text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Railroad Infrastructure Financing 
  Improvement Act of 1997''.
  
  SEC. 2. RAIL INFRASTRUCTURE AND EQUIPMENT LOANS.
  
      (a) Amendment to Title 49, United States Code.--Part B of subtitle 
  V of title 49, United States Code, is amended by inserting after 
  chapter 221 the following new chapter:
  
           ``CHAPTER 223--RAIL INFRASTRUCTURE AND EQUIPMENT LOANS
  
  ``Sec.
  ``22301. Definitions.
  ``22302. Direct loans and loan guarantees.
  ``22303. Administration of direct loans and loan guarantees.
  
  ``SEC. 22301. DEFINITIONS.
  
      ``For purposes of this chapter:
              ``(1)(A) The term `cost' means the estimated long-term cost 
          to the Government of a direct loan or loan guarantee, 
          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 shall be the net present 
          value, at the time when the direct loan is disbursed, of the 
          following 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.
              ``(C) The cost of a loan guarantee shall be the net present 
          value when a guaranteed loan is disbursed, of the following 
          cash flows:
                      ``(i) Estimated payments by the Government to cover 
                  defaults and delinquencies, interest subsidies, or 
                  other payments.
                      ``(ii) Estimated payments to the Government, 
                  including origination and other fees, penalties, and 
                  recoveries.
              ``(D) Any Government action that alters the estimated net 
          present value of an outstanding direct loan or loan guarantee 
          (except modifications within the terms of existing contracts or 
          through other existing authorities) shall be counted as a 
          change in the cost of that direct loan or loan guarantee. The 
          calculation of such changes shall be based on the estimated 
          present value of the direct loan or loan guarantee at the time 
          of modification.
              ``(E) In estimating net present values, the discount rate 
          shall be the average interest rate on marketable Treasury 
          securities of similar maturity to the direct loan or loan 
          guarantee for which the estimate is being made.
              ``(2) 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. The term does not include the acquisition of a 
          federally guaranteed loan in satisfaction of default claims.
              ``(3) The term `direct loan obligation' means a binding 
          agreement by the Secretary of Transportation to make a direct 
          loan when specified conditions are fulfilled by the borrower.
              ``(4) 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.
              ``(5) The term `loan guarantee commitment' means a binding 
          agreement by the Secretary to make a loan guarantee when 
          specified conditions are fulfilled by the borrower, the lender, 
          or any other party to the guarantee agreement.
              ``(6) The term `railroad carrier' has the meaning given 
          that term in section 20102.
  
  ``SEC. 22302. DIRECT LOANS AND LOAN GUARANTEES.
  
      ``(a) General Authority.--The Secretary of Transportation may 
  provide direct loans and loan guarantees to State and local 
  governments, government sponsored authorities and corporations, and 
  railroad carriers.
      ``(b) Eligible Purposes.--
              ``(1) In general.--Direct loans and loan guarantees under 
          this section shall be used to--
                      ``(A) acquire, improve, or rehabilitate 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 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 rail 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 $5,000,000,000 at any one time.
      ``(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 
          504(b)(1) of the Federal Credit Reform Act of 1990, 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;
              ``(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).
      ``(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 carrier 
  for whose benefit the assistance is intended--
              ``(1) will not use any funds or assets from railroad 
          operations for nonrail purposes, if such use would impair the 
          ability of the applicant or railroad carrier to provide rail 
          services in an efficient and economic manner, or would 
          adversely affect the ability of the applicant or railroad 
          carrier 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).
  
  ``SEC. 22303. ADMINISTRATION OF DIRECT LOANS AND LOAN GUARANTEES.
  
