Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Proposed Rules 10483

in § 1240.106 is obsolete and would be

removed.

Section 1240.116(b) of the rules and

regulations provides that each first

handler and producer-packer shall pay

their required assessment to the Board

at the address referenced in Section

1240.106. Since § 1240.106 is obsolete

and would be removed, reference to the

Board’s address in § 1240.116(b) would

also be removed.

Section 1240.120 of the rules and

regulations currently provides that first

handlers, producer-packers, importers,

or any persons who receive an

exemption from assessments are

required to make reports pursuant to the

Order and shall maintain and retain

such reports for at least two years

beyond the marketing year of their

applicability. The amended section

would designate the existing text in this

section as paragraph (a) and add a new

paragraph (b). The new paragraph

would provide that producers shall

maintain and retain books and records

for at least two years beyond the

marketing year of their applicability.

Such books and records shall include,

but not be limited to, information on

annual sales and production.

Section 1240.121 of the rules and

regulations currently provides that first

handlers, producer-packers, importers,

or any persons who receive an

exemption from assessments and are

required to make reports pursuant to the

Order shall make available to the Board

or the Secretary such records as are

appropriate and necessary to verify

reports required under the Order. The

amended section would designate the

existing text in this section as paragraph

(a) and add a new paragraph (b). The

new paragraph would provide that

producers are required to maintain and

retain books and records pursuant to the

Order and shall make available to the

Board or the Secretary such records as

are appropriate and necessary to verify

the information in § 1240.120(b) of the

rules and regulations.

Section 1240.122 of the rules and

regulations currently provides that all

information obtained from the books,

records, and reports of handlers,

producer-packers, or any persons who

receive an exemption from assessments

shall be kept confidential and all

information with respect to refunds of

assessments made to individual

producers and importers shall be kept

confidential. The paragraph would be

amended to indicate that information

obtained from producers would be

covered by this confidentiality

provision. Reference to all information

with respect to refunds of assessments

made to individual producers and

importers would be removed from the

paragraph. In 1991, following

amendment of the Act, producers and

importers voted to terminate the

authority for producers and importers to

obtain a refund of assessments.

Therefore, such language is now

obsolete and would be removed.

All written comments received in

response to this proposed rule by the

date specified herein will be considered

prior to the issuance of any final rule on

this action.

List of Subjects in 7 CFR Part 1240

Advertising, Agricultural research,

Honey, Imports, Reporting and

recordkeeping requirements.

For the reasons set forth in the

preamble, 7 CFR Part 1240 is proposed

to be amended as follows:

PART 1240—HONEY RESEARCH,

PROMOTION, AND CONSUMER

INFORMATION ORDER

1. The authority citation for 7 CFR

Part 1240 continues to read as follows:

Authority: 7 U.S.C. 4601–4612.

2. In § 1240.41, paragraph (h) is

revised to read as follows:

§ 1240.41 Assessments.

* * * * *

(h) Should a first handler or the

Secretary fail to collect an assessment

from a producer, the producer shall be

responsible for the payment of the

assessment to the Board. The producer

shall maintain records for the honey

produced by said producer.

* * * * *

§ 1240.41 [Amended]

3. In § 1240.41, paragraph (j) is

amended by removing the words

‘‘paragraph (h)’’ and adding in their

place the words ‘‘paragraph (i)’’.

§ 1240.51 [Amended]

4. In § 1240.51, the word ‘‘producer,’’

is added following the word ‘‘importer’’

and the words ‘‘two years beyond the

first period’’ are removed and the words

‘‘at least two years beyond the

marketing year’’ are added in their

place.

§ 1240.106 [Removed and reserved.]

5. Section 1240.106 is removed and

reserved.

§ 1240.116 [Amended]

6. In § 1240.116, paragraph (b), the

words ‘‘at the address referenced in

§ 1240.106,’’ are removed.

§ 1240.120 [Amended]

7. In § 1240.120, the existing

undesignated text is designated as

paragraph (a) and a new paragraph (b)

is added to read as follows:

§ 1240.120 Retention period for records.

* * * * *

(b) Each producer required to

maintain books and records pursuant to

this subpart shall maintain and retain

books and records for at least two years

beyond the marketing year of their

applicability. Such books and records

shall include, but not be limited to,

information on annual production and

sales. Information on annual sales shall

include such information as the name

and address of each handler, the

quantity sold to the handler, and the

date of sale.

