5902 Federal Register / Vol. 75, No. 24 / Friday, February 5, 2010 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Rural Utilities Service 

7 CFR Part 1720 

RIN–0572–ZA06 

Guarantees for Bonds and Notes 

Issued for Electrification or Telephone 

Purposes 

AGENCY: Rural Utilities Service, USDA. 

ACTION: Proposed rule. 

SUMMARY: The Rural Utilities Service 

(RUS) proposes to amend its regulations 

for the guarantee program for 

cooperative and other not-for-profit 

lenders that make loans for eligible 

electric and telephone purposes. These 

proposed amendments implement 

changes adapted in the Food, 

Conservation, and Energy Act of 2008. 

The intended effect is to update agency 

regulations to reflect current statutory 

authority. 

DATES: Written comments on this 

proposed action must be received by 

RUS no later than April 6, 2010. 

ADDRESSES: Submit comments by either 

of the following methods: 

• Federal eRulemaking Portal: Go to 

http://www.regulations.gov. In the 

‘‘Search Documents’’ box, enter RUS– 

09–Electric–0005, check the box under 

the Search box labeled ‘‘Select to find 

documents accepting comments or 

submissions,’’ and click on the GO>> 

key. To submit a comment, choose 

‘‘Send a comment or submission,’’ under 

the Docket Title. In order to submit your 

comment, the information requested on 

the ‘‘Public Comment and Submission 

Form,’’ must be completed. (If you click 

on the hyperlink of the docket when the 

search returns it, you will see the docket 

details. Click on the yellow balloon to 

receive the ‘‘Public Comment and 

Submission Form.’’) Information on 

using Regulations.gov, including 

instructions for accessing documents, 

submitting comments, and viewing the 

docket after the close of the comment 

period, is available through the site’s 

‘‘How to Use this Site’’ link. 

• Postal Mail/Commercial Delivery: 

Please send your comments addressed 

to Michele Brooks, Director, Program 

Development and Regulatory Analysis, 

USDA Rural Development, STOP 1522, 

Room 5162, 1400 Independence 

Avenue, SW., Washington, DC 20250– 

1522. Please state that your comment 

refers to Docket No. RUS–09–Electric– 

0005. 

Other Information: Additional 

information about RUS and its programs 

is available at http:// 

www.rurdev.usda.gov/index.html. 

FOR FURTHER INFORMATION CONTACT: 

Karen L. Larsen, Policy Analysis and 

Loan Management Staff, Office of the 

Assistant Administrator, Electric 

Programs, Rural Utilities Service, 

United States Department of 

Agriculture, 1400 Independence 

Avenue, SW., Room 5165–S, 

Washington, DC 20250–1560. 

Telephone (202) 720–9545; e-mail: 

karen.larsen@wdc.usda.gov. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This proposed rule has been 

determined to be not significant for 

purposes of Executive Order 12866 and, 

therefore, has not been reviewed by the 

Office of Management and Budget. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance (CFDA) number assigned to 

the Electric Loan and Loan Guarantee 

program is 10.850 Rural Electrification 

Loans and Loan Guarantees. The catalog 

is available on the Internet and the 

General Services Administration’s 

(GSA) free CFDA Web site at http:// 

www.cfda.gov. The CFDA Web site also 

contains a PDF file version of the 

Catalog that, when printed, has the same 

layout as the printed document that the 

Government Printing Office (GPO) 

provides. GPO prints and sells the 

CFDA to interested buyers. For 

information about purchasing the 

Catalog of Federal Domestic Assistance 

from GPO, call the Superintendent of 

Documents at 202–512–1800 or toll free 

at 866–512–1800, or access GPO’s online bookstore at http:// 

bookstore.gpo.gov. 

Executive Order 12372 

This proposed rule is excluded from 

the scope of Executive Order 12372, 

Intergovernmental Consultation, which 

may require consultation with State and 

local officials. See the final rule related 

notice entitled, ‘‘Department Programs 

and Activities Excluded from Executive 

Order 12372’’ (50 FR 47034) advising 

that RUS loans and loan guarantees 

were not covered by Executive Order 

12372. 

