This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

30831 

Vol. 83, No. 127 

Monday, July 2, 2018 

DEPARTMENT OF AGRICULTURE 

Rural Business-Cooperative Service 

Rural Utilities Service 

7 CFR Part 4280 

RIN 0570–AA85 

Guaranteed Loanmaking and Servicing 

Regulations; Corrections 

AGENCY: Rural Business-Cooperative 

Service and Rural Utilities Service; 

USDA. 

ACTION: Correcting amendments. 

SUMMARY: On June 3, 2016, the Rural 

Business-Cooperative Service 

promulgated changes to its Guaranteed 

Loanmaking and Servicing Regulations. 

Following final implementation of this 

final rule, RBS found that conforming 

amendments for adoption for the Rural 

Energy for America Program (REAP) had 

not been included. This technical 

correction makes amendments to allow 

REAP to continue to use procedures and 

forms from the revised Guaranteed 

program. 

DATES: Effective July 2, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Mark Brodziski, Rural Development, 

Energy Programs, U.S. Department of 

Agriculture, 1400 Independence Ave. 

SW, Stop 3225, Washington, DC 20250– 

3201; email: Mark.Brodziski@

wdc.usda.gov; telephone number: (202) 

720–0410. 

SUPPLEMENTARY INFORMATION: 

Need for Corrections 

The Agency published a final rule on 

June 3, 2016, (81 FR 35984) for the 

purpose of improving program delivery, 

clarifying the regulations to make them 

easier to understand, and reducing 

delinquencies. The Agency discovered 

that conforming amendments had not 

been included for 7 CFR part 4280 to 

continue to allow the Rural Energy for 

America Program to use procedures and 

forms already codified for the 

Guaranteed program and correctly 

reference revised 7 CFR part 4279. This 

notice makes technical corrections to 

include the actual language in 7 CFR 

part 4280 referencing language from 7 

CFR part 4279 prior to amendment of 

such regulation in 2017, update 

references included in 7 CFR part 4280 

to updated sections of 7 CFR part 4279, 

and update the title of Form RD 4280– 

2 from Grant Agreement to Financial 

Assistance Agreement, all as intended at 

the time of revision of 7 CFR part 4279. 

In addition, information on lender 

eligibility and credit quality is updated 

to bring them into conformance with the 

Guaranteed program and current 

implementation. 

List of Subjects in 7 CFR Part 4280 

Business and industry, Energy, Grant 

programs—Business, Loan programs— 

Business and industry, Rural areas. 

Accordingly, 7 CFR chapter XLII is 

amended by making the following 

correcting amendments: 

PART 4280—LOANS AND GRANTS 

■ 1. The authority citation for part 4280 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 940c; 

and 7 U.S.C. 1932(c). 

Subpart B—Rural Energy for America 

Program 

§§ 4280.103, 4280.110, 4280.112, 4280.113, 

4280.122, 4280.123, and 4280.196 

[Amended] 

■ 2. In §§ 4280.103, 4280.110, 4280.112, 

4280.113, 4280.122, 4280.123, and 

4280.196, remove the words ‘‘Grant 

Agreement’’ and add in their place the 

words ‘‘Financial Assistance 

Agreement’’ wherever they appear in 

the following places: 

■ a. § 4280.103; 

■ b. § 4280.110(i) introductory text, 

(i)(1), and (i)(2); 

■ c. § 4280.112(b)(2); 

■ d. § 4280.113(a)(4)(ii)(A) and (B); 

■ e. § 4280.122(d), (e), (f), (g) and (h); 

■ f. § 4280.123 introductory text and (d); 

■ g. § 4280.196 introductory text. 

■ 3. Amend § 4280.103 by: 

■ a. Placing the newly designated 

definition Financial Assistance 

Agreement (Form RD 4280–2, Rural 

Business Cooperative Service Financial 

Assistance Agreement, or successor 

form) in alphabetical order. 

