59224 Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Rules and Regulations 

(c) * * * 

(2) * * * 

(iv) The market administrator may 

increase or decrease the milk 

production standard specified in 

paragraph (c)(2)(ii) of this section if the 

market administrator finds that such 

revision is necessary to assure orderly 

marketing and efficient handling of milk 

in the marketing area. Before making 

such a finding, the market administrator 

shall investigate the need for the 

revision either on the market 

administrator’s own initiative or at the 

request of interested persons. If the 

investigation shows that a revision 

might be appropriate, the market 

administrator shall issue a notice stating 

that the revision is being considered and 

inviting written data, views, and 

arguments. Any decision to revise an 

applicable percentage must be issued in 

writing at least one day before the 

effective date. 

* * * * * 

Dated: October 7, 2005. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 05–20525 Filed 10–7–05; 12:57 pm] 

BILLING CODE 3410–02–P 

DEPARTMENT OF AGRICULTURE 

Rural Housing Service 

Rural Business-Cooperative Service 

Rural Utilities Service 

Farm Service Agency 

7 CFR Part 1902 

Disbursement of Funds 

AGENCIES: Rural Housing Service, Rural 

Business-Cooperative Service, Rural 

Utilities Service, and Farm Service 

Agency, USDA. 

ACTION: Final rule. 

SUMMARY: The Agencies are revising 

their disbursement of funds regulations. 

This action is necessary since existing 

regulations do not accurately reflect the 

current disbursement methodologies 

employed by the Agencies. The 

intended effect is to simplify and update 

the regulations; to eliminate reference to 

the obsolete Loan Disbursement System; 

clarify Federal Deposit Insurance 

Corporation (FDIC) and National Credit 

Union Administration (NCUA) 

insurance coverage; and eliminate 

reference to the now defunct Federal 

Savings and Loan Insurance Corporation 

(FSLIC). These amended regulations are 

to ensure the Agencies’ field offices 

have current guidance on the 

disbursement methods available and 

supervised bank accounts. 

EFFECTIVE DATE: October 12, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Ronald Gianella, Staff Accountant, 

Office of the Deputy Chief Financial 

Officer, Policy and Internal Review 

Division, U.S. Department of 

Agriculture, STOP 33, P.O. Box 200011, 

St. Louis, Missouri 63120, telephone: 

(314) 457–4298. 

SUPPLEMENTARY INFORMATION: 

Classification 

This action is not subject to the 

provisions of Executive Order 12866 

since it involves only internal Agency 

management. This action is not 

published for prior notice and comment 

under the Administrative Procedure Act 

since it involves only internal Agency 

management and publication for 

comment is unnecessary and contrary to 

the public interest. 

Programs Affected 

The Catalog of Federal Domestic 

Assistance programs impacted by this 

action are as follows: 

10.353—National Rural Development 

Partnership 

10.405—Farm Labor Housing Loans and 

Grants 

10.410—Very Low to Moderate Income 

Housing Loans 

10.411—Rural Housing Site Loans and 

Self-Help Housing Land Development 

Loans 

10.415—Rural Rental Housing Loans 

10.417—Very Low-Income Housing 

Repair Loans and Grants 

10.420—Rural Self-Help Housing 

Technical Assistance 

10.421—Indian Tribes and Tribal 

Corporation Loans 

10.427—Rural Rental Assistance 

Payments 

10.433—Rural Housing Preservation 

Grants 

10.438—Section 538 Rural Rental 

Housing Guaranteed Loans 

10.441—Technical and Supervisory 

Assistance Grants 

10.442—Housing Application Packaging 

Grants 

10.444—Direct Housing Natural Disaster 

Loans and Grants 

10.445—Direct Housing Natural Disaster 

10.446—Rural Community Development 

Initiative 

10.760—Water and Waste Disposal 

Systems for Rural Communities 

10.761—Technical Assistance and 

Training Grants 

10.762—Solid Waste Management 

Grants 

10.763—Emergency Community Water 

Assistance Grants 

10.766—Community Facilities Loans 

and Grants 

10.767—Intermediary Relending 

Program 

10.768—Business and Industry Loans 

10.769—Rural Business Enterprise 

Grants 

10.770—Water and Waste Disposal 

Loans and Grants (Section 306C) 

10.771—Rural Cooperative 

Development Grants 

10.772—Empowerment Zones Program 

10.773—Rural Business Opportunity 

Grants 

10.775—Renewable Energy Systems and 

Energy Efficiency Improvements 

Program 

10.854—Rural Economic Development 

Loans and Grants 

Intergovernmental Consultation 

Programs with Catalog of Federal 

Domestic Assistance numbers 10.353, 

10.405, 10.411, 10.415, 10.420, 10.421, 

10.427, 10.433, 10.760, 10.763, 10.766, 

10.767, 10.768, 10.769, 10.770, 10.771, 

10.773, and 10.854 are subject to the 

provisions of Executive Order 12372 

which requires intergovernmental 

consultation with State and local 

officials. 

