[Federal Register Volume 68, Number 158 (Friday, August 15, 2003)]
[Proposed Rules]
[Pages 48814-48833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20786]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 68, No. 158 / Friday, August 15, 2003 / 
Proposed Rules  

[[Page 48814]]



LOCAL TELEVISION LOAN GUARANTEE BOARD

7 CFR Parts 2200 and 2201

RIN 0572-AB82


LOCAL Television Loan Guarantee Program

AGENCY: LOCAL Television Loan Guarantee Board.

ACTION: Proposed rule.

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SUMMARY: The LOCAL Television Loan Guarantee Board (Board) is proposing 
regulations to implement the LOCAL Television Loan Guarantee Program 
(Program or LOCAL TV Program) as authorized by the Launching Our 
Communities' Access to Local Television Act of 2000 (the Act). Section 
1002 of the Act sets forth the primary purpose of the Act to facilitate 
access, on a technologically neutral basis to signals of local 
television stations for households located in Nonserved Areas and 
Underserved Areas. The Act establishes a LOCAL Television Loan 
Guarantee Board (the Board) to approve Guarantees made under the Act. 
The Board is comprised of the Secretary of the Treasury, the Chairman 
of the Board of Governors of the Federal Reserve System, the Secretary 
of Agriculture, and the Secretary of Commerce, or their designees.
    This rule proposes to establish eligibility and Guarantee 
requirements, the application and approval process, as well as the 
administration of Guarantees made by the Board. Additionally, this rule 
proposes the process through which the Board will consider applications 
under the priority considerations required in the Act.

DATES: Written comments must by received by the LOCAL Television Loan 
Guarantee Board, or bear a postmark or equivalent, no later than 
September 15, 2003. Comments regarding the information and 
recordkeeping requirements must be received by October 14, 2003.

ADDRESSES: Written comments should be addressed to Jacqueline G. 
Rosier, Secretary, LOCAL Television Loan Guarantee Board, 1400 
Independence Avenue, SW., STOP 1575, Room 2919-S, Washington, DC 20250-
1575. Telephone (202) 720-0530; Facsimile (202) 720-2734; e-mail 
[email protected].

FOR FURTHER INFORMATION CONTACT: Jacqueline G. Rosier, Secretary, LOCAL 
Television Loan Guarantee Board, 1400 Independence Avenue, SW., STOP 
1575, Room 2919-S, Washington, DC 20250-1575. Telephone (202) 720-0530; 
Facsimile (202) 720-2734; E-mail [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be significant for 
purposes of Executive Order 12866, and therefore has been reviewed by 
the Office of Management and Budget (OMB). In accordance with Executive 
Order 12866, an Economic Impact Analysis was completed, outlining the 
costs and benefits of implementing this program. The complete analysis 
is available from the Board upon request.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. The Board has determined that this rule meets the 
applicable standards provided in section 3 of the Executive Order, to 
minimize litigation, eliminate ambiguity, and reduce burden.

Administrative Procedure Act

    Pursuant to authority at 5 U.S.C. 553 (a)(2), this rule related to 
loans 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.

Regulatory Flexibility Act

    Because this 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.

Information Collection and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), the Board invites comments on this information collection 
for which the Board intends to request approval from the Office of 
Management and Budget (OMB).
    Comments on the information collection and recordkeeping 
requirements in this proposed rule must be received by October 14, 
2003.
    Comments are invited on (a) whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (b) the 
accuracy of the agency's estimate of burden including the validity of 
the methodology and assumptions used; (c) ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Comments on the information collection and recordkeeping 
requirements in this proposed rule may be sent to F. Lamont Heppe, Jr., 
Director, Program Development and Regulatory Analysis, Rural Utilities 
Service, U.S. Department of Agriculture, 1400 Independence Ave. SW., 
Stop 1522, Room 4034 South Building, Washington, DC 20250-1522.
    Title: LOCAL Television Loan Guarantee Program.
    Type of Request: New collection.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 9 hours per response.
    Respondents: Public bodies, commercial companies, cooperatives, 
nonprofits, Indian tribes, and limited dividend or mutual associations 
and must be incorporated or a limited liability company.
    Estimated Number of Respondents: 10.
    Estimated Number of Responses per Respondent: 19.4
    Estimated Total Annual Burden on Respondents: 1,830 hours.
    Copies of this information collection can be obtained from Michele 
Brooks,

[[Page 48815]]

Program Development and Regulatory Analysis, at (202) 690-1078.
    All responses to this information collection and recordkeeping 
notice will be summarized and included in the request for OMB approval. 
All comments will also become a matter of public record.

Catalog of Federal Domestic Assistance

    The Program described by this rule is listed in the Catalog of 
Federal Domestic Assistance Programs under No. 10.853, LOCAL Television 
Loan Guarantee Program. This catalog is available on a subscription 
basis from the Superintendent of Documents, the United States 
Government Printing Office, Washington, DC 20402. Telephone: (202) 512-
1800.

Executive Order 12372

    No intergovernmental consultation with State and local officials is 
required because this rule is not subject to the provisions of 
Executive Order 12372, Intergovernmental Consultation.

Unfunded Mandates

    This 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. 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

    It has been determined that this rule does not constitute a major 
Federal action significantly affecting the quality of the human 
environment, and in accordance with the National Environmental Policy 
Act of 1969 [42 U.S.C. 4321 et seq.] (NEPA), an Environmental Impact 
Statement is not required. If necessary, Loans sought to be guaranteed 
under this Program will be assessed individually to determine 
appropriate compliance with NEPA.

Government Paperwork Elimination Act

    The Board is committed to compliance with the Government Paperwork 
Elimination Act, which requires Government agencies to provide the 
public the option of submitting information or transacting business 
electronically to the maximum extent possible.

Civil Rights

    The LOCAL TV Board is an equal opportunity lender. Applicants are 
required to comply with regulations on nondiscrimination and equal 
employment opportunity.

Executive Order 12630

    This rule does not contain policies that have takings implications.

Executive Order 13132

    This rule does not contain policies having federalism implications 
requiring preparation of a Federalism Summary Impact Statement.

Background

    On December 21, 2000, the President signed Public Law 106-553, the 
Federal Funding Act for Fiscal Year 2001. Title X of Pub. L. 106-553, 
entitled the ``Launching our Communities'' Access to Local Television 
Act of 2000'' established the LOCAL Television Loan Guarantee Board and 
authorized the Board to guarantee Loans to facilitate access, on a 
technologically neutral basis, to signals of local television stations 
for households located in Nonserved Areas or Underserved Areas. The 
Board is comprised of the Secretaries of Agriculture, Treasury, and 
Commerce, and the Chair of the Board of Governors of the Federal 
Reserve System, or their designees. Individuals have been designated as 
Board members for each of the agencies represented on the Board. The 
LOCAL Television Act does not, however, designate a chair of the Board. 
Pursuant to procedural regulations previously published in the Federal 
Register on December 11, 2002 (67 FR 76105), the Board has chosen the 
designee of the Secretary of the Treasury as Chair. The Board is 
authorized to approve Guarantees up to 80 percent of the principal 
amount of up to $1.25 billion in Loans. The Board's authority to 
guarantee Loans under the Program expires on the earlier of the date 
the Secretary of Agriculture determines that at least 75 percent of 
Designated Market Areas, other than the top 40 Designated Market Areas, 
have access to Local Television Broadcast Signals for virtually all 
households or December 31, 2006.
    The Act requires the issuance of regulations to implement its 
provisions. Specifically, the Act requires that these regulations set 
forth: (1) The form of any application to be submitted to the Board; 
(2) the time periods for the review and consideration by the Board of 
applications submitted to the Board, as well as any other actions to be 
taken by the Board with respect to such applications; (3) appropriate 
safeguards against evasions of the Act; (4) circumstances in which an 
Applicant, together with any Affiliate of an Applicant, shall be 
treated as an Applicant for a Guarantee; (5) requirements that 
appropriate parties submit to the Board any documents and assurances 
that are required for the administration of the Act's provisions; (6) 
requirements governing defaults on Loans guaranteed under the Act, 
including the administration of the payment of guaranteed amounts upon 
Default; and (7) other provisions consistent with the Act's purposes as 
the Board considers appropriate.
    On March 14, 2001, the Rural Utilities Service (RUS), U.S. 
Department of Agriculture, published in the Federal Register a request 
for public comment and a notice of public discussion meetings on 
implementing the provisions of the Act (66 FR 14880). This notice 
requested comments and encouraged participation in informal meetings 
regarding the implementation of the Act. RUS requested information 
regarding all aspects of the Program, including any financial and 
technological implications, as well as analyses of any provisions of 
the Act that may present issues or problems in implementing the 
Program. On April 30, 2002, RUS issued a Notice of Inquiry (NOI) in the 
Federal Register (67 FR 21216) seeking additional public comment on the 
implementation of the Act. Specifically, the NOI was issued to assess 
the interest of eligible entities in pursuing application for funding 
under the Act taking into account: (1) The recent commercial and 
regulatory developments, including pending industry mergers; (2) the 
impacts of new technology capable of providing local TV signals; (3) 
the effects of the Satellite Home Viewer Improvement Act; and (4) the 
ability to accomplish the Act's objectives utilizing current 
appropriations.

Comments and Responses

    RUS received nine written comments in response to its March 14, 
2001, request for public comment and notice of public discussion 
meetings. Five of the nine commenters participated in public discussion 
meetings with RUS and other Board staff.
    RUS received three written comments in response to its April 30, 
2002, NOI.
    The twelve respondents included: satellite and internet services 
providers, cable, telecommunications & television trade associations, 
the interest of rural utilities companies and cooperatives, TV station 
owners and operators, a rural financial lender, a financial consultant 
and a terrestrial system local TV provider.
    RUS submitted the comments to the Board and the Board considered 
the oral and written comments as it formulated

[[Page 48816]]

these regulations implementing the Program.
    The comments received in response to both notices are available on 
the RUS Web site at: http://www.usda.gov/rus/telecom/initiatives/index_initiatives.htm#comment.

Description of Proposed Rule

    The LOCAL TV Act is intended to help spread local television into 
Nonserved Areas and Underserved Areas. The Act defines these terms in 
relation to the ability to receive the Local Television Broadcast 
Signals serving a particular Designated Market Area. What comprises 
these Local Television Broadcast Signals is not defined. This proposed 
rule would define Local Television Broadcast Signals to create a 
reasonable, meaningful, and administratively workable distinction 
between Nonserved Areas and Underserved Areas, so that priority is 
given to Projects that provide signals to areas without access to local 
signals.
    The Act refers to signals (plural). As such, receiving a single 
local television signal does not constitute access. The various 
technologies used to provide a multichannel system (typically a cable 
television system or a Direct Broadcast Satellite) do not inherently 
dictate the number of local signals provided. Therefore, Local 
Television Broadcast Signals must be defined on a different basis.
    As of August 15, 2003, the Federal Communications Commission (FCC) 
recognizes four major national television broadcast networks in its 
rulings. In addition, the Board determined that it is reasonable to 
define a practical set of ``Local Television Broadcast Signals'' as a 
set most likely to provide the local news, weather, sports and other 
programming of local interest that are the reason people need access to 
local signals. As such, the Board proposes a technologically neutral 
definition of ``Local Television Broadcast Signals'' so that Nonserved 
Areas and Underserved Areas are determined by whether that area has 
access to the local signals of the major national television broadcast 
networks. Further, the Act defines ``Nonserved Area'' to mean any area 
that is outside the grade B contour (as determined using standards 
employed by the FCC) of the Local Television Broadcast Signals serving 
a particular Designated Market Area and does not have access to such 
signals by any commercial, for profit, multichannel video provider. 
``Underserved Area'' is defined in the Act to mean any area that is 
outside the grade A contour (as determined using standards employed by 
the FCC) of the Local Television Broadcast Signals serving a particular 
Designated Market Area and has access to Local Television Broadcast 
Signals from not more than one commercial, for-profit multichannel 
video provider.
    The definitions of nonserved area and underserved area contained in 
this proposed rule are directly from the Act. We interpret these 
statutory definitions as follows. An area outside of the grade A 
contour, but within the grade B contour, can never be considered a 
nonserved area. Areas outside of the grade B contour, which by 
definition are always not included in the grade A contour, may be 
considered either a nonserved area or an underserved area. However, any 
one geographic area outside of the grade B contour can never be both 
nonserved and underserved. An area outside of the grade B contour would 
be nonserved if it does not have access to local television broadcast 
signals from any commercial, for profit, or multichannel video 
provider. An area outside of the grade B contour would be underserved 
if it has access to local television broadcast signals from only one 
commercial, for profit, multichannel video provider.
    The LOCAL TV Act requires the Board to develop and utilize 
underwriting criteria to determine which loans may be eligible for a 
loan guarantee under the Act. The underwriting criteria have been 
embodied within these proposed rules. The underwriting criteria will be 
posted on the LOCAL TV Web site at http://www.usda.gov/rus/localtvboard.
    In Section 2201.11(g)(2) of the proposed rule, the Board proposes 
that an Applicant applying for a guarantee for a loan greater than some 
minimum amount be required to submit a preliminary credit rating 
opinion letter prepared by a nationally recognized statistical rating 
organization. The proposed rule provides for a minimum amount of $5 
million. The Board Is interested in receiving comment on where this 
minimum should be set within the range of $5 million to $25 million. 
Comments must include relevant information in support of their 
positions.
    These proposed rules implement the requirements of the Act and 
provide a procedure to administer the Program.

List of Subjects in 7 CFR Parts 2200 and 2201

    Loan programs--Communications, Rural areas, Telecommunications, 
Reporting and recordkeeping requirements.
    For the reasons set forth in the preamble, chapter XX of title 7 of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 2200--ACCESS TO LOCAL TELEVISION SIGNALS GUARANTEED LOAN 
PROGRAM; GENERAL POLICIES AND PROCEDURES

    1. The authority citation for part 2200 continues to read as 
follows:

    Authority: 47 U.S.C. 1101 et seq.; Pub. L. 106--553; Pub. L. 
107-171.