■ b. Revising the definition of State to 

read as follows: 

§ 4280.103 Definitions. 

* * * * * 

State. Any of the 50 States of the 

United States, the District of Columbia, 

the Commonwealth of Puerto Rico, the 

U.S. Virgin Islands, Guam, American 

Samoa, the Commonwealth of the 

Northern Mariana Islands, the Republic 

of Palau, the Federated States of 

Micronesia, and the Republic of the 

Marshall Islands. 

* * * * * 

■ 4. Revise § 4280.125 to read as 

follows: 

§ 4280.125 Compliance with §§ 4279.29 

through 4279.99 of this chapter. 

(a) General. Except for § 4279.29 of 

this chapter, all loans guaranteed under 

this subpart must comply with the 

provisions found in §§ 4279.30 through 

4279.99 of this chapter. 

(b) Instead of § 4279.29 of this 

chapter, the Eligible lenders provisions 

of this subpart are: 

(1) Traditional lenders. An eligible 

lender is any Federal or State chartered 

bank, Farm Credit Bank, other Farm 

Credit System institution with direct 

lending authority, Bank for 

Cooperatives, Savings and Loan 

Association, or mortgage company that 

is part of a bank-holding company. 

These entities must be subject to credit 

examination and supervision by either 

an agency of the United States or a 

State. Eligible lenders may also include 

credit unions provided, they are subject 

to credit examination and supervision 

by either the National Credit Union 

Administration or a State agency, and 

insurance companies provided they are 

regulated by a State or National 

insurance regulatory agency. Eligible 

lenders include the National Rural 

Utilities Cooperative Finance 

Corporation. 

(2) Other lenders. Rural Utilities 

Service borrowers and other lenders not 

meeting the criteria of paragraph (a) of 

this section may be considered by the 

Agency for eligibility to become a 

guaranteed lender provided, the Agency 

determines that they have the legal 

authority to operate a lending program 

and sufficient lending expertise and 

financial strength to operate a successful 

lending program. 

(i) Such a lender must: 


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30832 Federal Register / Vol. 83, No. 127 / Monday, July 2, 2018 / Rules and Regulations 

(A) Have a record of successfully 

making at least three commercial loans 

annually for at least the most recent 3 

years, with delinquent loans not 

exceeding 10 percent of loans 

outstanding and historic losses not 

exceeding 10 percent of dollars loaned, 

or when the proposed lender can 

demonstrate that it has personnel with 

equivalent previous experience and 

where the commercial loan portfolio 

was of a similar quantity and quality; 

and 

(B) Have tangible balance sheet equity 

of at least seven percent of tangible 

assets and sufficient funds available to 

disburse the guaranteed loans it 

proposes to approve within the first 6 

months of being approved as a 

guaranteed lender. 

(ii) A lender not eligible under 

paragraph (a) of this section that wishes 

consideration to become a guaranteed 

lender must submit a request in writing 

to the State Office for the State where 

the lender’s lending and servicing 

activity takes place. The lender’s written 

request must include: 

(A) Evidence showing that the lender 

has the necessary capital and resources 

to successfully meet its responsibilities. 

(B) Copy of any license, charter, or 

other evidence of authority to engage in 

the proposed loanmaking and servicing 

activities. If licensing by the State is not 

required, an attorney’s opinion to this 

effect must be submitted. 

(C) Information on lending 

experience, including length of time in 

the lending business; range and volume 

of lending and servicing activity; status 

of loan portfolio including delinquency 

rate, loss rate as a percentage of loan 

amounts, and other measures of success; 

experience of management and loan 

officers; audited financial statements 

not more than 1 year old; sources of 

funds for the proposed loans; office 

location and proposed lending area; and 

proposed rates and fees, including loan 

origination, loan preparation, and 

servicing fees. Such fees must not be 

greater than those charged by similarly 

located commercial lenders in the 

ordinary course of business. 