Programs with Catalog of Federal 

Domestic Assistance numbers 10.410, 

10.417, 10.438, 10.441, 10.442, 10.444, 

10.445, 10.446, 10.761, 10.762, 10.772, 

10.775 are excluded from the scope of 

Executive Order 12372. 

Civil Justice Reform 

This final rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. In accordance with this 

rule: (1) Unless otherwise specifically 

provided, all State and local laws and 

regulations that are in conflict with this 

rule will be preempted; (2) no 

retroactive effect will be given to this 

rule except as specifically prescribed in 

the rule; and (3) administrative 

proceedings of the National Appeals 

Division (7 CFR part 11) must be 

exhausted before litigation against the 

Department is instituted. 

Paperwork Reduction Act 

The information collection 

requirements contained in this rule have 

been approved by the Office of 

Management and Budget (OMB) under 

the provisions of 44 U.S.C. Chapter 35 

and were assigned OMB control number 

0575–0184 in accordance with the 

Paperwork Reduction Act of 1995. No 

person is required to respond to a 

collection of information unless it 

displays a valid OMB control number. 

This rule does not impose any new 

Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Rules and Regulations 59225 

information collection requirements 

from those approved by OMB. 

GPEA Statement 

The Agencies are committed to 

compliance with GPEA, which requires 

Government agencies, in general, to 

provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Pub. L. 

104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under Section 202 of the UMRA, 

the Agencies generally must prepare a 

written statement, including a costbenefit analysis, for proposed and final 

rules with ‘‘Federal mandates’’ that may 

result in expenditures to State, local, or 

tribal governments, in the aggregate, or 

to the private sector, of $100 million or 

more in any 1 year. When such a 

statement is needed for a rule, Section 

205 of the UMRA generally requires the 

agencies to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

more cost-effective, or least burdensome 

alternative that achieves the objectives 

of the rule. This rule contains no 

Federal mandates (under the regulatory 

provisions of title II of the UMRA) for 

State, local, and tribal governments or 

the private sector. Thus, the rule is not 

subject to the requirements of Sections 

202 and 205 of the UMRA. 

Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR part 1940, 

Subpart G, ‘‘Environmental Program.’’

The Agencies have determined that this 

final action does not constitute a major 

Federal action significantly affecting the 

quality of human environment, and in 

accordance with the National 

Environmental Policy Act of 1969, 42 

U.S.C. 4321 et seq., an Environmental 

Impact Statement is not required. 

Executive Order 13132, Federalism 

The policies contained in this rule do 

not have any substantial direct effect on 

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. In addition, this 

rule does not impose substantial direct 

compliance costs on State and local 

governments. Therefore, consultation 

with the States is not required. 

Discussion of Final Rule 

7 CFR 1902, subpart A, is being 

revised to eliminate procedures 

servicing officials should follow in 

ordering loan and grant disbursements. 

These procedures are in 7 CFR 2018, 

subpart D. 7 CFR 1902, subpart A, is 

being revised to clarify FDIC and NCUA 

insurance coverage and eliminate 

reference to the now defunct FSLIC. The 

Financial Institutions Reform, Recovery, 

and Enforcement Act of 1989 abolished 

the insolvent FSLIC. The FDIC insures 

deposits in banks and savings 

associations and insures each person’s 

share in all joint accounts at an 

institution up to $100,000. The NCUA 

insures deposits in Federal credit 

unions and insures each person’s share 

in all joint accounts at an institution up 

to $100,000. 

The Farm Service Agency (FSA) 

disbursement policies are established in 

internal agency handbooks. While 

disbursements under some FSA 

programs were processed according to 7 

CFR 1902, subpart A, prior to the USDA 

Reorganization Act, FSA no longer 

utilizes this subpart. 

List of Subjects in 7 CFR Part 1902 

Accounting, banks, banking, grant 

programs—housing and community 

development, loan programs—

agriculture, loan programs—housing 

and community development. 

■ For reasons set forth in the preamble, 

Chapter XVIII, title 7, Code of Federal 

Regulations is amended as follows: 

PART 1902—SUPERVISED BANK 

ACCOUNTS 

■ 1. The authority citation for part 1902 

is revised to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 7 

U.S.C. 6991, et seq.; 42 U.S.C. 1480; 

Reorganization Plan No. 2 of 1953 (5 U.S.C. 

App.). 

Subpart A—Supervised Bank 

Accounts of Loan, Grant, and Other 

Funds 

■ 2. The title of subpart A is revised to 

read as set forth above. 

