[Federal Register Volume 64, Number 180 (Friday, September 17, 1999)]
[Rules and Regulations]
[Pages 50428-50429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24188]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1735

RIN 0572-AB49


General Policies, Types of Loans, Loan Requirements--
Telecommunications Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Direct final rule.

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SUMMARY: The Rural Utilities Service (RUS) is amending its regulations 
to clarify that loan applicants organized as limited liability 
companies may be eligible to receive financial assistance. This direct 
final rule is part of an ongoing RUS project to modernize agency 
policies in order to provide borrowers with the flexibility they need 
to continue providing reliable telephone service at reasonable costs in 
rural areas, while maintaining the integrity of Government loans. This 
action also conforms more closely to private lending practice.

DATES: This rule will become effective on November 16, 1999, unless we 
receive written adverse comments or notice of intent to submit adverse 
comments on or before October 18, 1999. If we receive such comment or 
notice, we will publish a document in the Federal Register prior to the 
effective date withdrawing the direct final rule.

ADDRESSES: Submit written comments or notice of intent to submit 
adverse comments to Roberta D. Purcell, Assistant Administrator, 
Telecommunications Program, Rural Utilities Service, 1400 Independence 
Avenue, SW., Room 4056, STOP 1590, Washington, DC 20250-1590. RUS 
requires a signed original and three copies of all comments (7 CFR part 
1700). Comments received will be available for public inspection at 
room 4056, South Building, U.S. Department of Agriculture, Washington, 
DC, between 8:00 a.m. and 4:00 p.m. (7 CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Jonathan P. Claffey, Deputy Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
1400 Independence Avenue, SW., Room 4056, STOP 1590, Washington, DC 
20250-1590. Telephone: (202) 720-9556.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant and, therefore, 
has not been reviewed by the Office of Management and Budget under 
Executive Order 12866.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. RUS has determined that this rule meets 
the applicable standards provided in section 3 of that Executive Order. 
In accordance with the Executive Order and the rule: (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 this rule; and 
(3) in accordance with section 212(e) of the Department of Agriculture 
Reorganization Act of 1994 (7 U.S.C. 6912(e)) administrative appeal 
procedures, if any, are required must be exhausted prior to initiating 
litigation against the Department or its agencies.

Regulatory Flexibility Act Certification

    RUS has determined that this rule will not have a significant 
economic impact on a substantial number of small entities, as defined 
by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The RUS 
telecommunications loan program provides borrowers with loans at 
interest rates and terms that are more favorable than those generally 
available from the private sector. Borrowers, as a result of obtaining 
federal financing, receive economic benefits that exceed any direct 
cost associated with complying with RUS regulations and requirements.

Information Collection and Recordkeeping Requirements

    This rule contains no new reporting or recordkeeping burdens under 
OMB control number 0572-0079 that would require approval under the 
Paperwork

[[Page 50429]]

Reduction Act of 1995 (44 U.S.C. Chapter 35).
    Send questions or comments regarding this burden or any other 
aspect of these collections of information, including suggestions for 
reducing the burden to F. Lamont Heppe, Director, Program Development 
and Regulatory Analysis, Rural Utilities Service, 1400 Independence 
Avenue, SW., Room 4034, STOP 1522, Washington, DC 20250-1522.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this rule will not 
significantly affect the quality of the human environment as defined by 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). 
Therefore, this action does not require an environmental impact 
statement or assessment.

Catalog of Federal Domestic Assistance

    The program described by this rule is listed in the Catalog of 
Federal Domestic Assistance programs under numbers 10.851, Rural 
Telephone Loans and Loan Guarantees, and 10.852, Rural Telephone Bank 
Loans. This catalog is available on a subscription basis from the 
Superintendent of Documents, the United States Government Printing 
Office, Washington, 20402-9325.

Executive Order 12372

    This program is excluded from the scope of Executive Order 12372, 
Intergovernmental Consultation which may require consultation with 
state and local offices. A final rule related notice entitled 
``Department Programs and Activities Excluded from Executive Order 
12372,'' (50 FR 47034) determined that RUS and Rural Telephone Bank 
loans and loan guarantees were not covered by Executive Order 12372.

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.

Background

    The telecommunications industry is becoming increasingly 
competitive. The Telecommunications Act of 1996 (Public Law 104-104) 
and regulatory actions by the Federal Communications Commission are 
drastically altering the regulatory and business environment of all 
telecommunications systems, including RUS borrowers. At the same time, 
changes in overall business trends and technology continue to place 
pressure on RUS financed systems to operate more efficiently.
    At the present, RUS regulations stipulate that an entity must be 
incorporated to be eligible for RUS financing (7 CFR 1735.14, Borrower 
eligibility). However, the limited liability company (LLC) structure is 
an increasingly used form of business organization. RUS has determined 
that its regulations should provide that LLCs be eligible for RUS loans 
if the state laws under which the LLC is organized and existing enable 
the LLC to effectively accomplish the purposes of the Rural 
Electrification Act of 1936 (7 U.S.C. 901 et seq.).
    RUS policies are utilized by the Governor of the Rural Telephone 
Bank in carrying out the Rural Telephone Bank's loan program.

List of Subjects in 7 CFR Part 1735

    Accounting, Loan programs--communications, Reporting and 
recordkeeping requirements, Rural areas, Telephone.

    For the reasons set forth in the preamble, 7 CFR Chapter XVII is 
amended as follows:

PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--
TELECOMMUNICATIONS PROGRAM

    1. The authority citation for part 1735 is revised to read as 
follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.

    2. In Sec. 1735.14, paragraph (c) is revised to read as follows:


Sec. 1735.14  Borrower eligibility.

* * * * *
    (c) RUS gives preference to those borrowers (including initial loan 
applicants) already providing telephone service in rural areas, and to 
cooperative, nonprofit, limited dividend, or mutual associations. To be 
eligible for a loan, a borrower:
    (1) Must provide or propose to provide the basic local exchange 
telephone service needs of rural areas;
    (2) Must have sufficient authority to carryout the purposes of the 
RE Act; and
    (3) Must be incorporated or a limited liability company.

    Dated: September 10, 1999.
Inga Smulkstys,
Acting Under Secretary, Rural Development.
[FR Doc. 99-24188 Filed 9-16-99; 8:45 am]
BILLING CODE 3410-15-P