(D) An estimate of the number and 

size of guaranteed loan applications the 

lender will develop. 

(3) Expertise. Loan guarantees will 

only be approved for lenders with 

adequate experience and expertise to 

make, secure, service, and collect REAP 

loans. 

■ 5. Revise § 4280.126 to read as 

follows: 

§ 4280.126 Guarantee/annual renewal fee. 

Except for the conditions for receiving 

reduced guarantee fee and unless 

otherwise specified in a Federal 

Register notice, the provisions specified 

in § 4279.120 of this chapter apply to 

loans guaranteed under this subpart. 

■ 6. Amend § 4280.129 by revising 

paragraph (e)(3) to read as follows: 

§ 4280.129 Guaranteed loan funding. 

* * * * * 

(e) * * * 

(3) Routine lender fees, as described 

in § 4279.120 (c) of this chapter. 

* * * * * 

■ 7. Amend § 4280.130 by revising 

paragraph (b) to read as follows: 

§ 4280.130 Loan processing. 

* * * * * 

(b) The provisions found in 

§§ 4279.125(d), 4279.150, 4279.166, 

4279.161, and 4279.167(b) of this 

chapter do not apply to loans 

guaranteed under this subpart. 

■ 8. Revise § 4280.131 to read as 

follows: 

§ 4280.131 Credit quality. 

The lender is primarily responsible 

for determining credit quality and must 

address all of the elements of credit 

quality in a written credit analysis 

including adequacy of equity, cash flow, 

collateral, history, management, and the 

current status of the industry for which 

credit is to be extended. 

(a) Cash flow. All efforts will be made 

to structure or restructure debt so that 

the business has adequate debt coverage 

and the ability to accommodate 

expansion. 

(b) Collateral. (1) Collateral must have 

documented value sufficient to protect 

the interest of the lender and the 

Agency and, except as set forth in 

paragraph (b)(2) of this section, the 

discounted collateral value will be at 

least equal to the loan amount. Lenders 

will discount collateral consistent with 

sound loan-to-value policy. 

(2) Some businesses are 

predominantly cash-flow oriented, and 

where cash flow and profitability are 

strong, loan-to-value coverage may be 

discounted accordingly. A loan 

primarily based on cash flow must be 

supported by a successful and 

documented financial history. 

(c) Industry. Current status of the 

industry will be considered and 

businesses in areas of decline will be 

required to provide strong business 

plans which outline how they differ 

from the current trends. The regulatory 

environment surrounding the particular 

business or industry will be considered. 

(d) Equity. Borrowers must 

demonstrate evidence of a financial 

contribution in the project of not less 

than 25 percent of total Eligible Project 

Costs. Federal grant funds may be used 

as the financial contribution. 

(e) Lien priorities. The entire loan will 

be secured by the same security with 

equal lien priority for the guaranteed 

and unguaranteed portions of the loan. 

The unguaranteed portion of the loan 

will neither be paid first nor given any 

preference or priority over the 

guaranteed portion. A parity or junior 

position may be considered provided 

that discounted collateral values are 

adequate to secure the loan in 

accordance with paragraph (b) of this 

section after considering prior liens. 

(f) Management. A thorough review of 

key management personnel will be 

completed to ensure that the business 

has adequately trained and experienced 

managers. 

■ 9. Revise § 4280.134 to read as 

follows: 

§ 4280.134 Personal and corporate 

guarantees. 

Except for Passive Investors, all 

personal and corporate guarantees must 

be in accordance with § 4279.132 of this 

chapter. 

■ 10. Amend § 4280.137 by revising 

paragraphs (b)(2)(viii)(C) and (c)(1), and 

the first sentence of paragraph (c)(2), to 

read as follows: 

§ 4280.137 Application and 

documentation. 

* * * * * 

(b) * * * 

(2) * * * 

(viii) * * * 

(C) Pro forma financial statements. 