      ``(a) Applications.--The Secretary of Transportation shall 
  prescribe the form and contents required of applications for assistance 
  under section 22302, to enable the Secretary to determine the 
  eligibility of the applicant's proposal, and shall establish terms and 
  conditions for direct loans and loan guarantees made under that 
  section.
      ``(b) Full Faith and Credit.--Loan guarantees made under section 
  22302 shall constitute general obligations of the United States backed 
  by the full faith and credit of the United States.
      ``(c) Assignment of Loan Guarantees.--The holder of a loan 
  guarantee made under section 22302 may assign the loan guarantee in 
  whole or in part, subject to such requirements as the Secretary may 
  prescribe.
      ``(d) Modifications.--The Secretary may approve the modification of 
  any term or condition of a direct loan, loan guarantee, direct loan 
  obligation, or loan guarantee commitment, including the rate of 
  interest, time of payment of interest or principal, or security 
  requirements, if the Secretary finds in writing that--
              ``(1) the modification is equitable and is in the overall 
          best interests of the United States; and
              ``(2) consent has been obtained from the applicant and, in 
          the case of a loan guarantee or loan guarantee commitment, the 
          holder of the obligation.
      ``(e) Compliance.--The Secretary shall assure compliance, by an 
  applicant, any other party to the loan, and any railroad carrier for 
  whose benefit assistance is intended, with the provisions of this Act, 
  regulations issued hereunder, and the terms and conditions of the 
  direct loan or loan guarantee, including through regular periodic 
  inspections.
      ``(f) Commercial Validity.--For purposes of claims by any party 
  other than the Secretary, a loan guarantee or loan guarantee commitment 
  shall be conclusive evidence that the underlying obligation is in 
  compliance with the provisions of this Act, 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 granted the application 
  therefor, except as to fraud or material misrepresentation by such 
  holder.
      ``(g) Default.--The Secretary shall prescribe regulations setting 
  forth procedures in the event of default on a loan made or guaranteed 
  under section 22302. The Secretary shall ensure that each loan 
  guarantee 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 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 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 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 shall not be required to make any 
          payment under paragraphs (1) through (3) if the Secretary 
          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 makes payment to a 
          holder, or a holder's agent, under subsection (g) in connection 
          with a loan guarantee made under section 22302, the Secretary 
          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 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 shall not be subject to any Federal or State 
          regulatory requirements when carrying out this paragraph.
      ``(i) Action Against Obligor.--The Secretary 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 made under section 22302, 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 22302. The 
  holder of a guarantee shall make available to the Secretary all records 
  and evidence necessary to prosecute the civil action. The Secretary may 
  accept property in full or partial satisfaction of any sums owed as a 
  result of a default. If the Secretary 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) of this section; and
              ``(2) any other cost to the United States of remedying the 
          default,
  the Secretary 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 finds is in violation of this Act, 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, or any property in the control of the Secretary, prior 
  to the entry of final judgment to such effect in any State, Federal, or 
  other court.
      ``(l) Investigation Charge.--The Secretary may charge and collect 
  from each applicant a reasonable charge for appraisal of the value of 
  the equipment or facilities for which the direct loan or loan guarantee 
  is sought, and for making necessary determinations and findings. Such 
  charge shall not aggregate more than one-half of 1 percent of the 
  principal amount of the obligation.''.
      (b) Conforming Amendment.--The table of chapters of subtitle V of 
  title 49, United States Code, is amended by inserting after the item 
  relating to chapter 221 the following:
  
  ``223. RAIL INFRASTRUCTURE AND EQUIPMENT LOANS..............   22301''.
  
  SEC. 3. TECHNICAL AND CONFORMING PROVISIONS.
  
      (a) Repeal.--Title V of the Railroad Revitalization and Regulatory 
  Reform Act of 1976 (45 U.S.C. 821 et seq.) is repealed.
      (b) Savings Provision.--A transaction entered into under the 
  authority of title V of the Railroad Revitalization and Regulatory 
  Reform Act of 1976 before the date of the enactment of this Act shall 
  be administered until completion under its terms as if subsection (a) 
  of this subsection were not enacted.
      (c) Technical and Conforming Amendments.--(1) Section 211(i) of the 
  Regional Rail Reorganization Act of 1973 (45 U.S.C. 721(i)) is 
  repealed.
      (2) Section 306(b) of title 49, United States Code, is amended by 
  striking ``title V of the Railroad Revitalization and Regulatory Reform 
  Act of 1976 (45 U.S.C. 821 et seq.)'' and inserting in lieu thereof 
  ``chapter 223 of this title''.
target: Railroad Infrastructure Financing Improvement Act of 1997 - Amends Federal railroad law to authorize the Secretary of Transportation to provide not more than $5 billion in direct loans and loan guarantees to State and local governments, government sponsored authorities and corporations, and railroad carriers to:  (1) acquire, improve, or rehabilitate existing rail equipment or facilities, or establish new railroad facilities; or (2) refinance outstanding debt incurred in carrying out such activities.  Sets forth specified conditions and eligibility requirements for such loans.
feat_title: Railroad Infrastructure Financing Improvement Act of 1997