Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Rules and Regulations 19531 

(LDPE, LLDPE, MDPE, HDPE) 

compound meeting the requirements of 

ANSI/ICEA S–94–649–2004 

(incorporated by reference in § 1728.97) 

and ASTM D 1248–05 (incorporated by 

reference in § 1728.97) for Type I, Class 

C, Category 4 or 5, Grade J3 before 

application to the cable. Polyvinyl 

chloride (PVC) and chlorinated 

polyethylene (CPE) jackets are not 

acceptable. 

(4) Semi-conducting jackets shall have 

a maximum radial resistivity of 100 

ohm-meter and a maximum moisture 

vapor transmission rate of 1.5 g/m2/24 

hours at 38° C (100° F) and 90 percent 

relative humidity in accordance with 

ASTM E 96/E96M–05 (incorporated by 

reference in § 1728.97). 

(5) The minimum thickness of the 

jacket over metallic neutral wires or 

straps shall comply with the thickness 

specified in ANSI/ICEA S–94–649–2004 

(incorporated by reference in § 1728.97). 

(i) Tests. (1) As part of a request for 

Agency consideration for acceptance 

and listing, the manufacturer shall 

submit certified test data results to the 

Agency that detail full compliance with 

ANSI/ICEA S–94–649–2004 

(incorporated by reference in § 1728.97) 

for each cable design. 

(i) Test results shall confirm 

compliance with each of the material 

tests, production sampling tests, tests on 

completed cable, and qualification tests 

included in ANSI/ICEA S–94–649–2004 

(incorporated by reference in § 1728.97). 

(ii) The testing procedure and 

frequency of each test shall be in 

accordance with ANSI/ICEA S–94–649– 

2004 (incorporated by reference in 

§ 1728.97). 

(iii) Certified test data results shall be 

submitted to the Agency for any test, 

which is designated by ANSI/ICEA S– 

94–649–2004 (incorporated by reference 

in § 1728.97) as being ‘‘for Engineering 

Information Only,’’ or any similar 

designation. 

(2) Partial discharge tests. 

Manufacturers shall demonstrate that 

their cable is not adversely affected by 

excessive partial discharge. This 

demonstration shall be made by 

completing the procedures described in 

paragraphs (i)(2)(i) and (i)(2)(ii) of this 

section. 

(i) Each shipping length of completed 

cable shall be tested and have certified 

test data results available indicating 

compliance with the partial discharge 

test requirements in ANSI/ICEA S–94– 

649–2004 (incorporated by reference in 

§ 1728.97). 

(ii) Manufacturers shall test 

production samples and have available 

certified test data results indicating 

compliance with ASTM D 2275–01 

(incorporated by reference in § 1728.97) 

for discharge resistance as specified in 

the ANSI/ICEA S–94–649–2004 

(incorporated by reference in § 1728.97). 

Samples of insulated cable shall be 

prepared by either removing the 

overlying extruded insulation shield 

material, or using insulated cable before 

the extruded insulation shield material 

is applied. The sample shall be mounted 

as described in ASTM D 2275–01 and 

shall be subjected to a voltage stress of 

250 volts per mil of nominal insulation 

thickness. The sample shall support this 

voltage stress, and not show evidence of 

degradation on the surface of the 

insulation for a minimum of 100 hours. 

The test shall be performed at least once 

on each 50,000 feet (15,240 m) of cable 

produced, or major fractions thereof, or 

at least once per insulation extruder 

run. 

(3) Jacket tests. Tests described in 

paragraph (i)(3)(i) of this section shall be 

performed on cable jackets from the 

same production sample as in 

paragraphs (i)(2)(i) and (i)(2)(ii) of this 

section. 

(i) A Spark Test shall be performed on 

nonconducting jacketed cable in 

accordance with ANSI/ICEA S–94–649– 

2004 (incorporated by reference in 

§ 1728.97) on 100 percent of the 

completed cable prior to its being 

wound on shipping reels. The test 

voltage shall be 4.5 kV AC for cable 

diameters <1.5 inches and 7.0 kV for 

cable diameters >1.5 inches, and shall 

be applied between an electrode at the 

outer surface of the nonconducting 

(insulating) jacket and the concentric 

neutral for not less than 0.15 second. 

