Legislation & Regulations
[Federal Register: January 5, 2006 (Volume 71, Number 3)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF TRANSPORTATION
Office of the Secretary of Transportation
[Docket No. OST-2005-23418]
Applications for Authority for Tax-Exempt Financing of Highway
Projects and Rail-Truck Transfer Facilities
AGENCIES: Office of the Secretary of Transportation (OST), DOT.
ACTION: Notice of solicitation for requests for allocations of tax-
exempt financing and request for comments.
SUMMARY: Section 11143 of Title XI of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users amends the
Internal Revenue Code by creating a new class of tax-exempt facility
bonds for qualified highway and surface freight transfer facilities.
The law limits the total amount of such bonds to $15 billion and
directs the Secretary of Transportation to allocate this amount among
qualified facilities. This notice solicits requests for such
allocations from interested entities that meet the statutory
requirements. The Department also requests comments from the public
that it may consider in its application of the authority provided by
DATES: Comments may be submitted at any time and will be considered as
appropriate whenever they are submitted.
ADDRESSES: Comments: To make sure your comments and related material
are not entered more than once in the docket, please submit them
identified by docket number OST-2005-23418 by only one of the following
(1) Web Site: http://dms.dot.gov. Follow the instructions for
submitting comments on the electronic docket site.
(2) Fax: 202-493-2251.
(3) Mail: Dockets Management Facility, U.S. Department of
Transportation, M-30, Room PL-401, 400 Seventh Street SW., Washington,
(4) Hand Delivery: Room PL-401 on the plaza level of the Nassif
Building, 400 Seventh Street SW., Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays.
Instructions: All submissions must include the agency name and
docket number of this notice. Due to security procedures in effect
since October 2001 on mail deliveries, mail received through the Postal
Service may be subject to delays. Commenters should consider using an
express mail firm to ensure the prompt filing of any comments not
submitted electronically or by hand. Note that all comments received
will be posted without change to http://dms.dot.gov, including any
personal information provided. Please see the Privacy Act heading under
Regulatory Analysis and Notices.
Docket: For access to the docket to read background documents or
comments received, go to http://dms.dot.gov at any time or to Room PL-
401 on the plaza level of the Nassif Building, 400 Seventh Street, SW.,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.
Applications: Mr. Jack Bennett, Office of the Assistant Secretary
for Transportation Policy, Office of Economic and Strategic Analysis
(P-20), Room 10305-E, 400 Seventh Street SW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Jack Bennett, U.S. Department of
Transportation, Office of the Assistant Secretary for Transportation
Policy, Office of Economic and Strategic Analysis (P-20), 400 Seventh
Street SW., Washington, DC 20590; (202) 366-6222.
A. Statutory Background
Section 11143 of Title XI of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU),
Public Law Number 109-59, 119 Stat. 1144 (Aug. 10, 2005) (the Act),
amends Sec. 142 of title 26, United States Code (hereinafter referred
to as the Internal Revenue Code or the Code) by adding sections
142(a)(15) and 142(m). These amendments create a new class of tax-
exempt financing for qualified highway or surface freight transfer
facilities. The law limits the amount of tax-exempt financing available
under this provision to $15 billion nationally and charges the
Secretary of Transportation with allocating this $15 billion among
qualified facilities. The relevant statutory provisions of the Code
• Section 103(a) of the Code provides that, except as
provided in section 103(b), gross income does not include interest on
any State or local bond.
• Section 103(b)(1) provides that the exclusion under
section 103(a) does not apply to any private activity bond that is not
a qualified bond (within the meaning of section 141).
• Section 141(e) provides that the term ``qualified bond''
includes an exempt facility bond that meets certain requirements.
• New section 142(a)(15) provides that the term ``exempt
facility bond'' includes qualified highway or surface freight transfer
• New section 142(m) defines the new class of exempt
facility bonds for qualified highway or surface freight transfer
• Section 142(m)(1) defines ``qualified highway or surface
freight transfer facilities'' as:
(A) Any surface transportation project which receives Federal
assistance under title 23, United States Code (as in effect on August
10, 2005, the date of the enactment of section 142(m)),
(B) Any project for an international bridge or tunnel for which an
international entity authorized under Federal or State law is
responsible and which receives Federal assistance under title 23,
United States Code (as so in effect), or
(C) Any facility for the transfer of freight from truck to rail or
rail to truck (including any temporary storage facilities directly
related to such transfers) which receives Federal assistance under
title 23 or title 49, United States Code (as so in effect).
