USC Subchapter II

USC Subchapter II
in effect

43 U.S.C. § 2421 Definitions

In this subchapter: (1) Indian tribeThe term “Indian tribe” has the meaning given the term in section 5304 of title 25. (2) LenderThe term “lender” means—(A) a non-Federal qualified institutional buyer (as defined in section 230.144A(a) of title 17, Code of Federal Regulation 11 So in original. Probably should be “Regulations”. (or any successor regulation), 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.)); or (B) a clean renewable energy bond lender (as defined in section 54(j)(2) 22 See References in Text note below. of title 26 (as in effect on December 22, 2006)). (3) Loan guaranteeThe term “loan guarantee” has the meaning given the term “loan guarantee” in section 661a of title 2. (4) Non-Federal borrowerThe term “non-Federal borrower” means—(A) a State (including a department, agency, or political subdivision of a State); or (B) a conservancy district, irrigation district, canal company, water users’ association, Indian tribe, an agency created by interstate compact, or any other entity that has the capacity to contract with the United States under Federal reclamation law. (5) ObligationThe term “obligation” means a loan or other debt obligation that is guaranteed under this section. (6) ProjectThe term “project” means—(A) a rural water supply project (as defined in section 2401(9) of this title); (B) an extraordinary operation and maintenance activity for, or the rehabilitation or replacement of, a facility—(i) that is authorized by Federal reclamation law and constructed by the United States under such law; or (ii) in connection with which there is a repayment or water service contract executed by the United States under Federal reclamation law; or (C) an improvement to water infrastructure directly associated with a reclamation project that, based on a determination of the Secretary—(i) improves water management; and (ii) fulfills other Federal goals. (7) SecretaryThe term “Secretary” means the Secretary of the Interior.

43 U.S.C. § 2422 Project eligibility

(a) Eligibility criteria(1) In generalThe Secretary shall develop and publish in the Federal Register criteria for determining the eligibility of a project for financial assistance under section 2423 of this title. (2) InclusionsEligibility criteria shall include—(A) submission of an application by the lender to the Secretary; (B) demonstration of the creditworthiness of the project, including a determination by the Secretary that any financing for the project has appropriate security features to ensure repayment; (C) demonstration by the non-Federal borrower, to the satisfaction of the Secretary, of the ability of the non-Federal borrower to repay the project financing from user fees or other dedicated revenue sources; (D) demonstration by the non-Federal borrower, to the satisfaction of the Secretary, of the ability of the non-Federal borrower to pay all operations, maintenance, and replacement costs of the project facilities; and (E) such other criteria as the Secretary determines to be appropriate. (b) WaiverThe Secretary may waive any of the criteria in subsection (a)(2) that the Secretary determines to be duplicative or rendered unnecessary because of an action already taken by the United States. (c) Projects previously authorizedA project that was authorized for construction under Federal reclamation laws prior to December 22, 2006, shall be eligible for assistance under this subchapter, subject to the criteria established by the Secretary under subsection (a). (d) Criteria for rural water supply projectsA rural water supply project that is determined to be feasible under section 2405 of this title is eligible for a loan guarantee under section 2423 of this title.

43 U.S.C. § 2423 Loan guarantees

(a) AuthoritySubject to the availability of appropriations, the Secretary may make available to lenders for a project meeting the eligibility criteria established in section 2422 of this title loan guarantees to supplement private-sector or lender financing for the project. (b) Terms and limitations(1) In generalLoan guarantees under this section for a project shall be on such terms and conditions and contain such covenants, representations, warranties, and requirements as the Secretary determines to be appropriate to protect the financial interests of the United States. (2) AmountLoan guarantees by the Secretary shall not exceed an amount equal to 90 percent of the cost of the project that is the subject of the loan guarantee, as estimated at the time at which the loan guarantee is issued. (3) Interest rateAn obligation shall bear interest at a rate that does not exceed a level that the Secretary determines to be appropriate, taking into account the prevailing rate of interest in the private sector for similar loans and risks. (4) AmortizationA loan guarantee under this section shall provide for complete amortization of the loan guarantee within not more than 40 years. (5) NonsubordinationAn obligation shall be subject to the condition that the obligation is not subordinate to other financing. (c) Prepayment and refinancingAny prepayment or refinancing terms on a loan guarantee shall be negotiated between the non-Federal borrower and the lender with the consent of the Secretary.

