of the Army (Secretary) to pay all or part of the principal of and interest on a loan or other debt obligation issued by a borrower and funded by a lender.

(r) Low income means the area has a per capita income of 80 percent or less of the national average.

(s) Nationally recognized statistical rating organization (NRSRO) means a credit rating agency identified and registered by the Office of Credit Ratings in the Securities and Exchange Commission under 15 U.S.C. 78c.

(t) Non-Federal means an organization that is not an agency or instrumentality of the Federal Government, including State, interstate, Indian Tribal, or local government, as well as private organizations.

(u) Preliminary application means the form and attachments prospective borrowers submit to the Corps to be considered for credit assistance following the announcement of available funding.

(v) Project means:

(1) Safety projects to maintain, upgrade, and repair dams (including dam removal) identified in the National Inventory of Dams with a primary owner type of State, local government, public utility, or private; and which meets the statutory requirements of Title 1, Division D of the Consolidated Appropriations Act 2021, meet the criteria outlined in 85 FR 39189 (see division D of the Further Consolidated Appropriations Act, 2020 (Pub. L. 116–94)).

(2) Any project that meets the criteria in paragraph (v)(1) of this section must also be a project for flood damage reduction, hurricane and storm damage reduction, aquatic environmental restoration, coastal or inland harbor navigation improvement, or inland and intracoastal waterways navigation improvement that the Secretary determines is technically sound, economically justified, and environmentally acceptable, including—

(i) A project to reduce flood damage;

(ii) A project to restore aquatic ecosystems;

(iii) A project to improve the inland and intracoastal waterways navigation system of the United States; and

(iv) A project to improve navigation of a coastal inland harbor of the United States, including channel deepening and construction of associated general navigation features.

(3) Acquisition of real property or an interest in real property for a project that meets the criteria under paragraph (v)(1) of this section—

(i) If the acquisition is integral to a project eligible for WIFIA credit assistance; or

(ii) Pursuant to an existing plan that, in the judgment of the Secretary, would mitigate the environmental impacts of water resources infrastructure projects otherwise eligible for WIFIA credit assistance.

(4) A combination of projects secured by a common security pledge, each of which is eligible for WIFIA credit assistance, for which an eligible entity, or a combination of eligible entities, submits a single application.

(w) Project obligation means any note, bond, debenture, or other debt obligation issued by a borrower in connection with the financing of a project, other than a Federal credit instrument.

(x) Projected substantial completion date means the expected date as determined by the Secretary, at which the stage in the progress of the project when the project or designated portion thereof is sufficiently complete in accordance with the contract documents so that the project or designated portion thereof can be used for its intended use.

(y) Prospective borrower means an eligible entity seeking credit assistance.

(z) Publicly sponsored means the obligor can demonstrate, to the satisfaction of the Secretary, that it has consulted with the affected State, local, or Tribal government in which the project is located, or is otherwise affected by the project, and that such government supports the proposed project. Support can be shown by a certified letter signed by the approving municipal department or similar agency, mayor or other similar designated authority, local ordinance, or any other means by which local government approval can be evidenced.

(aa) Secured loan means a direct loan or other debt obligation (including a note, bond, debenture, and sale or lease financing arrangement) issued by a borrower funded by the Secretary in connection with the financing of a project under 33 U.S.C. 3908.

(bb) Small community means a community of not more than 25,000 individuals.

(cc) State means any of the fifty States, the District of Columbia, Puerto Rico, or any other territory or possession of the United States.

(dd) State infrastructure financing authority means the State entity established or designated by the Governor of a State to receive a capitalization grant provided by, or otherwise carry out the requirements of, title VI of the Federal Water Pollution Control Act (33 U.S.C. 1381 et seq.) or section 1452 of the Safe Drinking Water Act (42 U.S.C. 300j–12).

(ee) Subsidy amount means the dollar amount of budget authority that is sufficient to cover the estimated long-term cost to the Federal Government of a Federal credit instrument, calculated on a net present value basis, excluding administrative costs and any incidental effects on the governmental receipts or outlays in accordance with the provisions of the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).

(ff) Substantial completion means the stage in the progress of the project when the project or designated portion thereof is sufficiently complete in accordance with the contract documents so that the project or designated portion thereof can be used for its intended use.

(gg) Technically sound means the project will meet all applicable engineering, safety, and other technical standards.

(hh) Term sheet means a contractual agreement between the Corps and the borrower (and the lender, if applicable) that sets forth the key business terms and conditions of a Federal credit instrument.

(ii) Territory means each of the commonwealths, territories, and possessions of the United States established in Title 48 of the U.S.C.

(jj) Treatment works has the meaning given the term in section 212 of the Federal Water Pollution Control Act (33 U.S.C. 1292).

(kk) Unemployment rate above national average means the area has an unemployment rate that is, for the most recent 24-month period for which data are available, at least 1 percent greater than the national average unemployment rate.

(ll) WIFIA means the Water Infrastructure Finance and Innovation Act of 2014 (Pub. L. 113–121), as amended.