[Federal Register Volume 67, Number 15 (Wednesday, January 23, 2002)]
[Notices]
[Pages 3140-3143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1666]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service


Broadband Pilot Loan Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Notice of funds availability.

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SUMMARY: This is to notify interested parties that, during the current 
fiscal year (FY) 2002, $80 million is available for loans in the 
Broadband Pilot Loan Program administered by the Rural Utilities 
Service (RUS). This is a continuation of the Broadband Pilot Loan 
Program initiated by RUS during FY 2001 to finance the construction of 
facilities and systems providing broadband transmission service to 
rural consumers. The program provides financing for facilities serving 
rural communities of up to 20,000 inhabitants so that rural consumers 
in those areas may enjoy the same quality and range of 
telecommunications services as are available in urban and suburban 
communities. This notice describes the eligibility and application 
requirements and the criteria RUS will consider in evaluating 
applications for broadband loans.
    RUS currently has applications for broadband loans, submitted in 
response to the FY 2001 Broadband Pilot Loan Program, in excess of $350 
million. Before accepting new applications, RUS will act on those 
completed applications currently pending. RUS currently has completed 
applications in the aggregate amount of $150 million. RUS anticipates 
that the FY 2002 lending authority will be fully committed after it has 
acted on those completed applications. However, should FY 2002 loan 
authority remain available thereafter, RUS shall publish a notice 
advising interested parties that it is accepting additional 
applications.

DATES: New applications will be accepted only if, after processing all 
pending completed applications, RUS publishes an additional notice 
announcing that loan funds remain available. See discussion below.

FOR FURTHER INFORMATION CONTACT: Roberta D. Purcell, Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
STOP 1590, 1400 Independence Avenue, SW., Washington, DC 20250-1590, 
Telephone (202) 720-9554, Facsimile (202) 720-0810.

SUPPLEMENTARY INFORMATION:

Information Collection and Recordkeeping Requirements

    This notice contains no reporting or recordkeeping provisions 
requiring Office of Management and Budget (OMB) approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) because RUS has 
already received all information required for analysis of the loans to 
be considered under this notice.

General Information

    During FY 2002, $80 million will be made available for loans for 
the construction of facilities and systems to provide broadband 
transmission services in rural areas. The Broadband Pilot program is 
authorized by 7 U.S.C. 950aaa and the Agriculture Appropriations Act, 
2002, Public Law 107-76 and is a continuation of the Broadband Pilot 
Loan Program initiated by RUS during FY 2001 pursuant to a NOFA 
published December 5, 2000, 65 FR 75920 (Initial NOFA).
    The Initial NOFA announced that $100 million in loan funds would be 
available during FY 2001 on a first-come, first-served basis. The queue 
for considering and approving loans was established by the date on 
which the application was determined to be complete by RUS. During FY 
2001, RUS approved for funding 12 applications totaling $100 million 
dollars. RUS currently has pending completed applications for broadband 
loans, submitted in response to the Initial

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NOFA, in the aggregate amount of $150 million.
    Except as discussed below under ``Response to Terrorist Events,'' 
before accepting new applications for broadband loans, RUS will act on 
those completed applications it currently has pending based on the date 
on which RUS determined the application to be complete. Should loan 
funds remain available thereafter, RUS will publish a notice advising 
interested parties that it is accepting additional applications.
    Drawing on experience gained in reviewing applications over the 
past year, this notice restates, clarifies, and provides additional 
information regarding the eligibility and application requirements and 
criteria RUS will consider in evaluating applications under the 
Broadband Pilot Loan Program.
    After the $80 million provided for in this NOFA is committed, RUS 
will return any remaining loan applications to their respective 
applicants. Should financing beyond the $80 million become available 
for broadband transmission services, RUS will, by separate notice, 
announce the eligibility and application requirements, priority 
criterion and approval standards.

Agency Contacts

    Applications from: Alabama, Florida, Georgia, Illinois, Indiana, 
Maryland, Massachusetts, Michigan, Mississippi, New Hampshire, New 
Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, 
Tennessee, Vermont, Virginia, West Virginia, Wisconsin, Puerto Rico, 
Virgin Islands: Mr. Kenneth Kuchno, Director, Eastern Area, 
Telecommunications, Rural Utilities Service, STOP 1599, 1400 
Independence Avenue, SW., Washington, DC 20250-1599, Telephone (202) 
690-4673.
    Applications from: Alaska, Idaho, Iowa, Minnesota, Missouri, 
Montana, North Dakota, Oregon, South Dakota, Washington, Wyoming: Mr. 
Jerry Brent, Director, Northwest Area, Telecommunications, Rural 
Utilities Service, STOP 1595, 1400 Independence Avenue, SW., 
Washington, DC 20250-1595, Telephone (202) 720-1025.
    Applications from: Arizona, Arkansas, California, Colorado, Hawaii, 
Kansas, Louisiana, Nebraska, Nevada, New Mexico, Oklahoma, Texas, Utah, 
American Samoa, Federated States of Micronesia, Guam, Republic of 
Marshall Islands, Republic of Palau, Commonwealth of the Northern 
Marianas Islands: Mr. Ken Chandler, Director, Southwest Area, 
Telecommunications, Rural Utilities Service, STOP 1597, 1400 
Independence Avenue, SW., Washington, DC 20250-1597, Telephone (202) 
720-0800.

