This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

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

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

24739

Vol. 63, No. 86

Tuesday, May 5, 1998

SMALL BUSINESS ADMINISTRATION

13 CFR Part 120

Business Loan Program

AGENCY: Small Business Administration

(SBA).

ACTION: Interim final rule.

SUMMARY: This interim final rule

implements Pub. L. 105–135, enacted on

December 2, 1997, with respect to SBA

financing in the pilot Premier Certified

Lenders Program (PCLP). The interim

final rule extends the pilot to October 1,

2000, and expands the authority of a

Certified Development Company (CDC)

participating in the PCLP (Premier

CDC).

DATES: This rule is effective May 4,

1998. Comments must be submitted on

or before July 6, 1998. SBA will publish

a final rule after the end of the comment

period.

ADDRESSES: Comments should be

mailed to Jane Palsgrove Butler, Acting

Associate Administrator for Financial

Assistance, Small Business

Administration, 409 Third Street, S.W.,

Washington, D.C. 20416.

FOR FURTHER INFORMATION CONTACT:

LeAnn M. Oliver, 202–205–6485.

SUPPLEMENTARY INFORMATION: Pub. L.

105–135, the ‘‘Small Business

Reauthorization Act of 1997’’ (1997

legislation), enacted on December 2,

1997, amends Section 504 of the Small

Business Investment Act of 1958 (15

U.S.C. 601 et seq.) and requires SBA to

promulgate regulations to carry out the

amendments. SBA is promulgating this

regulation in interim final rule form to

enable qualified CDCs to participate in

the PCLP Program as soon as possible.

Because this regulation merely

implements provisions contained in

the1997 legislation, SBA is satisfied that

the interim final rule poses no risk to

SBA’s PCLP program. SBA is seeking

comments in regards to this interim

final regulation. After the 60 day

comment period has expired, SBA will

issue a final rule.

Changes to PCLP

• The current SBA PCLP is limited to

15 CDCs. The interim final rule will

open the program to all qualified CDCs.

• The interim final rule expands and

clarifies the authority of a Premier CDC

to foreclose, litigate, and liquidate 504

loans made under PCLP.

• The interim final rule clarifies that

SBA makes the eligibility determination

regarding 504 loans and Borrowers. The

Premier CDC makes all other

determinations regarding loan approval.

• The interim final rule requires that

if there is a default on a Debenture

issued under PCLP, the Premier CDC

must reimburse SBA for 10 percent of

any loss incurred as a result of the

default. The amount for which a CDC is

liable is referred to as ‘‘Exposure.’’ To

cover its Exposure, a Premier CDC must

maintain a loss reserve of segregated

assets. This interim final rule codifies

SBA’s current interpretation of a loan

loss reserve and, in addition, permits a

Premier CDC to use irrevocable letters of

credit to fund the loss reserve. The

criterion for an eligible letter of credit is

based on its terms and the strength of

the institution making the commitment.

The interim final rule defines an eligible

letter of credit as one that: (1) is issued

by a ‘‘well capitalized bank’’ as defined

by the Federal Deposit Insurance

Corporation (FDIC); (2) has a term equal

to or greater than the term of the

financings it secures; and (3) is

otherwise acceptable to SBA. SBA plans

to review the terms of each irrevocable

letter of credit to ensure that SBA is

protected adequately against loss.

• Currently a Premier CDC is required

to maintain a loss reserve equal to the

greater of its historic loss rate on its

Debentures or 10 percent of its

Exposure. The interim final rule limits

the calculation of the loss reserve to 10

percent of the Premier CDC’s Exposure

or 1 percent of the Debentures it issues

under PCLP. The Premier CDC must

contribute 50 percent of required funds

to the loss reserve when a 504

Debenture is closed, 25 percent within

1 year after the Debenture is closed, and

25 percent within 2 years after the

Debenture is closed.