Information Collection and 

Recordkeeping Requirements 

This rule contains no new reporting 

or recordkeeping burdens under the 

Office of Management and Budget 

(OMB) that would require approval 

under the Paperwork Reduction Act of 

1995 (44 U.S.C. Chapter 35). 

National Environmental Policy Act 

Certification 

The Administrator of RUS has 

determined that this proposed rule will 

not significantly affect the quality of the 

human environment as defined by the 

National Environmental Policy Act of 

1969 (42 U.S.C. 4321 et seq.). Therefore, 

this action does not require an 

environmental impact statement or 

assessment. 

Regulatory Flexibility Act Certification 

It has been determined that the 

Regulatory Flexibility Act is not 

applicable to this proposed rule since 

the Agency is not required by 5 U.S.C. 

551 et seq. or any other provision of law 

to publish a notice of proposed 

rulemaking with respect to the subject 

matter of this rule. 

Executive Order 12988 

This proposed rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. The Agency has 

determined that this proposed rule 

meets the applicable standards in 

section 3 of the Executive Order. 

Unfunded Mandates 

This rule contains no Federal 

mandates (under the regulatory 

provisions of Title II of the Unfunded 

Mandates Reform Act of 1995) for State, 

local, and tribal governments for the 

private sector. Thus, this rule is not 

subject to the requirements of section 

202 and 205 of the Unfunded Mandates 

Reform Act of 1995. 

Executive Order 13132, Federalism 

The policies contained in this 

proposed 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. Nor does this rule 

impose substantial direct compliance 

costs on State and local governments. 

Therefore, consultation with the States 

is not required. 

Executive Order 13211 

This proposed rule does not have any 

adverse effects on energy supply, 

distribution, or use should the proposal 

be implemented. The Agency has 

determined that the preparation of 

Statement of Energy Effects under 

Executive Oder 13211 is not required. 

E-Government Act Compliance 

The Agency is committed to 

complying with the E-Government Act, 

to promote the use of the Internet and 

other information technologies to 

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Federal Register / Vol. 75, No. 24 / Friday, February 5, 2010 / Proposed Rules 5903 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. 

Background 

The Rural Electrification Act of 1936 

(the ‘‘RE Act’’) (7 U.S.C. 901 et seq.) 

authorizes the Secretary to guarantee 

and make loans to persons, 

corporations, States, territories, 

municipalities, and cooperative, nonprofit, or limited-dividend associations 

for the purpose of furnishing or 

improving electric and telephone 

service in rural areas. Responsibility for 

administering electrification and 

telecommunications loan and guarantee 

programs along with other functions the 

Secretary deemed appropriate have been 

assigned to RUS under the Department 

of Agriculture Reorganization Act of 

1994 (7 U.S.C. 6941 et seq.). The 

Administrator of RUS has been 

delegated responsibility for 

administering the programs and 

activities of RUS, see 7 CFR 1700.25. 

Section 6101 of the Farm Security and 

Rural Investment Act of 2002 (Pub. L. 

107–171) (FSRIA) amended the RE Act 

to add section 313A entitled 

‘‘Guarantees for Bonds and Notes Issued 

for Electrification or Telephone 

Purposes.’’ This section created a new 

loan guarantee program. Final 

regulations implementing the program 

were published in the Federal Register 

on October 29, 2004, 69 FR 63045. 

Section 6106(a)(1)(A) of the Food, 

Conservation, and Energy Act of 2008 

(Pub. L. 110–246) amended section 

313A of the RE Act extending the 

program authorization from September 

30, 2007, to September 30, 2012, 

expanding eligible loan purposes, and 

setting an annual limit of 

$1,000,000,000 on the total amount of 

guarantees approved by the Secretary 

during a fiscal year, subject to the 

availability of funds. Prior to the 2008 

amendment the total amount of a 

lender’s bonds and notes that could be 

guaranteed under section 313A was 

limited to the total amount of loans 

made by the lender concurrently with a 

loan approved by the Secretary under 

the RE Act. 