8. In § 1240.121 the existing

undesignated text is designated as

paragraph (a) and a new paragraph (b)

is added to read as follows:

§ 1240.121 Availability of records.

* * * * *

(b) Each producer who is required to

maintain books and records pursuant to

this subpart shall make available for

inspection by authorized employees of

the Board or the Secretary during

regular business hours such books and

records as are appropriate and necessary

to verify the information in

§ 1240.120(b) of this subpart.

§ 1240.122 [Amended]

9. In § 1240.122, the word

‘‘producers,’’ is added following the

word ‘‘importers’’ and the words ‘‘and

all information with respect to refunds

of assessments made to individual

producers and importers’’ are removed.

Dated: February 28, 1997.

Kenneth C. Clayton,

Acting Administrator.

[FR Doc. 97–5590 Filed 3–6–97; 8:45 am]

BILLING CODE 3410–02–P

Rural Telephone Bank

7 CFR Part 1610

Rural Utilities Service

7 CFR Parts 1735, 1737, 1739, and 1746

Rural Telephone Bank and

Telecommunications Program Loan

Policies, Types of Loans, Loan

Requirements

AGENCY: Rural Utilities Service and

Rural Telephone Bank, USDA.

ACTION: Proposed rule.

SUMMARY: The Rural Utilities Service

(RUS) proposes to amend its regulations

to incorporate changes to the

telecommunications loan program
10484 Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Proposed Rules

required by the 1996 Farm Bill and the

regulatory reinvention initiative of the

Vice President’s National Performance

Review. RUS has reviewed the

regulations concerning the

telecommunications program and the

Rural Telephone Bank loan policies and

requirements to determine whether they

are necessary, impose the least possible

burden consistent with safety and

soundness, and are written in a clear,

straightforward manner. As a result of

this review, the RUS

telecommunications program proposes

to update and streamline its regulations

and policy statements. In addition, this

regulation proposes to eliminate some

policies and procedures that have

become obsolete.

DATES: Written comments must be

received by RUS or carry a postmark or

equivalent not later than May 6, 1997.

ADDRESSES: Submit written comments

to Jonathan Claffey, Acting Deputy

Director, Advanced

Telecommunications Services Staff,

Rural Utilities Service, 1400

Independence Ave., SW., STOP 1701,

Room 2919, South Building,

Washington, DC 20250–1701. RUS

requests a signed original and three

copies of all comments (7 CFR part

1700). All comments received will be

made available for public inspection at

room 4034, South Building, U.S.

Department of Agriculture, Washington,

DC, between 8:00 a.m. and 4:00 p.m. (7

CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT:

Cheryl Gamboney, Analyst, Advanced

Telecommunications Services Staff,

(address as above). Telephone: (202)

720–0415. Facsimile: (202) 720–2734.

SUPPLEMENTARY INFORMATION:

Classification

This proposed rule has been

determined to be not significant and has

not been reviewed by the Office of

Management and Budget under

Executive Order 12866.

Civil Justice Reform

This proposed rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. RUS has determined

that this proposed rule meets the

applicable standards provided in Sec. 3.

of the Executive Order.

Regulatory Flexibility Act Certification

Pursuant to section 605(b) of the

Regulatory Flexibility Act, 5 U.S.C.

605(b), RUS certifies that this proposed

rule will not have a significant

economic impact on a substantial

number of small entities. If a rule has a

significant economic impact on a

substantial number of small entities, the

Regulatory Flexibility Act requires

agencies to analyze regulatory options

that would minimize any significant

impact of a rule on small entities. The

application for loans under the RUS

telecommunications program are

discretionary, regulatory requirements

will, therefore, apply only to those

entities which choose to apply for

funding.

This action is being taken as part of

the National Performance Review

program to eliminate excess regulations

and to improve the quality of those that

remain in effect. This proposed rule

simply reduces the Times Interest

Earned Ratio requirement for all

borrowers, simplifies current cash

distribution and investment

requirements for all borrowers, and

standardizes determination of loan

maturity. This proposed rule is

consistent with RUS’ continuing effort

to devolve, in particular, cash

management authority to the borrowers.

It is also consistent with the goals of the

regulatory reinvention initiative of the

National Performance Review.

Information Collection and

Recordkeeping Requirements

A notice of public comments was

issued in the Federal Register on

February 25, 1997, at 62 FR 8421

requesting approval by the Office of

Management and Budget (OMB)

pursuant to the Paperwork Reduction

Act of 1995 (44 U.S.C. Chapter 35, as

amended) under control number 0572–

0079.