43 U.S.C. § 2424 Defaults

(a) Payments by Secretary(1) In generalIf a borrower defaults on the obligation, the holder of the loan guarantee shall have the right to demand payment of the unpaid amount from the Secretary. (2) Payment requiredBy such date as may be specified in the loan guarantee or related agreements, the Secretary shall pay to the holder of the loan guarantee the unpaid interest on, and unpaid principal of, the obligation with respect to which the borrower has defaulted, unless the Secretary finds that there was not default by the borrower in the payment of interest or principal or that the default has been remedied. (3) ForbearanceNothing in this subsection precludes any forbearance by the holder of the obligation for the benefit of the non-Federal borrower that may be agreed on by the parties to the obligation and approved by the Secretary. (b) Subrogation(1) In generalIf the Secretary makes a payment under subsection (a), the Secretary shall be subrogated to the rights of the recipient of the payment as specified in the loan guarantee or related agreements, including, as appropriate, the authority (notwithstanding any other provision of law) to—(A) complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to the loan guarantee or related agreements; or (B) permit the non-Federal borrower, pursuant to an agreement with the Secretary, to continue to pursue the purposes of the project if the Secretary determines the purposes to be in the public interest. (2) Superiority of rightsThe rights of the Secretary, with respect to any property acquired pursuant to a loan guarantee or related agreement, shall be superior to the rights of any other person with respect to the property. (c) Payment of principal and interest by SecretaryWith respect to any obligation guaranteed under this section, the Secretary may enter into a contract to pay, and pay, holders of the obligation, for and on behalf of the non-Federal borrower, from funds appropriated for that purpose, the principal and interest payments that become due and payable on the unpaid balance of the obligation if the Secretary finds that—(1)(A) the non-Federal borrower is unable to meet the payments and is not in default; (B) it is in the public interest to permit the non-Federal borrower to continue to pursue the purposes of the project; and (C) the probable net benefit to the Federal Government in paying the principal and interest will be greater than that which would result in the event of a default; (2) the amount of the payment that the Secretary is authorized to pay shall be no greater than the amount of principal and interest that the non-Federal borrower is obligated to pay under the agreement being guaranteed; and (3) the borrower agrees to reimburse the Secretary for the payment (including interest) on terms and conditions that are satisfactory to the Secretary. (d) Action by Attorney General(1) NotificationIf the non-Federal borrower defaults on an obligation, the Secretary shall notify the Attorney General of the default. (2) RecoveryOn notification, the Attorney General shall take such action as is appropriate to recover the unpaid principal and interest due from—(A) such assets of the defaulting non-Federal borrower as are associated with the obligation; or (B) any other security pledged to secure the obligation.

43 U.S.C. § 2425 Operations, maintenance, and replacement costs

(a) In generalThe non-Federal share of operations, maintenance, and replacement costs for a project receiving Federal assistance under this subchapter shall be 100 percent. (b) PlanOn request of the non-Federal borrower, the Secretary may assist in the development of an operation, maintenance, and replacement plan to provide the necessary framework to assist the non-Federal borrower in establishing rates and fees for project beneficiaries.

43 U.S.C. § 2426 Title to newly constructed facilities

(a) New projects and facilitiesAll new projects or facilities constructed in accordance with this subchapter shall remain under the jurisdiction and control of the non-Federal borrower subject to the terms of the repayment agreement. (b) Existing projects and facilitiesNothing in this subchapter affects the title of—(1) reclamation projects authorized prior to December 22, 2006; (2) works supplemental to existing reclamation projects; or (3) works constructed to rehabilitate existing reclamation projects.

43 U.S.C. § 2427 Water rights

(a) In generalNothing in this subchapter preempts or affects State water law or an interstate compact governing water. (b) Compliance requiredThe Secretary shall comply with State water laws in carrying out this subchapter. Nothing in this subchapter affects or preempts State water law or an interstate compact governing water.

43 U.S.C. § 2428 Interagency coordination and cooperation

(a) ConsultationThe Secretary shall consult with the Secretary of Agriculture before promulgating criteria with respect to financial appraisal functions and loan guarantee administration for activities carried out under this subchapter. (b) Memorandum of agreementThe Secretary and the Secretary of Agriculture shall enter into a memorandum of agreement providing for Department of Agriculture financial appraisal functions and loan guarantee administration for activities carried out under this subchapter.

43 U.S.C. § 2429 Records; audits

(a) In generalA recipient of a loan guarantee shall keep such records and other pertinent documents as the Secretary shall prescribe by regulation, including such records as the Secretary may require to facilitate an effective audit. (b) AccessThe Secretary and the Comptroller General of the United States, or their duly authorized representatives, shall have access, for the purpose of audit, to the records and other pertinent documents.

43 U.S.C. § 2430 Full faith and credit

The full faith and credit of the United States is pledged to the payment of all guarantees issued under this section with respect to principal and interest.

43 U.S.C. § 2431 Report

Not later than 1 year after the date on which the eligibility criteria are published in the Federal Register under section 2422(a) of this title, and every 2 years thereafter, the Secretary shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Resources of the House of Representatives a report that describes the implementation of the loan guarantee program under section 2423 of this title.

43 U.S.C. § 2432 Effect on the reclamation laws

(a) Reclamation projectsNothing in this subchapter supersedes or amends any Federal law associated with a project, or a portion of a project, constructed under the reclamation laws. (b) No new or supplemental benefitsAny assistance provided under this subchapter shall not—(1) be considered to be a new or supplemental benefit for purposes of the Reclamation Reform Act of 1982 (43 U.S.C. 390aa et seq.); or (2) affect any contract in existence on December 22, 2006, that is executed under the reclamation laws.

43 U.S.C. § 2433 Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out this subchapter, to remain available until expended.

43 U.S.C. § 2434 Termination of authority

(a) In generalSubject to subsection (b), the authority of the Secretary to carry out this subchapter terminates on the date that is 10 years after December 22, 2006. (b) ExceptionThe termination of authority under subsection (a) shall have no effect on—(1) any loans guaranteed by the United States under this subchapter; or (2) the administration of any loan guaranteed under this subchapter before the effective date of the termination of authority.

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