• Although a Premier CDC’s Exposure

is 10 percent of any loss incurred by

SBA from a default on a 504 Debenture

processed through PCLP, the CDC must

contribute only 10 percent of its

Exposure (which is only 1 percent of

SBA’s loss from the default) on each

Debenture to the loss reserve. The

interim final rule amends the current

regulations to clarify that SBA may use

all assets in a Premier CDC’s loss reserve

to reimburse the Agency for the full 10

percent of its loss. If there is not enough

in the loss reserve, the interim final rule

requires that a Premier CDC pay SBA,

within 45 days of demand for the

payment, the difference between the

Premier CDC’s Exposure and the

amount withdrawn by SBA from the

loss reserve.

• The interim final rule specifies that

a Premier CDC must replenish

withdrawn loss reserve assets within 30

days with an equivalent amount of

assets.

• The interim final rule requires SBA

to allow a Premier CDC to withdraw loss

reserve assets attributable to any paid

off Debenture.

• The interim final rule extends the

pilot PCLP to October 1, 2000.

• The interim final rule requires a

CDC seeking to participate in PCLP to

apply to the SBA field office in which

it is most active.

Compliance With Executive Orders

12612, 12778, and 12866, the

Regulatory Flexibility Act (5 U.S.C. 601,

et seq.), and the Paperwork Reduction

Act (44 U.S.C. Ch. 35)

SBA certifies that this interim final

rule does not constitute a significant

rule within the meaning of Executive

Order 12866, since it is not likely to

have an annual effect on the economy

of $100 million or more, result in a

major increase in costs or prices, or have

a significant adverse effect on

competition or the U.S. economy.

SBA certifies that this interim final

rule does not have a significant

economic impact on a substantial

number of small entities within the

meaning of the Regulatory Flexibility

Act, 5 U.S.C. 601, et seq. Last year, SBA

made approximately four thousand 504

loans. Currently there are approximately

300 CDCs, less than 15 of which are

Premier CDCs. While the 1997

legislation removes the limit on the

number of CDCs that can become

Premier CDCs, SBA anticipates that, at

most, only half of the CDCs would be

affected by this rule. Thus the changes

to the PCLP implementing the 1997
24740 Federal Register / Vol. 63, No. 86 /Tuesday, May 5, 1998 /Rules and Regulations

legislation do not constitute a

significant impact on a substantial

number of small businesses.

SBA certifies that this interim final

rule does not impose any additional

reporting or recordkeeping requirements

under the Paperwork Reduction Act, 44

U.S.C. chapter 35.

For purposes of Executive Order

12612, SBA certifies that this interim

final rule has no federalism implications

warranting preparation of a Federalism

Assessment.

For purposes of Executive Order

12778, SBA certifies that this interim

final rule is drafted, to the extent

practicable, to accord with the standards

set forth in section 2 of that Order.

List of Subjects in 13 CFR Part 120

Loan programs—business, Small

businesses.

Accordingly, pursuant to authority

contained in section 5(b)(6) of the Small

Business Act (15 U.S.C. 634(b)(6)), SBA

amends part 120, chapter I, title 13,

Code of Federal Regulations as follows:

PART 120—BUSINESS LOANS

1. The authority citation for Part 120

continues to read as follows:

Authority: 15 U.S.C. 634(b)(6) and 636 (a)

and (h).

2. Revise § 120.845 to read as follows:

§ 120.845 Premier Certified Lenders

Program (PCLP).

The SBA has established a pilot

program to designate a number of CDCs

as Premier Certified Lenders (‘‘Premier

CDCs’’), and to authorize them to

approve, close, service, foreclose,

litigate, and liquidate 504 loans subject

to SBA regulations, procedures, and

policies. A Premier CDC’s authority to

approve loans under the Program is

subject to SBA’s determination that the

loan and Borrower meet SBA’s

eligibility requirements.

(a) PCLP loan approvals. A Premier

CDC notifies SBA of its approval of a

PCLP loan by submitting appropriate

documentation to SBA’s loan processing

center. SBA will notify the Premier CDC

of the SBA loan number (if it does not

identify a problem with eligibility, and

funds are available).

(b) Premier CDC Exposure. A Premier

CDC must reimburse SBA for 10 percent

of any loss incurred by SBA as a result

of a default by the Premier CDC on a

Debenture issued under the PCLP

(‘‘Exposure’’).

(c) Loss reserve. A Premier CDC must

establish a loss reserve to pay its

Exposure to SBA.