Section 6106(a)(1)(B) further amended 

section 313A of the RE Act by removing 

the provision prohibiting the recipient 

from using any amount obtained from 

the reduction in funding costs as a 

result of a guarantee under section 313A 

to reduce the interest rate charged on a 

new or concurrent loan. New loan 

guarantees will not be subject to this 

limitation. 

The proposed amendments to part 

1720 revise the current regulations to 

implement the changes made by the 

2008 Farm Bill and to clarify existing 

provisions. 

List of Subjects in 7 CFR Part 1720 

Electric power, Electric utilities, Loan 

programs—energy, Reporting and 

recordkeeping requirements, Rural 

areas. 

For reasons set out in the preamble, 

RUS proposes to amend chapter XVII of 

title 7 of the Code of Federal 

Regulations by amending part 1720 as 

follows: 

PART 1720—GUARANTEES FOR 

BONDS AND NOTES ISSUED FOR 

ELECTRIFICATION OR TELEPHONE 

PURPOSES 

1. The authority citation for part 1720 

continues to read as follows: 

Authority: 7 U.S.C. 901 et seq.; 7 U.S.C. 

940c–1. 

2. Revise § 1720.2 to read as follows: 

§ 1720.2 Background. 

The Rural Electrification Act of 1936 

(the ‘‘RE Act’’) (7 U.S.C. 901 et seq.) 

authorizes the Secretary to guarantee 

and make loans to persons, 

corporations, States, territories, 

municipalities, and cooperative, nonprofit, or limited-dividend associations 

for the purpose of furnishing or 

improving electric and telephone 

service in rural areas. Responsibility for 

administering electrification and 

telecommunications loan and guarantee 

programs along with other functions the 

Secretary deemed appropriate have been 

assigned to RUS under the Department 

of Agriculture Reorganization Act of 

1994 (7 U.S.C. 6941 et seq.). The 

Administrator of RUS has been 

delegated responsibility for 

administering the programs and 

activities of RUS, see 7 CFR 1700.25. 

Section 6101 of the Farm Security and 

Rural Investment Act of 2002 (Pub. L. 

107–171) (FSRIA) amended the RE Act 

to include a new program under section 

313A entitled Guarantees for Bonds and 

Notes Issued for Electrification or 

Telephone Purposes. This measure 

directed the Secretary of Agriculture to 

promulgate regulations that carry out 

the Program. The Secretary published 

the regulations for the program in the 

Federal Register as a final rule on 

October 29, 2004, adding Part 1720 to 

Title 7 of the Code of Federal 

Regulations. Section 6106(a)(1)(A) of the 

Food, Conservation, and Energy Act of 

2008 (Pub. L. 110–246) amended section 

313A of the RE Act by replacing the 

level of ‘‘concurrent loans’’ as a factor 

limiting the amount of bonds and notes 

that could be guaranteed and inserted 

‘‘for eligible electrification or telephone 

purposes’’ as the limitation on the 

amount of bonds and notes that can be 

guaranteed under section 313A up to an 

annual program limit of $1,000,000,000, 

subject to availability of funds. Section 

6106(a)(1)(B) further amended section 

313A of the RE Act by removing the 

prohibition against the recipient using 

an amount obtained from the reduction 

in funding costs as a result of a new 

guarantee under section 313A to reduce 

the interest rate charged on a new or 

concurrent loan. 

3. Amend § 1720.3 by adding the 

definition of ‘‘Eligible Loan’’ to read as 

follows: 

§ 1720.3 Definitions. 

* * * * * 

Eligible Loan means a loan that a 

guaranteed lender extends to a borrower 

for up to 100 percent of the cost of 

eligible electrification or telephone 

purposes consistent with the RE Act. 