■ 3. Section 1902.1 is revised to read as 

follows: 

§ 1902.1 General. 

This subpart prescribes the policies 

and procedures in establishing and 

using supervised bank accounts, and in 

placing Multi-Family Housing (MFH) 

reserve accounts in supervised bank 

accounts. 7 CFR part 2018, subpart D, 

provides the procedures Servicing 

Officials should follow in ordering loan 

and grant disbursements. 

(a) Borrowers referred to in this 

subpart include both loan and grant 

recipients. They are referred to as 

‘‘depositors’’ in the deposit agreements 

hereinafter described. References herein 

and in deposit agreements to ‘‘other 

lenders’’ include lenders and grantors 

other than Rural Development. 

(b) Banks and savings associations 

referred to in this subpart are those in 

which deposits are insured by the FDIC. 

(c) Credit unions referred to in this 

subpart are those in which deposits are 

insured by the NCUA. 

(d) Financial institutions as referred 

to in this subpart include banks, savings 

associations, and credit unions which 

are covered by the proper insurance 

coverage cited in paragraphs (b) and (c) 

of this section. 

(e) Supervised bank accounts referred 

to in this subpart are bank, savings 

association, or credit union accounts 

established through deposit agreements 

entered into between the borrower, the 

United States of America acting through 

Rural Development, and the Financial 

Institution on Form RD 402–1, ‘‘Deposit 

Agreement’’. 

(f) Form RD 402–1 provides for the 

deposit of funds in a supervised bank 

account to ensure the performance of 

the borrower’s obligation to Rural 

Development in connection with a loan 

and/or grant. 

(g) ‘‘Interest-Bearing Deposit 

Agreement’’ (Exhibit B of this subpart), 

provides for the deposit of loan or grant 

funds that are not required for 

immediate disbursement in specified 

interest-bearing deposits, and it is 

executed in conjunction with Form RD 

402–1. 

(h) Servicing officials referred to in 

this instruction include county 

supervisors, district directors, local 

supervisors, area supervisors, and 

National Office grant program managers. 

(i) Automated systems referred to in 

this instruction refers to the loan 

accounting systems; e.g., Program Loan 

Accounting System, Automated MultiHousing Accounting System, and 

Dedicated Loan Origination System, 

from which loan and grant 

disbursements are ordered. 

(j) This subpart includes the National 

Office directly servicing a grant 

recipient or recipient of cooperative 

agreement funds. 

■ 4. Section 1902.2 is revised to read as 

follows: 

§ 1902.2 Policies concerning 

disbursement of funds. 

(a) Generally, loan and grant 

disbursements may be requested on an 

as needed basis, thereby reducing the 

need for supervised bank accounts. For 

59226 Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Rules and Regulations 

all construction loans and those loans 

using multiple advances, only the actual 

amount to be disbursed at loan closing 

will be requested through the automated 

systems. Subsequent disbursements will 

be ordered as needed. However, 

supervised bank accounts may be used 

in certain circumstances. For example: 

(1) When a construction loan is made 

and the construction is substantially 

completed, but a small amount is being 

withheld pending completion of 

landscaping or some similar item. In 

this case, funds not disbursed may be 

placed in a supervised bank account for 

future disbursement as appropriate. 

(2) When a large number of checks 

will be issued in the construction of a 

dwelling or other development. In such 

cases, loan and grant disbursements will 

be requested in accordance with 7 CFR 

part 2018, subpart D as necessary, 

deposited in a supervised bank account, 

and disbursed as necessary to suppliers, 

sub-contractors, etc. 

(3) Association loan and grant funds 

made on a multiple advance basis may 

be deposited in a supervised bank 

account when required by State statutes 

or when determined necessary by the 

loan approval official. 

(4) Supervised bank accounts may be 

used when needed as defined in 

paragraph (a)(5) of this section to ensure 

the correct expenditures of all or a part 

of loan and grant funds, borrower 

contributions, and borrower income. 

Such accounts will be limited in 

amount and duration to the extent 

feasible through the prudent 

disbursement of funds and the prompt 

termination of the interests of Rural 

Development and other lenders when 

the accounts are no longer required. 

(5) When it is determined by the 

Servicing Official that special 

supervision is needed in the 

management of the borrower’s finances, 

funds may be deposited in a supervised 

bank account. This supervisory 

technique will be used for a temporary 

period to help the borrower learn to 

properly manage his/her finances. Such 

a period will not exceed 1 year unless 

extended by the Servicing Official. 

(b) Program instructions provide 

information as to the type of note to be 

utilized and the method of handling 

advances and the interest accrued. 

