[Federal Register Volume 73, Number 215 (Wednesday, November 5, 2008)]
[Rules and Regulations]
[Pages 65724-65726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26318]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1735
RIN 0572-AC13
General Policies, Types of Loans, Loan Requirements--
Telecommunications
AGENCY: Rural Utilities Service, USDA.
ACTION: Direct final rule.
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SUMMARY: The Rural Utilities Service, an agency delivering the United
States Department of Agriculture (USDA) Rural Development Utilities
Program, hereinafter referred to as Rural Development and/or the
Agency, amends its regulations for the Telecommunications Loan Program
(Loan Program). The Agency has reviewed its criteria for approving
loans and has determined that modifications to the Loan Program
regulations are required in order to ensure that some financially sound
applicants are not excluded from the Loan Program.
The Agency is proposing to amend its regulations to modify the
Times Interest Earned Ratio (TIER) requirements that
[[Page 65725]]
an applicant must comply with when receiving a loan. This direct final
rule is part of an ongoing Agency project to update Agency policies to
enable borrowers to provide reliable, modern telecommunications service
at reasonable costs in rural areas, while maintaining the security and
feasibility of the Government's loans.
DATES: This rule is effective December 22, 2008, without further
action, unless the Agency receives adverse comments or, submits in
writing intent to submit an adverse comment, by December 5, 2008.
Written adverse comments or, intent to submit an adverse comment, must
be received by Rural Development or carry a postmark or equivalent no
later that December 5, 2008. If adverse comments are received, the
Agency will publish a timely Federal Register document withdrawing this
rule.
ADDRESSES: Submit adverse comments by either of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov and in the ``Search Documents'' box, enter RUS-08-
Telecom-0002, and select GO>>. To submit a comment, choose ``Send a
comment or submission,'' under the Docket Title. In order to submit
your comment, the information requested on the ``Public Comment and
Submission Form,'' must be completed. Information on using
Regulations.gov, including instructions for accessing documents,
submitting comments, and viewing the docket after the close of the
comment period, is available through the site's ``How to Use this
Site'' link.
Postal Mail/Commercial Delivery: Please send your comment
addressed to Michele Brooks, Director, Program Development and
Regulatory Analysis, USDA Rural Development, STOP 1522, Room 5159, 1400
Independence Avenue, Washington, DC 20250-1522. Please state that your
adverse comment refers to Docket No. RUS-08-Telecom-0002.
Other Information: Additional information about Rural
Development and its programs is available at http://www.rurdev.usda.gov/index.html.
FOR FURTHER INFORMATION CONTACT: Jerry H. Brent, Director, Northern
Division, Telecommunications Program, USDA Rural Development, STOP
1595, 1400 Independence Avenue, SW., Washington, DC 20250-1595,
Telephone (202)720-1025, Facsimile (202) 690-4654. E-mail address:
[email protected].
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This direct final rule has been determined to be not significant
for purposes of Executive Order 12866, and therefore has not been
reviewed by the Office of Management and Budget (OMB).
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance (CFDA) Program number
assigned to the Rural Development Utilities Telecommunications Loans
and Loan Guarantees Program is 10.851. The CFDA is available on a
subscription basis from the Superintendent of Documents, the United
States Government Printing Office, Washington, DC 20402-9325; telephone
(202) 512-1800.
Executive Order 12372
This program is not subject to the requirements of Executive Order
12372, ``Intergovernmental Review of Federal Programs,'' as implemented
under USDA's regulations at 7 CFR part 3015.
Executive Order 12988
This direct final rule has been reviewed under Executive Order
12988, Civil Justice Reform. The Agency has determined that this rule
meets the applicable standards provided in section 3 of the Executive
Order. In addition, all state and local laws and regulations that are
in conflict with this rule will be preempted, no retroactive effect
will be given to this rule, and, in accordance with Sec 212(e) of the
Department of Agriculture Reorganization Act of 1994 (7 U.S.C.
6912(e)), administrative appeal procedures, if any, must be exhausted
before an action against the Department or its agencies may be
initiated.
Executive Order 13132, Federalism
The policies contained in this direct final rule do not have any
substantial direct effect on states, on the relationship between the
national government and the states, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
direct final rule impose substantial direct compliance costs on state
and local governments. Therefore, consultation with states is not
required.
Regulatory Flexibility Act Certification
Pursuant to 5 U.S.C. 553(a)(2), this final rule is exempt from the
rulemaking requirements of the Administrative Procedure Act (5 U.S.C.
551 et seq.), including the requirement to provide prior notice and an
opportunity for public comment. Because this final rule is not subject
to a requirement to provide prior notice and an opportunity for public
comment pursuant to 5 U.S.C. 553, or any other law, the analytical
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
are inapplicable.