Provide pro forma balance sheet at startup of the borrower’s business operation 

that reflects the use of the loan proceeds 

or grant award; 2 additional years of 

financial statements, indicating the 

necessary start-up capital, operating 

capital, and short-term credit; and 

projected cash flow and income 

statements for 3 years supported by a 

list of assumptions showing the basis for 

the projections. 

* * * * * 

(c) * * * 

(1) Application contents. If the 

application is for a loan with total 

project costs in the amount of $80,000 

or less, the application must contain the 

information specified in § 4280.119(b), 

except as specified in paragraph (c)(2) of 

this section (e.g., the grant application 

SF–424 forms under § 4280.119(b) are 

not required to be submitted), and must 

present the information in the same 

order as shown in § 4280.119(b). If the 

application is for less than $200,000, but 

more than $80,000, the application must 


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Federal Register / Vol. 83, No. 127 / Monday, July 2, 2018 / Rules and Regulations 30833 

contain the information specified in 

§ 4280.118(b), except as specified in 

paragraph (c)(2) of this section (e.g., the 

grant application SF–424 forms under 

§ 4280.117(a) are not required to be 

submitted), and must present the 

information in the same order as shown 

in § 4280.118(b). If the application is for 

$200,000 and greater, the application 

must contain the information specified 

in § 4280.117, except as specified in 

paragraph (c)(2) of this section, (e.g., the 

grant application SF–424 forms under 

§ 4280.117(a) are not required to be 

submitted), and must present the 

information in the same order as shown 

in § 4280.117. 

(2) Lender forms, certifications, and 

agreements. Each application submitted 

under paragraph (c) of this section must 

use Form RD 4279–1, ‘‘Application for 

Loan Guarantee,’’ and the forms and 

certifications specified in paragraphs 

(b)(2)(ii), (iii) (if not previously 

submitted), (v), (viii), (ix), (x), and (xi) 

of this section. * * * 

■ 11. Amend § 4280.142 by revising the 

first sentence of the introductory text to 

read as follows: 

§ 4280.142 Conditions precedent to 

issuance of loan note guarantee. 

The provisions of § 4279.181 of this 

chapter apply except for 

§ 4279.181(a)(9)(v). * * * 

* * * * * 

Dated: June 8, 2018. 

Bette B. Brand, 

Administrator, Rural Business-Cooperative 

Service. 

Dated: June 14, 2018. 

Kenneth L. Johnson, 

Administrator, Rural Utilities Service. 

[FR Doc. 2018–14170 Filed 6–29–18; 8:45 am] 

BILLING CODE 3410–XY–P 

FARM CREDIT ADMINISTRATION 

12 CFR Parts 611 and 615 

[Docket No. 2018–12366] 

RIN 3052–AC84 

Organization; Funding and Fiscal 

Affairs, Loan Policies and Operations, 

and Funding Operations; Investment 

Eligibility; Correction 

AGENCY: Farm Credit Administration. 

ACTION: Final rule; correction. 

SUMMARY: The Farm Credit 

Administration (FCA or our) is 

correcting a final rule that appeared in 

the Federal Register on June 12, 2019 

that amends our regulations governing 

investments of both Farm Credit System 

(FCS) banks and associations. The final 

rule strengthens eligibility criteria for 

investments that FCS banks purchase 

and hold, and implements section 939A 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act by 

removing references to and 

requirements for credit ratings and 

substituting other appropriate standards 

of creditworthiness. The final rule 

revises FCA’s regulatory approach to 

investments by FCS associations by 

limiting the type and amount of 

investments that an association may 

hold for risk management purposes. 

DATES: This correction shall become 

effective on January 1, 2019. 