(c) The debt instruments executed at 

the time of loan closing constitute an 

obligation on the part of the 

Government to disburse all funds at one 

time or in multiple advances, provided 

the funds are for purposes authorized by 

the Government at the time of loan 

closing. This obligatory commitment 

takes priority over any intervening liens 

or advances by other creditors, 

regardless of the provisions of the State 

laws involved. 

■ 5. Section 1902.3, is amended by 

revising paragraphs (a), (b) introductory 

text, and (c) to read as follows: 

§ 1902.3 Procedures to follow in fund 

disbursement. 

(a) The Servicing Official will 

determine during loan approval the 

amount(s) of loan or grant 

disbursement(s)—full or partial—and 

will process the request to the 

appropriate automated system in 

accordance with 7 CFR part 2018, 

subpart D. 

(b) When Treasury check(s) are 

delivered to the Servicing Official, the 

Servicing Official will make sure that 

the name of the borrower and the 

amount(s) of check(s) coincide with the 

request on file. The Servicing Official 

should be sure that the check is 

properly endorsed to ensure payment to 

the intended recipient. Examples of 

such restrictive endorsements are: 

* * * * * 

(c) When necessary, and only under 

the circumstances listed in § 1902.2, the 

Servicing Official will establish, or 

cause to be established, a supervised 

bank account. Funds deposited in a 

supervised bank account are to be 

recorded and accounted for on Form RD 

402–2, ‘‘Statement of Deposits and 

Withdrawals’’. 

■ 6. Section 1902.4 is amended by 

revising paragraphs (a)(3), (a)(5), and 

(b)(1) to read as follows: 

§ 1902.4 Establishing MFH reserve 

accounts in a supervised bank account. 

(a) * * * 

(3) Interest bearing. The reserve 

account funds are encouraged to be 

maintained in an interest-bearing 

account. The ‘‘Interest-Bearing Deposit 

Agreement’’ set out in Exhibit B of this 

subpart is not required to be used for 

reserve accounts. 

* * * * * 

(5) Financial institutions. The reserve 

account must be maintained in 

authorized financial institutions set out 

in subpart C of part 1930 of this chapter; 

e.g., banks, savings associations, credit 

unions, brokerage firms, mutual funds. 

Generally, any financial institution may 

be used provided invested or deposited 

funds are insured to protect against theft 

and dishonesty. The reserve account 

funds need not be Federally insured, but 

must be otherwise covered by nonFederal insurance against theft and 

dishonesty. 

* * * * * 

(b) * * * 

(1) Deposits. Generally, Rural 

Development will not require the review 

or approval of deposits or the use of 

Form RD 402–1 or 402–2. 

* * * * * 

7. Section 1902.6, is amended by 

revising paragraphs (a), (b)(3), (c), (d), 

(e), and (f) to read as follows: 

§ 1902.6 Establishing supervised bank 

accounts. 

(a) Each borrower will be given an 

opportunity to choose the financial 

institution in which the supervised 

bank account will be established, 

provided the financial institution is a 

member of the FDIC or NCUA, as 

applicable. 

(b) * * * 

(3) An agreement is reached with the 

financial institution regarding the place 

where the counter-signature will be on 

the checks. 

(c) When possible, Servicing Officials 

will make arrangements with financial 

institutions to waive service charges in 

connection with supervised bank 

accounts. However, there is no objection 

to the payment by the borrower of a 

reasonable charge for such service. 

(d) For each borrower, if the amount 

of any loan and grant funds, plus any 

borrower contributions and funds from 

other sources to be deposited in the 

supervised bank account will exceed 

$100,000, the financial institution will 

be required to pledge collateral for the 

excess over $100,000 before the deposit 

is made (see § 1902.7 of this subpart). If 

the supervised bank account is a joint 

account, any amount over the FDIC- or 

NCUA-insured limit must be 

collateralized. 

(e) Only one supervised bank account 

will be established for any borrower 

regardless of the amount or source of 

funds, except for Rural Rental Housing 

loans where separate accounts will be 

established for each project. 

(f) When a supervised bank account is 

established, an original and two copies 

of the applicable Deposit Agreement 

and the Interest-Bearing Deposit 

Agreement (Exhibit B of this subpart), 

when applicable, will be executed by 

the borrower, the financial institution, 

and a Servicing Office employee. The 

original will be retained in the 

borrower’s case file, one executed copy 

will be delivered to the financial 

institution and one executed copy to the 

borrower. An extra copy of the InterestBearing Deposit Agreement, when 

applicable, will be prepared and 

attached to the certificate, passbook, or 

other evidence of deposit representing 

the interest-bearing deposit. 

* * * * * 

■ 8. Section 1902.7, is amended by 

revising paragraphs (a), (b) introductory 

Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Rules and Regulations 59227 

text, (b)(1), (b)(2), (c), (d), (e), and (f) to 

read as follows: 

§ 1902.7 Pledging collateral for deposit of 

funds in supervised bank accounts. 