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, Jr., Director, Program Support

and Regulatory Analysis, Rural Utilities

Service, STOP 1522, Washington, DC

20250–1522.

National Environmental Policy Act

Certification

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.

Program Affected

The program described by this

proposed rule is listed in the Catalog of

Federal Domestic Assistance Programs

under 10.851, Rural

Telecommunications Loans and Loan

Guarantees, and 10.582, Rural

Telephone Bank Loans. This catalog is

available on a subscription basis from

the Superintendent of Documents, the

United States Government Printing

Office, Washington, DC 20402.

Intergovernmental Review

This program is excluded from the

scope of Executive Order 12372,

Intergovernmental Consultation. A

Notice of Final Rule entitled

Department Programs and Activities

Excluded from Executive Order 12372

(50 FR 47034) exempts RUS and Rural

Telephone Bank loans and loan

guarantees to governmental and nongovernmental entities from coverage

under this Order.

Unfunded Mandate

This rule contains no Federal

mandates (under the regulatory

provisions of Title II of the Unfunded

Mandate Reform Act) for State, local,

and tribal governments or the private

sector. Thus today’s rule is not subject

to the requirements of sections 202 and

205 of the Unfunded Mandate Reform

Act.

Background

The Federal Agriculture Improvement

and Reform Act of 1996 (Pub. L. 104–

127) amended Section 309 of the Rural

Electrification Act of 1936, as amended

(7 U.S.C. 901 et seq.)(RE Act), by

eliminating the provision that allows

RUS telecommunications borrowers to

determine the term of a loan made

under Title 3 of the RE Act at the time

the loan application is submitted.

The present maximum loan period is

35 years. With rapidly changing

technology, obsolescence is occurring

more quickly; therefore, borrowers are

depreciating their facilities at a faster

rate. If plant financed is retired and

replaced by new plant before the loan is

repaid, earnings from this new plant

will have to be used to pay the old loan

and any new loan used to finance the

replacement facilities. If the loan period

is longer than the depreciation period

and the capital recovered through

depreciation is not used to replace

plant, the loan could be

undercollateralized and the borrower’s

rate base would be eroded.

RUS is, therefore, proposing that the

loan period for RUS and Rural

Telephone Bank (Bank) loans not

exceed the expected composite

economic life of the facilities to be

financed; expected composite economic

life means the depreciated life plus

three years. Bank borrowers may request

a repayment period that is longer than

the expected composite economic life of
Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Proposed Rules 10485

the facilities financed by the loan. Such

borrowers, however, will be required to

provide additional security for the loan

by maintaining a funded reserve. The

maximum loan period for all loans will

remain at 35 years.

Further, under existing regulations, if

the loan maturity period selected by the

borrower exceeds the expected

composite economic life of the facilities

financed by a period of more than three

years, the loan would be conditioned

upon the borrower electing to maintain

either a net plant to secured debt ratio

of at least 1.2, or a funded reserve in

such amount that the balance of the

reserve plus the value of the facilities

less depreciation be at least equal to the

remaining principal payments on the

loan. RUS is proposing to offer, subject

to certain conditions, borrowers subject

to the funded reserve or net plant to

secured debt ratio requirements an

option to replace those notes with notes

that match the remaining composite

economic life of the facilities financed,

as determined by the feasibility study

prepared in connection with the loan.

Borrowers meeting these conditions

replacing Bank notes will not be

required to pay a prepayment premium,

if such requirement is contained in the

original note.

To optimize the use of loan funds,

RUS proposes to limit the size of RUS

cost-of-money loans and Bank loans

made to individual borrowers in order

to distribute the amount of RUS cost-ofmoney and Bank funds appropriated

among a greater number of borrowers.

Section 201 of the RE Act, in part,

clearly states that, ‘‘* * * The

Administrator in making such loans

shall, insofar as possible, obtain

assurance that the telecommunications

service to be furnished or improved

thereby will be made available to the

widest practical number of rural users

* * *’’.

In fiscal years 1991 through 1995, the

Agriculture Appropriation Acts had

established loan levels for the Bank in

amounts insufficient to provide for the

total number of applications completed

and on hand at the end of those fiscal

years. If the Bank had limited the

amount of individual loans to no more

than 10 percent of the lending authority,

approximately $35.6 million of Bank

funding over those five years would

have been available to other borrowers.

Correspondingly, approximately $25.6

million of RUS cost-of-money funding

also would have been available to other

borrowers.

