Federal Register / Vol. 73, No. 183 / Friday, September 19, 2008 / Rules and Regulations 54305 

(a) The right of the REE Agency to 

disallow costs and recover funds on the 

basis of a later audit or other review. 

(b) The obligation of the Cooperator to 

return any funds due as a result of later 

refunds, corrections, or other 

transactions. 

(c) Audit requirements in § 550.24. 

(d) Property management 

requirements in §§ 550.36 through 

550.42. 

(e) Records retention as required in 

§ 550.56. 

§ 550.62 Collection of amounts due. 

(a) Any funds paid to a Cooperator in 

excess of the amount to which the 

Cooperator is finally determined to be 

entitled under the terms and conditions 

of the award constitute a debt to the 

Federal Government. If not paid within 

a reasonable period after the demand for 

payment, the REE Agency may in 

accordance with 7 CFR part 3, reduce 

the debt by— 

(1) Making an administrative offset 

against other requests for 

reimbursements, or 

(2) Withholding advance payments 

otherwise due to the Cooperator, or 

(3) Taking other action permitted by 

statute. 

(b) Except as otherwise provided by 

law, the REE Agency shall charge 

interest on an overdue debt in 

accordance with 31 CFR part 900, 

‘‘Federal Claims Collection Standards.’’ 

Gale A. Buchanan, 

Chief Scientist, USDA, Under Secretary, 

Research, Education, and Economics. 

[FR Doc. E8–21941 Filed 9–18–08; 8:45 am] 

BILLING CODE 3410–03–P 

DEPARTMENT OF AGRICULTURE 

Rural Business-Cooperative Service 

7 CFR Parts 1951 and 4274 

RIN: 0570–AA70 

Intermediary Relending Program 

AGENCY: Rural Business-Cooperative 

Service, USDA. 

ACTION: Direct final rule. 

SUMMARY: The Rural BusinessCooperative Service (RBS) amends its 

regulations for the Intermediary 

Relending Program (IRP). This action is 

needed to address several contradictions 

between the servicing and processing 

regulations. The intended effect of this 

action is to incorporate consistent 

language in both regulations as it relates 

to loan limits for ultimate recipients, 

eligible vs. ineligible uses of funds, and 

include a requirement on the extent to 

which ultimate recipients are assisted 

by the loans made. The changes will 

result in eliminating inconsistencies 

within the regulations and provide 

clarity and guidance that will allow the 

program to operate more efficiently and 

effectively. 

DATES: This direct final rule is effective 

November 3, 2008, unless USDA Rural 

Development receives written adverse 

comments or written notice of intent to 

submit adverse comments on or before 

October 20, 2008. If USDA Rural 

Development receives such comments 

or notice, USDA Rural Development 

will publish a timely document in the 

Federal Register withdrawing the direct 

final rule. 

ADDRESSES: You may submit adverse 

comments or notice of intent to submit 

adverse comments to this rule by any of 

the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Submit written comments via 

the U.S. Postal Service to the Branch 

Chief, Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, STOP 0742, 1400 

Independence Avenue, SW., 

Washington, DC 20250–0742. 

• Hand Delivery/Courier: Submit 

written comments via Federal Express 

Mail or other courier service requiring a 

street address to the Branch Chief, 

Regulations and Paperwork 

Management Branch, U.S. Department 

of Agriculture, 300 7th Street, SW., 7th 

Floor, Washington, DC 20024. 

All written comments will be 

available for public inspection during 

regular work hours at 300 7th Street, 

SW., 7th Floor address listed above. 

FOR FURTHER INFORMATION CONTACT: Lori 

A. Washington, Loan Specialist, 

Specialty Lenders Division, Rural 

Business-Cooperative Service, U.S. 

Department of Agriculture, STOP 3225, 

1400 Independence Ave., SW., 

Washington, DC 20250–3225, 

Telephone (202) 720–9815, E-mail 

lori.washington@wdc.usda.gov. 

SUPPLEMENTARY INFORMATION: 

Classification 

This rule has been determined to be 

not significant for purposes of Executive 

Order 12866 and has been reviewed by 

the Office of Management and Budget 

(OMB). 

Programs Affected 

The Catalog of Federal Domestic 

Assistance number for the program 

impacted by this action is 10.767, 

Intermediary Relending Program. 

