[Federal Register Volume 74, Number 3 (Tuesday, January 6, 2009)]
[Rules and Regulations]
[Pages 393-395]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-31255]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
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Federal Register / Vol. 74, No. 3 / Tuesday, January 6, 2009 / Rules
and Regulations
[[Page 393]]
DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1780
RIN 0572-AC11
Amending the Water and Waste Program Regulations
AGENCY: Rural Utilities Service, USDA.
ACTION: Direct final rule.
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SUMMARY: The Rural Utilities Service (RUS), an agency delivering the
United States Department of Agriculture's (USDA) Rural Development
Utilities Programs, hereinafter referred to as Rural Development or the
Agency, is amending its regulations to administer the Water and Waste
Loan and Grant Programs. This action implements provisions of the 2008
Farm Bill for interest rates on direct loans and modifies the interest
rate structure currently being used for the direct loan program.
Interest rates on loans subject to 5 or 7 percent interest rate
limitations (poverty and intermediate rates, respectively) will adjust
with changes in the market rate. The poverty and intermediate interest
rates will be established at rates equal to a percentage of current
market yields for outstanding municipal obligations. The intended
effect of the amendment is to make part 1780 current with statutory
authority. No adverse comments are expected.
DATES: This rule will become effective February 20, 2009 without
further action unless the Agency receives written adverse comments or
written notices of intent to submit adverse comments on or before
February 5, 2009. If the Agency receives adverse comments or notices,
the Agency will publish a timely notice in the Federal Register
withdrawing the rule. Comments received will be considered under the
proposed rule published in this edition of the Federal Register in the
proposed rule section. A second public comment period will not be held.
Written comments must be received by the Agency or carry a postmark or
equivalent no later than February 5, 2009.
ADDRESSES: You may submit comments to this rule by any of the following
methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov. In the ``Search Documents'' box, enter RUS-08-
Water-0005, check the box under the Search box labeled ``Select to find
documents accepting comments or submissions'', and click on the GO>>
key. 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. (If you click on the hyperlink of the docket when the search
returns it, you will see the docket details. Click on the yellow
balloon to receive the ``Public Comment and Submission Form''.)
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.
Other Information: Additional information about Rural Development
and its programs is available at http://www.rurdev.usda.gov/index.html.
FOR FURTHER INFORMATION CONTACT: Cheryl Francis, Loan Specialist, Water
and Environmental Programs, USDA Rural Development, 1400 Independence
Avenue, STOP 1570, Room 2229 South Building, Washington, DC 20250-1570.
Telephone: (202) 720-9589; Fax: (202) 690-0649; e-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not significant and was not
reviewed by the Office of Management and Budget (OMB) under Executive
Order 12866, Regulatory Planning and Review.
E-Government Act Compliance
The Agency is committed to complying with the E-Government Act, to
promote the use of the Internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance (CFDA) number assigned
to the water and waste loan and grant program is 10.760, Water and
Waste Disposal Systems for Rural Communities. The Catalog is available
on the Internet and the General Services Administration's (GSA) free
CFDA Web site at http://www.cfda.gov. The CFDA Web site also contains a
PDF file version of the Catalog that, when printed, has the same layout
as the printed document that the Government Printing Office (GPO)
provides. GPO prints and sells the CFDA to interested buyers. For
information about purchasing the Catalog of Federal Domestic Assistance
from GPO, call the Superintendent of Documents at 202-512-1800 or toll
free at 866-512-1800, or access GPO's on-line bookstore at http://bookstore.gpo.gov.
Executive Order 12372
The program is subject to the provisions of Executive Order 12372,
which requires intergovernmental consultation with State and local
officials. Consultation will be completed at the time of the action
performed.
Executive Order 12988
This 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.
Additionally, (1) all state and local laws and regulations that are in
conflict with this rule will be preempted; (2) no retroactive effect
will be given to the rule; and (3) administrative appeal procedures, if
any, must be exhausted before litigation against the Department or its
agencies may be initiated, in accordance with the regulations of the
National Appeals Division of USDA at 7 CFR part 11.