* * * * * 

4. Amend § 1720.4 by revising 

paragraphs (a)(2), (3), (4), and (b)(2) to 

read as follows: 

§ 1720.4 General standards. 

(a) * * * 

(2) At the time the guarantee is 

executed, the total principal amount of 

guaranteed bonds outstanding would 

not exceed the principal amount of 

outstanding eligible loans previously 

made by the guaranteed lender; 

(3) The proceeds of the guaranteed 

bonds will not be used directly or 

indirectly to fund projects for the 

generation of electricity; and 

(4) The guaranteed lender will not use 

any amounts obtained from the 

reduction in funding costs provided by 

a loan guarantee issued prior to June 18, 

2008, to reduce the interest rates 

borrowers are paying on new or 

outstanding loans, other than new 

concurrent loans as provided in 7 CFR 

part 1710, of this chapter. 

(b) * * * 

(2) Maintain sufficient collateral equal 

to the principal amount outstanding, for 

guaranteed lenders having a credit 

rating below ‘‘A¥’’ on its senior secured 

debt without regard to the guarantee, or 

in the case of a lender that does not 

have senior secured debt, a corporate 

(counterparty) credit rating below ‘‘A¥’’ 

without regard to the guarantee. 

Collateral shall be in the form of specific 

and identifiable unpledged securities 

equal to the value of the guaranteed 

amount. In the case of a guaranteed 

lender’s default, the U.S. government 

claim shall not be subordinated to the 

claims of other creditors, and the 

indenture must provide that in the event 

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5904 Federal Register / Vol. 75, No. 24 / Friday, February 5, 2010 / Proposed Rules 

of default, the government has first 

rights on the asset. Upon application 

and throughout the term of the 

guarantee, guaranteed lenders not 

subject to collateral pledging 

requirements shall identify, with the 

concurrence of the Secretary, specific 

assets to be held as collateral should the 

credit rating of its senior secured debt, 

or its corporate credit rating, as 

applicable, without regard to the 

guarantee fall below ‘‘A¥.’’ The 

Secretary has discretion to require 

collateral at any time should 

circumstances warrant. 

* * * * * 

5. Amend § 1720.5 by revising 

paragraphs (a)(1) and (b)(1) to read as 

follows: 

§ 1720.5 Eligibility criteria. 

(a) * * * 

(1) A bank or other lending institution 

organized as a private, not-for-profit 

cooperative association, or otherwise 

organized on a non-profit basis; and 

* * * * * 

(b) * * * 

(1) The guaranteed lender must 

furnish the Secretary with a certified list 

of the principal balances of eligible 

loans then outstanding and certify that 

such aggregate balance is at least equal 

to the sum of the proposed principal 

amount of guaranteed bonds to be 

issued, and any previously issued 

guaranteed bonds outstanding; and 

* * * * * 

6. Amend § 1720.6 by revising 

paragraph (a)(7) to read as follows: 

§ 1720.6 Application process. 

(a) * * * 

(7) Evidence of a credit rating, from a 

Rating Agency, on its senior secured 

debt or its corporate credit rating, as 

applicable, without regard to the 

government guarantee and satisfactory 

to the Secretary; and 

* * * * * 

7. Amend § 1720.7 by revising 

paragraphs (b)(3) and (4), adding new 

paragraphs (b)(5) and (6), and revising 

paragraph (d) to read as follows: 

§ 1720.7 Application evaluation. 

* * * * * 

(b) * * * 

(3) The applicant’s demonstrated 

performance of financially sound 

business practices as evidenced by 

reports of regulators, auditors and credit 

rating agencies; 

(4) The extent to which the applicant 

is subject to supervision, examination, 

and safety and soundness regulation by 

an independent federal agency; 

(5) The extent of concentration of 

financial risk that RUS may have 

resulting from previous guarantees 

made under Section 313A of the RE Act; 

and 

(6) The extent to which providing the 

guarantee to the applicant will help 

reduce the cost and/or increase the 

supply of credit to rural America, or 

generate other economic benefits, 

including the amount of fee income 

available to be deposited into the Rural 

Economic Development Subaccount, 

maintained under section 313(b)(2)(A) 

of the RE Act (7 U.S.C. 940c(b)(2)(A)), 

after payment of the subsidy amount. 