    2. The title of part 2200 is proposed to be revised to read as set 
out above.
    3. Section 2200.1 is proposed to be amended by adding a new 
paragraph (d) to read as follows:


Sec.  2200.1  Definitions.

* * * * *
    (d) Person means any individual, corporation, cooperative, 
partnership, joint venture, association, joint-stock company, limited 
liability company or partnership, trust, unincorporated organization, 
government entity, agency or instrumentality or any subdivision 
thereof.
    4. Part 2200 is proposed to be amended by adding sections 2200.10 
through 2200.12 to read as follows:


Sec.  2200.10  Restrictions on lobbying.

    (a) No funds received through a Loan guaranteed under the Program 
in this chapter may be expended by the recipient of a Federal contract, 
grant, loan, loan guarantee, or cooperative agreement to pay any person 
for influencing or attempting to influence an officer or employee of 
any agency, a Member of Congress, an officer or employee of Congress, 
or an employee of a Member of Congress in connection with any of the 
following covered Federal actions: the awarding of any Federal 
contract, the making of any Federal grant, the making of any Federal 
loan or loan Guarantee, the entering into of any cooperative agreement, 
and the extension, continuation, renewal, amendment, or modification of 
any Federal contract, grant, loan, loan Guarantee, or cooperative 
agreement.
    (b) Each person who requests or receives from an agency a 
commitment providing for the United States to insure or guarantee a 
loan shall file with that agency a statement, set forth in the 
application form, whether that person has made or has agreed to make 
any payment to influence or attempt to influence an officer or employee 
of any agency, a Member of Congress, an officer or employee of 
Congress, or an employee of a Member of Congress in

[[Page 48817]]

connection with that loan insurance or Guarantee.
    (c) Each person who requests or receives from an agency a 
commitment providing for the United States to insure or guarantee a 
loan shall file with that agency a Standard Form--LLL if that person 
has made or has agreed to make any payment to influence or attempt to 
influence an officer or employee of any agency, a Member of Congress, 
an officer or employee of Congress, or an employee of a Member of 
Congress in connection with that loan insurance or Guarantee.
    (d) Each person shall file a certification, contained in the 
application form, and a disclosure form (Standard Form--LLL), if 
required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (e) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000, unless such person 
previously filed a certification, and a disclosure form, if required, 
under paragraph (c) of this section.
    (f) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraphs (d) or (e) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a 
covered Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.


Sec.  2200.11  Government-wide debarment and suspension 
(nonprocurement).

    (a) Executive Order (E.O.) 12549 provides that, to the extent 
permitted by law, Executive departments and agencies shall participate 
in a governmentwide system for nonprocurement debarment and suspension. 
A person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect. The Board shall 
review the List of Debarred entities prior to making final loan 
Guarantee decisions. Suspension or debarment may be a basis for denying 
a loan Guarantee.
    (b) This section applies to all persons who have participated, are 
currently participating or may reasonably be expected to participate in 
transactions under Federal nonprocurement programs. For purposes of 
this section such transactions will be referred to as ``covered 
transactions.''
    (1) Covered transaction. For purposes of this section, a covered 
transaction is a primary covered transaction or a lower tier covered 
transaction. Covered transactions at any tier need not involve the 
transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph 
(b)(2) of this section, a primary covered transaction is any 
nonprocurement transaction between an agency and a person, regardless 
of type, including: grants, cooperative agreements, scholarships, 
fellowships, contracts of assistance, loans, loan guarantees, 
subsidies, insurance, payments for specified use, donation agreements 
and any other nonprocurement transactions between a Federal agency and 
a person.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction;
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $100,000) under a 
primary covered transaction;
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons may 
include loan officers or chief executive officers acting as principal 
investigators and providers of federally required audit services.
    (2) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits 
received in an individual's business capacity are not accepted);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of this section 
would be prohibited by law.
    (3) Board covered transactions. This section applies to the Board's 
Loan Guarantees, subcontracts and transactions at any tier that are 
charges as direct or indirect costs, regardless of type.
    (c) Primary covered transactions. Except to the extent prohibited 
by law, persons who are debarred or suspended shall be excluded from 
primary covered transactions as either participants or principals 
throughout the Executive Branch of the Federal Government for the 
period of their debarment, suspension, or the period they are proposed 
for debarment under 48 CFR part 9, subpart 9.4. Accordingly, no agency 
shall enter into primary covered transactions with such excluded 
persons during such period, except as permitted pursuant to paragraph 
(l) of this section.
    (d) Lower tier covered transactions. Except to the extent 
prohibited by law, persons who have been proposed for debarment under 
48 CFR part 9, subpart 9.4, debarred or suspended shall be excluded 
from participating as either participants or principals in all lower 
tier covered transactions (see paragraph (b)(1)(ii) of this section for 
the period of their exclusion.

[[Page 48818]]

    (e) Exceptions. Debarment or suspension does not affect a person's 
eligibility for:
    (1) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (2) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, and 
entities consisting wholly or partially of foreign governments or 
foreign governmental entities;
    (3) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits 
received in an individual's business capacity are not accepted);
    (4) Federal employment;
    (5) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (6) Incidental benefits derived from ordinary governmental 
operations; and
    (7) Other transactions where the application of this section would 
be prohibited by law.
    (f) Persons who are ineligible are excluded in accordance with the 
applicable statutory, executive order, or regulatory authority.
    (g) Persons who accept voluntary exclusions are excluded in 
accordance with the terms of their settlements. The Board shall, and 
participants may, contact the original action agency to ascertain the 
extent of the exclusion.
    (h) The Board may grant an exception permitting a debarred, 
suspended, or voluntarily excluded person, or a person proposed for 
debarment under 48 CFR part 9, subpart 9.4, to participate in a 
particular covered transaction upon a written determination by the 
agency head or an authorized designee stating the reason(s) for 
deviating from the Presidential policy established by Executive Order 
12549. However, in accordance with the President's stated intention in 
the Executive Order, exceptions shall be granted only infrequently. 
Exceptions shall be reported in accordance with the Executive Order.
    (i) Notwithstanding the debarment, suspension, proposed debarment 
under 48 CFR part 9, subpart 9.4, determination of ineligibility, or 
voluntary exclusion of any person by an agency, agencies and 
participants may continue covered transactions in existence at the time 
the person was debarred, suspended, proposed for debarment under 48 CFR 
part 9, subpart 9.4, declared ineligible, or voluntarily excluded. A 
decision as to the type of termination action, if any, to be taken 
should be made only after thorough review to ensure the propriety of 
the proposed action.
    (j) Agencies and participants shall not renew or extend covered 
transactions (other than no-cost time extensions) with any person who 
is debarred, suspended, proposed for debarment under 48 CFR part 9, 
subpart 9.4, ineligible or voluntary excluded, except as provided in 
paragraph (h) of this section.
    (k) Except as permitted under paragraphs (h) or (i) of this 
section, a participant shall not knowingly do business under a covered 
transaction with a person who is:
    (1) Debarred or suspended;
    (2) Proposed for debarment under 48 CFR part 9, subpart 9.4; or
    (3) Ineligible for or voluntarily excluded from the covered 
transaction.
    (l) Violation of the restriction under paragraph (k) of this 
section may result in disallowance of costs, annulment or termination 
of award, issuance of a stop work order, debarment or suspension, or 
other remedies as appropriate.
    (m) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, proposed for debarment under 48 
CFR part 9, subpart 9.4, ineligible, or voluntarily excluded from the 
covered transaction, unless it knows that the certification is 
erroneous. An agency has the burden of proof that a participant did 
knowingly do business with a person that filed an erroneous 
certification.


Sec.  2200.12  Freedom of Information Act.

    (a) Definitions. All terms used in this section, which are defined 
in 5 U.S.C. 551 or 5 U.S.C. 552 shall have the same meaning in this 
section. In addition the following definitions apply to this section:
    (1) FOIA, as used in this section, means the ``Freedom of 
Information Act,'' as amended, 5 U.S.C. 552.
    (2) Commercial use request means a request from or on behalf of one 
who seeks information for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person 
on whose behalf the request is made.
    (3) Direct costs mean those expenditures that the Board actually 
incurs in searching for, reviewing, and duplicating documents in 
response to a request made under paragraph (c) of this section. Direct 
costs include, for example, the labor costs of the employee performing 
the work (the basic rate of pay for the employee, plus 16 percent of 
that rate to cover benefits). Not included in direct costs are overhead 
expenses such as the costs of space and heating or lighting of the 
facility in which the records are kept.
    (4) Duplication means the process of making a copy of a document in 
response to a request for disclosure of records or for inspection of 
original records that contain exempt material or that otherwise cannot 
be inspected directly. Among others, such copies may take the form of 
paper, microfilm, audiovisual materials, or machine-readable 
documentation (e.g., magnetic tape or disk).
    (5) Educational institution means a preschool, a public or private 
elementary or secondary school, or an institution of undergraduate 
higher education, graduate higher education, professional education, or 
an institution of vocational education that operates a program of 
scholarly research.
    (6) Noncommercial scientific institution refers to an institution 
that is not operated on a ``commercial'' basis (as that term is used in 
this section) and which is operated solely for the purpose of 
conducting scientific research, the results of which are not intended 
to promote any particular product or industry.
    (7) News means information about current events or that would be of 
current interest to the public. Examples of news media entities 
include, but are not limited to, television or radio stations 
broadcasting to the public at large, and publishers of newspapers and 
other periodicals (but only in those instances when they can qualify as 
disseminators of ``news'') who make their products available for 
purchase or subscription by the general public. ``Freelance'' 
journalists may be regarded as working for a news organization if they 
can demonstrate a solid basis for expecting publication through that 
organization, even though not actually employed by it.
    (8) Representative of the news media means any person actively 
gathering news for an entity that is organized and operated to publish 
or broadcast news to the general public.
    (9) Review means the process of examining documents, located in 
response to a request for access, to determine whether any portion of a 
document is exempt information. It includes doing all that is necessary 
to excise the documents and otherwise to prepare them for release. 
Review does not include time spent resolving general

[[Page 48819]]

legal or policy issues regarding the application of exemptions.
    (10) Search means the process of looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification within documents. Searches may be done manually or by 
computer.
    (b) Records available for public inspection and copying. (1) Types 
of records made available. The information in this section is furnished 
for the guidance of the public and in compliance with the requirements 
of the FOIA. This section sets forth the procedures the Board follows 
to make publicly available the materials specified in 5 U.S.C. 
552(a)(2). These materials shall be made available for inspection and 
copying at the Board's offices pursuant to 5 U.S.C. 552(a)(2). 
Information routinely provided to the public as part of a regular Board 
activity (for example, press releases) may be provided to the public 
without following this section.
    (2) Reading room procedures. Information available under this 
section is available for inspection and copying, from 9 a.m. to 5 p.m. 
weekdays, at 1400 Independence Avenue, SW., Washington, DC.
    (3) Electronic records. Information available under this section 
shall also be available on the Board's Web site found at www.usda.gov/rus/localtvboard.
    (c) Records available to the public on request. (1) Types of 
records made available. All records of the Board that are not available 
under paragraph (b) of this section shall be made available upon 
request, pursuant to the procedures in this section and the exceptions 
set forth in the FOIA.
    (2) Procedures for requesting records. A request for records shall 
reasonably describe the records in a way that enables the Board's staff 
to identify and produce the records with reasonable effort and without 
unduly burdening or significantly interfering with any of the Board's 
operations. The request shall be submitted in writing to the Secretary 
of the Board at LOCAL Television Loan Guarantee Board, 1400 
Independence Avenue, SW., STOP 1575, Room 2919-S, Washington, DC 20250-
1575, or sent by facsimile to the Secretary of the Board at (202) 720-
2734. The request shall be clearly marked FREEDOM OF INFORMATION ACT 
REQUEST.
    (3) Contents of request. The request shall contain the following 
information:
    (i) The name and address of the requester, and the telephone number 
at which the requester can be reached during normal business hours;
    (ii) Whether the requested information is intended for commercial 
use, or whether the requester represents an educational or 
noncommercial scientific institution, or news media;
    (iii) A statement agreeing to pay the applicable fees, or a 
statement identifying any fee limitation desired, or a request for a 
waiver or reduction of fees that satisfies paragraph (f) of this 
section.
    (d) Processing requests. (1) Priority of responses. The date of 
receipt for any request, including one that is addressed incorrectly or 
that is referred to the Board by another agency, is the date the 
Secretary of the Board actually receives the request. The Secretary of 
the Board shall normally process requests in the order they are 
received. However, in the Secretary of the Board's discretion, the 
Board may use two or more processing tracks by distinguishing between 
simple and more complex requests based on the number of pages involved, 
or some other measure of the amount of work and/or time needed to 
process the request, and whether the request qualifies for expedited 
processing as described in paragraph (d)(2) of this section. When using 
multitrack processing, the Secretary of the Board may provide 
requesters in the slower track(s) with an opportunity to limit the 
scope of their requests in order to qualify for faster processing. The 
Secretary of the Board shall contact the requester by telephone or by 
letter, whichever is most efficient in each case.
    (2) Expedited processing. (i) A person may request expedited access 
to records by submitting a statement, certified to be true and correct 
to the best of that person's knowledge and belief, that demonstrates a 
compelling need for the records, as defined in 5 U.S.C. 
552(a)(6)(E)(v).
    (ii) The Secretary of the Board shall notify a requester of the 
determination whether to grant or deny a request for expedited 
processing within ten working days of receipt of the request. If the 
Secretary of the Board grants the request for expedited processing, the 
Board shall process the request for access to information as soon as 
practicable. If the Secretary of the Board denies a request for 
expedited processing, the requester may file an appeal pursuant to the 
procedures set forth in paragraph (e) of this section, and the Board 
shall respond to the appeal within twenty days after the appeal was 
received by the Board.
    (3) Time limits. The time for response to requests shall be 20 
working days, except:
    (i) In the case of expedited treatment under paragraph (d)(2) of 
this section;
    (ii) Where the running of such time is suspended for payment of 
fees pursuant to paragraph (f)(2)(ii) of this section;
    (iii) Where the estimated charge is less than $250, and the 
requester does not guarantee payment pursuant to paragraph (f)(2)(i) of 
this section; or
    (iv) In unusual circumstances, as defined in 5 U.S.C. 
552(a)(6)(B)(iii), the time limit may be extended for a period of time 
not to exceed 10 working days as provided by written notice to the 
requester, setting forth the reasons for the extension and the date on 
which a determination is expected to be dispatched; or such alternative 
time period as mutually agreed to by the Secretary of the Board and the 
requester when the Secretary of the Board notifies the requester that 
the request cannot be processed in the specified time limit.
    (4) Response to request. In response to a request that satisfies 
paragraph (c) of this section, an appropriate search shall be conducted 
of records in the custody and control of the Board on the date of 
receipt of the request, and a review made of any responsive information 
located. The Secretary of the Board shall notify the requester of:
    (i) The Secretary of the Board's determination of the request and 
the reasons therefor;
    (ii) The information withheld, and the basis for withholding; and
    (iii) The right to appeal any denial or partial denial, pursuant to 
paragraph (e) of this section.
    (5) Referral to another agency. To the extent a request covers 
documents that were created by, obtained from, classified by, or is in 
the primary interest of another agency, the Secretary of the Board may 
refer the request to that agency for a direct response by that agency 
and inform the requester promptly of the referral. The Secretary of the 
Board shall consult with another Federal agency before responding to a 
requester if the Board receives a request for a record in which:
    (i) Another Federal agency subject to the FOIA has a significant 
interest, but not the primary interest; or
    (ii) Another Federal agency not subject to the FOIA has the primary 
interest or a significant interest. Ordinarily, the agency that 
originated a record will be presumed to have the primary interest in 
it.
    (6) Providing responsive records. (i) A copy of records or portions 
of records responsive to the request shall be sent to the requester by 
regular U.S. mail to the address indicated in the request, unless the 
requester elects to take delivery of the documents at the Board's 
Freedom of Information Office or makes other acceptable arrangements, 
or the

