[Code of Federal Regulations]
[Title 49, Volume 7]
[Revised as of October 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR639.31]

[Page 58-59]
 
                        TITLE 49--TRANSPORTATION
 
CHAPTER VI--FEDERAL TRANSIT ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
 
PART 639_CAPITAL LEASES--Table of Contents
 
                       Subpart D_Lease Management
 
Sec.  639.31  Early lease termination or modification.


    (a) Except as provided in paragraph (c) of this section, if a 
capital lease under this part is terminated or its terms substantially 
modified before the end of the period used in the cost-effectiveness 
evaluation, or if the recipient by an affirmative act or omission 
vitiates the cost-effectiveness determination of the lease, future lease

[[Page 59]]

costs will no longer qualify as eligible capital expenses. In addition, 
the recipient must reimburse the project--
    (1) Any Federal funds paid for the portion of the lease term 
eliminated by early termination; and
    (2) The Federal share of the excess, if any, of the present value of 
lease costs, which exceeds the purchase costs as calculated under 
subpart C of this part for the period of the lease up to the point of 
termination.
    (b) Penalties resulting from early termination of a capital lease 
under this part are not eligible for Federal financial assistance.
    (c) Paragraph (a) of this section does not apply if a lessor 
defaults on or otherwise does not meet its obligations under the capital 
lease and the recipient takes appropriate action to ensure that the 
procurement continues to be cost-effective. FTA shall be notified of any 
such event.