Moreover, recent Federal action

affecting RUS and Bank borrowers is the

Telecommunications Act of 1996, a

broad and far-reaching reform of

communications law that is expected to

change notably the telecommunications

industry. The Telecommunications Act

will provide for a more competitive,

deregulated national

telecommunications policy framework.

Of greatest immediate relevance for RUS

and Bank borrowers are forthcoming

regulations by the Federal

Communications Commission

concerning certain provisions of the

Telecommunications Act. Pending the

outcome of these forthcoming

regulations, RUS borrowers have

temporarily delayed plans for major

network construction. However, now

more than ever, the need and

importance of RUS telecommunications

loans is crucial for future development

of telecommunications infrastructure in

rural America. As a direct result of

RUS’s telecommunications loans, rural

communities have been enjoying access

to advanced telecommunications

services.

To continue fulfilling RUS’s mission

of ensuring that rural

telecommunications providers have the

means to modernize their networks, to

fully effect the mandated area coverage

provision of the RE Act, and to achieve

maximum use of funds available, RUS is

proposing to limit the loan amount to

any single borrower in a fiscal year to,

generally, no more than 10 percent of

the lending authority from

appropriations in any fiscal year. This

proposed regulation would optimize the

use of a limited source of loan funding

by distributing the amount of funding

available among the greatest number of

applicants in an economical, efficient,

and orderly manner.

In general, the security documents

required in connection with RUS loans,

Bank loans, and RUS guarantees contain

provisions requiring borrowers to

maintain a certain Times Interest Earned

Ratio (TIER) level. In particular, under

existing regulations, borrowers are

required to maintain after the end of the

Forecast Period a TIER equal to the

projected TIER determined by the

feasibility study prepared in connection

with the loan, but not greater than 1.75.

RUS proposes to reduce the maximum

TIER maintenance requirement to no

more than 1.50 for all borrowers

receiving any type of loan after the

effective date of the final rule. In 1995

almost ninety percent of RUS’s

reporting borrowers had a TIER greater

than 1.5.

Section 205 of the RE Act and the

RUS mortgage documents, contain

RUS’s policy regarding investments and

distributions of assets by borrowers. In

general, borrowers with a certain

minimum net worth requirement are

permitted to make capital distributions

without RUS approval in a cumulative

amount up to a limit set by a formula

that considers the borrowers past

financial performance. The calculation

used to determine a borrower’s

allowable distribution level has, over

the years, become exceedingly complex.

RUS is simplifying its policy by

eliminating the complex formula used

to determine the allowable level of

distributions and investments and

replacing it with a more straightforward

process which can readily be calculated

from a borrower’s current financial

statements. The new requirements limit

the amount of distributions and

investments relative to the borrower’s

current net worth. To facilitate the

availability of cash flow to support

diversified activities, RUS proposes

predefined tests, using current annual

financial data only, for determining the

level of permitted distributions and

investments. This approach would

recognize and provide for diversity

among borrowers without creating

undue complexity. RUS’s new policy

regarding investments and distributions

of assets by borrowers will be in all

mortgages for loans approved after the

effective date of the final rule.

Borrowers that have not received a loan

after the effective date of the final rule

may request the Administrator to apply

the new requirements to them.

For over 25 years it has been the RUS

preferred design to bury outside plant

(e.g., buried wire and cable

telecommunications facilities and

associated material) whenever

economically feasible. This method of

construction minimizes potential

impairment of borrowers’ facilities due

to damage caused by storms and other

natural catastrophes. Based on its long

experience in this type of design, RUS

proposes to adopt the policy that it will

finance only buried plant for all loans

unless RUS determines that buried plant

is not economically feasible.

RUS further proposes to make

technical corrections to final regulations

which were reorganized and

redesignated on September 27, 1990, at

55 FR 39393. In particular, certain

regulations contained cross references

which inadvertently had not been

updated. This action is simply a

correction to these regulations with no

change to substance. Changes to

regulatory text are merely to update

cross references. As currently

published, the final regulations may

prove to be misleading.

On August 27, 1991, at 56 FR 42461,

RUS published 7 CFR parts 1739 and

1746 that established pre-and post-loan

policies for 90 percent RUS guarantees
10486 Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Proposed Rules

of certain loans from qualified private

lenders. This program was authorized

under section 314 of the RE Act. The

Rural Electrification Loan Restructuring

Act of 1993, Public Law 103–129,

signed by President Clinton on

November 1, 1993, amended section 314

of the RE Act to abolish this 90 percent

guarantee program. RUS is, therefore,

removing 7 CFR parts 1739 and 1746.