FOR FURTHER INFORMATION CONTACT: 

David J. Lewandrowski, Senior Policy 

Analyst, Office of Regulatory Policy, 

(703) 883–4212, TTY (703) 883–4056, 

lewandrowskid@fca.gov; 

J.C. Floyd, Associate Director of Finance 

and Capital Market Team, Office of 

Regulatory Policy, (703) 883–4321, 

TTY (703) 883–4056, floydjc@fca.gov; 

or 

Richard A. Katz, Senior Counsel, Office 

of General Counsel, (703) 883–4020, 

TTY (703) 883–4056, katzr@fca.gov. 

SUPPLEMENTARY INFORMATION: In FR Doc. 

2018–12366 appearing on page 27486 in 

the Federal Register of Tuesday, June 

12, 2018, the following corrections are 

made: 

§ 611.1153 [Corrected] 

■ 1. On page 27499, in the first column, 

in part 611, amendatory instruction 2 is 

removed. 

§ 611.1155 [Corrected] 

■ 2. On page 27499, in the first column, 

in part 611, amendatory instruction 3 is 

removed. 

§ 615.5133 [Corrected] 

■ 3. On page 27500, in the first column, 

in § 615.5133, in paragraph (b), in the 

fourth sentence, the word ‘‘banks’’ is 

corrected to read ‘‘bank’s’’. 

§ 615.5140 [Corrected] 

■ 4. On page 27502, in the third column, 

in § 615.5140, in paragraph (b)(3)(i), in 

the first sentence, the reference 

‘‘§ 615.5133(a), (b), (c), (d), and (e)’’ is 

corrected to read ‘‘§ 615.5133(a), (b), (c), 

(d), (e), (h), and (i).’’ 

■ 5. On page 27502, in the third column, 

in § 615.5140, in paragraph (b)(4)(ii), in 

the first sentence, the reference 

‘‘§ 615.5132’’ is corrected to read 

‘‘§ 615.5131’’. 

■ 6. On page 27503, in the first column, 

in § 615.5140, in paragraph (b)(6)(ii), in 

the first sentence, the reference 

‘‘paragraph (b)(3)’’ is corrected to read 

‘‘paragraph (b)(4)’’. 

§ 615.5143 [Corrected] 

■ 7. On page 27503, in the second 

column, in § 615.5143, in paragraph 

(a)(2), the reference ‘‘§ 615.5140(b)(3)’’ is 

corrected to read ‘‘§ 615.5140(b)(4)’’. 

■ 8. On page 27503, in the third column, 

in § 615.5143, in paragraph (b)(3), the 

reference ‘‘§ 615.5140(b)(3)’’ is corrected 

to read ‘‘§ 615.5140(b)(4)’’. 

Dated: June 26, 2018. 

Dale L. Aultman, 

Secretary, Farm Credit Administration Board. 

[FR Doc. 2018–14107 Filed 6–29–18; 8:45 am] 

BILLING CODE 6705–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 97 

[Docket No. 31200; Amdt. No. 3806] 

Standard Instrument Approach 

Procedures, and Takeoff Minimums 

and Obstacle Departure Procedures; 

Miscellaneous Amendments 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This rule amends, suspends, 

or removes Standard Instrument 

Approach Procedures (SIAPs) and 

associated Takeoff Minimums and 

Obstacle Departure Procedures for 

operations at certain airports. These 

regulatory actions are needed because of 

the adoption of new or revised criteria, 

or because of changes occurring in the 

National Airspace System, such as the 

commissioning of new navigational 

facilities, adding new obstacles, or 

changing air traffic requirements. These 

changes are designed to provide for the 

safe and efficient use of the navigable 

airspace and to promote safe flight 

operations under instrument flight rules 

at the affected airports. 

DATES: This rule is effective July 2, 

2018. The compliance date for each 

SIAP, associated Takeoff Minimums, 

and ODP is specified in the amendatory 

provisions. 

The incorporation by reference of 

certain publications listed in the 

regulations is approved by the Director 

of the Federal Register as of July 2, 2018. 

ADDRESSES: Availability of matter 

incorporated by reference in the 

amendment is as follows: 


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