[Federal Register Volume 77, Number 29 (Monday, February 13, 2012)]
[Proposed Rules]
[Pages 7546-7547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3242]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 77, No. 29 / Monday, February 13, 2012 / 
Proposed Rules  

[[Page 7546]]



DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Part 4279

RIN 0570-AA87


Definitions and Abbreviations

AGENCY: Rural Business-Cooperative Service, Rural Utilities Service, 
USDA.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Rural Business-Cooperative Service is amending its 
regulations for the Business and Industry Guaranteed Loan Program to 
clarify that the Agency guarantee does not cover default and penalty 
interest or late charges. The Agency's regulations are currently silent 
on this issue. However, it has always been the Agency's policy not to 
pay out additional cost for default interest, penalty interest, and 
late charges calculated and submitted on a final report of loss claim 
under the Loan Note Guarantee. The Agency does permit the lender to 
charge default interest with prior Agency approval. By defining 
``interest'' in the definition section of the regulation and clarifying 
the Agency's policy as it relates to default interest, penalty 
interest, and late charge, this will avert any misunderstandings.

DATES: Comments on this proposed rule must be received on or before 
March 14, 2012.

ADDRESSES: You may submit comments to this proposed rule by any of the 
following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Submit written comments via the U.S. Postal Service 
to the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, STOP 0742, 1400 Independence Avenue SW., 
Washington, DC 20250-0742.
     Hand Delivery/Courier: Submit written comments via Federal 
Express Mail or other courier service requiring a street address to the 
Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, 300 7th Street SW., 7th Floor, Washington, 
DC 20024.
    All written comments will be available for public inspection during 
regular work hours at the 300 7th Street, SW., 7th Floor address listed 
above.

FOR FURTHER INFORMATION CONTACT: Mr. David Lewis, Rural Development, 
Business Programs, U.S. Department of Agriculture, 1400 Independence 
Avenue SW., Stop 3221, Washington, DC 20250-3221; email: 
[email protected]; telephone (202) 690-0797.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and has not been reviewed by the Office of 
Management and Budget (OMB).

Programs Affected

    The Catalog of Federal Domestic Assistance Program number assigned 
to the Business and Industry Guaranteed Loan Program is 10.768. The 
Catalog of Federal Domestic Assistance Program number assigned to the 
Biorefinery Assistance is 10.865. The Catalog of Federal Domestic 
Assistance Program number assigned to the Rural Energy for America 
Program is 10.868.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' Rural Development has determined 
that this action does not constitute a major Federal action 
significantly affecting the quality of the human environment and, in 
accordance with the National Environmental Policy Act (NEPA) of 1969, 
42 U.S.C. 4321 et seq., an Environmental Impact Statement is not 
required.

Executive Order 12372, Intergovernmental Consultation

    The program is subject to the provisions of Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials. Consultation will be completed at the time of the action 
performed.

Executive Order 12988, Civil Justice

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. The Agency has determined that this rule meets the 
applicable standards provided in section 3 of the Executive Order. 
Additionally, (1) all state and local laws and regulations that are in 
conflict with this rule will be preempted; (2) no retroactive effect 
will be given to the rule; and (3) administrative appeal procedures, if 
any, must be exhausted before litigation against the Department or its 
agencies may be initiated, in accordance with the regulations of the 
National Appeals Division of USDA at 7 CFR part 11.

Executive Order 13132, Federalism

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on state and local 
governments. Therefore, consultation with states is not required.

Regulatory Flexibility Act Certification

    Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 
605(b), the Agency certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. The Agency 
made this determination based on the fact that this regulation only 
impacts those who choose to participate in the program. Small entity 
applicants will not be impacted to a greater extent than large entity 
applicants.

Unfunded Mandates

    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995) for 
State, local, and tribal governments or the private sector. Thus, this 
rule is not subject to the requirements of sections 202 and 205 of the 
Unfunded Mandates Reform Act of 1995.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on Rural Development in 
the development of regulatory policies

[[Page 7547]]

that have tribal implications or preempt tribal laws. Rural Development 
has determined that the rule does not have a substantial direct effect 
on one or more Indian tribe(s) or on either the relationship or the 
distribution of powers and responsibilities between the Federal 
Government and Indian tribes. Thus, this rule is not subject to the 
requirements of Executive Order 13175. If a tribe determines that this 
rule has implications of which Rural Development is not aware and would 
like to engage with Rural Development on this rule, please contact 
Rural Development's Native American Coordinator at [email protected].

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, the 
information collection activities associated with this rule are covered 
under the Business and Industry Guaranteed Loan Program, OMB Number: 
0570-0017.
    This rule contains no new reporting or recordkeeping requirements 
that would require approval under the Paperwork Reduction Act of 1995 
(44 U.S.C. Chapter 35).

E-Government Act Compliance

    Rural Development is committed to complying with the E-Government 
Act, to promote the use of the Internet and other information 
technologies, to provide increased opportunities for citizen access to 
Government information and services, and other purposes.

I. Background

    The Agency reviewed 7 CFR 4279.2 which is composed of two 
paragraphs, the first of which is pertinent. Section 4279.2(a) 
discusses the definitions, which has thirty seven terms use in the 
Guaranteed Loanmaking. The definitions and abbreviations contained in 
Sec.  4279.2 also apply to the Business and Industry Guaranteed Loan 
Servicing regulations and, unless otherwise noted, the Biorefinery 
Assistance Loan Program and the Rural Energy for America Program. 
Currently, the Agency regulations do not define ``interest'', ``default 
interest'', ``penalty interest'' or ``late charges''. However, it is 
the Agency's policy not to pay out additional cost for default 
interest, penalty interest and late charges calculated and submitted on 
a final report of loss claim under the Loan Note Guarantee. However, 
the lender's Promissory Note may contain provisions for default, 
penalty interest, or late charges with prior Agency approval. These 
charges must be customary and reasonable. Accordingly, the Agency is 
making the proposed changes in this rule.

II. Discussion of Change

    The Agency is revising Sec.  4279.2(a), to address the situation 
discussed in the ``Background'' section. Specifically, the Agency is 
adding a paragraph in Sec.  4287.2(a), after the term ``Holder'' and 
before the term Interim Financing, which will define ``Interest.'' The 
change being made by this rule is to clarify that ``interest'' does not 
include default or penalty interest, or late fees. The lender may 
charge the borrower these fees with prior Agency approval.

List of Subjects in 7 CFR Part 4279

    Business and industry, Loan programs, Rural development assistance.

    For the reasons set forth in the preamble, chapter XLII, title 7, 
of the Code of Federal Regulations is proposed to be amended as 
follows:

CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
SERVICE, DEPARTMENT OF AGRICULTURE

PART 4279--GUARANTEED LOANMAKING

    1. The authority citation for part 4279 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1932(a); and 7 U.S.C. 1989.

Subpart A--General

    2. Paragraph (a) of Sec.  4279.2 is amended by adding a new 
definition of Interest, to read as follows:


Sec.  4279.2  Definitions and abbreviations.

* * * * *
    Interest. A fee paid by a borrower to the lender as a form of 
compensation for the use of money. When money is borrowed, interest is 
paid as a fee over a certain period of time (typically months or years) 
to the lender as a percentage of the principal amount owed. 
``Interest'' does not include default or penalty interest or late fees 
or charges. The lender may charge these fees and interest with prior 
Agency approval, but they are not covered by the Loan Note Guarantee.
* * * * *

    Dated: February 2, 2012.
Dallas Tonsager,
Under Secretary, Rural Development.
[FR Doc. 2012-3242 Filed 2-10-12; 8:45 am]
BILLING CODE 3410-XY-P