[[Page 48820]]

Secretary of the Board deems it appropriate to send the documents by 
another means. The Secretary of the Board shall provide a copy of the 
record in any form or format requested if the record is readily 
reproducible in that form or format, but the Secretary of the Board 
need not provide more than one copy of any record to a requester.
    (ii) The Secretary of the Board shall provide any reasonably 
segregable portion of a record that is responsive to the request after 
deleting those portions that are exempt under the FOIA or this section.
    (iii) Except where disclosure is expressly prohibited by statute, 
regulation, or order, the Secretary of the Board may authorize the 
release of records that are exempt from mandatory disclosure whenever 
the Board or designated Board members determine that there would be no 
foreseeable harm in such disclosure.
    (iv) The Board is not required in response to the request to create 
records or otherwise to prepare new records.
    (7) Prohibition against disclosure. Except as provided in this 
part, no officer, employee, or agent of the Board shall disclose or 
permit the disclosure of any unpublished information of the Board to 
any person (other than Board officers, employees, or agents properly 
entitled to such information for the performance of official duties), 
unless required by law.
    (e) Appeals. (1) Any person denied access to Board records 
requested under paragraph (c) of this section, denied expedited 
processing under paragraph (d) of this section, or denied a waiver of 
fees under paragraph (f) of this section may file a written appeal 
within 30 calendar days after the date of such denial with the Board. 
The written appeal shall prominently display the phrase FREEDOM OF 
INFORMATION ACT APPEAL on the first page, and shall be addressed to 
Chairman of the Board, LOCAL Television Loan Guarantee Board, 1400 
Independence Avenue, SW., STOP 1575, Room 2919-S, Washington, DC 20250-
1575, or sent by facsimile to (202) 720-2734. The appeal shall include 
a copy of the original request, the initial denial, if any, and a 
statement of the reasons why the requested records should be made 
available and why the initial denial was in error.
    (2) The Chairman of the Board shall make a determination regarding 
any appeal within 20 working days of actual receipt of the appeal, and 
the determination letter shall notify the appealing party of the right 
to seek judicial review in the event of denial.
    (f) Fee schedules and waiver of fees.
    (1) Fee schedule. The fees applicable to a request for records 
pursuant to paragraph (c) of this section are set forth in the uniform 
fee schedule at the end of this paragraph (f).
    (i) Search. (A) Search fees shall be charged for all requests other 
than requests made by educational institutions, noncommercial 
scientific institutions, or representatives of the news media, subject 
to the limitations of paragraph (f)(1)(iv) of this section. The 
Secretary of the Board shall charge for time spent searching even if no 
responsive record is located or if the Secretary of the Board withholds 
the record(s) located as entirely exempt from disclosure.
    Search fees shall be the direct costs of conducting the search by 
the involved employees.
    (B) For computer searches of records, requesters will be charged 
the direct costs of conducting the search, although certain requesters 
(as provided in paragraph (f)(3) of this section) will be charged no 
search fee and certain other requesters (as provided in paragraph 
(f)(3)) are entitled to the cost equivalent of two hours of manual 
search time without charge. These direct costs include the costs, 
attributable to the search, of operating a central processing unit and 
operator/programmer salary.
    (ii) Duplication. Duplication fees will be charged to all 
requesters, subject to the limitations of paragraph (f)(1)(iv) of this 
section. For a paper photocopy of a record (no more than one copy of 
which need be supplied), the fee shall be 15 cents per page. For copies 
produced by computer, such as tapes or printouts, the Secretary of the 
Board shall charge the direct costs, including operator time, of 
producing the copy. For other forms of duplication, the Secretary of 
the Board will charge the direct costs of that duplication.
    (iii) Review. Review fees shall be charged to requesters who make a 
commercial use request. Review fees shall be charged only for the 
initial record review--the review done when the Secretary of the Board 
determines whether an exemption applies to a particular record at the 
initial request level. No charge will be made for review at the 
administrative appeal level for an exemption already applied. However, 
records withheld under an exemption that is subsequently determined not 
to apply may be reviewed again to determine whether any other exemption 
not previously considered applies, and the costs of that review are 
chargeable. Review fees shall be the direct costs of conducting the 
review by the involved employees.
    (iv) Limitations on charging fees. (A) No search fee will be 
charged for requests by educational institutions, noncommercial 
scientific institutions, or representatives of the news media.
    (B) No search fee or review fee will be charged for a quarter-hour 
period unless more than half of that period is required for search or 
review.
    (C) Whenever a total fee calculated under this paragraph is $25 or 
less for any request, no fee will be charged.
    (D) For requesters other than those seeking records for a 
commercial use, no fee will be charged unless the cost of search in 
excess of two hours plus the cost of duplication in excess of 100 pages 
totals more than $25.
    (2) Payment procedures. All persons requesting records pursuant to 
paragraph (c) of this section shall pay the applicable fees before the 
Secretary of the Board sends copies of the requested records, unless a 
fee waiver has been granted pursuant to paragraph (f)(6) of this 
section. Requesters must pay fees by check or money order made payable 
to the Treasury of the United States.
    (i) Advance notification of fees. If the estimated charges are 
likely to exceed $25, the Secretary of the Board shall notify the 
requester of the estimated amount, unless the requester has indicated a 
willingness to pay fees as high as those anticipated. Upon receipt of 
such notice, the requester may confer with the Secretary of the Board 
to reformulate the request to lower the costs. The processing of the 
request shall be suspended until the requester provides the Secretary 
of the Board with a written guarantee that payment will be made upon 
completion of the processing.
    (ii) Advance payment. The Secretary of the Board shall require 
advance payment of any fee estimated to exceed $250. The Secretary of 
the Board shall also require full payment in advance where a requester 
has previously failed to pay a fee in a timely fashion. If an advance 
payment of an estimated fee exceeds the actual total fee by $1 or more, 
the difference shall be refunded to the requester. The time period for 
responding to requests under paragraph (d)(4) of this section, and the 
processing of the request shall be suspended until the Secretary of the 
Board receives the required payment.
    (iii) Late charges. The Secretary of the Board may assess interest 
charges when fee payment is not made within 30 days of the date on 
which the billing was sent. Assessment of such interest will commence 
on the 31st day following the day on which the billing was sent.

[[Page 48821]]

Interest is at the rate prescribed in 31 U.S.C. 3717.
    (3) Categories of uses. The fees assessed depend upon the fee 
category. In determining which category is appropriate, the Secretary 
of the Board shall look to the identity of the requester and the 
intended use set forth in the request for records. Where a requester's 
description of the use is insufficient to make a determination, the 
Secretary of the Board may seek additional clarification before 
categorizing the request.
    (i) Commercial use requester. The fees for search, duplication, and 
review apply when records are requested for commercial use.
    (ii) Educational, non-commercial scientific institutions, or 
representatives of the news media requesters. The fees for duplication 
apply when records are not sought for commercial use, and the requester 
is a representative of the news media or an educational or 
noncommercial scientific institution, whose purpose is scholarly or 
scientific research. The first 100 pages of duplication, however, will 
be provided free.
    (iii) All other requesters. For all other requests, the fees for 
search and duplication apply. The first two hours of search time and 
the first 100 pages of duplication, however, will be provided free.
    (4) Nonproductive search. Fees for search may be charged even if no 
responsive documents are found. Fees for search and review may be 
charged even if the request is denied.
    (5) Aggregated requests. A requester may not file multiple requests 
at the same time, solely in order to avoid payment of fees. If the 
Secretary of the Board reasonably believes that a requester is 
separating a request into a series of requests for the purpose of 
evading the assessment of fees or that several requesters appear to be 
acting together to submit multiple requests solely in order to avoid 
payment of fees, the Secretary of the Board may aggregate such requests 
and charge accordingly. It is considered reasonable for the Secretary 
of the Board to presume that multiple requests by one requester on the 
same topic made within a 30-day period have been made to avoid fees.
    (6) Waiver or reduction of fees. A request for a waiver or 
reduction of the fees, and the justification for the waiver, shall be 
included with the request for records to which it pertains. If a waiver 
is requested and the requester has not indicated in writing an 
agreement to pay the applicable fees if the waiver request is denied, 
the time for response to the request for documents, as set forth in 
under paragraph (d)(4) of this section, shall not begin until a 
determination has been made on the request for a waiver or reduction of 
fees.
    (i) Standards for determining waiver or reduction. The Secretary of 
the Board may grant a waiver or reduction of fees where it is 
determined both that disclosure of the information is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operation or activities of the government, and 
that the disclosure of information is not primarily in the commercial 
interest of the requester. In making this determination, the following 
factors shall be considered:
    (A) Whether the subject of the records concerns the operations or 
activities of the government;
    (B) Whether disclosure of the information is likely to contribute 
significantly to public understanding of government operations or 
activities;
    (C) Whether the requester has the intention and ability to 
disseminate the information to the public;
    (D) Whether the information is already in the public domain;
    (E) Whether the requester has a commercial interest that would be 
furthered by the disclosure; and, if so,
    (F) Whether the magnitude of the identified commercial interest of 
the requester is sufficiently large, in comparison with the public 
interest in disclosure, that disclosure is primarily in the commercial 
interest of the requester.
    (ii) Contents of request for waiver. A request for a waiver or 
reduction of fees shall include a clear statement of how the request 
satisfies the criteria set forth in paragraph (f)(6)(i) of this 
section.
    (iii) Burden of proof. The burden shall be on the requester to 
present evidence or information in support of a request for a waiver or 
reduction of fees.
    (iv) Determination by Secretary of the Board. The Secretary of the 
Board shall make a determination on the request for a waiver or 
reduction of fees and shall notify the requester accordingly. A denial 
may be appealed to the Board in accordance with paragraph (e) of this 
section.
    (7) Uniform fee schedule.