List of Subjects

7 CFR Part 1610

Accounting, Loan programs—

communications, Reporting and

recordkeeping requirements, Rural

areas, Telecommunications.

7 CFR Part 1735

Accounting, Loan programs—

communications, Reporting and

recordkeeping requirements, Rural

areas, Telecommunications.

7 CFR Part 1737

Accounting, Loan programs—

communications, Reporting and

recordkeeping requirements, Rural

areas, Telecommunications.

7 CFR Part 1739

Accounting, Guaranteed program,

Loan programs—communications,

Reporting and recordkeeping

requirements, Rural areas,

Telecommunications.

7 CFR Part 1746

Accounting, Guaranteed program,

Loan programs—communications,

Reporting and recordkeeping

requirements, Rural areas,

Telecommunications.

For the reasons set forth in the

preamble, and under the authority of 7

U.S.C. 901 et. seq., chapters XVI and

XVII of Title 7 of the Code of Federal

Regulations are proposed to be amended

as follows:

CHAPTER XVI

PART 1610—LOAN POLICIES

1. The authority citation for part 1610

continues to read as follows:

Authority: 7 U.S.C. 941 et seq.; Pub. L.

103–354, 108 Stat. 3178 (7 U.S.C. 6941, et.

seq.).

2. In § 1610.6, new paragraph (d) is

added to read as follows:

§ 1610.6 Concurrent Bank and RUS costof-money loans.

* * * * *

(d) Generally, no more than 10

percent of lending authority from

appropriations in any fiscal year for

Bank and RUS cost-of-money loans may

be loaned to a single borrower. The

Bank will publish by notice in the

Federal Register the dollar limit that

may be loaned to a single borrower in

that particular fiscal year based on

approved Bank and RUS lending

authority.

3. In § 1610.11, a new paragraph (c) is

added to read as follows:

§ 1610.11 Prepayments.

* * * * *

(c) Borrowers that qualify to issue a

refunding note or notes in accordance

with 7 CFR 1735.43, Payments on loans,

shall not be required to pay a

prepayment premium on all payments

made in accordance with the new

payment schedule.

CHAPTER XVII

PART 1735—GENERAL POLICIES,

TYPES OF LOANS, LOAN

REQUIREMENTS—

TELECOMMUNICATIONS PROGRAM

1. The part heading for part 1735 is

revised as set forth above.

1a. The authority citation for part

1735 is revised to read as follows:

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

seq.; Pub. L. 103–354, 108 Stat. 3178 (7

U.S.C. 6941 et. seq.).

2. In § 1735.2, the definition of

Construction fund is amended by

removing the reference ‘‘See 7 CFR part

1758.’’, the definitions for Adjusted

assets and Adjusted net worth are

removed, and new definitions Cash

distribution, Net worth, and Total assets

are added in alphabetical order to read

as follows:

§ 1735.2 Definitions.

* * * * *

Cash distribution means investments,

guarantees, extensions of credit,

advances, loans, non-affiliated company

joint ventures, and affiliated company

investments. Not included in this

definition are qualified investments (see

7 CFR part 1744, subpart D).

* * * * *

Net worth has the meaning as defined

in the mortgage with RUS.

* * * * *

Total assets has the meaning as

defined in the mortgage with RUS.

3. In § 1735.3, the first sentence is

revised to read as follows:

§ 1735.3 Availability of forms.

Single copies of RUS forms and

publications cited in this part are

available from Program Support

Regulatory Analysis, Rural Utilities

Service, STOP 1522, 1400 Independence

Ave., SW., Washington, DC 20250–1522.

* * *

4. In § 1735.17, paragraph (c) is

revised to read as follows:

§ 1735.17 Facilities financed.

* * * * *

(c) RUS will not make any type of

loan to finance the following items:

(1) Station apparatus (including PBX

and key systems) not owned by the

borrower and any associated inside

wiring;

(2) Certain duplicative facilities, see

§ 1735.12;

(3) Facilities to serve subscribers

outside the local exchange service area

of the borrower unless those facilities

are necessary to furnishing or improving

telecommunications service within the

borrower’s service areas;

(4) Facilities to provide service other

than 1-party; and

(5) System designs or facilities to

provide service that cannot withstand or

are not designed to minimize damage

caused by storms and other natural

catastrophes, including, but not limited

to hurricanes, floods, tornadoes,

mudslides, lightning, windstorms, hail,

fire, and smoke.