(ii) [Reserved] 

(4) Frequency of sample tests shall be 

in accordance with ANSI/ICEA S–94– 

649–2004 (incorporated by reference in 

§ 1728.97). 

(5) If requested by the borrower, a 

certified copy of the results of all tests 

performed in accordance with this 

section shall be furnished by the 

manufacturer on all orders. 

(j) Miscellaneous. (1) All cable 

provided under this specification shall 

have suitable markings on the outer 

surface of the jacket at sequential 

intervals not exceeding 2 feet (0.61 m). 

The label shall indicate the name of the 

manufacturer, conductor size, type and 

thickness of insulation, center 

conductor material, voltage rating, year 

of manufacture, and jacket type. There 

shall be no more than 6 inches (0.15 m) 

of unmarked spacing between texts label 

sequence. The jacket shall be marked 

with the symbol required by Rule 350G 

of the National Electrical Safety Code 

and the borrower shall specify any 

markings required by local safety codes. 

This is in addition to extruded red 

stripes required in this section. 

(2) Watertight seals shall be applied to 

all cable ends to prevent the entrance of 

moisture during transit or storage. Each 

end of the cable shall be firmly and 

properly secured to the reel. 

(3) Cable shall be placed on shipping 

reels suitable for protecting it from 

damage during shipment and handling. 

Reels shall be covered with a suitable 

covering to help provide physical 

protection to the cable. 

(4) A durable label shall be securely 

attached to each reel of cable. The label 

shall indicate the purchaser’s name and 

address, purchase order number, cable 

description, reel number, feet of cable 

on the reel, tare and gross weight of the 

reel, and beginning and ending 

sequential footage numbers. 

Dated: March 8, 2012. 

Jonathan Adelstein, 

Administator, Rural Utilities Service. 

[FR Doc. 2012–7610 Filed 3–30–12; 8:45 am] 

BILLING CODE P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 120 

RIN 3245–AG48 

7(a) Loan Program; Eligible Passive 

Companies 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Direct final rule. 

SUMMARY: This direct final rule amends 

SBA’s existing regulations to clarify the 

eligible uses of loan proceeds by an 

Operating Company in connection with 

an SBA-guaranteed loan to an Eligible 

Passive Company. 

DATES: This rule is effective on May 17, 

2012 without further action, unless 

significant adverse comment is received 

by May 2, 2012. If significant adverse 

comment is received, SBA will publish 

a timely withdrawal of the rule in the 

Federal Register. 

ADDRESSES: You may submit comments, 

identified by RIN 3245–AG48, by one of 

the following methods: (1) Federal 

eRulemaking Portal: 

www.regulations.gov; following the 

instructions for submitting comments; 

or (2) Mail/Hand Delivery/Courier: 

Grady B. Hedgespeth, Director, Office of 

Financial Assistance, U.S. Small 

Business Administration, 409 Third 

Street SW., Suite 8300, Washington, DC 

20416. 

SBA will post all comments to this 

rule on www.regulations.gov. If you 

wish to submit confidential business 


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19532 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Rules and Regulations 

information (CBI) as defined in the User 

Notice at www.regulations.gov, you 

must submit such information to Grady 

B. Hedgespeth, Director, Office of 

Financial Assistance, U.S. Small 

Business Administration, 409 Third 

Street SW., Suite 8300, Washington, DC 

20416, or send an email to 

grady.hedgespeth@sba.gov. You should 

highlight the information that you 

consider to be CBI and explain why you 

believe SBA should hold this 

information as confidential. SBA will 

review your information and determine 

whether it will make the information 

public or not. 

FOR FURTHER INFORMATION CONTACT: 

Grady B. Hedgespeth, Director, Office of 

Financial Assistance, U.S. Small 

Business Administration, 409 Third 

Street SW., Suite 8300, Washington, DC 

20416; (202) 205–7562; 

grady.hedgespeth@sba.gov. 