Examples of intermodal freight transfer facilities for the transfer
of freight from truck to rail or rail to truck include cranes, loading
docks, and computer-controlled equipment that are integral to such
freight transfers. Examples of facilities that are not freight transfer
facilities include lodging, retail, industrial, or manufacturing
facilities, except to the extent that such facilities also include
freight transfer activities.
• Section 142(m)(2)(A) provides a $15,000,000,000 national
limitation on the aggregate amount of tax-exempt financing for
qualified highway or surface freight transfer facilities allocated by
• Section 142(m)(2)(B) provides that an issue shall not be
treated as an issue described in section 142(a)(15) for a qualified
highway or surface freight transfer facility if the aggregate face
amount of bonds issued pursuant to such issue for any qualified highway
or surface freight transfer facility (when added to the aggregate face
amount of bonds previously so issued for such facility) exceeds the
amount allocated to such facility by the Secretary of Transportation
under section 142(m)(2)(C).
• Section 142(m)(2)(C) provides that the Secretary of
Transportation shall allocate the $15,000,000,000 national limitation
among qualified highway or surface freight transfer facilities in such
manner as the Secretary determines appropriate.
• Section 142(m)(3) provides that an issue shall not be
treated as an issue described in section 142(a)(15) for a
qualified highway or surface freight transfer facility unless at least
95 percent of the net proceeds of the issue is expended for qualified
highway or surface freight transfer facilities within the 5-year period
beginning on the date of issuance. If at least 95 percent of such net
proceeds is not expended within such 5-year period, an issue shall be
treated as continuing to meet the 5-year spending requirements of
section 142(m)(3) if the issuer uses all unspent proceeds of the issue
to redeem bonds of the issue within 90 days after the end of such 5-
year period. The Secretary of the Treasury, at the request of the
issuer, may extend such 5-year period if the issuer establishes that
any failure to meet such period is due to circumstances beyond the
control of the issuer.
• Section 142(m)(4) provides an exception to the volume
limit in section 142(m)(2) for any bond (or series of bonds) issued to
refund a bond issued under section 142(a)(15) if:
(A) The average maturity date of the issue of which the refunding
bond is a part is not later than the average maturity date of the bonds
to be refunded by such issue (for this purpose, ``average maturity'' is
determined in accordance with section 147(b)(2)(A)),
(B) The amount of the refunding bond does not exceed the
outstanding amount of the refunded bond, and
(C) The refunded bond is redeemed not later than 90 days after the
date of the issuance of the refunding bond.
• Section 11143(c) of SAFETEA-LU provides that exempt
facility bonds described in section 142(a)(15) for qualified highway
and surface freight transfer facilities are exempt from general state
volume caps on private activity bonds in section 146.
B. Applications for Allocations
Parties who wish to take advantage of the tax-exempt financing
provided by Section 11143 of SAFETEA-LU are invited to apply to DOT for
an allocation of this authority. Upon receipt of such an application,
the Department will, after due consideration, either accept or reject
the application, or communicate further with the applicant if
additional information is needed to fully consider the application. The
Department is not specifying any form for an application, nor is it
requiring all or any of the information listed below to be included in
the initial application. Nevertheless, applicants may wish to include
the following information to facilitate the Department's consideration
of the application:
1. Amount of Allocation Requested.
2. Proposed Date of Bond Issuance. Provide the approximate date
when it is anticipated that the tax-exempt bonds would be issued should
authority to do so be allocated by the Department.
3. Date of Inducement by the Bond Issuer. Provide a copy of a
resolution adopted in accordance with state or local law authorizing
the issuance of a specific issue of obligations. The resolution may
state that issuance of obligations is contingent upon receipt of an
allocation from the Secretary of Transportation of a portion of the
$15,000,000,000 national limitation.
4. Draft Bond Counsel Opinion Letter. Provide Form of Bond Counsel
Opinion or date by which a draft letter will be provided.
5. Financing/Development Team Information. Provide the names of the
issuer of the bonds, the borrower, and any other key participants in
the financing, with complete contact information, including Federal
taxpayer identification numbers.