[[Page 394]]
Executive Order 13132, Federalism
The policies contained in this 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
final rule impose substantial direct compliance costs on state and
local governments. Therefore, consultation with states is not required.
Regulatory Flexibility Act Certification
Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C.
605(b), the Agency certifies that this rule will not have a significant
economic impact on a substantial number of small entities. The
amendments reflect only statutory changes that Congress has mandated
and over which the Agency has no discretion. They also involve minimal
procedural matters on other agreements already negotiated.
Unfunded Mandates
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the Unfunded Mandates Reform Act of 1995) for
State, local, and tribal governments or the private sector. Thus, this
rule is not subject to the requirements of sections 202 and 205 of the
Unfunded Mandates Reform Act of 1995.
National Environmental Policy Act Certification
This 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 rule contains no new reporting or recordkeeping burdens under
OMB control number 0572-0121 that would require approval under the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
Background
The water and waste loan and grant program is authorized by the
Consolidated Farm and Rural Development Act (CONACT), (7 U.S.C. 1921 et
seq.), as amended. The program provides loan and grant funds for water
and waste disposal projects serving the most financially needy rural
communities. Financial assistance should result in reasonable user
costs for rural residents, rural businesses, and other rural users. The
program is limited to rural areas and small towns with a population of
10,000 or less.
The direct loan program has a three-tier interest rate structure,
commonly known as the poverty, intermediate, and market rates. The
poverty and intermediate rates are available to customers least able to
afford high interest rates. The poverty rate should be the lowest rate.
However, the market rate was lower than the poverty rate (inverted
rates) 11 out of 23 quarters from fiscal year 2003 through 2008. The
inverted rates meant that the customers eligible for poverty and
intermediate rate loans would repay their loans at rates higher than
those that the market rate customers would pay. The inverted rates were
inconsistent with section 307(a)(3)(A) of the CONACT, which stipulated
that interest rates on loans be lower than the current market yield for
outstanding municipal obligations.
The Food, Conservation and Energy Act of 2008 (Farm Bill) (Pub. L.
110-234) amends section 307(a)(3) of the CONACT (7 U.S.C. 1927(a)(3)).
The amendments ensure that the poverty and intermediate rates are tied
to the market rate. As percentages of the market rate, they will always
be lower than the market rate. The poverty rate is set at 60 percent of
the market rate, and the intermediate rate is set at 80 percent of the
market rate. This interest rate change applies to loans approved after
May 22, 2008. The change does not apply to a loan for a specific
project that has been approved, but not closed on or before May 22,
2008. The interest rates of those loans will be determined by the rate
structure that existed before the enactment of the Farm Bill. To
conform to the Farm Bill's provisions, the water and waste loan and
grant regulation, 7 CFR Part 1780, is being amended.
The interest rate changes will provide for a tiered interest rate
structure, providing for the lowest interest rates to the lowest income
communities. The new rate structure will allow the Agency to provide
the neediest communities with financial assistance that will result in
reasonable user costs for their users.
The poverty and intermediate interest rates have statutory
limitations, established by the CONACT in section 307(a)(3). The
poverty rate cannot exceed five percent, and the intermediate rate
cannot exceed seven percent. As explained above, the market rate cannot
exceed the current market yield for outstanding municipal obligations
in accordance with the Omnibus Reconciliation Act of 1981. Regardless
of whether the interest rates must be determined by the approval date
of a loan--on or before May 22, 2008, or on or after May 23, 2008--
these statutory limitations are in effect.
Loans approved at each level of interest rates must meet certain
requirements under the water and waste regulation. All loans approved
at the poverty rate must comply with the following conditions:
(1) The primary loan purpose will be to upgrade existing facilities
or construct new facilities required to meet applicable health or
sanitary standards, and
(2) The median household income of the service area is below the
poverty level for a family of four, or below 80 percent of the
statewide nonmetropolitan median household income.
The intermediate interest rate applies to loans that do not meet
the requirements for the poverty rate and for which the median
household income of the service area is not more than 100 percent of
the nonmetropolitan median household income of the State. The market
rate applies to all loans that do not qualify for a poverty or
intermediate interest rate.