Definitions

    As used in this notice:
    Bandwidth means the capacity of the radio frequency band or 
physical facility needed to carry the broadband transmission services.
    Broadband transmission services means providing an information rate 
equivalent to at least 200 kilobits/second in the consumer's connection 
to the network, both from the provider to the consumer (downstream) and 
from the consumer to the provider (upstream).
    Eligible applicant shall have the meaning set forth in that 
paragraph entitled ``Eligible Applicant.''
    Eligible loan purposes shall have the meaning set forth in that 
paragraph entitled ``Eligible Loan Purposes.''
    Loan design shall have the meaning set forth in the paragraph 
entitled ``Loan Design.''
    Rural areas means any area of the United States not included within 
the boundaries of any incorporated or unincorporated city, village, or 
borough having a population in excess of 20,000 inhabitants.
    Spectrum means a defined band of frequencies that will accommodate 
the broadband transmission services.

Eligible Applicant

    To be eligible for a loan, the applicant must meet the following 
conditions:
    (1) The applicant must be a public body; an Indian tribe; a 
cooperative, nonprofit, limited dividend, or mutual association; an 
incorporated or limited liability company; or other legally organized 
entity. The applicant may not be an individual or a partnership.
    (2) The applicant must have the legal authority to own and operate 
the broadband facilities, to enter into contracts, to borrow funds, 
provide security, and otherwise comply with applicable federal statutes 
and regulations.

Eligible Loan Purposes

    Loans may be approved to finance the improvement, expansion, 
construction, acquisition and operation of facilities or systems to 
furnish or improve broadband transmission service in rural areas 
subject to the following:
    (1) Loans may be approved to finance the acquisition of operating 
lines and facilities only if the acquisition is necessary to furnish or 
improve broadband transmission service in rural areas;
    (2) Loans may be approved to finance the lease or purchase of 
spectrum rights and bandwidth necessary to provide the broadband 
transmission services;
    (3) Loans may not be approved to finance operating expenses except 
in limited circumstances, such as for the initial operation of a new 
system, where RUS determines such financing will enhance feasibility of 
the loan and no other source of financing is available; and
    (4) Loans may not be approved to finance the duplication of 
existing adequate broadband transmission services provided by others.

Minimum Loan Amount

    Loans under this authority will not be made for less than $100,000.

Loan Terms

    Loans shall bear interest based on the United States Treasury rate 
for loans with comparable maturities and shall be repaid with interest 
within a period, not to exceed 10 years, that approximates the expected 
useful life of the facilities financed.

Application

    Except as set forth below under ``Response to Terrorist Events,'' 
RUS processes applications for loans for broadband transmission 
services on a first-come, first-served basis determined by the date on 
which the applicant submitted a completed application.
    A completed application must include the following documentation, 
studies, reports and information satisfactory to RUS:
    (1) Completed Standard Form 424, ``Application for Federal 
Assistance.''
    (2) Evidence that applicant is an eligible applicant.
    (3) A loan design.
    (4) Evidence that the proposed project will not result in the 
duplication of existing facilities providing adequate broadband 
transmission service.
    (5) Description of the qualifications of applicant's management and 
key employees including relevant training and work experience.
    (6) Financial feasibility studies, as described below.
    (7) Proposed security arrangements for the loan.
    (8) An environmental report on the project.
    (9) Evidence that the applicant and the project will be in 
compliance with applicable laws.
    Upon receipt, RUS reviews an application to determine whether the 
application is complete. If RUS determines that an application is not 
complete, it advises the applicant of requirements that must be met. 
Upon determining that the application is

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complete, RUS assigns an application completion date which establishes 
the order of the application in the loan queue with the earliest 
application completion dates evaluated first. A determination that an 
application is complete is not a commitment to approve the application. 
Applicants are advised in writing of their respective application 
completion dates and the availability of loan funds.
    As of the date of this notice, RUS has a loan queue of completed 
applications in an aggregate amount well in excess of FY 2002 lending 
authority. Consequently, RUS is not now accepting additional 
applications.