(a) Funds in excess of $100,000 per 

financial institution, deposited for 

borrowers in supervised bank accounts, 

must be secured by pledging acceptable 

collateral with the Federal Reserve Bank 

(FRB) in an amount not less than the 

excess. If the supervised bank account is 

a joint account, any amount over the 

FDIC- or NCUA-insured limit must be 

collateralized. 

(b) As soon as it is determined that 

the loan will be approved and the 

applicant has selected or tentatively 

selected a financial institution for the 

supervised bank account, the Servicing 

Official will contact the financial 

institution to determine: 

(1) That the financial institution 

selected is insured by the FDIC (banks 

and savings associations) or NCUA 

(credit unions). 

(2) Whether the financial institution is 

willing to pledge collateral with the FRB 

under 31 CFR part 202 (Treasury 

Circular 176) to the extent necessary to 

secure the amount of funds being 

deposited in excess of the FDIC or 

NCUA insurance limit. 

* * * * * 

(c) If the financial institution agrees to 

pledge collateral, the Servicing Official 

should complete RD Form Letter 1902–

A–2, ‘‘Designated Financial 

Institution—Collateral Pledge’’, in an 

original and two copies: The original for 

the National Office, Policy and Analysis 

Division; the first copy for the State 

Office; and the second copy for the 

Servicing Official. The Rural 

Development Form Letter 1902–A–2 

should be forwarded to the National 

Office, Policy and Analysis Division, at 

least 30 days before the date of loan 

closing. 

(d) The National Office, Policy and 

Analysis Division, will arrange for the 

financial institution under its 

designation as a depository and 

financial agent of the U.S. Government 

to pledge the requested collateral. 

(e) If, two days before loan closing, 

the local Rural Development office 

which requested the collateral has not 

received notification from the National 

Office, Policy and Analysis Division, 

that collateral has been pledged, contact 

should be made with the financial 

institution to ascertain whether they 

have pledged collateral with their local 

FRB under 31 CFR part 202 (Treasury 

Circular 176). If the financial institution 

has pledged collateral, the local Rural 

Development office should contact the 

National Office, Policy and Analysis 

Division, who will follow-up with the 

local FRB concerning the collateral. 

(f) When the amount of deposit in the 

supervised bank account has been 

reduced to a point where the financial 

institution desires part or all of the 

collateral released, it should contact the 

National Office, Policy and Analysis 

Division. The local Rural Development 

office will be contacted for release 

authorization. The authorization release 

will be made through the local FRB, 

with notification to the financial 

institution. The local Rural 

Development office may also request 

release through the National Office, 

Policy and Analysis Division. 

■ 9. Section 1902.8, is added to read as 

follows: 

§ 1902.8 Authority to establish and 

administer supervised bank accounts. 

Servicing Officials are authorized to 

establish supervised bank accounts, 

deposit loan checks and other funds, 

countersign checks, close accounts, and 

execute all forms in connection with 

supervised bank account transactions 

and redelegate this authority to a person 

under their supervision who is 

considered capable of exercising such 

authority. State Directors will make 

written demand upon the bank for 

withdrawals outlined in § 1902.16. 

■ 10. Section 1902.9, is amended by 

revising paragraphs (a)(1), (a)(2), (a)(3), 

(a)(5), (b) introductory text, and (b)(2) to 

read as follows: 

§ 1902.9 Deposits. 

(a) * * * 

(1) Checks made payable solely to the 

Federal Government or any Agency 

thereof, and a joint check when the 

Treasurer of the United States is a joint 

payee, may not be deposited in a 

supervised bank account. 

(2) Rural Development personnel will 

accept funds for deposit in a borrower’s 

supervised bank account ONLY in the 

form of: A check or money order 

endorsed by the borrower ‘‘For Deposit 

Only;’’ a check drawn to the order of the 

financial institution in which the funds 

are to be deposited; a loan check drawn 

on the U.S. Treasury; or a Rural 

Development electronic funds transfer 

disbursement. 

(i) A joint check that is payable to the 

borrower and Rural Development will 

be endorsed by the Servicing Official as 

provided in 7 CFR part 1951, subpart B, 

Exhibit B, section 4. 

(ii) Ordinarily, when deposits are 

made from funds which are received as 

the result of consent or subordination 

agreements or assignments of income, 

the check should be drawn to the order 

of the financial institution in which the 

supervised bank account is established 

or jointly to the order of the borrower 

and Rural Development. All such 

checks should be delivered or mailed to 

the Servicing Office. 