The three-tier interest rate structure existed on May 22 as
follows:
(1) Poverty Interest Rate. The poverty rate was set at 4.500
percent regardless of fluctuations in the market rate, subject to the
statutory limit of five percent.
(2) Intermediate Interest Rate. The intermediate rate was set at
one-half of the difference of the poverty rate and the market rate.
(3) The market interest rate is based on the 11-Bond Index,
published by Bond Buyer for general obligation bonds. The calculation
uses the average yield of the four weeks prior to the first Friday of
the last month before the beginning of a quarter.
The poverty and intermediate interest rates will be determined
based on the approval date of the loan under amendments to the water
and waste regulation. For a loan for a specific project that has been
approved, but not closed on or before May 22, the rate structure in
effect at that time will determine the rates. For loans approved on or
after May 23, 2008, the percentage of market rate will be used to
determine the poverty and intermediate interest rates.
The following table summarizes the interest rates:
[[Page 395]]
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On or before May 22, On or after May 23,
2008 2008 Limitations
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Poverty Rate......................... 4.50%.................. 60% of market rate..... 5.00%.
Intermediate Rate.................... 4.50% + 0.5 (Market 80% of market rate..... 7.00%.
Rate less Poverty
Rate).
Market Rate.......................... Average of 11 Bond Average of 11 Bond Less than the current
Index for the 4 weeks Index for the 4 weeks market yield for
prior to the first prior to the first outstanding municipal
Friday before the Friday before the obligations.
beginning of the new beginning of the new
quarter. quarter.
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These amendments are not published for proposed rulemaking because
they merely reflect changes in statutory authority enacted by the Farm
Bill. They make only minor technical corrections to the regulations,
which do not involve matters of agency discretion. The Farm Bill leaves
no discretion to the agency for setting interest rates. Notice and
public comment, therefore, are impractical, unnecessary, and contrary
to the public interest.
List of Subjects in 7 CFR Part 1780
Community development, Community facilities, Grant programs--
housing and community development, Reporting and recordkeeping
requirements, Rural areas, Waste treatment and disposal, Water supply,
Watersheds.
0
For reasons set forth in the preamble, chapter XVII of title 7 of the
Code of Federal Regulations is amended as follows:
PART 1780--WATER AND WASTE LOANS AND GRANTS
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1. The authority citation for part 1780 continues to read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.
Subpart A--General Policies and Requirements
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2. Amend Sec. 1780.13 to add paragraph (a)(3) and to revise the
introductory text of paragraph (b) and (c) to read as follows:
Sec. 1780.13 Rates and terms.
(a) * * *
(3) For a loan for a specific project that has been approved, but
not closed on or before May 22, 2008, the rate structure in effect at
that time will determine the interest rates. For loans approved on or
after May 23, 2008, a percentage of the market rate will be used to
determine the poverty and intermediate interest rates.
(b) Poverty rate. The poverty interest rate will not exceed 5 per
centum per annum. Loans approved on or after May 23, 2008, will have
the poverty interest rate set at 60 percent of the market rate. All
poverty rate loans must comply with the following conditions:
* * * * *
(c) Intermediate rate. The intermediate interest rate will not
exceed 7 percent per annum. For a loan for a specific project that has
been approved, but not closed on or before May 22, 2008, the
intermediate rate is the poverty rate plus one-half of the difference
between the poverty rate and the market rate, not to exceed 7 percent
per annum. Loans approved on or after May 23, 2008, will have the
intermediate interest rate set at 80 percent of the market rate. The
intermediate interest rate will apply to loans that do not meet the
requirements for the poverty rate and for which the median household
income of the service area is not more than 100 percent of the
nonmetropolitan median household income of the State.
* * * * *
Dated: October 20, 2008.
James M. Andrew,
Administrator, Rural Utilities Service.
[FR Doc. E8-31255 Filed 1-5-09; 8:45 am]
BILLING CODE 3410-15-P