------------------------------------------------------------------------
                  Service                               Rate
------------------------------------------------------------------------
(i) Manual search.........................  Actual salary rate of
                                             employee involved, plus 16
                                             percent of salary rate.
(ii) Computerized search..................  Actual direct cost,
                                             including operator time.
(iii) Duplication of records:
  (A) Paper copy reproduction.............  $.15 per page.
  (B) Other reproduction (e.g., computer    Actual direct cost,
   disk or printout, microfilm,              including operator time.
   microfiche, or microform).
(iv) Review of records (includes employee   Actual salary rate of
 preparation for release, i.e. excising).    conducting review, plus 16
                                             percent of salary rate.
------------------------------------------------------------------------

    (g) Request for confidential treatment of business information. (1) 
Submission of request. Any submitter of information to the Board who 
desires confidential treatment of business information pursuant to 5 
U.S.C. 552(b)(4) shall file a request for confidential treatment with 
the Board at the time the information is submitted or a reasonable time 
after submission.
    (2) Form of request. Each request for confidential treatment of 
business information shall state in reasonable detail the facts 
supporting the commercial or financial nature of the business 
information and the legal justification under which the business 
information should be protected. Conclusory statements that release of 
the information would cause competitive harm generally will not be 
considered sufficient to justify confidential treatment.
    (3) Designation and separation of confidential material. All 
information considered confidential by a submitter shall be clearly 
designated ``PROPRIETARY'' or ``BUSINESS CONFIDENTIAL'' in the 
submission and separated from information for which confidential 
treatment is not requested. Failure to segregate confidential 
commercial or financial information from other material may result in 
release of the nonsegregated material to the public without notice to 
the submitter.
    (h) Request for access to confidential commercial or financial 
information. (1) Request for confidential commercial or financial 
information. A request by a submitter for confidential treatment of any 
business information shall be considered in connection with a request 
for access to that information.
    (2) Notice to the submitter. (i) The Secretary of the Board shall 
notify a submitter who requested confidential treatment of information 
pursuant to 5 U.S.C. 552(b)(4), of the request for access.
    (ii) Absent a request for confidential treatment, the Secretary of 
the Board may notify a submitter of a request for access to submitter's 
business information if the Secretary of the Board

[[Page 48822]]

reasonably believes that disclosure of the information may cause 
substantial competitive harm to the submitter.
    (iii) The notice given to the submitter by mail, return receipt 
requested, shall be given as soon as practicable after receipt of the 
request for access, and shall describe the request and provide the 
submitter seven working days from the date of notice, to submit written 
objections to disclosure of the information. Such statement shall 
specify all grounds for withholding any of the information and shall 
demonstrate why the information which is considered to be commercial or 
financial information, and that the information is a trade secret, is 
privileged or confidential, or that its disclosure is likely to cause 
substantial competitive harm to the submitter. If the submitter fails 
to respond to the notice within the time specified, the submitter will 
be considered to have no objection to the release of the information. 
Information a submitter provides under this paragraph may itself be 
subject to disclosure under the FOIA.
    (3) Exceptions to notice to submitter. Notice to the submitter need 
not be given if:
    (i) The Secretary of the Board determines that the request for 
access should be denied;
    (ii) The requested information lawfully has been made available to 
the public;
    (iii) Disclosure of the information is required by law (other than 
5 U.S.C. 552); or
    (iv) The submitter's claim of confidentiality under 5 U.S.C. 
552(b)(4) appears obviously frivolous or has already been denied by the 
Secretary of the Board, except that in this last instance the Secretary 
of the Board shall give the submitter written notice of the 
determination to disclose the information at least seven working days 
prior to disclosure.
    (4) Notice to requester. At the same time the Secretary of the 
Board notifies the submitter, the Secretary of the Board also shall 
notify the requester that the request is subject to the provisions of 
this section.
    (5) Determination by Secretary of the Board. The Secretary of the 
Board's determination whether or not to disclose any information for 
which confidential treatment has been requested pursuant to this 
section shall be communicated to the submitter and the requester 
immediately. If the Secretary of the Board determines to disclose the 
business information over the objection of a submitter, the Secretary 
of the Board shall give the submitter written notice via mail, return 
receipt requested, or similar means, which shall include:
    (i) A statement of reason(s) why the submitter's objections to 
disclosure were not sustained;
    (ii) A description of the business information to be disclosed; and
    (iii) A statement that the component intends to disclose the 
information seven working days from the date the submitter receives the 
notice.
    (6) Notice of lawsuit. The Secretary of the Board shall promptly 
notify any submitter of information covered by this section of the 
filing of any suit against the Board to compel disclosure of such 
information, and shall promptly notify a requester of any suit filed 
against the Board to enjoin the disclosure of requested documents.
    5. Part 2201 is proposed to be added to read as follows:

PART 2201--LOCAL TELEVISION LOAN GUARANTEE PROGRAM--PROGRAM 
REGULATIONS

Subpart A--General
Sec.
2201.1 Definitions.
2201.2-2201.9 [Reserved]
Subpart B--Loan Guarantees
2201.10 Loan amount and Guarantee percentage.
2201.11 Application requirements.
2201.12 Applicant.
2201.13 Lender.
2201.14 Eligible Loan purposes.
2201.15 Ineligible Loan purposes.
2201.16 Environmental requirements.
2201.17 Submission of applications.
2201.18 Application selection.
2201.19 Loan terms.
2201.20 Collateral.
2201.21 Fees.
2201.22 Issuance of Guarantees.
2201.23 Funding for the Program.
2201.24 Insurance.
2201.25 Performance Agreement.
2201.26 Lender standard of care.
2201.27 Assignment or transfer of Loans.
2201.28 Participation in guaranteed Loans.
2201.29 Supplemental guarantees.
2201.30 Adjustments.
2201.31 Indemnification.
2201.32 Termination of obligations.
2201.33 Defaults
2201.34 OMB Control Number

    Authority: 47 U.S.C. 1101 et seq.; Pub. L. 106-553; Pub. L. 107-
171.

Subpart A--General


Sec.  2201.1  Definitions.

    Act means Title X of Public Law 106-553, entitled the Launching our 
Communities' Access to Local Television (LOCAL TV) Act of 2000, as 
amended.
    Administrator means the Administrator of the Rural Utilities 
Service, U.S. Department of Agriculture, acting pursuant to the Act and 
on behalf of the Board.
    Affiliate means any person or entity that controls, or is 
controlled by, or is under common control with, another person or 
entity; and may include any individual who is a director or senior 
management officer of an Affiliate, a shareholder controlling more than 
25 percent of the voting securities of an Affiliate, or more than 25 
percent of the ownership interest in an Affiliate not organized in 
stock form.
    Agent means that Lender authorized to take such actions, exercise 
such powers, and perform such duties on behalf and in representation of 
all Lenders party to a Guarantee of a single Loan, as is required by, 
or necessarily incidental to, the terms and conditions of the 
Guarantee.
    Applicant means any party that is seeking financing under the Act 
in order to provide access to Local Television Broadcast Signals for 
households in Nonserved Areas and Underserved Areas.
    Asset means anything owned by the Applicant that has commercial or 
exchange value including, but not limited to, cash flows and rights 
thereto.
    Banking Institution means a bank or bank holding company.
    Board means the LOCAL Television Loan Guarantee Board authorized by 
the Act to approve Guarantees to facilitate access, on a 
technologically neutral basis, to Local Television Broadcast Signals 
for households located in Nonserved Areas and Underserved Areas.
    Borrower means the entity liable for the payment of principal and 
interest on any Loan guaranteed under the Act, where such entity shall 
be a corporation, partnership, joint venture trustee or government 
entity, agency or instrumentality. An individual cannot be a Borrower.
    Collateral means all Assets economically pledged by the Applicant, 
any Affiliate of the Applicant, or both that is required under the 
provisions of the Act or the Loan Documents to secure the repayment of 
the indebtedness of the Borrower under the Loan Documents.
    Default means a failure by a Borrower, other than a Payment 
Default, on its obligations under the Loan Documents which has not been 
cured by the Borrower or duly waived by the Lender within any 
applicable cure period.
    Designated Market Area (DMA) means an area designated as such by 
Nielsen Media Research and published in the most recent Nielsen Station 
Index Directory and Nielsen Station Index

[[Page 48823]]

United States Television Household Estimates.
    Generally Accepted Accounting Principles (GAAP) means a common set 
of accounting standards and procedures that are either promulgated by 
an authoritative accounting rulemaking body or accepted as appropriate 
due to wide-spread application in the United States.
    Guarantee means the written agreement, including all terms and 
conditions and all exhibits thereto, guaranteeing repayment of a 
specified percentage of the principal of a Loan pursuant to the Act.
    Guaranteed Portion means the portion of the principal of a loan 
that is subject to the Guarantee.
    High-Speed Internet means a data connection to the Internet 
providing an information rate exceeding 200 kilobits per second (kbps) 
in the consumer's connection to the network in at least one direction, 
either from the provider to the consumer (downstream) or from the 
consumer to the provider (upstream).
    Lender means an entity that has committed to make a Loan to an 
Applicant, where such entity shall be:
    (1) An entity currently engaged in commercial lending in the normal 
course of its business; or
    (2) A nonprofit corporation, including the National Rural Utilities 
Cooperative Finance Corporation, engaged primarily in commercial 
lending, but does not include any governmental entity or any Affiliate 
thereof, the Federal Agricultural Mortgage Corporation, any institution 
supervised by the Office of Federal Housing Enterprise Oversight, the 
Federal Housing Finance Board, or any Affiliate of such entities.
    Loan means a Loan guaranteed pursuant to the Act and includes the 
funds made available to the Borrower by the Lender.
    Loan Agreement means the contract between the Lender and the 
Borrower, approved by the Board, setting forth the terms applicable to 
the Loan.
    Loan Documents means the Loan Agreement, Guarantee and all other 
instruments, and all documentation between or among the Lender, the 
Borrower, and the Board or Administrator, evidencing the making, 
disbursing, securing, collecting, or otherwise administering of the 
Loan.
    Local Television Broadcast Signals means the television signals 
that carry the local network broadcasts of the four major national 
television broadcast networks as recognized by the Federal 
Communications Commission (as of August 15, 2003 these networks are 
ABC, CBS, Fox, and NBC). When a particular national television 
broadcast network is carried by more than one broadcaster in a DMA, the 
signal of any one of these local broadcasters will qualify as the Local 
Television Broadcast Signal of the network at that location. In a DMA 
where one or more of these networks do not have a local affiliate, the 
set of Local Television Broadcast Signals only includes the local 
affiliates of the aforementioned networks that are present in that DMA. 
In areas not included in a DMA but under the jurisdiction of the FCC, 
an appropriate set of Local Television Broadcast Signals will be 
determined on a case-by-case basis, subject to the approval of the 
Board.
    Net equity means the value of the total Assets of an entity, less 
the total liabilities of that entity, as recorded under Generally 
Accepted Accounting Principles for the fiscal quarter ended immediately 
prior to the date on which the subject Loan is approved.
    Net Worth Ratio means the book value of equity over total Assets.
    Nonserved Area means any area that is outside the grade B contour 
(as determined using standards employed by the Federal Communications 
Commission (FCC)) of the Local Television Broadcast Signals serving a 
particular Designated Market Area and does not have access to such 
signals by any commercial, for profit, multichannel video provider.
    Offer of Guarantee means the Board's decision to approve an 
application for, and extend a Guarantee under, the LOCAL TV Act.
    Payment Default means any failure of a Borrower to pay any amount 
of principal or interest on the Loan when and as due under the Loan 
Agreement (including, without limitation, following any acceleration 
thereunder) which has not been cured within any applicable cure period.
    Payment Demand means a request, by the Lender or Agent, following a 
Payment Default, in writing to the Board, for payment under the 
Guarantee in respect of the defaulted principal.
    Performance Agreement means the written agreement between the 
Administrator and the Borrower (and Lender, if applicable), pursuant to 
which the Borrower provides stipulated performance schedules with 
respect to Local Television Broadcast Signals provided through the 
Project.
    Program means the LOCAL Television Loan Guarantee Program (LOCAL TV 
Program) established under the Act.
    Project means a proposal for the acquisition, improvement, 
enhancement, construction, deployment, launch, or rehabilitation of the 
means to deliver Local Television Broadcast Signals to a Nonserved Area 
or Underserved Area.
    Regulatory Capital Ratio means tier 1 and total capital ratios as 
shown on a Banking Institution's balance sheet.
    Security means all Collateral required by the provisions of the Act 
or the Loan Documents to secure repayment of any indebtedness of the 
Borrower under the Loan Documents.
    Separate Tier of Local Television Broadcast Signals means a 
category or package of services provided by the applicant, to include 
the Local Television Broadcast Signals and all over-the-air television 
broadcast signals carried pursuant to the must-carry requirement of the 
Communications Act of 1934, as amended, offered as a distinct and 
separate service choice to the applicant's subscribers at a specified 
lower rate when compared to other program service choices.
    Term Sheet means an executed agreement between the Applicant and 
the Lender or Agent that sets forth the key business terms and 
conditions of the proposed Loan. Execution of this agreement represents 
evidence of the commitment between the Applicant and Lender or Agent.
    Underserved Area means any area that is outside the grade A contour 
(as determined using standards employed by the Federal Communications 
Commission) of the Local Television Broadcast Signals serving a 
particular Designated Market Area and has access to such signals from 
not more than one commercial, for profit, multichannel video provider.
    Unguaranteed Portion means the portion of the principal of a Loan 
that is not covered by the Guarantee.


Sec. Sec.  2201.2--2201.9  [Reserved]

Subpart B--Loan Guarantees


Sec.  2201.10  Loan amount and Guarantee percentage.

    (a) Aggregate value of loans. The aggregate value of all Loans for 
which Guarantees are issued under the Program, including the 
Unguaranteed Portions of such Loans, may not exceed $1,250,000,000.
    (b) Guarantee percentage. (1) A Guarantee approved by the Board may 
not exceed an amount equal to 80 percent of the principal amount of a 
Loan made to finance the acquisition, improvement, enhancement, 
construction, deployment, launch, or rehabilitation of the means by 
which Local Television Broadcast Signals are delivered to a Nonserved 
Area or Underserved Area;

[[Page 48824]]

    (2) If only a portion of a Loan is meant to achieve the purposes 
described in paragraph (b)(1) of this section, the Board shall 
determine that portion of the Loan meant to achieve such purpose and 
may approve a Guarantee in an amount not exceeding 80 percent of that 
portion of the Loan.
    (c) Minimum loan amount. The Board will not approve a Guarantee for 
a Loan in an amount less than $1,000,000 (inclusive of both the 
Guaranteed and Unguaranteed Portions of the Loan).
    (d) Form of Guarantee. The Board shall adopt a form of Guarantee to 
be used under the Program, and shall publish the Guarantee on its 
website. Modifications to the provisions of the form of Guarantee must 
be approved and adopted by the Board.


Sec.  2201.11  Application requirements.