(3) If direct or insured loan funds or 

borrower contributions are to be 

deposited in a supervised bank account, 

such funds will be deposited on the date 

of loan closing after it has been 

determined that the loan can be closed. 

However, if it is impossible to deposit 

the funds on the day the loan is closed 

due to reasons such as distance from the 

financial institution or banking hours, 

the funds will be deposited on the first 

banking day following the date of loan 

closing. 

* * * * * 

(5) When funds from any source in 

the form of cash, check, or money order 

are deposited by Rural Development 

personnel in a supervised bank account, 

a deposit slip will be prepared in an 

original and two copies with 

distribution as follows: Original to the 

financial institution, one copy to the 

borrower, and one copy for the 

borrower’s case folder. The name of the 

borrower, the sources of funds, ‘‘Subject 

to Rural Development 

Countersignature’’ and, if applicable, 

the account number, will be entered on 

each deposit slip. 

* * * * * 

(b) Deposits by borrowers. Funds in 

the form of cash, check, or money order 

may be deposited in the supervised 

bank account by the borrower if 

authorized by Rural Development, 

provided the financial institution has 

agreed that when a deposit is made to 

the account by other than Rural 

Development personnel, the financial 

institution will promptly deliver or mail 

a copy of the deposit slip to the Rural 

Development Servicing Office. 

* * * * * 

(2) Funds other than loan or grant 

funds may be deposited by the borrower 

in those exceptional instances where an 

agreement is reached between the 

Servicing Official and the borrower, 

whereby the borrower will make 

deposits of income from any source 

directly into the supervised bank 

account. In such instances the borrower 

will be instructed to prepare the deposit 

slip in the manner described in § 1902.9 

(a)(5) of this subpart. 

■ 11. Section 1902.10, is amended by 

revising paragraph (a), revising 

paragraphs (d)(2) through (d)(5), and 

removing paragraph (d)(6) to read as 

follows: 

59228 Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Rules and Regulations 

§ 1902.10 Withdrawals. 

(a) The Servicing Official will not 

countersign checks on the supervised 

bank account for the use of funds unless 

the funds deposited by the borrower 

from other sources were cash deposits, 

checks which the Servicing Official 

knows to be good, or deposited checks 

which have cleared. 

* * * * * 

(d) * * * 

(2) Ordinarily, a check will be 

countersigned before it is delivered to 

the payee. However, in justifiable 

circumstances, such as when excessive 

travel on the part of the borrower or 

Servicing Official would be involved, or 

purchase would be prevented, and the 

borrower can be relied upon to select 

goods and services in accordance with 

the plans, a check may be delivered to 

the payee by the borrower before being 

countersigned. 

(i) When a check is to be delivered to 

the payee before being countersigned, 

the Servicing Official must make it clear 

to the borrower and to the payee, if 

possible, that the check will be 

countersigned only if the quantity and 

quality of items purchased are in 

accordance with approved plans. 

(ii) Checks delivered to the payee 

before counter-signature will bear the 

following legend in addition to the 

legend for countersignature: Valid only 

upon countersignature of Rural 

Development.’’

(iii) The check must be presented by 

the payee or a representative to the 

Rural Development Servicing Office for 

the required countersignature. 

(iv) Such check must be accompanied 

by a bill of sale, invoice, or receipt 

signed by the borrower identifying the 

nature and cost of goods or services 

purchased, or similar information must 

be indicated on the check. 

(3) For real estate loans or grants, 

whether the check is delivered to the 

payee before or after countersignature, 

the number and date of the check will 

be inserted on all bills of sale, invoices, 

receipts, and itemized statements for 

materials, equipment, and services. 

(4) Bills of sale, invoices, receipts, or 

itemized statements may be returned to 

the borrower with the canceled check 

for the payment of the bill. 

(5) Checks to be drawn on a 

supervised bank account will bear the 

legend: 

• ‘‘Countersigned,’’ not as co-maker or 

endorser. 

lllllllllllllllllll

lllllllllllllllllll

(Title) 

Rural Development 

■ 12. Section 1902.11 is revised to read 

as follows: 

§ 1902.11 Servicing Office records. 

A record of funds deposited in a 

supervised bank account will be 

maintained on Form RD 402–2 in 

accordance with the Forms Manual 

Insert. The record of funds provided for 

operating purposes by another creditor 

or grantor will be on a separate Form RD 

402–2 so that they can be clearly 

identified. 

■ 13. Section 1902.14 is revised to read 

as follows: 

§ 1902.14 Reconciliation of accounts. 

(a) A checking account statement will 

be obtained periodically in accordance 

with established practices in the area. If 

the checking statement does not include 

sufficient information to reconcile the 

account (the name of the payee or the 

check number and the amount of each 

check; i.e., a negotiable demand draft 

drawn on a financial institution), the 

original cancelled check or either a copy 

or other reasonable facsimile of the 

cancelled check must be provided to the 

Servicing Office with the statement. 