(1) Assets. A Premier CDC’s loss

reserve must be composed of any

combination of: segregated funds on

deposit in one or more federally insured

depository institutions; or irrevocable

letters of credit. All loss reserve deposits

and letters of credit must be assigned by

the Premier CDC to SBA in a manner

acceptable to SBA. A Premier CDC’s loss

reserve deposits in an institution may

exceed the institution’s insured amount,

but only if the institution is ‘‘well

capitalized’’ as defined in regulations of

the Federal Deposit Insurance

Corporation, as amended (12 CFR

325.103) (‘‘well capitalized bank’’). A

loss reserve irrevocable letter of credit

must (i) be issued by a well capitalized

bank, (ii) have a term equal to or longer

than the term of the financings it

secures, and (iii) be otherwise

acceptable to the SBA.

(2) Contributions. A Premier CDC’s

loss reserve must total 1 percent of the

Debentures it issues under the PCLP

Program. A Premier CDC must

contribute 50 percent of the required

loss reserve attributable to each

financing when the Debenture it issues

to fund the financing is closed, 25

percent within 1 year after the

Debenture is closed, and 25 percent

within 2 years after the Debenture is

closed.

(3) Reimbursement. SBA determines a

Premier CDC’s Exposure on a loan and

withdraws the amount necessary to

cover the Exposure. If, after full use of

any assets in the loss reserve, there are

not enough loss reserve assets to cover

a Premier CDC’s Exposure, the Premier

CDC must pay SBA any difference

between the Exposure and the loss

reserve assets withdrawn by SBA to

cover the Exposure within 45 days of a

demand for payment by SBA.

(4) Replenishment. If SBA withdraws

assets from the loss reserve to cover a

Premier CDC’s Exposure, the CDC must

replace the withdrawn loss reserve

assets within 30 days of the withdrawal

with contributions equal to or greater

than the amount of the assets

withdrawn.

(5) Withdrawal. A Premier CDC may

withdraw loss reserve assets attributable

to any repaid Debenture upon written

approval by SBA.

(d) Review. SBA will review a Premier

CDC’s financings annually.

(e) Suspension and revocation. The

AA/FA may suspend or revoke a CDC’s

Premier designation upon written notice

stating the reasons for the suspension or

revocation at least 10 business days

prior to the effective date of the

suspension or revocation. Reasons for

suspension or revocation may include

loan performance unacceptable to SBA,

failure to meet loss reserve or eligibility

criteria, or violations of applicable

statutes, regulations, or published SBA

policies and procedures. A Premier CDC

may appeal the suspension or

revocation made under this section

pursuant to the procedures set forth in

part 134 of this chapter. The action of

the AA/FA shall remain in effect

pending resolution of the appeal.

(f) Applications. A CDC may obtain

information concerning this pilot

program from the Office of Program

Development in the Office of Financial

Assistance at SBA’s Headquarters. A

CDC may submit its application to the

SBA field office in which it is most

active. The SBA field office will send

the application with its

recommendation to the AA/FA for a

final decision.

(g) Acceptance into program. When

determining a CDC’s application, SBA

will consider the CDC’s ability to work

with the local SBA office and the

quality of past performance.

(h) Program period. The PCLP pilot

program ends on October 1, 2000.

Dated: April 28, 1998.

Aida Alvarez,

Administrator.

[FR Doc. 98–11848 Filed 5–4–98; 8:45 am]

BILLING CODE 8025–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 97–NM–300–AD; Amendment

39–10511; AD 98–09–30]

RIN 2120–AA64

Airworthiness Directives; Airbus Model

A330–301 Series Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This amendment adopts a

new airworthiness directive (AD),

applicable to certain Airbus Model

A330–301 series airplanes. This action

requires a one-time visual inspection to

measure clearances between the engine

forward feed pipe and shroud sleeve in

the engine pylon; and repetitive

operational tests for fuel leakage, and

replacement of the shroud sleeve with a

new improved part, if necessary. This

amendment is prompted by the issuance

of mandatory continuing airworthiness

information by a foreign civil

airworthiness authority. The actions

specified in this AD are intended to

prevent fuel from leaking into the pylon

primary structure and into the engine