* * * * *

5. In § 1735.22, paragraph (g) is

redesignated as new paragraph (i),

paragraph (f) is revised, and new

paragraphs (g) and (h) are added to read

as follows:

§ 1735.22 Loan security.

* * * * *

(f) For purposes of determining

compliance with TIER requirements,

unless a borrower whose existing

mortgage contains TIER maintenance

requirements notifies RUS in writing

differently, RUS will apply the

requirements described in paragraph (g)

of this section to the borrower regardless

of the provisions of the borrower’s

existing mortgage.

(g) For loans approved after [effective

date of final rule] loan contracts and

mortgages covering hardship loans, RUS

cost-of-money loans, RTB loans, and

guaranteed loans will contain a

provision requiring the borrower to

maintain a TIER of at least 1.0 during

the Forecast Period. At the end of the

Forecast Period, the borrower shall be

required to maintain, at a minimum, a

TIER at least equal to the projected TIER

determined by the feasibility study

prepared in connection with the loan,

but at least 1.0 and not greater than 1.5.

(h) Nothing in this section shall affect

any rights of supplemental lenders

under the RUS mortgage, or other

creditors of the borrower, to limit a

borrower’s TIER requirement to a level
Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Proposed Rules 10487

above that established in paragraph (g)

of this section.

* * * * *

6. In § 1735.31, paragraphs (d) and (e)

are redesignated as new paragraphs (e)

and (f), and new paragraph (d) is added

to read as follows:

§ 1735.31 RUS cost-of-money and RTB

loans.

* * * * *

(d) Generally, no more than 10

percent of lending authority from

appropriations in any fiscal year for

RUS cost-of-money and RTB loans may

be loaned to a single borrower. RUS will

publish by notice in the Federal

Register the dollar limit that may be

loaned to a single borrower in that

particular fiscal year based on approved

RUS and RTB lending authority.

* * * * *

7. Section 1735.33 is added to read as

follows:

§ 1735.33 Variable interest rate loans.

After June 10, 1991, and prior to

November 1, 1993, RUS made certain

variable rate loans at interest rates less

than 5 percent but not less than 2

percent. For those borrowers that

received variable rate loans, this section

describes the method by which interest

rates are adjusted. The interest rate used

in determining feasibility is the rate

charged to the borrower until the end of

the Forecast Period for that loan. At the

end of the Forecast Period, the interest

rate for the loan may be annually

adjusted by the Administrator upward

to a rate not greater than 5 percent, or

downward to a rate not less than the

rate determined in the feasibility study

on which the loan was based, based on

the borrower’s ability to pay debt

service and maintain a minimum TIER

of 1.0. Downward and upward

adjustments will be rounded down to

the nearest one-half or whole percent.

To make this adjustment, projections set

forth in the loan feasibility study will be

revised annually by RUS (beginning

within four months after the end of the

Forecast Period) to reflect updated

revenue and expense factors based on

the borrower’s current operating

condition. Any such adjustment will be

effective on July 1 of the year in which

the adjustment was determined. If the

Administrator determines that the

borrower is capable of meeting the

minimum TIER requirements of

§ 1735.22(f) at a loan interest rate of 5

percent on a loan made as described in

this section, then the loan interest rate

shall be fixed, for the remainder of the

loan repayment period , at the standard

interest rate of 5 percent.

8. In § 1735.43, paragraph (a) is

revised, paragraph (b) is redesignated as

new paragraph (f), and new paragraphs

(b) through (e) are added to read as

follows:

§ 1735.43 Payments on Loans.

(a) Except as described in this

paragraph (a), RUS loans approved after

[effective date of final rule] must be

repaid with interest within a period

that, rounded to the nearest whole year,

equals the expected composite

economic life of the facilities to be

financed, as calculated by RUS;

expected composite economic life

means the depreciated life plus three

years. The expected composite

economic life shall be based on the

depreciation rates for the facilities

financed by the loan. In states where the

borrower must obtain state regulatory

commission approval of depreciation

rates, the depreciation rates used shall

be the rates currently approved by the

state commission or rates for which the

borrower has received state commission

approval. In cases where a state

regulatory commission does not approve

depreciation rates, the expected

composite economic life shall be based

on the most recent median depreciation

rates published by RUS for all borrowers

(see 7 CFR 1737.70). Borrowers may

request a repayment period that is

longer or shorter than the expected

composite economic life of the facilities

financed. If the Administrator

determines that, if a shorter period is

likely to cause the borrower to

experience hardship, the Administrator

may agree to approve a period longer

than requested. A shorter period may be

approved as long as the Administrator

determines that the loan remains

feasible.