Checking account statements will be 

reconciled promptly with Servicing 

Office records. The person making the 

reconciliation will initial the record and 

indicate the date of the action. 

(b) All checking account statements 

and, if necessary, original cancelled 

checks or either a copy or other 

reasonable facsimile of the cancelled 

checks will be forwarded immediately 

to the borrower when bank statements 

and Servicing Office records are in 

agreement. If a transmittal is used, Form 

RD 140–4, ‘‘Transmittal of Documents’’, 

is prescribed for that purpose. 

(c) If the financial institution did not 

return the original cancelled check(s) to 

the Agency with the statements, and 

Rural Development has a need for the 

original cancelled check(s), the financial 

institution, upon request by the Agency, 

will furnish to the Agency the requested 

original cancelled check(s) or a certified 

copy or other reasonable certified 

facsimile of the cancelled check(s) and 

will provide this service to Rural 

Development with no fees being 

assessed the Agency or the Depositor’s 

account for the service. 

■ 14. Section 1902.15 is amended by 

revising paragraph (b), removing 

paragraph (c), redesignating paragraph 

(d) as paragraph (c) and revising newly 

designated paragraphs (c)(1)(i) 

introductory text, (c)(2) introductory 

text, (c)(2)(iii), and (c)(4) to read as 

follows: 

§ 1902.15 Closing accounts. 

* * * * * 

(b) For all loan accounts, after 

completion of authorized loan funds 

expenditures, and after promptly 

refunding any remaining unexpended 

loan funds on the borrower’s loan 

account with Rural Development or 

another lender, as appropriate. 

(c) * * * 

(1) * * * 

(i) Ordinarily, upon notice of the 

death of a borrower, the Servicing 

Official will request the State Director to 

make demand upon the bank for the 

balance on deposit and apply all the 

balance after payment of any bank 

charges to the borrower’s Rural 

Development indebtedness. When the 

State Director approves continuation 

with a survivor, the supervised bank 

account of a deceased borrower may be 

continued with a remaining joint debtor 

who is liable for the loan and agrees to 

use the unexpended funds as planned, 

provided: 

* * * * * 

(2) Borrowers in default. Whenever it 

is impossible or impractical to obtain a 

signed check from a borrower whose 

supervised bank account is to be closed, 

the Servicing Official will request the 

State Director to make demand upon the 

financial institution for the balance on 

deposit in the borrower’s supervised 

bank account for application as 

appropriate: 

* * * * * 

(iii) For the return of Rural 

Development grant funds in accordance 

with 7 CFR part 1951, subpart B or 

* * * * * 

(4) Paid up borrowers. A paid-up 

borrower is one who has a balance 

remaining in the supervised bank 

account and has repaid the entire 

indebtedness to Rural Development and 

has properly expended all funds 

advanced by other lenders. In such 

cases the Servicing Official will: 

(i) Notify the borrower in writing that 

the interests in the account of Rural 

Development have been terminated, and 

(ii) Inform the borrower of the balance 

remaining in the supervised bank 

account. 

■ 15. Section 1902.50 is revised to read 

as follows: 

§ 1902.50 OMB control number. 

The reporting and recordkeeping 

requirements contained in this 

regulation have been approved by the 

OMB and have been assigned OMB 

Control Number 0575–0158. 

■ 16. Exhibit B of this subpart is 

amended by revising the prefix for the 

Federal Register / Vol. 70, No. 196 / Wednesday, October 12, 2005 / Rules and Regulations 59229 

date from ‘‘19’’ to be ‘‘20’’ every place 

it is mentioned. 

Dated: September 16, 2005. 

Russell T. Davis, 

Administrator, Rural Housing Service. 

[FR Doc. 05–20357 Filed 10–11–05; 8:45 am] 

BILLING CODE 3410–XV–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2005–22626; Directorate 

Identifier 2002–NM–295–AD; Amendment 

39–14332; AD 2005–20–35] 

RIN 2120–AA64 

Airworthiness Directives; Airbus Model 

A320–111 Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT). 

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is superseding an 

existing airworthiness directive (AD), 

which applies to certain Airbus Model 

A320–111 airplanes. The existing AD 

currently requires repetitive inspections 

for cracking in the front and rear faces 

and at the crown fittings of the upper 

stringers of the center wing box and 

applicable repairs. This new AD 

requires continuing the repetitive 

inspections at revised thresholds and 

intervals, and applicable repairs. This 

AD results from a manufacturer survey 

of airplanes affected by the existing 

inspection program that led to the 

consequent revision of the thresholds 

and intervals of the repetitive 

inspections. We are issuing this AD to 

detect and correct fatigue cracking of the 

upper stringers of the center wing box, 

which could lead to loss of structural 

integrity of the wing. 