Intergovernmental Review 

The IRP is subject to the provisions of 

Executive Order 12372, which requires 

intergovernmental consultation with 

State and local officials. USDA Rural 

Development has conducted 

intergovernmental consultation in the 

manner delineated in RD Instruction 

1940–J, ‘‘Intergovernmental Review of 

Rural Development Programs and 

Activities,’’ and in 7 CFR part 3015, 

subpart V. 

Civil Justice Reform 

This direct final rule has been 

reviewed under Executive Order 12988, 

Civil Justice Reform. In accordance with 

this rule: (1) All State and local laws 

and regulations that are in conflict with 

this rule will be preempted, (2) no 

retroactive effect will be given this rule, 

and (3) administrative proceedings in 

accordance with the regulations of the 

Agency at 7 CFR part 11 must be 

exhausted before bringing suit in court 

challenging action taken under this rule 

unless those regulations specifically 

allow bringing suit at an earlier time. 

Environmental Impact Statement 

This document has been reviewed in 

accordance with 7 CFR Part 1940, 

Subpart G, ‘‘Environmental Program.’’ 

USDA Rural Development has 

determined that this action does not 

constitute a major Federal action 

significantly affecting the quality of the 

human environment, and, in accordance 

with the National Environmental Policy 

Act of 1969, Public Law 91–190, an 

Environmental Impact Statement is not 

required. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 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, 

USDA Rural Development 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 UMRA generally requires USDA 

Rural Development 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 


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54306 Federal Register / Vol. 73, No. 183 / Friday, September 19, 2008 / Rules and Regulations 

provisions of Title II of the UMRA) for 

State, local, and tribal governments or 

the private sector. Thus, this rule is not 

subject to the requirements of sections 

202 and 205 of UMRA. 

Regulatory Flexibility Act 

In compliance with the Regulatory 

Flexibility Act, USDA Rural 

Development has determined that this 

action would not have a significant 

economic impact on a substantial 

number of small entities because the 

action will not affect a significant 

number of small entities as defined by 

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

601). USDA Rural Development made 

this determination based on the fact that 

this regulation only impacts those who 

choose to participate in the program. 

Small entity applicants will not be 

impacted to a greater extent than large 

entity applicants. Therefore, a 

regulatory impact analysis was not 

performed. 

Executive Order 13132, Federalism 

It has been determined under 

Executive Order 13132, Federalism, that 

this rule does not have sufficient 

federalism implications to warrant the 

preparation of a Federalism Assessment. 

The provisions contained in this rule 

will not have a substantial direct effect 

on States or their political subdivisions 

or on the distribution of power and 

responsibilities among the various 

levels of Government. 

Paperwork Reduction Act 

This rule does not revise or impose 

any new information collection or 

recordkeeping requirements. 

E-Government Act Compliance 

USDA Rural Development is 

committed to complying with the EGovernment Act, to promote the use of 

the Internet and other information 

technologies to provide increased 

opportunities for citizen access to 

Government information and services, 

and for other purposes. 

Background 

A recent Management Control Review 

of the program identified contradictions 

between the processing (7 CFR part 

4274, subpart D) and servicing (7 CFR 

part 1951, subpart R) regulations. USDA 

Rural Development is correcting 

inconsistencies in the following areas: 

(1) Eligible and ineligible loan purposes; 

(2) ineligible borrowers; and (3) the 

definition of ‘‘rural area.’’ The following 

clarifications are being made (1) setting 

the level of ultimate recipient loan 

assistance; and (2) establishing when 

debt refinancing should be considered. 

We are also deleting references to 

churches which precluded charitable 

and faith-based institutions from 

participating in the program in order to 

align it with current Departmental 

policies. We are also requiring an 

annual report on the extent to which 

increased employment, income and 

ownership opportunities are provided to 

low-income persons, farm families, and 

displaced farm families for each loan 

made by an intermediary. 

List of Subjects 

7 CFR Part 1951 

Loan programs—Agriculture, rural 

areas. 

7 CFR Part 4274 

Community development, Economic 

development, Loan programs— 

Business, Rural areas. 

■ For reasons set forth in this preamble, 

chapters XVIII and XLII, title 7, Code of 

Federal Regulations, are amended as 

follows: 

CHAPTER XVIII—RURAL HOUSING 

SERVICE, RURAL BUSINESSCOOPERATIVE SERVICE, RURAL 

UTILITIES SERVICE, AND FARM 

SERVICE AGENCY, DEPARTMENT OF 

AGRICULTURE 

PART 1951—SERVICING AND 

COLLECTIONS 

■ 1. The authority citation for part 1951 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1932 

Note; 7 U.S.C. 1989; 301 U.S.C. 3716; 42 

U.S.C. 1480. 