SUPPLEMENTARY INFORMATION: SBA 

generally makes business loans only to 

small businesses engaged in regular 

business activities, and prohibits such 

assistance to entities engaged in passive 

investment or real estate development, 

or which do not engage in regular and 

continuous activity as an operating 

business. SBA regulations at 13 CFR 

120.111 currently provide an exception 

to this prohibition on providing 

financial assistance to passive entities if 

the passive entity is an Eligible Passive 

Company that leases real or personal 

property to an Operating Company for 

use in the Operating Company’s 

business and complies with the 

conditions set forth in the regulation. 

SBA defines an ‘‘Eligible Passive 

Company’’ or ‘‘EPC’’ as an entity that 

does not engage in regular and 

continuous business activity, which 

leases real or personal property to an 

Operating Company for use in the 

Operating Company’s business. An 

‘‘Operating Company’’ or ‘‘OC’’ is an 

eligible small business actively involved 

in conducting business operations now 

or about to be located on real property 

owned by an Eligible Passive Company, 

or using or about to use in its business 

operations personal property owned by 

an Eligible Passive Company. 

Section 120.111 requires the Eligible 

Passive Company to ‘‘use loan proceeds 

to acquire or lease, and/or improve or 

renovate, real or personal property 

(including eligible refinancing).’’ The 

regulation does not specifically state the 

eligible uses of loan proceeds for use by 

the Operating Company, but does 

require the Operating Company to be a 

guarantor or a co-borrower (with the 

Eligible Passive Company) on the loan. 

In a 7(a) loan including working capital 

for use by the Operating Company, the 

regulation requires the Operating 

Company to be a co-borrower. 

When SBA promulgated the current 

regulations as described above, it 

offered the following explanation for 

allowing the Operating Company to be 

allocated a portion of the loan proceeds 

in a loan to an Eligible Passive 

Company: 

[I]t is common for an Operating Company 

to need working capital when the Eligible 

Passive Company applies for a loan primarily 

to finance the acquisition of real or personal 

property. In the past, SBA has required the 

Eligible Passive Company to use the loan 

proceeds solely to acquire and improve 

property for lease to an Operating Company. 

Thus, two separate SBA loans would be 

needed—one to the Eligible Passive Company 

for the real estate and the other to the 

Operating Company for working capital. 

(Notice of Proposed Rulemaking 

published in the Federal Register on 

December 15, 1995 (60 FR 64356) and 

Final Rule published on January 31, 

1996 (61 FR 3226).) At that time, SBA 

proposed and finalized a regulatory 

change to allow a single loan to the EPC 

to be used, in part, for working capital 

by the OC, provided the OC is a coborrower. The loan proceeds for 

working capital would be allocated to 

the OC, while the loan proceeds for the 

acquisition and improvements of the 

property for lease to the OC would be 

allocated to the EPC. 

The practice of structuring a loan with 

the real estate held by an EPC that leases 

the real estate to the OC for operation 

of its business has become increasingly 

common. Further, it has come to SBA’s 

attention that many participating 

lenders have interpreted this rule to 

allow EPCs and OCs to borrow funds for 

the OC’s purchase of other assets for its 

use, including the purchase of stock or 

intangible assets (such as trademarks, 

copyrights, intellectual property, or 

goodwill), as long as the OC was a coborrower with the EPC. SBA recognizes 

the need for this type of financing. 

Thus, in order to allow it to continue, 

SBA is amending 120.111(a)(5) to clarify 

that if the OC is a co-borrower with the 

EPC, part of the loan proceeds of a 7(a) 

loan may be used for working capital or 

the purchase of other assets for use by 

the OC, including the purchase of stock 

or intangible assets (such as trademarks, 

copyrights, intellectual property, or 

goodwill). SBA is also amending 

120.120(b)(4) to conform with this 

change. 

Because this is a clarifying 

amendment that is consistent with 

industry practice, SBA expects no 

significant adverse comments. Based on 

that fact, SBA has decided to proceed 

with a direct final rule giving the public 

30 days to comment. If SBA receives 

any significant adverse comment during 

the comment period, SBA will 

withdraw the rule and publish it as a 

proposed rule. 

Compliance With Executive Orders 

12866, 12988, 13132, and 13563, the 

Paperwork Reduction Act (44 U.S.C. 