    A completed application consists of the following information:
    (a) An executive summary of the Project. The Applicant must provide 
the Board with a general Project overview that addresses each of the 
following six categories:
    (1) A general overview of the system to be developed and 
description of the Project including the types of equipment, 
technologies, and facilities to be used;
    (2) An explanation of how the Applicant will provide Local 
Television Broadcast Signals to Nonserved Areas and Underserved Areas;
    (3) A short description of the Applicant including a written 
narrative describing its demonstrated capability and experience in 
providing access to Local Television Broadcast Signals for households;
    (4) An explanation of the total Project cost including a breakdown 
of the Loan required and the source of funding for the remainder of the 
Project, if a portion of the Project is to be paid with non-Loan funds;
    (5) The name of the Lender or Agent (including a listing of other 
participating Lenders, if applicable) and a description of the 
financing structure of the proposed Loan; and
    (6) A general description of the geographic area to be served.
    (b) Background information. General information concerning the 
Applicant, its Affiliates, and its Lender or Agent, including a 
description of any financial and contractual arrangements among the 
parties. Specific information required of all Applicants is as follows:
    (1) Evidence of legal authority and existence of the applicant. The 
Applicant must provide evidence of its legal existence and authority to 
execute the Loan Documents under the proposed Loan and perform the 
activities proposed under the Project. Such evidence must include 
Articles of Incorporation and bylaws for incorporated Applicants; other 
types of Applicants should submit appropriate documentation for their 
forms of organization. If the Applicant is a special purpose entity 
(SPE) formed for the purpose of the Project, then the Applicant must 
provide a copy of the Deed of Partnership or Articles of Organization 
for the SPE.
    (2) Affiliates descriptions. A listing of all Affiliates of the 
Applicant including a description of the nature of the Applicants 
relationship to each Affiliate. Any existing or proposed contractual 
arrangements with each Affiliate should be described.
    (3) Legal name. The legal name and form of organization of the 
proposed Lender or Agent.
    (4) Cover Form. A signed copy of Standard Form 424.
    (c) A business plan. A plan, satisfactory to the Board, presenting 
in detail the fundamentals of the business and providing sufficient 
financial data to indicate that the business will be economically 
sustainable. The business plan should include, at a minimum:
    (1) Risk assessments. An assessment of the risks related to 
construction, performance, demand, and financing structure, including a 
narrative statement detailing planned risks mitigation strategies;
    (2) Plans. A comprehensive operations and maintenance plan;
    (3) Economic and financial analysis. A review of economic and 
financial factors affecting the business in general and the Project in 
particular, including:
    (i) The adequacy and stability of the business' customer base;
    (ii) The demand for services;
    (iii) The sensitivity of the business to economic cycles;
    (iv) Future capital needs;
    (v) The adequacy, competitiveness and affordability of service 
fees; and
    (vi) An overview of the prevailing economic and demographic trends 
in the target service area.
    (4) Project Market Analysis. A breakdown of the key elements of the 
Project, including:
    (i) All proposed services to be offered, including High-speed 
Internet Service, and whether a Separate Tier of Local Television 
Broadcast Signals will be provided;
    (ii) The total number of households, by DMA, and by Nonserved and 
Underserved Area, which will have access to Local Television Broadcast 
Signals under the Project;
    (iii) The total number of households, by DMA, and by Nonserved and 
Underserved Area, which will have access under the Project to any other 
services as described pursuant to paragraph (c)(4)(i) of this section, 
including an explanation if this number is greater than the total 
identified in paragraph (c)(4)(ii);
    (iv) Estimates of the number of households identified in paragraphs 
(c)(4)(ii) and (c)(4)(iii) which will subscribe to each of the services 
identified in paragraph (c)(4)(i) of this section by DMA, including a 
breakdown of Nonserved and Underserved households;
    (v) A breakdown of the Applicant's proposed pricing coupled with an 
evaluation of any competitor's services offerings and pricings.
    (vi) A service deployment plan and a deployment performance 
schedule, by DMA, for the services to access the Local Television 
Broadcast Signals.
    (d) Financial forecast and information. The Applicant must 
demonstrate its financial ability to complete and maintain the Project 
and repay its obligations. The financial data must include the 
following:
    (1) Audited financial statements. Income statements, balance 
sheets, and cash flow statements for at least the last three years or 
from the date of inception if less than three years. If the Applicant 
is an SPE, then the Applicant must provide at least the last three 
years of audited financial statements of the shareholders or partners 
of the SPE. If an Affiliate has been designated by the Applicant as a 
source of credit support, then at least three years audited financial 
statements for the Affiliate must be submitted as well;
    (2) Plan of finance. An identification and explanation of all 
sources and uses of funds throughout the proposed loan period, 
including, but not limited to, any payments to Affiliates or 
shareholders of the Applicant, estimated Project costs, and proposed 
terms.
    (3) A Pro-forma financial forecast covering the life of the 
proposed loan, including balance sheets, income statements and cash 
flow statements, with an explanation of assumptions. These Projections 
must be prepared in accordance with Generally Accepted Accounting 
Principles and should discuss such issues as the effects of inflation, 
competition, ongoing repair and replacement needs, technological 
obsolescence, working capital requirements, and other factors that may 
affect the Applicant's ability to meet its debt service obligations.
    (4) Project budget. A detailed cost breakdown of all facilities to 
be constructed as part of the Project. This breakdown should be on a 
per unit

[[Page 48825]]

basis. It should also clearly show what will be financed with 
guaranteed loan funds and what will be financed with other funds, 
consistent with the plan of finance in paragraph (d)(2) of this 
section.
    (5) Commitments. The Applicant must disclose all reasonably 
foreseeable financial obligations, contingent liabilities, or other 
commitments that could affect its financial health over the proposed 
financing term. At the Board's request, the Applicant must take all 
reasonable measures to insulate the Project and the Loan from external 
factors that could affect timely payment of principal and interest. The 
Board may ask for additional detailed information on commitments where 
it is deemed necessary.
    (6) Credit enhancement. In cases where an Affiliate provides credit 
enhancement, the Applicant must provide documentation demonstrating the 
Affiliate is sufficiently capitalized and evidencing the strength, 
extent, limitations, and priority of the credit enhancement relative to 
the other obligations of the Affiliate.
    (e) A certified system plan, technical analysis, and design. 
Prepared by qualified personnel on the Applicant's staff or by a 
licensed consulting engineer, consisting of the following:
    (1) A detailed description of the proposed service area including 
maps of the service area;
    (2) A TV Signals Coverage Diagram and detailed description of all 
existing and proposed facilities. The diagram must include proposed 
route miles of cable plant, if applicable, the estimated area served, 
types of facilities to be deployed (terrestrial microwave or satellite 
microwave, wireless, translator, fiber optic cable or coaxial cable, 
electronic equipment, etc.), the capacity of the facilities (number of 
fibers, size of the cables, and intended number of channels, 
frequencies used, bandwidth capacity, etc.), and the serving area of 
the proposed facilities;
    (3) The intended capabilities of the Project's facilities, 
including bandwidth, proposed television signal topology, standards, 
and television signal transmission protocols. In addition, the 
Applicant must explain the manner in which the transmission facilities 
will deliver the proposed Local Television Broadcast Signals, including 
any equipment necessary to receive the signals which will be located at 
the subscribers premise, and/or, near or/on the subscribers' television 
set;
    (4) A listing of all regulatory approvals required to operate 
facilities, including licenses, permits, and franchises and the status 
of any required approvals not obtained at the time of the application. 
For any approvals not yet received, the Applicant should provide 
details on the nature of the needed approval, the justification for 
expecting such an approval, the track-record of the Applicant in 
obtaining such approvals, and the contingency plan in the event the 
approval is delayed;
    (5) A description of the television signal sources (including, but 
not limited to local, regional and national television signal 
broadcasters, other television signal providers, content providers, 
cable television operators and providers, enhanced service providers, 
providers of satellite services, and the anticipated role of such 
providers in the proposed Project);
    (6) The results of discussions, if any, with local television 
broadcasters serving the Project area;
    (7) An identification of all Local Television Broadcast Signals 
that will be carried by the Project;
    (8) An identification of the digital signal quality and capacity in 
megabits per second (Mb/s) that will be required to digitally broadcast 
all Local Television Broadcast Signals to be provided by the Project;
    (9) An identification of the net usable bandwidth, in Mb/s, that 
are surplus to the provision of the Local Television Broadcast Signals 
to be provided by the Project and that will be used to provide High 
Speed Internet Service; and
    (10) A description of the extent to which the Project will enable 
the delivery of Local Television Broadcast Signals by a means 
reasonably compatible with existing systems or devices predominantly in 
use for the reception of television signals.
    (f) Lender information. (1) Lender. The Application shall include 
the information described in Sec.  2201.13(b), (c) and (d) of this part 
concerning the Lender or Lenders.
    (2) Term Sheet. The Application shall include a signed Term Sheet.
    (3) Lender's analysis. The Applicant shall submit the Lender's 
detailed analysis of the creditworthiness of the transaction at the 
time of application and any supporting due diligence documentation, 
including a complete underwriting analysis of the Project (assessing 
Applicant creditworthiness and Project feasibility) exercising the 
Lender's standard of care as set forth at Sec.  2201.26(a).
    (4) Certification. The Lender must certify that the information 
provided pursuant to paragraphs (f)(1), (2) and (3) of this section is 
true and accurate.
    (5) Additional Information. The Board will request any other 
information the Board deems material to its assessment of the Lender.
    (g) Other Financial Information. (1) Collateral. The Applicant 
shall provide a detailed description and valuation of all Collateral to 
be used to secure the Loan. This valuation shall be supported by an 
independent, third party appraisal for existing Assets, and/or adequate 
cost substantiation for Assets to be constructed for purposes of the 
Project, and in all cases shall be acceptable to the Board. Such a 
valuation should address, at a minimum, pledged Assets of the 
Applicant, any designated Affiliate of the Applicant, or both as 
identified in the Loan Documents, including primary Assets to be used 
in the delivery of the service for which the Loan sought would be 
guaranteed. The Applicant also must provide a depreciation schedule (as 
classified under and in accordance with GAAP) for the major Assets in 
order for the Board to determine the economically useful life of the 
primary Assets to be used in delivery of the signals concerned. 
Appraisals of real property must be prepared by State licensed or 
certified appraisers, and be consistent with the ``Uniform Standards of 
Professional Appraisal Practice,'' promulgated by the Appraisal 
Standards Board of the Appraisal Foundation.
    (2) Credit Opinion. With respect to applications for a Loan of $5 
million or more, the Applicant is required to obtain and submit to the 
Board a preliminary credit rating opinion letter on the proposed 
transaction at the time of application, prepared by a nationally 
recognized statistical rating organization (rating agency) approved by 
the Board. This preliminary credit rating opinion shall be based on the 
financing structure proposed by the Applicant for the Project absent 
the Federal Guarantee. The Board will utilize this preliminary credit 
assessment to assist in evaluating the creditworthiness of the proposed 
transaction and determining whether it provides a reasonable assurance 
of repayment. In addition, applicants for loans less than $5 million 
that have a credit rating shall provide that credit rating to the 
Board. The Board will utilize this preliminary credit assessment (for 
loans over $5 million) or an existing credit rating (for loans less 
than $5 million) to assist in evaluating the creditworthiness of the 
proposed transaction and determining whether it provides a reasonable 
assurance of repayment. The Board may approve a Guarantee over $5 
million only if it receives a final credit rating opinion letter from 
the rating agency on the Loan that is in form and substance acceptable 
to the Board.

[[Page 48826]]

    (3) Evidence of lack of credit elsewhere. The Applicant shall 
provide the information required pursuant to Sec.  2201.12(b)(2)(v) of 
this part.
    (h) Compliance with other Federal statutes, regulations and 
Executive Orders. The Applicant must certify compliance with other 
applicable Federal statutes, regulations, and Executive Orders.
    (i) Environmental impact. The Applicant must provide an 
environmental assessment that details of the Project's impact on the 
environment as required pursuant to Sec.  2201.16 of this part.
    (j) Federal debt certification. The Applicant must provide a 
certification that it is not delinquent on any obligation owed to the 
government (7 CFR parts 3016 and 3019). No Guarantee will be made if 
either the Applicant or Lender has an outstanding, delinquent Federal 
debt until:
    (1) The delinquent account has been paid in full;
    (2) A negotiated repayment schedule is established and at least one 
payment has been received; or
    (3) Other arrangements, satisfactory to the agency responsible for 
collecting the debt, are made.
    (k) Supplemental information. The Applicant should provide any 
additional information it considers relevant to the Project and likely 
to be helpful in determining the extent to which the Project would 
further the purposes of the Act.
    (l) Additional information required by the Board. The Applicant 
must provide any additional information the Board determines is 
necessary to adequately evaluate the application.
    (m) Application fee. For an application to be considered complete, 
the Applicant must submit a check payable to the United States Treasury 
in the amount of the application fee as set forth in Sec.  2201.21(a) 
of this part.
    (n) Incomplete application. An incomplete application, including 
any fee submitted therewith, will be returned to the Applicant without 
action.


Sec.  2201.12  Applicant.

    (a) Eligibility. (1) The Board will make a determination of 
eligibility of an Applicant to be a Borrower under the Program based 
upon the Applicant's ability to directly provide, as a result of 
financing received under the Program, Local Television Broadcast 
Signals to households in Nonserved Areas and/or Underserved Areas and 
the information provided pursuant to paragraph (b) of this section.
    (2) A determination that an Applicant is eligible does not assure 
that the Board will approve a Guarantee sought, or otherwise preclude 
the Board from declining to approve a Guarantee.
    (b) Documentation for Eligibility Determination. (1) An Applicant 
must provide a Term Sheet evidencing a commitment of that Lender or 
Agent, and the Lenders it represents, to make a Loan to the Applicant 
upon an Offer of Guarantee by the Board, subject to the requirements of 
the Act and the regulations set forth in this part.
    (2) An Applicant must provide documentation demonstrating that:
    (i) The Assets, facilities, or equipment covered by the Loan will 
be utilized economically and efficiently;
    (ii) The terms, conditions, security, and schedule and amount of 
repayments of principal and the payment of interest with respect to the 
Loan protect the financial interests of the United States and are 
reasonable;
    (iii) Appropriate and adequate Collateral secures the Loan sought 
to be guaranteed;
    (iv) All necessary and required regulatory and other approvals, 
spectrum licenses, and delivery permissions have been received for the 
Loan and the Project under the Loan;
    (v) The Loan would not be available on reasonable terms and 
conditions without a Guarantee under this Program. To satisfy this 
requirement, an Applicant must provide, with its application, 
documentation from at least one lending institution other than the 
Lender to which the Applicant has applied for financial assistance 
dated within six months of submission of the application, indicating 
that the Applicant was unable to obtain substantially the same Loan it 
is applying for on reasonable terms and conditions; and
    (vi) Repayment of the Loan can reasonably be expected.