(b) Borrowers with RTB loans

approved after [effective date of final

rule] with a maturity that exceeds the

expected composite economic life of the

facilities to be financed by the loan by

a period of more than three years,

release of funds included in the loan

shall be conditioned upon the borrower

establishing and maintaining, pursuant

to a plan approved by RUS, a funded

reserve in such an amount that the

balance of the reserve plus the value of

the facilities less depreciation shall at

all times be at least equal to the

remaining principal payments on the

loan. Funding of the reserve must begin

within one year of approval of release of

funds and must continue regularly over

the expected composite economic life of

the facilities financed.

(c) Borrowers that have demonstrated

to the satisfaction of the Administrator

an inability to maintain the funded

reserve or net plant to secured debt ratio

requirements, if any, contained in their

mortgage, may elect to replace notes

with an original maturity that exceeded

the composite economic life of the

facilities financed with notes bearing a

shorter maturity approximating the

expected composite economic life of the

facilities financed, if this will result in

a shorter maturity for the loan. The

principal balance of the notes

(hereinafter in this section called the

‘‘refunding notes’’) issued to refund and

substitute for the original notes would

be the unpaid principal balance of the

original notes. The refunding notes

would mature at a date no later than the

remaining economic life of the facilities

financed by the loan, plus three years.

Interest on the original note must

continue to be paid through the closing

date. All other payment terms,

including the rate of interest on the

refunding notes, would remain

unchanged. Disposition of funds in the

funded reserve will be determined by

RUS at the closing date. RUS will notify

the borrower in writing of the

amendment of loan payment

requirements and the terms and

conditions thereof.

(d) A borrower qualifying under

paragraph (c) of this section shall not be

required to pay a prepayment premium

on such portion of the payments under

its new notes as exceeds the payments

required under the notes being replaced.

(e) To apply for refunding notes,

borrowers must send to the Area Office

the following:

(1) A certified copy of a board

resolution requesting an amendment of

loan payment requirements and that

certain notes be replaced;

(2) If applicable, evidence of approval

by the regulatory body with jurisdiction

over the telecommunications service

provided by the borrower to issue

refunding notes; and

(3) Such other documents as may be

required by the RUS.

* * * * *

9. In § 1735.46, paragraphs (b), (c) and

(d) are revised, paragraphs (e) and (f) are

removed, and paragraphs (g) and (h) are

redesignated as paragraphs (e) and (f) to

read as follows:

§ 1735.46 Loan security documents.

* * * * *

(b) Loan security documents of

borrowers with loans approved after

[effective date of final rule] will provide

limits on allowable cash distributions in

any calendar year as follows:

(1) No more than 25 percent of the

prior calendar year’s net earnings or

margins if the borrower’s net worth is at
10488 Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Proposed Rules

least 1 percent of its total assets after the

distribution is made;

(2) No more than 50 percent of the

prior calendar year’s net earnings or

margins if the borrower’s net worth is at

least 20 percent of its total assets after

the distribution is made;

(3) No more than 75 percent of the

prior calendar year’s net earnings or

margins if the borrower’s net worth is at

least 30 percent of its total assets after

the distribution is made; or

(4) No limit on distributions if the

borrower’s net worth is at least 40

percent of its total assets after the

distribution is made.

(c) Borrowers that have not received

a loan after [effective date of final rule]

may request the Administrator to apply

these requirements to them. Borrowers

may request in writing that RUS

substitute the new requirements

described in paragraphs (b)(1) through

(b)(4) of this section. Upon request by

the borrower, the provisions of the

borrower’s loan documents restricting

cash distributions or investments shall

not be enforced to the extent that such

provisions are inconsistent with this

section.

(d) Rural development investments

meeting the criteria set forth in 7 CFR

part 1744, subpart D, will not be

counted against a borrower’s allowable

cash distributions in any calendar year

(7 U.S.C. 926).

* * * * *

§ 1735.60 [Amended]

10. § 1735.60, paragraph (a)

introductory text is amended by

removing the reference ‘‘(see 7 CFR part

1758)’’ and paragraph (a)(3) is removed.