* * * * * 

(d) Decisions by the Secretary. The 

Secretary shall approve or deny 

applications in a timely manner as such 

applications are received; provided, 

however, that in order to facilitate 

competitive evaluation of applications, 

the Secretary may from time to time 

defer a decision until more than one 

application is pending. The Secretary 

may limit the number of guarantees 

made to a maximum of five per year, to 

ensure a sufficient examination is 

conducted of applicant requests. RUS 

shall notify the applicant in writing of 

the Secretary’s approval or denial of an 

application. Approvals for guarantees 

shall be conditioned upon compliance 

with 7 CFR 1720.4 and 1720.6 of this 

part. The Secretary reserves the 

discretion to approve an application for 

an amount less than that requested. 

8. Amend § 1720.8 by revising 

paragraphs (a)(3), (4), and (8) to read as 

follows: 

§ 1720.8 Issuance of the guarantee. 

(a) * * * 

(3) Prior to the issuance of the 

guarantee, the applicant must certify to 

the Secretary that the proceeds from the 

guaranteed bonds will be applied to 

fund new eligible loans under the RE 

Act, to refinance concurrent loans, or to 

refinance existing debt instruments of 

the guaranteed lender used to fund 

eligible loans; 

(4) The applicant provides a certified 

list of eligible loans and their 

outstanding balances as of the date the 

guarantee is to be issued; 

* * * * * 

(8) The applicant shall provide 

evidence of a credit rating on its senior 

secured debt or its corporate credit 

rating, as applicable, without regard to 

the guarantee and satisfactory to the 

Secretary; and 

* * * * * 

9. Amend § 1720.12 by revising 

paragraph (a)(5) to read as follows: 

§ 1720.12 Reporting requirements. 

(a) * * * 

(5) Credit rating, by a Rating Agency, 

on its senior secured debt or its 

corporate credit rating, as applicable, 

without regard to the guarantee and 

satisfactory to the Secretary; and 

* * * * * 

10. Revise § 1720.13 to read as 

follows: 

§ 1720.13 Limitations on guarantees. 

In a given year the maximum amount 

of guaranteed bonds that the Secretary 

may approve will be subject to budget 

authority, together with receipts 

authority from projected fee collections 

from guaranteed lenders, the principal 

amount of outstanding eligible loans 

made by the guaranteed lender, and 

Congressionally-mandated ceilings on 

the total amount of credit. The Secretary 

may also impose other limitations as 

appropriate to administer this guarantee 

program. 

Dated: January 8, 2010. 

Jonathan Adelstein, 

Administrator, Rural Utilities Service. 

[FR Doc. 2010–2402 Filed 2–4–10; 8:45 am] 

BILLING CODE 3410–15–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2009–1179; Airspace 

Docket No. 09–ASW–35] 

Proposed Amendment of Class E 

Airspace; Magnolia, AR 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: This action proposes to 

amend Class E airspace at Magnolia, AR. 

Decommissioning of the Magnolia nondirectional beacon (NDB) at Magnolia 

Municipal Airport, Magnolia, AR, has 

made this action necessary for the safety 

and management of Instrument Flight 

Rules (IFR) operations at Magnolia 

Municipal Airport. 

DATES: Comments must be received on 

or before March 22, 2010. 

ADDRESSES: Send comments on this 

proposal to the U.S. Department of 

Transportation, Docket Operations, 1200 

New Jersey Avenue, SE., West Building 

Ground Floor, Room W12–140, 

Washington, DC 20590–0001. You must 

identify the docket number FAA–2009– 

1179/Airspace Docket No. 09–ASW–35, 

at the beginning of your comments. You 

may also submit comments through the 

Internet at http://www.regulations.gov. 

WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS