[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1735.13]

[Page 307]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--TELECOMMUNICATIONS PROGRAM--Table of Contents
 
               Subpart B--Loan Purposes and Basic Policies
 
Sec. 1735.13  Location of facilities and service for nonrural subscribers.

    (a) When it is determined by the Administrator to be necessary in 
order to furnish or improve telephone service in rural areas, loans may 
be made for the improvement, expansion, construction, acquisition, and 
operation of telephone lines, facilities, or systems without regard to 
their geographical location.
    (b) To the greatest extent practical, loans are limited to providing 
telephone facilities that serve subscribers in rural areas. In order to 
furnish and improve service to rural subscribers it may at times be 
necessary to provide loan funds to finance telephone facilities which 
(1) will also serve nonrural subscribers, or (2) are located in nonrural 
areas. Loans may be approved to finance such facilities if the 
Administrator determines, on a case-by-case basis, that (i) the primary 
purpose of the loan is to provide service to rural areas and (ii) the 
financing of facilities for nonrural subscribers is necessary and 
incidental to furnishing or improving telephone service in rural areas.
    (c) Loan funds may be approved for facilities to serve nonrural 
subscribers only if (1) the principal purpose of the loan is to furnish 
and improve rural service and (2) the use of loan funds to serve 
nonrural subscribers is necessary and incidental to the principal 
purpose of the loan. The following are examples of purposes for which 
such loans may be made (such loans are not limited to these examples):
    (1) In the case of construction of a new system, if the loan would 
not be economically feasible and self-liquidating unless the nonrural as 
well as the rural portions of the telephone service area are included in 
the proposed system, the loan may include funds for both portions.
    (2) Where the acquisition of an existing system located in and 
serving a nonrural area is necessary to serve as the nucleus of an 
expanded system to furnish area coverage service in rural areas, the 
loan may include funds to finance the acquisition.
    (3) When a system is being converted to modern service for rural 
subscribers, the loan may include funds for the conversion of the 
nonrural facilities, if the rural service will be improved as a result 
of such nonrural improvements and it is impractical to finance and serve 
the nonrural and rural areas separately.
    (4) A loan may include funds to serve nonrural subscribers located 
in community centers frequently called by the rural subscribers if the 
construction to serve such nonrural subscribers will be incidental to, 
and contribute substantially to, the provision of adequate service for 
the rural subscribers.
    (d) RUS may also approve financing for facilities to serve nonrural 
areas if, at the time financing was first approved by RUS:
    (1) The nonrural area had a population of 1,500 or less when first 
financed by RUS and that financing was approved prior to November 1, 
1993; or
    (2) The nonrural area had a population of 5,000 or less when first 
financed by RUS and that financing was approved on or after November 1, 
1993.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 58 FR 66253, Dec. 20, 1993]