§ 1735.76 [Amended]

11. § 1735.76, the second ‘‘or’’ is

removed and the word ‘‘of’’ is added in

its place.

PART 1737—PRE-LOAN POLICIES

AND PROCEDURES COMMON TO

INSURED AND GUARANTEED

TELECOMMUNICATIONS LOANS

12. The part heading for part 1737 is

revised as set forth above.

13. The authority citation for part

1737 is revised to read as follows:

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

seq.; Pub. L. 103–354, 108 Stat. 3178 (7

U.S.C. 6941 et. seq.).

§ 1737.70 [Amended]

14. In § 1737.70, paragraph (d) is

removed and reserved.

PART 1739—[REMOVED]

15. Part 1739 is removed.

PART 1746—[REMOVED]

16. Part 1746 is removed.

Dated: February 24, 1997.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 97–5223 Filed 3–6–97; 8:45 am]

BILLING CODE 3410–15–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 96–NM–120–AD]

RIN 2120–AA64

Airworthiness Directives;

Construcciones Aeronauticas, S.A.

(CASA) Model C–212 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of proposed rulemaking

(NPRM).

SUMMARY: This document proposes the

adoption of a new airworthiness

directive (AD) that is applicable to all

CASA Model C–212 series airplanes.

This proposal would require an initial

inspection of the restrictor pistons on

the shock absorbers of the left and right

main landing gear (MLG) to determine

the number and condition of threaded

screw pins that are installed;

replacement of any discrepant pin; and

repetitive inspections of certain pistons.

Modification of certain pistons by the

installation of two additional pins

would terminate these inspections. This

proposal is prompted by reports

indicating that the threaded screw pin

that holds the restrictor piston on the

slide tube of the shock absorber has

been found to have loosened on some

airplanes. The actions specified by the

proposed AD are intended to prevent

the loss of hydraulic damping in the

MLG, due to failure of the screw pins

that hold the restrictor pistons on the

slide tubes of the shock absorbers, and

consequent structural damage to the

airplane.

DATES: Comments must be received by

April 16, 1997.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), Transport

Airplane Directorate, ANM–103,

Attention: Rules Docket No. 96–NM–

120–AD, 1601 Lind Avenue, SW.,

Renton, Washington 98055–4056.

Comments may be inspected at this

location between 9:00 a.m. and 3:00

p.m., Monday through Friday, except

Federal holidays.

The service information referenced in

the proposed rule may be obtained from

Construcciones Aeronauticas, S.A.,

Getafe, Madrid, Spain. This information

may be examined at the FAA, Transport

Airplane Directorate, 1601 Lind

Avenue, SW., Renton, Washington.

FOR FURTHER INFORMATION CONTACT:

Gregory Dunn, Aerospace Engineer,

Standardization Branch, ANM–113,

FAA, Transport Airplane Directorate,

1601 Lind Avenue, SW., Renton,

Washington 98055–4056; telephone

(206) 227–2799; fax (206) 227–1149.

SUPPLEMENTARY INFORMATION:

Comments Invited

Interested persons are invited to

participate in the making of the

proposed rule by submitting such

written data, views, or arguments as

they may desire. Communications shall

identify the Rules Docket number and

be submitted in triplicate to the address

specified above. All communications

received on or before the closing date

for comments, specified above, will be

considered before taking action on the

proposed rule. The proposals contained

in this notice may be changed in light

of the comments received.

Comments are specifically invited on

the overall regulatory, economic,

environmental, and energy aspects of

the proposed rule. All comments

submitted will be available, both before

and after the closing date for comments,

in the Rules Docket for examination by

interested persons. A report

summarizing each FAA-public contact

concerned with the substance of this

proposal will be filed in the Rules

Docket.

Commenters wishing the FAA to

acknowledge receipt of their comments

submitted in response to this notice

must submit a self-addressed, stamped

postcard on which the following

statement is made: ‘‘Comments to

Docket Number 96–NM–120–AD.’’ The

postcard will be date stamped and

returned to the commenter.

Availability of NPRMs

Any person may obtain a copy of this

NPRM by submitting a request to the

FAA, Transport Airplane Directorate,

ANM–103, Attention: Rules Docket No.

96–NM–120–AD, 1601 Lind Avenue,

SW., Renton, Washington 98055–4056.

Discussion

The Direccio ́n General de Aviacio ́n

(DGAC), which is the airworthiness

authority for Spain, has notified the

FAA that an unsafe condition may exist

on all CASA Model C–212 series

airplanes. The DGAC advises that it has