Ch. 35) and the Regulatory Flexibility 

Act (5 U.S.C. 601–612) 

Executive Order 12866 

The Office of Management and Budget 

(OMB) has determined that this direct 

final rule does not constitute a 

significant regulatory action under 

Executive Order 12866. This direct final 

rule is also not a major rule under the 

Congressional Review Act. 

Executive Order 12988 

This action meets applicable 

standards set forth in Sections 3(a) and 

3(b)(2) of Executive Order 12988, Civil 

Justice Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. The action does not have 

retroactive or preemptive effect. 

Executive Order 13132 

For the purposes of Executive Order 

13132, SBA has determined that this 

direct final rule will not have 

substantial, direct effects on the 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. Therefore, for the 

purpose of Executive Order 13132, SBA 

has determined that this direct final rule 

has no federalism implications 

warranting the preparation of a 

federalism assessment. 

Executive Order 13563 

For the purposes of Executive Order 

13563, SBA has received meaningful 

feedback from the industry over the past 

several months and has held 

discussions with various participating 

lenders that have requested this 

clarification. All of the input SBA has 

received has been supportive of this 

clarification. 

Paperwork Reduction Act, 44 U.S.C., 

Ch. 35 

SBA has determined that this direct 

final rule does not impose additional 

reporting or recordkeeping requirements 

under the Paperwork Reduction Act, 44 

U.S.C., Chapter 35. 

Regulatory Flexibility Act, 5 U.S.C. 

601–612 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601–612, requires 


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Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Rules and Regulations 19533 

administrative agencies to consider the 

effect of their actions on small entities, 

including small businesses. According 

to the RFA, when an agency issues a 

rule, the agency must prepare an 

analysis to determine whether the 

impact of the rule will have a significant 

economic impact on a substantial 

number of small entities. However, the 

RFA allows an agency to certify a rule 

in lieu of preparing an analysis, if the 

rulemaking is not expected to have a 

significant impact on a substantial 

number of small entities. This rule 

amends existing Agency regulations to 

clarify the eligible uses of loan proceeds 

for an Operating Company when it is a 

co-borrower with an Eligible Passive 

Company and does not create new 

requirements. These amendments will 

affect small entities; however, SBA has 

determined that these amendments will 

not have a significant economic impact 

on a substantial number of such entities. 

List of Subjects in 13 CFR Part 120 

Community development, Exports, 

Loan programs—business, Small 

businesses. 

For the reasons stated in the 

preamble, SBA amends 13 CFR part 120 

as follows: 

PART 120—BUSINESS LOANS 

■ 1. The authority citation for 13 CFR 

part 120 continues to read as follows: 

Authority: 15 U.S.C. 634(b)(6), (b)(7), 

(b)(14), (h), and note, 636(a), (h) and (m), 650, 

687(f), 696(3), and 697(a) and (e); Pub. L. 

111–5, 123 Stat. 115, Pub. L. 111–240, 124 

Stat. 2504. 

■ 2. Amend § 120.111 by revising 

paragraph (a)(5) to read as follows: 

§ 120.111 What conditions must an 

Eligible Passive Company satisfy? 

* * * * * 

(a) * * * 

(5) The Operating Company must be 

a guarantor or co-borrower with the 

Eligible Passive Company. In a 7(a) loan 

that includes working capital and/or the 

purchase of other assets, including 

intangible assets, for the Operating 

Company’s use, the Operating Company 

must be a co-borrower. 

* * * * * 

■ 3. Amend § 120.120 by revising 

paragraph (b)(4) to read as follows: 

§ 120.120 What are eligible uses of 

proceeds? 

* * * * * 

(b) * * * 

(4) Working capital (if the Operating 

Company is a co-borrower with the 

Eligible Passive Company, part of the 

loan proceeds may be applied for 

working capital and/or the purchase of 

other assets, including intangible assets, 

for use by the Operating Company). 

* * * * * 

Dated: March 26, 2012. 

Karen G. Mills, 

Administrator. 

