# 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                     Start Printed Page 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 

* * * * *

*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

* * * * *

(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 

* * * * *

(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                             Start Printed Page 6924                            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 

* * * * *

(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 

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