Subpart R—Rural Development Loan 

Servicing 

■ 2. Section 1951.853 is amended by 

adding paragraph (b)(2)(xi) to read as 

follows: 

§ 1951.853 Loan purposes for undisbursed 

RDLF loan funds from HHS. 

* * * * * 

(b) * * * 

(2) * * * 

(xi) Debt refinancing if the following 

conditions are met. 

(A) Intermediary is responsible for 

determining whether debt restructuring 

is in the best interest of the revolving 

loan fund. 

(B) Refinancing debts will be allowed 

only when it is determined by the 

intermediary that the project is viable 

and refinancing is necessary to create 

new or save existing jobs or create or 

continue a needed service; and 

(C) On any request for refinancing of 

a secured loan, the intermediary must 

obtain the previously held collateral as 

security and must not pay off a creditor 

in excess of the value of the collateral. 

Additional collateral will be required 

when the refinancing of an unsecured 

loan is unavoidable to accomplish the 

necessary strengthening of the ultimate 

recipient’s position. 

■ 3. Section 1951.854 is amended by 

removing paragraphs (b)(7) and (b)(8) 

and revising paragraph (a) to read as 

follows: 

§ 1951.854 Ineligible assistance purposes. 

(a) Intermediaries. Intermediary loans 

may not be used by the intermediary for 

any of the following purposes: 

(1) For payment of the intermediary’s 

own administrative costs or expenses. 

(2) For assistance in excess of what is 

needed to accomplish the purpose of the 

ultimate recipient project. 

(3) For distribution or payment to the 

owner, partners, shareholders, or 

beneficiaries of the ultimate recipient or 

members of their families when such 

persons will retain any portion of their 

equity in the ultimate recipient. 

(4) For charitable institutions, that 

would not have revenue from sales, fees, 

or stable revenue to support the 

operation and repay the loan, and 

fraternal organizations. 

(5) For assistance to Federal 

government employees, active duty 

military personnel, employees of the 

intermediary, or any organization for 

which such persons are directors or 

officers or have 20 percent or more 

ownership. 

(6) For relending in a non-rural area. 

(7) For a loan to an ultimate recipient 

which has an application pending with, 

or a loan outstanding from, another 

intermediary involving an IRP revolving 

fund if the total IRP loans would exceed 

the limits established in § 4274.331(b). 

(8) For any line of credit. 

(9) For lending and investment 

institutions and insurance companies. 

(10) For golf courses, race tracks, or 

gambling facilities. 

(11) To finance more than 75 percent 

or more than $250,000 of an ultimate 

recipient’s total project cost, as 

described in § 4274.331(b). The total 

amount of RDLF funds requested by the 

ultimate recipient plus the outstanding 

balance of any existing RDLF loan(s) 

will not exceed $150,000. This limit 

does not apply to revolved funds. Other 

loans, grants, or intermediary or 

ultimate recipient contributions or 

funds from other sources must be used 

to make up the difference between the 

total cost and the assistance provided 

with RDLF funds. 

(12) For any investments in securities 

or certificates of deposit of over 30-day 


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Federal Register / Vol. 73, No. 183 / Friday, September 19, 2008 / Rules and Regulations 54307 

duration without the concurrence of 

Rural Development. If the IRP funds 

have been unused to make loans to 

ultimate recipients for 6 months or 

more, those funds will be returned to 

Rural Development unless Rural 

Development provides an exception to 

the intermediary. Any exception would 

be based on evidence satisfactory to 

Rural Development that every effort is 

being made by the intermediary to 

utilize the IRP funding in conformance 

with program objectives. 

CHAPTER XLII—RURAL BUSINESSCOOPERATIVE SERVICE AND RURAL 

UTILITIES SERVICE, DEPARTMENT OF 

AGRICULTURE 

PART 4274—DIRECT AND INSURED 

LOANMAKING 

■ 4. The authority citation for part 4274 

continues to read as follows: 

Authority: 5 U.S.C. 301; 7 U.S.C. 1932 

note; 7 U.S.C. 1989. 

Subpart D—Intermediary Relending 

Program (IRP) 

■ 5. Section 4274.314 is amended by 

revising paragraph (b)(10)(i) and by 

adding paragraph (b)(15) to read as 

follows: 

§ 4274.314 Loan purposes. 