Unfunded Mandates
This direct final rule contains no Federal mandates (under the
regulatory provision of Title II of the Unfunded Mandates Reform Act of
1995) for State, local, and tribal governments or the private sector.
Therefore, this direct final rule is not subject to the requirements of
sections 202 and 205 of the Unfunded Mandates Reform Act of 1995.
Environmental Impact Statement
This direct final rule has been examined under Agency environmental
regulations at 7 CFR part 1794. The Administrator has determined that
this action is not a major Federal action significantly affecting the
environment. Therefore, in accordance with the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et seq.), an Environmental Impact
Statement or Assessment is not required.
Information Collection and Recordkeeping Requirements
This direct rule contains no new reporting or recordkeeping burdens
under OMB control number 0572-0079 that would require approval under
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
Background
Overview
Rural Development improves the quality of life in rural America by
providing investment capital, in the form of loans and grants, for the
deployment of rural telecommunications infrastructure. Financial
assistance is provided to rural utilities; municipalities; commercial
corporations; limited liability companies; public utility districts;
Indian tribes; and cooperative, nonprofit, limited-dividend, or mutual
associations. In order to achieve the goal of increasing economic
opportunity in rural America, the Agency finances infrastructure that
enables access to a seamless, nationwide telecommunications network.
With access to the same advanced telecommunications networks of its
urban counterparts, especially broadband networks designed to
accommodate distance learning, telework and telemedicine, rural America
will see improving educational opportunities, health care, economies,
safety and security, and ultimately higher employment. The Agency is
[[Page 65726]]
committed to ensuring that rural areas will have access to affordable,
reliable, advanced telecommunications services, comparable to those
available throughout the rest of the United States, to provide a
healthy, safe and prosperous place to live and work.
While the Agency is proud of the results it has achieved in Rural
America with the Telecommunications Loan Program, it believes that the
overall effectiveness of the program can be improved by modifying the
existing rules. The change to the current regulation will permit
additional financially sound borrowers, who clearly meet the intent of
the Telecommunications Loan Program, to be eligible to participate in
the program.
Discussion of Changes
Facilities financed by the Loan Program are typically constructed
over a five year period (Forecast Period). The feasibility studies used
to demonstrate that an applicant is eligible for a loan and can repay
it assumes this Forecast Period. The feasibility study is also used to
forecast the applicant's Times Interest Earned Ratio or TIER. The TIER
is one measure of an applicant's ability to repay the loan. Currently,
the regulation states that applicants must maintain a TIER of at least
1.0 during the Forecast Period. At the end of the Forecast Period, the
applicant shall be required to maintain, at a minimum, a TIER at least
equal to the projected TIER determined by the feasibility study
prepared in connection with the loan, but at least 1.0 and not greater
than 1.5.
The requirement that an applicant maintain a TIER of at least 1.0
during the Forecast Period, arbitrarily and unfairly disqualifies some
applicants from the Loan Program. During the Forecast Period as an
applicant constructs facilities, there is always a delay from the time
that the construction is initiated to the time that construction is
completed and revenues increase based upon the new subscribers
connected and new services offered. During this period, it would not be
unusual for the applicant's TIER to be less than 1.0. This occurrence
is not generally an indicator that the applicant is in financial
difficulty, but a direct result of the time lag associated with
construction of facilities. In addition, the current provision
effectively disqualifies any start up or new entity from qualifying for
the Loan Program. In many cases these newer entities, and the rural
residents they serve, are the ones that stand to benefit the greatest
from the program.
This change would not constitute a loan security risk as an
applicant's financial performance is continuously monitored and the
advance of loan funds can be suspended should the situation warrant
such action. In addition, the applicant would still be required to
maintain the projected TIER at the end of the Forecast Period.
List of Subjects in 7 CFR 1735
Loan programs--communications, Rural Areas, Telecommunications and
Telephone.
0
For reasons set forth in the preamble, the Agency amends Chapter XVII
of title 7 of the Code of Federal Regulations by revising part 1735 as
follows:
PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--
TELECOMMUNICATIONS PROGRAM
0
1. The authority citation for part 1735 continues to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.
0
2. In Sec. 1735.22, paragraph (g) is revised to read as follows:
Sec. 1735.22 Loan Security.
Subpart B--Loan Purposes
* * * * *
(g) For Loans approved after December 22, 2008, the borrower shall
be required to maintain a TIER, at the end of the Forecast Period, at
least equal to the projected TIER determined by the feasibility study
prepared in connection with the loan, which shall be at least 1.0 and
not greater than 1.5.
* * * * *
Dated: September 8, 2008.
James M. Andrew,
Administrator, Rural Utilities Service.
[FR Doc. E8-26318 Filed 11-4-08; 8:45 am]
BILLING CODE 3410-15-P