Sec.  2201.13  Lender.

    (a) Eligibility. (1) The Board will make a determination of 
eligibility of a Lender to make a Loan to be guaranteed under the 
Program based upon the criteria set forth in paragraphs (b) and (c) of 
this section.
    (2) A determination that a Lender is eligible does not assure that 
the Board will approve a Guarantee sought, or otherwise preclude the 
Board from declining to approve a Guarantee.
    (b) Qualifications. In addition to evaluating an application 
pursuant to Sec.  2201.18, in making a determination to approve a 
Guarantee to a Lender, the Board will assess:
    (1) The Lender's Regulatory Capital Ratios, in the case of Banking 
Institutions, or Net Worth Ratios, in the case of other institutions;
    (2) Whether the Lender possesses the ability to administer the 
Loan, including its experience with loans to telecommunications 
companies;
    (3) The scope, volume and duration of the Lender's activity in 
administering loans, including federally guaranteed loans;
    (4) The performance of the Lender's loan portfolio, including its 
current delinquency rate;
    (5) The Lender's charge-off rate, expressed as a percentage of 
outstanding loans for its current fiscal year;
    (6) If the Lender intends to sell participation interests in the 
Loan, the plan of syndication; and
    (7) Any other matter the Board deems material to its assessment of 
the Lender.
    (c) A Loan will not be guaranteed unless:
    (1) If the Lender is not a nonprofit corporation and is subject to 
loan-to-one-borrower and Affiliate transaction restrictions under 
applicable law, the Loan is made in accordance with such restrictions;
    (2) If the Lender is not a nonprofit corporation and is not subject 
to the restrictions described in paragraph (c)(1) of this section, the 
Loan is made to a Borrower that is not an Affiliate of the Lender and 
the amount of the Loan, and all outstanding loans by the Lender to the 
Borrower and any of its Affiliates, does not exceed 10 percent of the 
Net Equity of the Lender;
    (3) If the Lender is a nonprofit corporation, the Board determines 
that:
    (i) Such nonprofit corporation has one or more issues of 
outstanding long-term debt that is rated within the highest 3 rating 
categories of a nationally recognized statistical rating organization, 
as evidenced by written confirmation from the nationally recognized 
statistical rating organization, subject to updating upon request of 
the Board; and
    (ii) The making of the Loan would not cause a decline in the rating 
of such Lender's long-term debt below the highest 3 rating categories 
of a nationally recognized statistical rating organization, as 
evidenced by written confirmation from the nationally recognized 
statistical rating organization, subject to updating upon request of 
the Board.
    (d) Agent. (1) An application for a Guarantee of a single Loan that 
includes participation of more than one Lender must identify one of the 
Lenders participating in such Loan to act as Agent for all Lenders. 
This Agent is

[[Page 48827]]

responsible for administering the Loan and shall have those duties and 
responsibilities required of an Agent, as set forth in the Guarantee.
    (2) If more than one Lender is seeking a Guarantee of a single 
Loan, each one of the Lenders on the application must meet the 
qualifications set forth in paragraphs (b) and (c) of this section. 
However, only the Agent must meet the qualifications set forth in 
paragraph (b)(2) and (3) of this section.
    (3) Each Lender, irrespective of any indemnities or other 
agreements between the Lenders and the Agent, shall be bound by all 
actions, and/or failures to act, of the Agent. The Board and the 
Administrator shall be entitled to rely upon such actions and/or 
failures to act of the Agent as binding all Lenders.


Sec.  2201.14  Eligible Loan purposes.

    To be guaranteed under the Program, a Loan must be made for the 
purpose of financing the acquisition, improvement, enhancement, 
construction, deployment, launch, or rehabilitation of the means by 
which Local Television Broadcast Signals will be delivered to a 
Nonserved Area or Underserved Area.


Sec.  2201.15  Ineligible Loan purposes.

    (a) The proceeds of the Loan shall not be used for operating, 
advertising, or promotion expenses, or for the acquisition of licenses 
for the use of spectrum in any competitive bidding.
    (b) The Applicant shall not transfer proceeds of the Loan to any 
Affiliate(s).
    (c) A Loan shall not be guaranteed unless the proposed Project, as 
determined by the Board in consultation with the National 
Telecommunications and Information Administration, is not likely to 
have a substantial adverse impact on competition that outweighs the 
benefits of improving access to Local Television Broadcast Signals in a 
Nonserved Area or Underserved Area and is commercially viable.
    (d) The Board will not fund a Project that is designed primarily to 
serve one or more of the top 40 Designated Market Areas.
    (e) The Board will not fund a Project that would alter or remove 
National Weather Service warnings from Local Television Broadcast 
Signals.
    (f) No Guarantee may be granted or used to provide funds to a 
Project that extends, upgrades, or enhances the services provided over 
any cable system to an area that, as of the enactment of the Act, is 
covered by a cable franchise agreement that expressly obligates a cable 
operator to serve such area.


Sec.  2201.16  Environmental requirements.

    (a) General. (1) Environmental assessments of the Board's actions 
will be conducted in accordance with applicable statutes, regulations, 
and Executive Orders. Therefore, each application for a Guarantee under 
the Program must be accompanied by information necessary for the Board 
to meet the requirements of applicable law.
    (2) Actions requiring compliance with NEPA. (i) The types of 
actions classified as ``major Federal actions'' subject to NEPA 
procedures are discussed in 40 CFR parts 1500 through 1508.
    (ii) With respect to this Program, these actions typically include:
    (A) Any Project, permanent or temporary, that will involve 
construction and/or installations;
    (B) Any Project, permanent or temporary, that will involve ground 
disturbing activities; and
    (C) Any Project supporting renovation, other than interior 
remodeling.
    (3) Environmental information required from the Applicant. (i) 
Environmental data or documentation concerning the use of the proceeds 
of any Loan guaranteed under this Program must be provided by the 
Applicant to the Board to assist the Board in meeting its legal 
responsibilities.
    (ii) Such information includes:
    (A) Documentation for an environmental threshold review from 
qualified data sources, such as a Federal, State or local agency with 
expertise and experience in environmental protection, or other sources, 
qualified to provide reliable environmental information;
    (B) Any previously prepared environmental reports or data relevant 
to the Loan at issue;
    (C) Any environmental review prepared by Federal, State, or local 
agencies relevant to the Loan at issue; and
    (D) Any other information that can be used by the Board to ensure 
compliance with environmental laws.
    (iii) All information supplied by the Applicant is subject to 
verification by the Board.
    (b) The regulations of the Council on Environmental Quality 
implementing NEPA require the Board to provide public notice of the 
availability of Project specific environmental documents such as 
environmental impact statements, environmental assessments, findings of 
no significant impact, records of decision, etc., to the affected 
public. See 40 CFR 1506.6(b). Environmental information concerning 
specific Projects can be obtained from the Board by contacting: 
Secretary, LOCAL Television Loan Guarantee Board, 1400 Independence 
Ave., SW., Room 2919-S, Stop 1575; Washington, DC 20250-1575.
    (c) National Environmental Policy Act. (1) Purpose. The purpose of 
this paragraph (c) is to adopt procedures for compliance with the 
National Environmental Policy Act, 42 U.S.C. 4321 et seq., by the 
Board. This paragraph supplements regulations at 40 CFR Chapter V.
    (2) Definitions. For purposes of this section, the following 
definitions apply:
    Categorical exclusion means a category of actions which do not 
individually or cumulatively have a significant effect on the human 
environment and for which neither an environmental assessment nor an 
environmental impact statement is required.
    Environmental assessment means a document that briefly discusses 
the environmental consequences of a proposed action and alternatives 
prepared for the purposes set forth in 40 CFR 1508.9.
    EIS means an environmental impact statement prepared pursuant to 
section 102(2)(C) of NEPA.
    FONSI means a finding of no significant impact on the quality of 
human environment after the completion of an environmental assessment.
    NEPA means the National Environmental Policy Act, 42 U.S.C. 4321, 
et seq.
    Working capital loan means money used by an ongoing business 
concern to fund its existing operations.
    (3) Delegations to the Secretary of the Board. (i) All incoming 
correspondence from Council on Environmental Quality (CEQ) and other 
agencies concerning matters related to NEPA, including draft and final 
EIS, shall be brought to the attention of the Secretary of the Board. 
The Secretary of the Board will prepare or, at his or her discretion, 
coordinated replies to such correspondence.
    (ii) With respect to actions of the Board, the Board will:
    (A) Ensure preparation of all necessary environmental assessments 
and EISs;
    (B) Maintain a list of actions for which environmental assessments 
are being prepared;
    (C) Revise this list at regular intervals, and send the revisions 
to the Environmental Protection Agency;
    (D) Make the list available for public inspection;
    (E) Maintain a list of EISs; and
    (F) Maintain a file of draft and final EISs.

[[Page 48828]]

    (4) Categorical exclusions. (i) This paragraph describes various 
classes of Board actions that normally do not have a significant impact 
on the human environment and are categorically excluded. The word 
``normally'' is stressed; there may be individual cases in which 
specific factors require contrary action.
    (ii) Subject to the limitations in paragraph (c)(4)(iii) of this 
section, the actions described in this paragraph have been determined 
not to have a significant impact on the quality of the human 
environment. They are categorically excluded from the need to prepare 
an environmental assessment or an EIS under NEPA.
    (A) Guarantees of working capital loans; and
    (B) Guarantees of loans for the refinancing of outstanding 
indebtedness of the Applicant, regardless of the purpose for which the 
original indebtedness was incurred.
    (iii) Actions listed in paragraph (c)(4)(ii) of this section that 
otherwise are categorically excluded from NEPA review are not 
necessarily excluded from review if they would be located within, or in 
other cases, potentially affect:
    (A) A floodplain;
    (B) A wetland;
    (C) Important farmlands, or prime forestlands or rangelands;
    (D) A listed species or critical habitat for an endangered species;
    (E) A property that is listed on or may be eligible for listing on 
the National Register of Historic Places;
    (F) An area within an approved State Coastal Zone Management 
Program;
    (G) A coastal barrier or a portion of a barrier within the Coastal 
Barrier Resources System;
    (H) A river or portion of a river included in, or designated for, 
potential addition to the Wild and Scenic Rivers System;
    (I) A sole source aquifer recharge area;
    (J) A State water quality standard (including designated and/or 
existing beneficial uses and anti-degradation requirements); or
    (K) The release or disposal of regulated substances above the 
levels set forth in a permit or license issued by an appropriate 
regulatory authority.
    (5) Responsibilities and procedures for preparation of an 
environmental assessment. (i) The Board will request that the Lender 
and Applicant prepare an environmental assessment that provides 
information concerning all potentially significant environmental 
impacts of the Applicant's proposed Project. The Board, consulting at 
its discretion with CEQ, will review the information provided by the 
Lender and Applicant. Though no specific format for an environmental 
assessment is prescribed, it shall be a separate document, suitable for 
public review and should include the following in conformance with 40 
CFR 1508.9:
    (A) Description of the environment. The existing environmental 
conditions relevant to the Board's analysis determining the 
environmental impacts of the proposed Project should be described. The 
no action alternative also should be discussed;
    (B) Documentation. Citations to information used to describe the 
existing environment and to assess environmental impacts should be 
clearly referenced and documented. These sources should include, as 
appropriate, but not be limited to, local, tribal, regional, State, and 
Federal agencies, as well as, public and private organizations and 
institutions;
    (C) Evaluating environmental consequences of proposed actions. A 
brief discussion should be included of the need for the proposal, of 
alternatives as required by 42 U.S.C. 4332(2)(E) and their 
environmental impacts. The discussion of the environmental impacts 
should include measures to mitigate adverse impacts and any 
irreversible or irretrievable commitments of resources to the proposed 
Project.
    (ii) An environmental assessment, may:
    (A) Tier upon the information contained in a previous EIS, as 
described in 40 CFR 1502.20;
    (B) Incorporate by reference reasonably available material, as 
described in 40 CFR 1502.21; and/or
    (C) Adopt a previously completed EIS reasonably related to the 
Project for which the proceeds of the Loan sought to be guaranteed 
under the Program will be used, as described in 40 CFR 1506.3.
    (iii) If, on the basis of the environmental assessment, the Board 
determines that an EIS is not required, a FONSI, as described in 40 CFR 
1508.13 will be prepared. The FONSI will include the environmental 
assessment or a summary of it and be available to the public from the 
Board. The Board shall maintain a record of these decisions, making 
them available to interested parties upon request. Requests should be 
directed to LOCAL Television Loan Guarantee Board, 1400 Independence 
Ave., SW., Room 2919-S, Stop 1575; Washington, DC 20250-1575. Prior to 
a final Guarantee decision, a copy of the NEPA documentation shall be 
sent to the Board for consideration.
    (6) Responsibilities and procedures for preparation of an 
environmental impact statement. (i) If after the environmental 
assessment has been completed, the Board determines that an EIS is 
necessary, it and other related documentation will be prepared by the 
Board in accordance with section 102(2)(c) of NEPA, this section, and 
40 CFR parts 1500 through 1508. The Board may seek additional 
information from the Applicant in preparing the EIS. Once the document 
is prepared, the Board will transmit the document to the Environmental 
Protection Agency.
    (ii) EIS. (A) The following procedures, as discussed in 40 CFR 
parts 1500 through 1508, will be followed in preparing an EIS:
    (1) The format and contents of the draft and final EIS shall be as 
discussed in 40 CFR part 1502.
    (2) The requirements of 40 CFR 1506.9 for filing of documents with 
the Environmental Protection Agency shall be followed.
    (3) The Board, consulting at its discretion with CEQ, shall examine 
carefully the basis on which supportive studies have been conducted to 
assure that such studies are objective and comprehensive in scope and 
in depth.
    (4) NEPA requires that the decision making ``utilize a systematic, 
interdisciplinary approach that will ensure the integrated use of the 
natural and social sciences and the environmental design arts.'' 42 
U.S.C. 4332(A). If such disciplines are not present on the Board staff, 
appropriate use should be made of personnel of Federal, State, and 
local agencies, universities, non-profit organizations, or private 
industry.
    (B) Until the Board issues a record of decision as provided in 40 
CFR 1502.2 no action concerning the proposal shall be taken which 
would:
    (1) Have an adverse environmental impact; or
    (2) Limit the choice of reasonable alternatives.
    (3) 40 CFR 1506.10 places certain limitations on the timing of 
Board decisions on taking ``major Federal actions.'' A Guarantee shall 
not be made before the times set forth in 40 CFR 1506.10.
    (iii) A public record of decision stating what the decision was; 
identifying alternatives that were considered, including the 
environmentally preferable one(s); discussing any national 
considerations that entered into the decision; and summarizing a 
monitoring and enforcement program if applicable for mitigating the 
environmental effects of a proposal will be prepared. This record of 
decision will be prepared at the time the decision is made.