Loan Design

    A Loan Design should contain the following, satisfactory to RUS:
    (1) A narrative discussing the proposed broadband transmission 
project including the costs of the project, all existing and proposed 
facilities that are a part of the project, the services to be provided 
by the project, the proposed service area, and the basis for subscriber 
forecasts;
    (2) Engineering design studies providing an economical and 
practical engineering design for construction of the applicant's 
broadband project that includes a detailed description of the 
facilities to be funded and setting forth technical specifications, 
data rates, and costs;
    (3) A map of the proposed service area reflecting the location of 
facilities and systems providing similar broadband services owned and 
operated by other entities; and
    (4) Subscriber forecasts and supporting documentation including 
market surveys.

Feasibility Study

    RUS will approve a loan only if, in RUS' sole judgment, the loan 
will be repaid according to its terms within the time agreed. The 
applicant must provide RUS with studies, satisfactory to RUS, 
addressing the financial feasibility of the broadband project. The 
applicant should include in its application:
    (1) Financial statements of the applicant for the last three years 
or for so long as the applicant has been in business if the applicant 
has not been in business for three years;
    (2) A loan budget showing all costs of the proposed project and the 
amount of loan and nonloan funds to be used;
    (3) A pro-forma five-year financial forecast including all revenues 
and expenses for the five-year period, a subscriber penetration 
forecast, and a detailed description of all associated assumptions;
    (4) Depreciation rates for the equipment being financed; and
    (5) Such additional information relating to financial feasibility 
as the borrower may choose to include after consulting with RUS.

Loan Security

    RUS will approve a loan only if, in RUS' sole judgment, the 
security therefore is reasonably adequate. Generally, RUS requires as 
security a first lien on all of the real and personal property that is 
part of the project financed by the loan, including any additional 
property relating to the project acquired after the date of the loan. 
RUS may require additional security, including, without limitation, a 
first lien on all real and personal property of applicant, and pledges 
of stock or other ownership interests in the applicant. RUS may also 
require that the applicant provide equity as a part of project or 
system financing.
    RUS loan documents set forth additional requirements on the 
applicant with respect to providing and maintaining security including 
operational, financial, and investment covenants and controls.

Approval Criteria

    RUS will consider, for approval, completed applications on a first-
come, first-served basis as discussed above under ``Application''. In 
order to approve a loan, RUS must determine that the application 
satisfies the following criteria:
    (1) The project will provide broadband transmission services in 
rural areas in an efficient and economical manner;
    (2) Loan funds will be used for eligible loan purposes;
    (3) The applicant has the necessary expertise and experience to 
successfully complete and operate the project;
    (4) The project is financially feasible and the loan will be repaid 
according to its terms;
    (5) The security for the loan is reasonably adequate; and
    (6) The applicant and the project will be in compliance with 
applicable laws.
    If RUS concludes that the application satisfies the above criteria, 
RUS may approve the application, in whole or part, and prescribe terms 
and conditions applicable to the loan.
    The applicant will be advised in writing of RUS loan approval and 
the expected timetable for delivery of loan documents for execution by 
the borrower.
    If RUS does not approve the application, RUS will so advise the 
applicant in writing.

Loan Documents

    The terms and conditions of loans shall be set forth in loan 
documents prepared by RUS. On request, RUS will provide applicants with 
examples of notes, loan agreements, and security instruments developed 
for use in the Broadband Pilot Loan Program. However, the terms and 
conditions of each loan shall be determined on a case-by-case basis.
    Among other matters, RUS may prescribe conditions to the advance of 
funds that address concerns regarding the feasibility of and the 
security for the loan. RUS may also prescribe terms and conditions 
applicable to the construction and operation of the project and the 
delivery of broadband transmission services to rural areas.

Other Federal Statutes and Regulations

    Loan applications will be required to demonstrate compliance with 
all applicable federal statutes and regulations, including, among 
others, those relating to nondiscrimination in federally assisted 
programs, government wide debarment and suspension (non-procurement), 
government wide requirements for drug-free workplace, restrictions on 
lobbying, audits, architectural barriers, flood hazard precautions, and 
delinquent debt.
    Applicants should contact the appropriate office identified above 
under ``Agency Contacts'' for additional information regarding any 
federal statutes and regulations which may apply to the project covered 
by the application.

Response to Terrorist Events

    Current RUS borrowers are advised that section 770 of FY 2002 
Appropriations Act, Public Law 107-76, provides as follows:
    Notwithstanding any other provision of law, from the funds 
appropriated to the Rural Utilities Service by this Act, any current 
Rural Utilities Service borrower within 100 miles of New York City 
shall be eligible for additional financing, refinancing, collateral 
flexibility, and deferrals on an expedited basis without regard to 
population limitations for any financially feasible telecommunications, 
energy or water project that assists endeavors related to the 
rehabilitation, prevention, relocation, site preparation, or relief 
efforts resulting from the terrorist events of September 11, 2001.
    Current borrowers qualifying under section 770 should contact the 
appropriate office identified above under ``Agency Contacts'' for 
additional information.

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    Dated: January 11, 2002.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 02-1666 Filed 1-22-02; 8:45 am]
BILLING CODE 3410-15-P