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.

Proposed Rules Federal Register

6922

Vol. 65, No. 29

Friday, February 11, 2000

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1735

RIN 0572–AB53

General Policies, Types of Loans, Loan

Requirements—Telecommunications

Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

SUMMARY: The Rural Utilities Service

(RUS) is proposing to amend its

regulations to provide that applicants

may seek financial assistance to provide

mobile telecommunications service

without regard to whether the applicant

is providing basic local exchange

service in the territory to be served. RUS

is also clarifying its regulations with

regard to the application of

nonduplication provisions and state

telecommunications modernization

plans to mobile telecommunications

services. In addition, RUS has included

criteria for determining ‘‘reasonably

adequate service’’ levels for mobile

telecommunications service. This

proposed rule is part of an ongoing RUS

project to modernize agency policies in

order to provide borrowers with the

flexibility to continue providing

reliable, modern telephone service at

reasonable costs in rural areas, while

maintaining the security and feasibility

of the Government’s loans.

DATES: Written comments on this

proposed rule must be received by RUS

or carry a postmark or equivalent by

March 13, 2000.

ADDRESSES: Written comments on this

proposed rule should be addressed to

Roberta D. Purcell, Assistant

Administrator, Telecommunications

Program, Rural Utilities Service, 1400

Independence Avenue, SW., Room

4056, STOP 1590, Washington, DC

20250–1590. RUS requires a signed

original and three copies of all

comments (7 CFR part 1700.4). All

comments received will be available for

public inspection in room 4056, South

Building, U.S. Department of

Agriculture, Washington, DC, between

8:00 a.m. and 4:00 p.m., Monday

through Friday (7 CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT:

Jonathan P. Claffey, Deputy Assistant

Administrator, Telecommunications

Program, Rural Utilities Service, 1400

Independence Avenue, SW., Room

4056, STOP 1590, Washington, DC

20250–1590. Telephone: (202) 720–

9556.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been

determined to be not significant and,

therefore, has not been reviewed by the

Office of Management and Budget under

Executive Order 12866.

Executive Order 12988

This proposed rule has been reviewed

in accordance with Executive Order

12988, Civil Justice Reform. RUS has

determined that this proposed rule

meets the applicable standards provided

in section 3 of that Executive Order. In

addition, all State and local laws and

regulations that are in conflict with this

rule will be preempted; no retroactive

effect will be given to this rule; and, in

accordance with section 212(e) of the

Department of Agriculture

Reorganization Act of 1994 (7 U.S.C.

6912(e)), administrative appeal

procedures, if any are required, must be

exhausted prior to initiating litigation

against the Department or its agencies.

Regulatory Flexibility Act Certification

RUS has determined that this

proposed rule will not have a significant

economic impact on a substantial

number of small entities, as defined by

the Regulatory Flexibility Act (5 U.S.C.

601 et seq.). The RUS

telecommunications loan program

provides borrowers with loans at

interest rates and terms that are more

favorable than those generally available

from the private sector. RUS borrowers,

as a result of obtaining federal

financing, receive economic benefits

that exceed any direct cost associated

with complying with RUS regulations

and requirements.

Information Collection and

Recordkeeping Requirements

This proposed rule contains no new

reporting or recordkeeping burdens

under OMB control number 0572–0079

that would require approval under the

Paperwork Reduction Act of 1995 (44

U.S.C. chapter 35).

Send questions or comments

regarding this burden or any other

aspect of these collections of

information, including suggestions for

reducing the burden to F. Lamont

Heppe, Director, Program Development

and Regulatory Analysis, Rural Utilities

Service, 1400 Independence Avenue,

SW., Room 4034, STOP 1522,

Washington, DC 20250–1522.

National Environmental Policy Act

Certification

The Administrator of RUS has

determined that this proposed rule will

not significantly affect the quality of the

human environment as defined by the

National Environmental Policy Act of

1969 (42 U.S.C. 4321 et seq.). Therefore,

this action does not require an

environmental impact statement or

assessment.

Catalog of Federal Domestic Assistance

The program described by this

proposed rule is listed in the Catalog of

Federal Domestic Assistance programs

under numbers 10.851, Rural Telephone

Loans and Loan Guarantees, and 10.852,

Rural Telephone Bank Loans. This

catalog is available on a subscription

basis from the Superintendent of

Documents, the United States

Government Printing Office,

Washington, 20402–9325. Telephone:

(202) 512–1800.

Executive Order 12372

This program is excluded from the

scope of Executive Order 12372,

Intergovernmental Consultation, which

may require consultation with State and

local officials. See the final rule related

notice entitled ‘‘Department Programs

and Activities Excluded from Executive

Order 12372,’’ (50 FR 47034).

Unfunded Mandates

This proposed 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 proposed rule

Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Proposed Rules 6923

is not subject to the requirements of

sections 202 and 205 of the Unfunded

Mandates Reform Act of 1995.

Background

The telecommunications industry is

becoming increasingly competitive. The

Telecommunications Act of 1996

(Public Law 104–104) and regulatory

actions by the Federal Communications

Commission are drastically altering the

regulatory and business environment of

all telecommunications systems,

including RUS borrowers. At the same

time, changes in overall business trends

and technologies continue to place

pressure on RUS-financed systems to

offer a wider array of services and to

operate more efficiently.

RUS regulations currently stipulate

that an entity must provide or propose

to provide the basic local exchange

telephone service needs of rural areas to

be eligible for RUS financing (7 CFR

1735.14, Borrower Eligibility) and that

loans cannot be made for facilities to

serve subscribers outside the borrower’s

local exchange service area (7 CFR

1735.17, Facilities Financed). The

Telecommunications Act of 1996,

however, made the term ‘‘basic local

exchange service’’ obsolete. The law

mandates that universally available and

affordable telecommunications services,

including access to advanced services,

be made available to all US citizens—

whether in rural areas or city centers,

affluent or poor communities. RUS

supports this mandate and the goal that,

with the assistance of advanced

telecommunications technology, rural

citizens be provided the same economic,

educational, and health care benefits

available in the larger metropolitan

areas. RUS believes that the most

expeditious way to bring the full range

of telephone services to rural areas is to

make certain providers of services, in

addition to providers of local exchange

services, eligible for RUS financing.

Mobile telecommunications services are

included among the telephone services

financeable under the Rural

Electrification Act (RE Act) and

contemplated in the

Telecommunication Act of 1996. Mobile

telecommunications service is

fundamentally different from wireline

service and RUS believes that, in

addition to wireline service, mobile

telecommunications services should be

made available in all rural areas.

Therefore, RUS is deleting its

requirement that all borrowers provide

local exchange service. Since mobile

telecommunications services do not and

cannot serve the same function as

contemplated in state

telecommunications modernization

plans (TMPs) for wireline services (see

7 CFR 1751.106), RUS policy is to

consider a borrower receiving a loan to

finance such services to be participating

in the state’s plan so long as the loan

funds are not used in a manner that, in

RUS’ opinion, is inconsistent with the

borrower achieving the goals set forth in

the plan. RUS will continue to follow

this policy regardless of whether the

borrower provides any local exchange

services. In addition, RUS has included

criteria for determining ‘‘reasonably

adequate service’’ levels for mobile

telecommunications service.

RUS regulations are also utilized by

the Governor of the Rural Telephone

Bank in carrying out the Rural

Telephone Bank’s (the Bank) loan

program; therefore, these policy

revisions would apply to loans made by

the Bank, as well.

List of Subjects in 7 CFR Part 1735

Accounting, Loan programs—

communications, Reporting and

recordkeeping requirements, Rural

areas, Telephone.

For the reasons set forth in the

preamble, 7 CFR chapter XVII is

proposed to be amended as follows:

PART 1735—GENERAL POLICIES,

TYPES OF LOANS, LOAN

REQUIREMENTS—

TELECOMMUNICATIONS PROGRAM

The authority citation for part 1735 is

revised to read as follows:

Authority: 7 U.S.C. 901 et seq., 1921 et

seq., and 6941 et seq.

2. In § 1735.2, the following

definitions are added in alphabetical

order to read as follows:

§ 1735.2 Definitions.

* * * * *

Mobile telecommunications service

means the transmission of a radio

communication voice service between

mobile and land or fixed stations, or

between mobile stations.

* * * * *

Public switched network means any

common carrier switched network,

whether by wire or radio, including

local exchange carriers, interexchange

carriers, and mobile

telecommunications service providers,

that use the North American Numbering

Plan in connection with the provision of

switched services.

RUS means the Rural Utilities

Service, an agency of the United States

Department of Agriculture, successor to

the Rural Electrification Administration.

* * * * *

3. Amend § 1735.10 by:

A. Revising paragraph (b);

B. Redesignating paragraphs (c), (d),

and (e) as (d), (e), and (f), respectively;

and

C. Add a new paragraph (c).

The revision and addition read as

follows:

§ 1735.10 General.

* * * * *

(b) RUS will not make hardship loans,

RUS cost-of-money loans, or RTB loans

for any wireline local exchange service

or similar fixed-station voice service

that, in RUS’ opinion, is inconsistent

with the borrower achieving the

requirements stated in the State’s

telecommunication modernization plan

within the time frame stated in the plan

(see 7 CFR part 1751, subpart B), unless

RUS has determined that achieving the

requirements as stated in such plan is

not technically or economically feasible.

(c) A borrower applying for a loan to

finance mobile telecommunication

services shall be considered to be a

participant in the State’s

telecommunication modernization plan

so long as the loan funds are not used

in a manner that, in the opinion of the

Administrator, is inconsistent with the

borrower achieving the goals set forth in

the plan.

* * * * *

4. Amend § 1735.12 by:

A. Revising paragraph (c) introductory

text; and

B. Adding new paragraphs (d) and (e).

The revision and addition read as

follows:

§ 1735.12 Nonduplication.

* * * * *

(c) RUS shall consider the following

criteria for any wireline local exchange

service or similar fixed-station voice

service in determining whether such

service is reasonably adequate:

* * * * *

(d) RUS shall consider the following

criteria for any of mobile

telecommunications service in

determining whether such service is

reasonably adequate:

(1) The extent to which area coverage

is being provided as described in 7 CFR

1735.11.

(2) Clear and reliable call

transmission is provided with sufficient

channel availability.

(3) The mobile telecommunications

service signal strength is at least—

85dBm (decibels expressed in

miliwatts).

(4) The mobile telecommunications

service is interconnected with the

public switched network.

(5) Mobile 911 service is available to

all subscribers, when requested by the

6924 Federal Register / Vol. 65, No. 29 / Friday, February 11, 2000 / Proposed Rules

1See 12 CFR 225.7(b)(1).

2See 62 FR 9289, 9314 (February 18, 1997), and

12 U.S.C. 1464(q)(1)(A).

3See Letter from J. Virgil Mattingly, Jr., to

William S. Eckland, Esq., dated December 7, 1999

(the ‘‘Interpretation’’).

local government entity responsible for

this service.

(6) No Federal or State regulatory

commission having jurisdiction has

determined that the quality, availability,

or reliability of the service provided is

inadequate.

(7) Mobile telecommunications

service is not provided at rates which

render the service unaffordable to a

majority of the rural persons.

(8) Any other criteria the

Administrator determines to be

applicable to the particular case.

(e) RUS does not consider mobile

telecommunications service facilities a

duplication of existing wireline local

exchange service or similar fixed-station

voice facilities. RUS may finance mobile

telecommunications systems designed

to provide eligible services in rural areas

under the Rural Electrification Act even

though the services provided by the

system may incidentally overlap

services of existing mobile

telecommunications providers.

5. Amend § 1735.14 by:

A. Removing paragraph (c)(1);

B. Redesignating paragraphs (c)(2) and

(c)(3) as (c)(1) and (c)(2), respectively;

and

C. Adding paragraph (d).

The addition reads as follows:

§ 1735.14 Borrower eligibility.

* * * * *

(d) Generally, RUS will not make a

loan to another entity to provide the

same telecommunications service in an

area served by an existing RUS

telecommunications borrower providing

such service.

§ 1735.17 [Amended]

6. Amend § 1735.17 by:

A. Removing paragraph (c)(3); and

B. Redesignating paragraphs (c)(4) and

(c)(5) as (c)(3) and (c)(4), respectively.

Dated: February 2, 2000.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 00–3040 Filed 2–10–00; 8:45 am]

BILLING CODE 3410–15–P

FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Regulation Y; Docket No. R–1060]

Revisions Regarding Tying

Restrictions

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Board of Governors of the

Federal Reserve System is seeking

public comment on a proposed

exception to the anti-tying restrictions

of section 106 of the Bank Holding

Company Act Amendments of 1970 and

the Board’s Regulation Y. The proposed

amendment would establish a ‘‘safe

harbor’’ permitting a bank to offer a

credit card that can be used to make

purchases from a retailer affiliated with

the bank.

DATES: Comments must be received by

March 13, 2000.

ADDRESSES: Comments should refer to

Docket No. R–1060, and may be mailed

to Ms. Jennifer J. Johnson, Secretary,

Board of Governors of the Federal

Reserve System, 20th Street and

Constitution Avenue, NW, Washington,

DC 20551. Comments also may be

delivered to Room B–2222 of the Eccles

Building between 8:45 a.m. and 5:15

p.m. weekdays or delivered to the guard

station in the Eccles Building Courtyard

on 20th Street, NW (between

Constitution Avenue and C Street, NW)

at any time. All comments received at

the above address will be available for

inspection and copying by any member

of the public in the Freedom of

Information Office, Room MP–500 of the

Martin Building, between 9:00 a.m. and

5:00 p.m. weekdays, except as provided

in § 261.14 of the Board’s Rules

Regarding the Availability of

Information (12 CFR 261.14).

FOR FURTHER INFORMATION CONTACT:

Scott G. Alvarez, Associate General

Counsel (202/452–3583), or Andrew S.

Baer, Attorney (202/452–2246), Legal

Division. Users of Telecommunication

Device for Deaf (TTD) only, contact

Diane Jenkins at (202) 452–3544.

SUPPLEMENTARY INFORMATION:

Background

Section 106(b) of the Bank Holding

Company Act Amendments of 1970 (12

U.S.C. 1972) generally prohibits a bank

from tying the availability or price of a

product or service to the purchase by a

customer of another product or service

offered by the bank or any of its

affiliates. A bank engages in a tie for

purposes of section 106 by conditioning

the availability of, or offering a discount

on, one product or service (the ‘‘tying

product’’) on the condition that the

customer obtain some additional

product or service (the ‘‘tied product’’)

from the bank or from any of its

affiliates. Violations of section 106 can

be addressed by the Board through an

enforcement action, by the Department

of Justice through a request for an

injunction, or by a customer or other

party through an action for damages. 12

U.S.C. 1972, 1973, and 1975.

Section 106 contains an explicit

exception (the ‘‘statutory traditional

bank product exception’’) that permits a

bank to tie a product or service to a

loan, discount, deposit, or trust service

(‘‘a traditional bank product’’) offered by

that bank. The Board has extended this

exception by providing that a bank may

condition the availability of, or vary the

consideration for, any product or service

on the condition that the customer

obtain a traditional bank product from

an affiliate of the bank (the ‘‘regulatory

traditional bank product exception’’).1

The Board adopted the regulatory

traditional bank product exception in its

present form because inter-affiliate

transactions do not appear to pose any

greater risk of anti-competitive behavior

than intra-bank transactions, and

because Congress had extended the

statutory traditional bank product

exception to cover inter-affiliate

transactions for savings associations and

their affiliates.2

Section 106 authorizes the Board to

grant exceptions to its restrictions by

regulation or order. On December 7,

1999, the General Counsel of the Board

issued a legal interpretation indicating

the Board’s view that section 106 does

not prohibit a credit card bank from

issuing a credit card that may be used

to make purchases from a retailer

affiliated with the credit card bank

(‘‘private-label credit card’’).3 The

Interpretation did not address the

situation where a bank or its retailer

affiliate offer discounts on their

respective products in connection with

a private-label credit card arrangement,

as that situation was not presented by

the request for an interpretation. The

proposed exception also does not cover

that situation.

Proposed Rule

The Board is proposing to use its

statutory authority to grant a regulatory

exemption to section 106 for privatelabel credit cards that may be used at a

retailer affiliated with the issuing bank.

The Board is proposing the exception in

order to disseminate the Board’s view,

as reflected in the Interpretation, that

such arrangements are not as a general

matter anticompetitive, and to create a

rule of more general applicability not

limited to the facts on which the

Interpretation was based.