[[Page 48829]]

Sec.  2201.17  Submission of applications.

    (a) Applications should be submitted as follows:
    (1) Applications for Guarantees shall be submitted to the LOCAL 
Television Loan Guarantee Board, 1400 Independence Avenue, SW., Stop 
1575, Room 2919-S, Washington, DC 20250-1575. Applications should be 
marked Attention: Secretary, LOCAL Television Loan Guarantee Board.
    (2) Applications must be submitted postmarked not later than the 
application filing deadline established by the Board if the 
applications are to be considered during the period for which the 
application was submitted.
    (3) All Applicants must submit an original and two copies of a 
completed application.
    (b) Application deadline. One or more application windows will be 
announced. The duration of each application window for submission of 
applications will be approximately 120 days. Notice of an application 
window will be published in the Federal Register.


Sec.  2201.18  Application selection.

    (a) Application priority. When evaluating applications to determine 
which Project or combinations of Projects will best facilitate access 
to Local Television Broadcast Signals, the Board shall give priority in 
the approval of Guarantees to the following categories:
    (1) First, to applications for Projects that will serve households 
in Nonserved Areas.
    (2) Second, to applications for Projects that will serve households 
in Underserved Areas.
    (3) Within each category, the Board shall balance applications for 
Projects that will serve the largest number of households with 
applications for Projects that will serve remote, isolated communities 
(including noncontiguous States) in areas that are unlikely to be 
served through market mechanisms. The Board shall consider the 
Project's estimated cost per household and shall give priority to those 
applications for Projects that provide the highest quality service at 
the lowest cost per household.
    (b) Additional considerations. (1) The Board shall give higher 
consideration to applications for Projects that, in addition to 
providing Local Television Broadcast Signals, also provide High-speed 
Internet service.
    (2) The Board shall consider other factors, which shall include 
applications for Projects that:
    (i) Offer a separate tier of Local Television Broadcast Signals at 
a lower cost to consumers, except where prohibited by applicable 
Federal, State, or local laws or regulations;
    (ii) Enable the delivery of Local Television Broadcast Signals 
consistent with the purpose of the Act by means reasonably compatible 
with existing systems or devices predominantly in use.
    (c) Other considerations. All other evaluation factors and priority 
considerations being equal, the Board will give a preference in 
approving Guarantees to those applications for Projects that provide 
greater amounts and higher quality Collateral.
    (d) Protection of United States financial interests. The Board may 
not approve the Guarantee of a Loan unless:
    (1) The Board has been given documentation, assurances, and access 
to information, persons, and entities necessary, as determined by the 
Board, to address issues relevant to review of the Loan by the Board 
for purposes of the Act; and
    (2) The Board makes a determination in writing that:
    (i) To the best of its knowledge upon due inquiry, the Assets, 
facilities, or equipment covered by the Loan will be utilized 
economically and efficiently;
    (ii) The terms, conditions, security, and schedule and amount of 
repayments of principal and the payment of interest with respect to the 
Loan protect the financial interests of the United States and are 
reasonable;
    (iii) The value of Collateral provided by an Applicant is at least 
equal to the unpaid balance of the Loan amount; and if the value of 
Collateral provided by an Applicant is less than the Loan amount, the 
additional required Collateral is provided by the Applicant or an 
Affiliate designated by the Applicant and acceptable to the Board;
    (iv) All necessary and required regulatory and other approvals, 
spectrum licenses, and delivery permissions have been received for the 
Loan and the Project under the Loan;
    (v) The Loan would not be available on reasonable terms and 
conditions without a Guarantee under the Act; and
    (vi) Repayment of the Loan can be reasonably expected.
    (e) Non approvals. A Guarantee will not be approved if it is 
determined that:
    (1) The Applicant's proposal does not indicate financial 
feasibility, or the Collateral is determined to not adequately secure 
the Loan;
    (2) The Applicant's proposal indicates technical flaws, which, in 
the opinion of the Board, would prevent successful implementation, or 
operation of the Project;
    (3) Any other aspect of the Applicant's proposal fails to 
adequately address any requirements of the Act or the regulations in 
this part or contains inadequacies which would, in the opinion of the 
Board, undermine the ability of the Project to meet the general purpose 
of the Act or comply with requirements of the regulations in this part; 
or
    (4) Proceeds for the Loan will be used for any of the ineligible 
purposes set forth in Sec.  2201.15.


Sec.  2201.19  Loan terms.

    (a) All Loans guaranteed under the Program shall be due and payable 
in full no later than the earlier of 25 years from date of the closing 
of the Loan or the economically useful life of the primary Assets to be 
used in delivery of the signals concerned, as determined by the Board.
    (b) Loans guaranteed under the Program must:
    (1) Bear a rate of interest determined by the Board to protect the 
financial interests of the United States and to be reasonable. This 
determination will be based on the Board's comparison of the:
    (i) Difference, or interest rate spread, between the interest rate 
on the Loan sought to be guaranteed and the current average yield on 
outstanding marketable obligations of the United States of comparable 
maturity; and
    (ii) The interest rate spread between the rates on recently issued 
and similarly rated and structured obligations and the current yields 
on outstanding marketable obligations of the United States of 
comparable maturity.; and
    (2) Have terms that, in the judgment of the Board, are consistent 
in material respects with the terms of similar obligations in the 
private capital market.
    (c) So long as any principal and interest is due and payable on a 
Loan guaranteed under the Act, a Borrower shall:
    (1) Maintain Assets, equipment, facilities, and operations on a 
continuing basis;
    (2) Not make any discretionary dividend payments that impair its 
ability to repay obligations guaranteed under the Act;
    (3) Remain sufficiently capitalized; and
    (4) Submit to and cooperate fully with any audit or Collateral 
review required by the Board.


Sec.  2201.20  Collateral.

    (a) Existence of adequate Collateral. An Applicant shall provide 
the Board such documentation as is necessary, in the judgment of the 
Board, to provide satisfactory evidence that appropriate and adequate 
Collateral secures a Loan

[[Page 48830]]

guaranteed under the Program. Prior to approving a Guarantee, the Board 
shall require that the value of the Collateral pledged to be at least 
equal to the unpaid balance of the Loan Amount.
    (b) Form of Collateral. Collateral required by paragraph (a) of 
this section shall consist solely of Assets of the Applicant, any 
Affiliate of the Applicant, or both, as identified in the Loan 
Documents, including primary Assets to be used in the delivery of the 
service for which the Loan is guaranteed. Such Assets may include, but 
are not limited to, the following:
    (1) Tangible Assets, including current Assets (such as cash, 
accounts receivable, and inventory), reserve funds, land, buildings, 
machinery, fixtures, and equipment;
    (2) Assignments of all relevant contractual agreements, including 
contractual rights to certain cash flows, marketing arrangements, 
third-party guarantees, insurance policies, contractors' bonds, and 
other agreements or rights that may be of value;
    (3) All permits, governmental approvals, franchises and licenses, 
necessary to carry out and operate the required equipment or service; 
and
    (4) Other Assets, which, in the judgment of the Board, possess 
Collateral value suitable for securing the Loan, including a pledge of 
all or part of the Applicant's ownership interest in the Project or 
company, and any after-acquired property.
    (c) Applicant's compliance findings. An Applicant's compliance with 
paragraphs (a) and (b) of this section does not assure a finding of 
reasonable assurance of repayment, or assure the Board's Guarantee of 
the Loan.
    (d) Collateral for entire loan. The same Collateral shall secure 
the entire Loan, including both the Guaranteed Portion and the 
Unguaranteed Portion.
    (e) Review of valuation. The value of Collateral securing a Loan is 
subject to review and approval by the Board, and may be adjusted 
downward by the Board if the Board reasonably believes such adjustment 
is appropriate. The Board's evaluation of the proposed Collateral for 
the Loan will be based on several factors, including but not limited 
to:
    (1) The expected value of the pledged Collateral in the event of 
defaults with specific consideration given to the residual value of 
Project Assets to third-parties and the liquidity of such Assets;
    (2) The cash flow characteristics of the Project;
    (3) The contractual characteristics of the Project to the extent 
Project-related agreements underpin the Project's estimated cash flows;
    (4) The competitiveness of the Project's economics and the 
associated certainty of cash flows in the future; and
    (5) The creditworthiness of any designated Affiliates(s) that 
provides services to the Applicant or provides any credit support.
    (f) Ongoing Collateral assessment. The Board shall require that the 
value of the Collateral shall be at all times at least equal to the 
unpaid balance of the Loan Amount. To ensure that the ongoing value of 
the Collateral is properly maintained, the Board may require the 
borrower to have an ongoing third-party inspection and valuation of the 
Collateral that is acceptable to the Board. If the Collateral value at 
the measurement date is less than the unpaid balance of the Loan 
Amount, the Borrower or its designated Affiliates(s) will be required 
to pledge additional acceptable Collateral to cover any deficit.
    (g) Lien on Collateral. (1) Upon the Board's approval of a 
Guarantee, the Administrator shall have liens on Collateral securing 
the Loan, which shall be superior to all other liens on such 
Collateral. The value of the Collateral (based on a determination 
satisfactory to the Board) shall be at least equal to the unpaid 
balance of the Loan amount, giving significant consideration to the 
expected value of the Collateral in the event of defaults with specific 
consideration given to the residual value of the Project Assets to 
third-parties and the liquidity of such Assets.
    (2) Both the Administrator and the Lender or Agent shall have a 
perfected security interest in the Collateral fully sufficient to 
protect the financial interests of the United States and the Lenders. 
However, the security interest perfected by the Administrator shall 
ensure that the Administrator has first priority in such Collateral.


Sec.  2201.21  Fees.

    (a) Application fee. The Board shall charge each Applicant for a 
Guarantee under the Program a non-refundable fee, payable to the United 
States Treasury, to cover the costs of making necessary determinations 
and findings with respect to an application for a Guarantee under the 
Program. The amount of the fee is $10,000 for Loans of $1 million up to 
$50 million, $15,000 for Loans of $50 million up to $100 million, 
$30,000 for Loans of $100 million up to $500 million, and $40,000 for 
Loans of $500 million or greater.
    (b) Guarantee Origination Fee. The Board shall charge and collect 
from a Borrower, at the closing of the Loan, a Guarantee Origination 
Fee to cover the administrative costs of Board related to such Loan. 
The amount of such fee shall be the lesser of two percent of the Loan 
amount or $500,000.
    (c) Lender fees. A Lender or Agent may assess and collect from the 
Borrower such fees and costs associated with the application and 
origination of the Loan as are reasonable and customary, taking into 
consideration the amount and complexity of the credit. The Board may 
take such fees and costs into consideration when determining whether to 
offer a Guarantee.


Sec.  2201.22  Issuance of Guarantees.

    (a) The Board's decisions to approve an application and extend an 
Offer of Guarantee under the Program is conditioned upon:
    (1) The Lender or Agent and Applicant obtaining any required 
regulatory or judicial approvals;
    (2) The Lender or Agent and Applicant being legally authorized to 
enter into the Loan under the terms and conditions submitted to the 
Board in the application;
    (3) The Board's receipt of the Loan Documents and any related 
instruments, in form and substance satisfactory to the Board all 
properly executed by the Lender or Agent, Applicant, and any other 
required party other than the Board;
    (4) No material adverse change in the Applicant's ability to repay 
the Loan between the date of the Board's approval and the date the 
Guarantee is to be issued;
    (5) Entering into the Guarantee violates no Loan covenants or 
existing contractual obligations of the Borrower; and
    (6) Such other conditions as determined by the Board.
    (b) The Board may withdraw its approval of an application and 
rescind its Offer of Guarantee if the Board determines that the Lender 
or Agent or the Applicant cannot, or is unwilling to, provide adequate 
documentation and proof of compliance with paragraph (a) of this 
section within the time provided for in the Offer of Guarantee.
    (c) Only after receipt of all the documentation required by this 
section will the Administrator sign and deliver the Guarantee.


Sec.  2201.23  Funding for the Program.