DATES: Effective October 27, 2005. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in the AD 

as of October 27, 2005. 

We must receive comments on this 

AD by December 12, 2005. 

ADDRESSES: Use one of the following 

addresses to submit comments on this 

AD. 

• DOT Docket Web site: Go to http:// 

dms.dot.gov and follow the instructions 

for sending your comments 

electronically. 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov 

and follow the instructions for sending 

your comments electronically. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street SW., Nassif Building, 

Room PL–401, Washington, DC 20590. 

• Fax: (202) 493–2251. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

Contact Airbus, 1 Rond Point Maurice 

Bellonte, 31707 Blagnac Cedex, France, 

for service information identified in this 

AD. 

FOR FURTHER INFORMATION CONTACT: Dan 

Rodina, Aerospace Engineer, 

International Branch, ANM–116, FAA, 

Transport Airplane Directorate, 1601 

Lind Avenue, SW., Renton, Washington 

98055–4056; telephone (425) 227–2125; 

fax (425) 227–1149. 

SUPPLEMENTARY INFORMATION: 

Discussion 

On October 13, 1993, the FAA issued 

AD 93–16–10, amendment 39–8667 (58 

FR 47825, September 13, 1993). That 

AD applies to certain Airbus Model 

A320 airplanes. That AD requires 

repetitive inspections for cracking in the 

front and rear faces and at the crown 

fittings of the upper stringers of the 

center wing box and applicable repairs, 

if necessary. We issued that AD to 

detect fatigue cracking in the upper 

stringer, which could lead to loss of 

structural integrity. 

Actions Since Existing AD Was Issued 

Since we issued AD 93–16–10, Airbus 

conducted a survey of the upper 

stringers of the center wing boxes of 

airplanes affected by the existing 

inspection program. The results of the 

survey demonstrated that it was 

necessary to decrease the thresholds and 

intervals of the repetitive inspections, 

due to an adjustment of the A320 family 

reference fatigue mission. 

Relevant Service Information 

Airbus has issued Service Bulletin 

A320–57–1030, Revision 03, dated 

August 28, 2002. The service bulletin 

describes procedures for performing 

repetitive inspections—at thresholds 

and intervals which have been revised 

from those specified in Service Bulletin 

A320–57–1030, dated August 12, 1991, 

which is the service information 

referenced in AD 93–16–10—for 

cracking in the front and rear faces and 

at the crown fittings of the upper 

stringers of the center wing box between 

frame (FR) 36 and FR42. The Direction 

Ge ́ne ́rale de l’Aviation Civile (DGAC), 

which is the airworthiness authority for 

France, mandated the service 

information and issued French 

airworthiness directive 2002–341(B), 

dated June 26, 2002, to ensure the 

continued airworthiness of these 

airplanes in France. 

FAA’s Determination and Requirements 

of This AD 

This airplane model is manufactured 

in France and is type certificated for 

operation in the United States under the 

provisions of section 21.29 of the 

Federal Aviation Regulations (14 CFR 

21.29) and the applicable bilateral 

airworthiness agreement. Pursuant to 

this bilateral airworthiness agreement, 

the DGAC has kept the FAA informed 

of the situation described above. We 

have examined the DGAC’s findings, 

evaluated all pertinent information, and 

determined that we need to issue an AD 

for products of this type design that are 

certificated for operation in the United 

States. 

Therefore, we are issuing this AD to 

supersede AD 93–16–10. This new AD 

continues to require repetitive 

inspections with revised inspection 

thresholds and intervals, applicable 

repairs; as specified in the service 

information described previously, 

except as discussed under ‘‘Differences 

Between the AD and Service 

Information.’’

Differences Between the AD and 

Service Information 

Where the service bulletin describes 

procedures to contact the manufacturer 

for repair methods, this AD requires 

operators to use a repair method that we 

or the DGAC (or its delegated agent) 

approve. 

Clarification of Inspection Terminology 

In this AD, the ‘‘detailed visual 

inspection’’ specified in the service 

bulletin is referred to as a ‘‘detailed 

inspection.’’ We have included the 

definition for a detailed inspection in 

Note 1 of this AD. 

Explanation of Change to Applicability 

We have revised the applicability of 

the existing AD to identify model 

designations as published in the most 

recent type certificate data sheet for the 

affected models. 

Costs of Compliance 

None of the airplanes affected by this 

action are on the U.S. Register. All 

airplanes affected by this AD are 

currently operated by non-U.S. 

operators under foreign registry; 

therefore, they are not directly affected 

by this AD action. However, we 

consider this AD necessary to ensure 

that the unsafe condition is addressed if