* * * * * 

(b) * * * 

(10) * * * 

(i) The intermediary is responsible for 

making prudent lending decisions based 

on sound underwriting principles when 

considering the restructuring of an 

ultimate recipient’s debt; and 

* * * * * 

(15) Aquaculture-based rural small 

businesses. 

■ 6. Section 4274.319 is amended by 

revising paragraphs (c) and (d) and by 

adding paragraphs (m) and (n) to read as 

follows: 

§ 4274.319 Ineligible loan purposes. 

* * * * * 

(c) Charitable institutions, that would 

not have revenue from sales, fees, or 

stable revenue to support the operation 

and repay the loan, and fraternal 

organizations. 

(d) Assistance to Federal government 

employees, active duty military 

personnel, employees of the 

intermediary, or any organization for 

which such persons are directors or 

officers or have 20 percent or more 

ownership. 

* * * * * 

(m) For any line of credit. 

(n) For any legitimate business 

activity when more than 10 percent of 

the annual gross revenue is derived 

from legalized gambling activity. 

■ 7. Section 4274.338 is amended by 

adding paragraph (b)(4)(ii)(D) to read as 

follows: 

§ 4274.338 Loan agreements between the 

Agency and the intermediary. 

* * * * * 

(b) * * * 

(4) * * * 

(ii) * * * 

(D) An annual report on the extent to 

which increased employment, income 

and ownership opportunities are 

provided to low-income persons, farm 

families, and displaced farm families for 

each loan made by such intermediary. 

Dated: September 12, 2008. 

Ben Anderson, 

Administrator, Rural Business-Cooperative 

Service. 

[FR Doc. E8–22003 Filed 9–18–08; 8:45 am] 

BILLING CODE 3410–XY–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 223 

[Regulation W; Docket No. R–1330] 

Transactions Between Member Banks 

and Their Affiliates: Exemption for 

Certain Securities Financing 

Transactions Between a Member Bank 

and an Affiliate 

AGENCY: Board of Governors of the 

Federal Reserve System (Board). 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: In light of the continuing 

unusual and exigent circumstances in 

the financial markets, the Board has 

adopted, on an interim final basis, a 

regulatory exemption for member banks 

from certain provisions of section 23A 

of the Federal Reserve Act and the 

Board’s Regulation W. The exemption 

increases the capacity of member banks, 

subject to certain conditions designed to 

help ensure the safety and soundness of 

the banks, to enter into securities 

financing transactions with affiliates. 

DATES: The interim final rule became 

effective on September 14, 2008. 

Comments must be received on or 

before October 31, 2008. 

ADDRESSES: You may submit comments, 

identified by Docket No. R–1330, by any 

of the following methods: 

Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

Fax: (202) 452–3819 or (202) 452– 

3102. 

Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. 

Public comments may also be viewed 

electronically or in paper form in Room 

MP–500 of the Board’s Martin Building 

(20th and C Streets, NW.) between 9 

a.m. and 5 p.m. on weekdays. 

FOR FURTHER INFORMATION CONTACT: 

Mark E. Van Der Weide, Assistant 

General Counsel, (202) 452–2263, Legal 

Division, or Norah M. Barger, Deputy 

Director, (202) 452–2402, Division of 

Banking Supervision and Regulation, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. For the deaf, hard of hearing, 

and speech impaired only, 

teletypewriter (TTY), (202) 263–4869. 

SUPPLEMENTARY INFORMATION: In light of 

the ongoing dislocations in the financial 

markets, and the potential impact of 

such dislocations on the functioning of 

the U.S. tri-party repurchase agreement 

market, the Board has adopted on an 

interim basis the following exemption 

from section 23A of the Federal Reserve 

Act (12 U.S.C. 371c) and the Board’s 

Regulation W (12 CFR part 223). The 

exemption will facilitate the ability of 

an affiliate of a member bank (such as 

an SEC-registered broker-dealer) to 

obtain financing, if needed, for 

securities or other assets that the 

affiliate ordinarily would have financed 

through the U.S. tri-party repurchase 

agreement market. The exemption is 

subject to several conditions designed to 

protect the safety and soundness of the 

member bank. 

First, the member bank may use the 

exemption to finance only those asset 

types that the affiliate currently finances 

in the U.S. tri-party repurchase 

agreement market. 

Second, the transactions must be 

marked to market daily and subject to 

daily margin maintenance requirements, 


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