    (a) Costs incurred by the Government. The Act provides funding for 
the costs incurred by the Government as a result of granting Guarantees 
under the Program. While pursuing the goals of the Act, it is the 
intent of the Board to

[[Page 48831]]

minimize the cost of the Program to the Government. The Board will 
estimate the risk posed by the guaranteed Loans to the funds 
appropriated for the costs of the Guarantees under the Program and 
operate the Program accordingly.
    (b) Credit risk premium. (1) Establishment and approval. The Board 
may establish and approve the acceptance of credit risk premiums with 
respect to a Guarantee under this Act in order to offset the cost, as 
defined in section 502(5) of the Federal Credit Reform Act of 1990, of 
the Guarantee. To the extent that appropriations of budget authority 
are insufficient to cover the cost, as so determined, of a Guarantee, 
and the Board approves such a Guarantee, credit risk premiums shall be 
accepted from a non-Federal source on behalf of a Borrower.
    (2) Credit risk premium amount. (i) General. The Board shall 
determine the amount of any credit risk premium to be accepted with 
respect to a Guarantee on the basis of:
    (A) The financial and economic circumstances of the Borrower, 
including the amount of Collateral offered;
    (B) The proposed schedule of Loan disbursements;
    (C) The business plans of the Borrower;
    (D) Any financial commitment from a broadcast signal provider; and
    (E) The concurrence of the Director of the Office of Management and 
Budget as to the amount of the credit risk premium.
    (ii) Proportionality. To the extent that appropriations of budget 
authority are sufficient to cover the cost, as determined under section 
502(5) of the Federal Credit Reform Act of 1990, of Guarantees, the 
credit risk premium with respect to each Guarantee shall be reduced 
proportionately.
    (iii) Payment of premiums. Credit risk premiums under this 
paragraph shall be paid to an escrow account established in the 
Treasury, which shall accrue interest. Such interest shall be retained 
by the escrow account, subject to paragraph (b)(2)(iv) of this section.
    (iv) Deductions from escrow account. If a liquidation of the 
Collateral occurs pursuant to Sec.  2201.33(h), any shortfall between 
the proceeds of the liquidation net of costs and expenses relating to 
the liquidation, and the guarantee amount paid shall be deducted from 
funds in the escrow account and credited to the Administrator for 
payment of such shortfall. At such time as all Loans guaranteed under 
this Program have been repaid or otherwise satisfied in accordance with 
the Act and the regulations in this part, remaining funds in the escrow 
account, if any, shall be refunded, on a pro rata basis, to Borrowers 
whose Loans guaranteed under the Program were not in Payment Default or 
Default, or where any Payment Default or Default was cured in 
accordance with the terms of the Loan Documents.


Sec.  2201.24  Insurance.

    The Borrower of a Loan guaranteed under the Program shall obtain, 
at its expense, insurance sufficient to protect the financial interests 
of the United States, as determined by the Board.


Sec.  2201.25  Performance Agreement.

    (a) The Borrower of a Loan guaranteed under the Program shall enter 
into a Performance Agreement with the Administrator with respect to the 
Local Television Broadcast Signals to be provided through the Project.
    (b) The Administrator may assess against and collect from a 
Borrower a penalty not to exceed 3 times the interest accrued on the 
Loan during the period of noncompliance if the Borrower fails to meet 
its stipulated Performance Agreement entered into under paragraph (a) 
of this section.


Sec.  2201.26  Lender standard of care.

    (a) The Lender or Agent shall exercise due care and diligence in 
analyzing and administering the Loan as would be exercised by a 
responsible and prudent Banking Institution when analyzing and 
administering a secured loan of such Banking Institution's own funds 
without a Guarantee. Such standards shall also apply to any and all 
underwriting analysis, approvals, determinations, permissions, 
acceptances, requirements, or opinion made, given, imposed or reached 
by Lender.
    (b) The Lender or Agent shall have such other obligations and 
duties to the Board and the Administrator as are set forth in the Act 
or Loan Documents.


Sec.  2201.27  Assignment or transfer of Loans.

    (a) Modifications. The Loan Documents may not be modified, in whole 
or in part, without the prior written approval of the Board.
    (b) Requirements. (1) Subject to the provisions of paragraphs (c) 
and (d) of this section and other provisions of this part, a Lender or 
Agent may assign or transfer the Loan including the Loan Documents to 
another Lender that meets the eligibility requirements of Sec.  2201.13 
of this part.
    (2) Any assignment or transfer of a Loan, or any pledge or other 
use of a Loan as security, including but not limited to any derivatives 
transaction, will require the prior written approval of the Board.
    (c) The provisions of paragraph (b) of this section shall not apply 
to transfers which occur by operation of law.
    (d) The Agent must hold an interest in a Loan guaranteed under the 
Program equal to at least the lesser of $25 million or fifteen percent 
of the aggregate amount of the Loan. Of this amount, the Agent must 
hold an interest in the Unguaranteed Portion of the Loan equal to at 
least the minimum amount of the Loan required to be held by the Agent 
under the preceding sentence multiplied by the percentage of the entire 
Loan that is not guaranteed. A non-Agent Lender must hold an interest 
in the Unguaranteed Portion of the Loan representing no less than five 
percent of such Lender's total interest in the Loan; provided, that a 
non-Agent Lender may transfer its interest in the Unguaranteed Portion 
after payment of the Guaranteed Portion has been made under the 
Guarantee.
    (e) The Guarantee shall have no force or effect if any part of the 
Guaranteed Portion of the Loan is transferred separate and apart from 
the Unguaranteed Portion of the Loan. At least five percent of any 
assignment or transfer interest in a Loan must be unguaranteed to 
ensure that no part of the Guaranteed Portion of the Loan is 
transferred separate and apart from the Unguaranteed Portion of the 
Loan.


Sec.  2201.28  Participation in guaranteed Loans.

    (a) Subject to paragraphs (b), (c) and (d) of this section, a 
Lender may distribute the risk of a portion of a Loan guaranteed under 
the Program by sale of participations therein if:
    (1) Neither the Loan note nor the Guarantee is assigned, conveyed, 
sold, or transferred in whole or in part as a result of the sale of 
such participations;
    (2) The Lender remains solely responsible for the administration of 
the Loan as an Agent; and
    (3) The Board's ability to assert any and all defenses available to 
it under the law and under the Loan Documents is not adversely 
affected.
    (b) The following categories of entities may purchase participation 
interests in Loans guaranteed under the Program:
    (1) Lenders that meet the eligibility requirements of Sec.  2201.13 
of this part;
    (2) Qualified institutional buyers as defined in 17 CFR 230.144A 
(a), known as Rule 144A (a) of the Securities and Exchange Commission 
and issued under the Securities Act of 1933 (15 U.S.C. 77a et seq.); or
    (3) Any other entity approved by the Board on a case-by-case basis.

[[Page 48832]]

    (c) An Agent may not grant participations in that portion of its 
interest in a Loan that may not be assigned or transferred under Sec.  
2201.27(d) of this part. A Lender, other than the Agent, may not grant 
participations in that portion of its interest in a Loan that may not 
be assigned or transferred under Sec.  2201.27(d) of this part.
    (d) At least five percent of any participation interest in a Loan 
must be unguaranteed.


Sec.  2201.29  Supplemental guarantees.

    The Board will allow the structure of a guaranteed Loan to include 
one or more supplemental guarantees only from a State or local 
governmental or tribal entity that cover the Unguaranteed Portion of 
the Loan, provided that:
    (a) There shall be no supplemental guarantee with respect to the 
Unguaranteed Portion required to be held by the Agent or sole Lender 
pursuant to Sec.  2201.27(d) of this part;
    (b) The Loan Documents relating to any supplemental guarantee shall 
be acceptable in form and substance to the Board; and
    (c) In approving the issuance of a Guarantee, the Board may impose 
any conditions with respect to supplemental guarantee(s) relating to 
the Loan that it considers appropriate.


Sec.  2201.30  Adjustments.

    (a) The Board must approve the adjustment of any term or condition 
of the Loan Documents under this Program, including the rate of 
interest, time of payment of principal or interest, or Collateral 
requirements. Adjustments may be approved by the Board only if:
    (1) The adjustment is consistent with the financial interests of 
the United States;
    (2) Consent has been obtained from the parties to the Loan 
Agreement;
    (3) The adjustment is consistent with the underwriting criteria 
developed for the Program;
    (4) The adjustment does not adversely affect the interest of the 
Federal Government in the Assets or Collateral of the Borrower;
    (5) The adjustment does not adversely affect the ability of the 
Borrower to repay the Loan; and
    (6) The National Telecommunications and Information Administration 
of the Department of Commerce has been consulted by the Board regarding 
the adjustment.
    (b) A Lender's decision to forego remedial action in the event of a 
breach of financial covenants required under the Loan Agreement will 
not constitute an adjustment under this section.


Sec.  2201.31  Indemnification.

    (a) The United States shall be indemnified by any Affiliate of a 
Borrower designated in the Loan Documents for any losses that the 
United States incurs as a result of:
    (1) A judgment against the Borrower or any of its Affiliates;
    (2) Any breach by the Borrower or any of its Affiliates of their 
obligations under the Loan Documents;
    (3) Any violation of the provisions of the Act, or the regulations 
in this part, by the Borrower or any of its Affiliates;
    (4) Any penalties incurred by the Borrower or any of its Affiliates 
for any reason, including violation of a performance schedule 
stipulated in a Performance Agreement; and
    (5) Any other circumstances that the Board considers appropriate.
    (b) The Board may require more than one Affiliate of a Borrower to 
make the indemnifications referred to in paragraph (a) of this section.
    (c) The indemnifications referred to in paragraph (a) of this 
section shall be included in the Loan Documents.


Sec.  2201.32  Termination of obligations.

    The Board shall have such rights to terminate the Guarantee as are 
set forth in the Act and Loan Documents.


Sec.  2201.33  Defaults.

    (a) In determining, following any Payment Default or Default, 
whether to accelerate the maturity of any amounts outstanding under the 
Loan Documents or otherwise to declare such amounts to be immediately 
due and payable, or pursue other remedial actions available under the 
Loan Documents, the Agent or Lender, as the case may be, shall act at 
all times in accordance with the standard of care and diligence 
required under Sec.  2201.26(a) of this part.
    (b) Following any Payment Default, the Agent or Lender shall 
promptly notify the Board and be entitled to make a Payment Demand. Any 
Payment Demand shall:
    (1) Identify the amount and due date of the defaulted payment of 
principal and the outstanding amounts of principal and interest under 
the Loan;
    (2) Describe briefly the circumstances leading to the Payment 
Default, including, without limitation, the nature of any precipitating 
Default, whether an acceleration has occurred, and whether a bankruptcy 
proceeding has been instituted or threatened; and
    (3) Be accompanied by a copy of each of the Loan Documents and all 
notices and other correspondence with the Borrower or other Lender 
relating to the Payment Default and any precipitating Default.
    (c) Following any Payment Demand being made, the Agent or Lender 
shall furnish to the Board promptly upon request from the Board and, in 
any event, not later than ninety (90) days from the date of such 
request, each of the following:
    (1) A written, detailed and reasonable plan for the partial or 
complete foreclosure on and liquidation of the Collateral, including, 
without limitation, detailed estimates by the Agent or Lender of the 
time and reasonable costs of collection anticipated to be necessary in 
order to carry out such plan; and
    (2) A written, detailed and reasonable work-out plan, if such a 
plan is feasible, for the continued operation of the Borrower 
calculated, in the Agent's or Lender's judgment, to assure the best 
prospect for repayment of principal and interest under the Loan without 
partial or complete foreclosure and liquidation of the Collateral, 
including, without limitation, detailed estimates of the time and 
expense required for such work-out and an assessment of the risks to 
the Agent or Lender and the Board associated therewith relative to such 
risks associated with complete foreclosure and liquidation; and, if any 
partial foreclosure and liquidation is a part of such proposed work-out 
plan, a detailed estimate of the time and reasonable costs of 
collection anticipated by the Agent or Lender to be required to effect 
such partial liquidation.
    (d) By making a Payment Demand, the Agent or Lender shall be 
conclusively deemed to have certified, with full knowledge of the 
provisions of 18 U.S.C. 1001 and 31 U.S.C. 3729 including, without 
limitation, the provisions thereof for penalties and damages, to the 
Board that it has fully and timely complied with all material 
provisions and obligations under the Guarantee and the Loan Documents, 
that the amount demanded is past due and owed by the Borrower under the 
Loan Agreement, and that the demand is properly made and required to be 
satisfied by the Board under the terms of the Guarantee.
    (e) Following receipt of any Payment Demand, the Board or, on its 
behalf, any duly authorized representative or designee, may conduct an 
audit and investigation of compliance with all material provisions and 
obligations under the Guarantee. The Agent and/or Lender shall 
cooperate fully and diligently with any such audit and investigation.
    (f) Within a reasonable period of time from receipt by the Board of 
a Payment Demand, the Board shall approve

[[Page 48833]]

payment of the amount to be paid in respect of the unpaid principal 
amount under the Loan to which the Payment Demand relates. The Board 
may withhold such payment if any audit or investigation is pending or 
if information remains to be furnished by the Agent or Lender. Further, 
payment shall not be made to the extent it is determined by the Board, 
whether as the result of an audit, investigation or otherwise, that the 
Board's payment obligation has terminated. Payment shall be made by 
wire transfer in immediately available funds to the bank and account 
designated by the Agent or Lender for such purpose.
    (g) The Board may take, or direct to be taken any action in 
liquidating the Collateral that the Board determines to be necessary or 
proper, consistent with Federal law and regulations.
    (h) Pursuant to the Guarantee, upon Payment Demand by the Agent or 
Lender, and whether the Board has approved any payment under the 
Guarantee or any payment has been made under the Guarantee, the Board, 
through the Administrator, shall have the right to liquidate, or cause 
to be liquidated, the Collateral. The Board, at its sole discretion, 
shall have the right to require that the Agent or Lender, solely or 
with the Administrator, conduct to completion any liquidation of any of 
the Collateral. Such liquidation shall be conducted by the Agent or 
Lender in accordance with the standards of care specified in Sec.  
2201.26(a) of this part.


Sec.  2201.34  OMB Control Number.

    The information collection requirements in this part are approved 
by the Office of Management and Budget and assigned OMB control number 
0572-XXXX.

    Dated: August 11, 2003.
Jacqueline G. Rosier,
Secretary, LOCAL Television Loan Guarantee Board.
[FR Doc. 03-20786 Filed 8-14-03; 8:45 am]
BILLING CODE 3410-15-P