[FR Doc. 2012–7808 Filed 3–30–12; 8:45 am] 

BILLING CODE 8025–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

U.S. Customs and Border Protection 

19 CFR Parts 171 and 172 

[CBP Dec. 12–07] 

Changes in the Statutory Authority for 

Petitions for Relief 

AGENCY: U.S. Customs and Border 

Protection, Department of Homeland 

Security. 

ACTION: Final rule; technical corrections. 

SUMMARY: This document amends U.S. 

Customs and Border Protection (CBP) 

regulations by making technical 

corrections to reflect the repeal of one 

of the underlying statutory authorities 

regarding petitions for relief from a fine, 

penalty, forfeiture, or liquidated 

damages under a law administered by 

CBP. Administrative petitioning rights 

are not affected by removal of this 

authority because CBP has other 

existing statutory authority for these 

provisions. This document also amends 

regulations to reflect changes in 

delegation authority as effected by the 

transfer of CBP to the Department of 

Homeland Security (DHS), and makes 

non-substantive editorial and 

nomenclature changes. 

DATES: The final rule is effective on 

April 2, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Todd Schneider, Penalties Branch, 

Regulations and Rulings, Office of 

International Trade, Customs and 

Border Protection, Tel. (202) 325–0261. 

SUPPLEMENTARY INFORMATION: 

Background 

This document amends title 19 of the 

Code of Federal Regulations (19 CFR) by 

making technical corrections to 19 CFR 

parts 171 and 172, specifically, sections 

171.11, 171.12, 172.11, and 172.12. 

These regulations delegate to the 

Fines, Penalties, and Forfeitures Officer 

or the Chief, Penalties Branch, 

Regulations and Rulings, Office of 

International Trade, U.S. Customs and 

Border Protection (CBP) Headquarters 

the authority to remit or mitigate fines, 

penalties, or forfeitures, or cancel claims 

for liquidated damages. 

The purpose of the technical 

corrections is to conform the statutory 

authority sections listed for 19 CFR 

parts 171 and 172 and the text of the 

relevant regulatory provisions to reflect 

the repeal of title 46, United States Code 

(U.S.C.) Appendix section 320 (24 Stat. 

81), enacted June 19, 1886, which is 

currently cited as one of the underlying 

statutory authorities. Title 46 U.S.C. 

Appendix section 320 was repealed as 

part of the recodification of the 

appendix to title 46 of the United States 

Code, by Public Law 109–304, section 

19 (120 Stat. 1711), which was enacted 

October 6, 2006, and this document 

removes the repealed statutory citation 

from the CBP regulations. 

Please note that CBP has existing 

statutory authority to continue 

accepting administrative petitions under 

19 U.S.C. 1618, 1623, and 31 U.S.C. 

5321, as appropriate. Therefore, this 

rule does not alter the rights of a person 

alleged to have committed a violation, 

or a breach of a bond condition, to 

petition for relief. 

This document also amends 19 CFR 

171.12 to reflect the transfer of authority 

from the Treasury Department to the 

U.S. Department of Homeland Security 

(DHS) and the delegation of authority 

from DHS to the Commissioner of CBP. 

On November 25, 2002, the President 

signed into law the Homeland Security 

Act of 2002, Public Law 107–296, 116 

Stat. 2135. Accordingly, as of March 1, 

2003, the former U.S. Customs Service 

of the Department of the Treasury was 

transferred to DHS and reorganized to 

become CBP. 

On May 15, 2003, the Treasury 

Department issued Treasury Department 

Order Number No. 100–16 delegating to 

DHS its authority related to the customs 

revenue functions, with certain 

delineated exceptions in which the 

Treasury Department retained its 

authority. See Appendix to 19 CFR part 

0. The Treasury Department transferred 

to DHS its authority over fines, 

penalties, and forfeitures and the 

Secretary of DHS further delegated this 

authority to the Commissioner of CBP. 

Accordingly, this document amends 19 

CFR 171.12 to reflect these changes. 

Inapplicability of Notice and Delayed 

Effective Date 

Because the technical corrections set 

forth in this document are necessary to 

conform 19 CFR parts 171 and 172 to 

reflect the repeal of 46 U.S.C. Appendix 

section 320, pursuant to 5 U.S.C. 

553(b)(B), CBP finds that good cause 

exists for dispensing with notice and 


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