6. Borrower Information: For each borrower, provide the official
business name, ownership and legal structure (corporation, partnership,
or sole proprietorship), Federal taxpayer identification number, and
prior experience as it relates to carrying out projects similar to that
proposed. For the purposes of this Notice, the term ``borrower''
includes any borrower of the bond proceeds or any other entity
responsible for re-paying the bonds.
7. Project Description. Describe the project as a whole and the
proposed organizational and legal structure of the project (ownership,
franchise or lease arrangements, etc.). Describe the portion of the
project and all capital assets to be funded with the proceeds of the
exempt facility bonds. If the application is for an international
bridge or tunnel under section 142(m)(1)(B), the project description
should include a representation that the international entity that has
responsibility for the project is authorized under Federal or state
8. Project Schedule. Provide a timeline showing the estimated start
and completion dates for each major phase or milestone of project
development. Indicate the current status of milestones on this
timeline, including all necessary permits and environmental approvals.
9. Financial Structure. Provide a statement of anticipated sources
and uses of funds for the project, including separate line items, as
applicable, for proceeds of exempt facility bonds or other borrowing,
federal grants, state and local grants, other credit assistance, and
private investment. Provide a projected drawdown schedule for the use
of funds, project revenue and expenses, and sources of security and
repayment for the bonds.
10. Description of Title 23/49 U.S.C. funding received by the
project. Provide the date (or anticipated date) of receipt and types
and amount of financial assistance.
11. Project Readiness. Describe the financing/development team's
capacity to undertake this project. Discuss readiness to begin the
project. List all major permits and approvals necessary for
construction of the project and the date, or projected date, of the
receipt of such permits or approvals. Include information on
engineering work, and procurement of construction.
12. Signatures. Applications should be signed by a duly authorized
representative of the proposed issuer and a duly authorized
representative of each proposed borrower. Applications may be submitted
by the proposed issuer or the proposed borrower.
13. Declarations. Each application, including any supporting
reports or other document, should include the following declaration
signed by an individual who has personal knowledge of the relevant
facts and circumstances: ``Under penalties of perjury, I declare that I
have examined this document and, to the best of my knowledge and
belief, the document contains all the relevant facts relating to the
document, and such facts are true, correct, and complete.''
14. Addresses. Applications should be submitted (with 10 copies)
to: Mr. Jack Bennett, U.S. Department of Transportation, Office of the
Assistant Secretary for Transportation Policy, P-20, Room 10305 E, 400
7th Street SW., Washington, DC 20590.
C. Consideration of Applications
Upon receipt, the Department will consider the application in light
of applicable statutory requirements and the availability of tax-exempt
authority for the type and location of the project for which the
allocation is requested. If the Department needs additional information
from the applicant, the Department will contact the applicant to
arrange for the submission the required information.
In making application to the Department, applicants should note
that there are no specific standards, beyond those set forth in
applicable laws or regulation, that apply to the consideration of the
The Department is particularly concerned that once it makes an
allocation, tax-exempt facility bonds are
issued in timely fashion. Hence, if the schedules agreed upon in the
final allocation action are not met, the allocation may be withdrawn.
D. Compliance With Rules Governing Qualified Private Activity Bonds
The application process described in this Notice only goes to
allocation of tax-exempt financing by the Department of Transportation.
All representations made as part of this application process are
subject to verification on examination. In addition, except as
otherwise provided in this Notice, nothing in this Notice shall be
construed as overriding any requirements or limitations applicable to
exempt facility bonds found in sections 103 and 141 through 150 of the
Code and the applicable regulations thereunder, or affecting the
ability of the IRS to examine the bond issue for compliance with those
requirements or limitations.
E. Request for Comments
Interested parties are invited to provide comment on how the
Department should exercise the allocation authority provided by Section
11143 of SAFETEA-LU. Comments may address both the process described in
this notice and any other matters that the commenter believes would be
useful for the Department to consider in its administration of this
provision of SAFETEA-LU. This is new authority for the DOT, and the
Department will be continually examining its implementation of this
provision to ensure that allocations are occurring in a fair and
reasonable manner, that this tax-exempt bonding authority is fully
utilized, and that this financing opportunity adds to the vitality of
the Nation's transportation system.
Jeffrey N. Shane,
Under Secretary of Transportation for Policy.
[FR Doc. E5-8306 Filed 1-4-06; 8:45 am]
BILLING CODE 4910-62-P