Source: https://www.federalregister.gov/documents/2000/04/25/00-9992/emergency-oil-and-gas-guaranteed-loan-program-conforming-changes
Timestamp: 2018-04-27 09:18:14
Document Index: 8905765

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Federal Register :: Emergency Oil and Gas Guaranteed Loan Program; Conforming Changes
A Rule by the Emergency Oil and Gas Guaranteed Loan Board on 04/25/2000
24105-24107 (3 pages)
https://www.federalregister.gov/d/00-9992 https://www.federalregister.gov/d/00-9992
The Emergency Oil and Gas Guaranteed Loan Board (Board) is amending the regulations governing the Emergency Oil and Gas Guaranteed Loan Program (Program). These changes are meant to conform the regulations and the guarantee agreement that will be used for the program. The intent of these changes is to eliminate potential ambiguities or unintended conflicts between the language of the regulations and that of the Guarantee agreement. This rule also makes several technical changes to merely conform the regulations with the standard of care adopted by the Board, to conform the regulations to the form of the Guarantee and form of Application for Guarantee adopted by the Board, correct minor typographical errors and add a mail stop to the Board's mailing address, or to clarify the allocation of Lender responsibilities, liabilities and restrictions in circumstances where more than one lender are parties to the Guarantee.
Charles E. Hall, Executive Director, Emergency Oil and Gas Guaranteed Loan Board, U.S. Department of Commerce, Room H2500, Washington, DC 20230, (202) 219-0584.
On October 27, 1999, the Board published a final rule codifying at Chapter 5, Title 13, Code of Federal Regulations (CFR), regulations implementing the Program, as established in Chapter 1 of Public Law 106-51, the Emergency Oil and Gas Guaranteed Loan Act of 1999 (64 FR 57946).
Section 500.2 sets forth certain definitions applicable to the Program. This rule adds a definition of “Agent”, a term used in the Guarantee to refer to the applicant lender that is designated to perform certain duties on behalf of all lenders where more than one lender are parties to a Guarantee.
This rule also modifies the definition of “Guarantee” in § 500.2 to make clear that more than one lender may be parties to a Guarantee. The definition of “Lender” in § 500.2 is also modified to specify that in a multi-lender Guarantee, the term “Lender” means “Agent”.
Section 500.201 of the Board's regulations sets forth the definition of an eligible lender for purposes of the Act and the factors that the Board will assess in determining whether the Board should issue a Guarantee to a particular applicant lender. The Board is amending this section of its regulations to clarify that multiple lenders under one application for a guarantee must each meet the Eligible Lender requirements, to require that an application for guarantee from more than one lender identify the lender that will act as Agent, and to set forth the respective responsibilities and liabilities of individual lenders, where more than one lender are parties to a Guarantee.
Section 500.205 of the Board's regulations specifies the information and documentation to be contained in an application for guarantee. The section is being modified to include a reference to documentation demonstrating that the lender is eligible under § 500.201(a) and to allow the Board to make a determination to issue the guarantee to such lender under § 500.201(c), as required by paragraph 36 of the Board's form of Application for Guarantee.
Section 500.210 of the Board's regulations sets forth restrictions and limitations on transfer of interests in a guaranteed loan. The section has been revised to reflect the fact that there may be multiple lenders that are parties to a Guarantee, and to allow transfer by a non-Agent lender of the non-guaranteed portion of a loan after payment under the Guarantee has been made.
Section 500.211 sets forth lender responsibilities under the Program. Paragraph (b) of this section sets forth a standard of care applicable to actions taken by a lender. Specifically, the regulations state:
Subsequent to publication of the final rule, the Board has been informed that Start Printed Page 24106the formulation of the standard of care commonly used among commercial lenders requires the exercise of due care and diligence in administering the loan as would be exercised by a reasonable and prudent banking institution. (emphasis added). As such, the Board is amending its regulations to include the word “reasonable” in lieu of “responsible” as that is the term accepted and understood by commercial lenders to express the standard of care.
Paragraph (c) of § 500.211 requires a representation and agreement by the lender that it is able to, and will, administer the loan in accordance with the applicable standard of care. The paragraph has been modified to limit the representation and agreement to the applicant lender where there are multiple lenders that are parties to a Guarantee.
Paragraph (e) of § 500.211 specifies lender obligations with respect to loan monitoring. The paragraph is being amended to eliminate a requirement for best efforts to cause Borrower correction of any noncompliance with loan documents, because it is inconsistent with the “reasonable and prudent” standard of care that has been adopted by the Board.
Paragraph (f) of § 500.211 sets forth reporting requirements concerning guaranteed loans. The paragraph has been modified to eliminate certain references to specific due dates for reporting and instead refer to the terms of the Guarantee for such dates.
Paragraph (g) of § 500.211 states, in relevant part, that the Lender must notify the Board in writing without delay of the deterioration in the internal risk rating of a loan guaranteed under the Program within 3 business days of such action by the Lender; and the occurrence of each event of default under the Loan Documents or Guarantee promptly, but not later than 3 business days, of the Lender's learning of such occurrence. This rule merely changes, from three days to five days, the time within which the lender must provide notification of these events to the Board. This change is being made to provide lenders additional time to both discover and report the listed events.
Section 500.213 of the Board's regulations specifies the circumstances under which the Board in its discretion shall be entitled to terminate a guarantee. The section has been modified to conform to the form of Guarantee adopted by the Board by eliminating a reference to the possibility that a Guarantee might be executed before loan closing, eliminating a requirement for written notice of termination, and providing for partial as well as entire termination of a guarantee where there are multiple lenders that are parties to a Guarantee.
Executive Director, Emergency Oil and Gas Guaranteed Loan Board.
For the reasons set forth in the preamble, the Emergency Oil and Gas Guaranteed Loan Board amends 13 CFR part 500 as follows:
2. Section 500.2 is amended by redesignating paragraphs (c) through (k) as paragraphs (d) through (l), by adding a new paragraph (c), and by revising redesignated paragraphs (g) and (h) to read as follows:
(h) Lender means a private banking or investment institution, eligible under § 500.201, that is a party to a Guarantee Start Printed Page 24107issued by the Board. With respect to a Guarantee of a single loan to which more than one Lender is a party, the term Lender means Agent.
3. Section 500.201 is amended by redesignating paragraphs (b) and (c) as paragraphs (c) and (d) and adding a new paragraph (b) to read as follows:
§ 500.201
4. Section 500.205 is amended by revising paragraph (b)(11) to read as follows
§ 500.205
(11) Documentation sufficient to demonstrate that the Lender is eligible under § 500.201(a) and to allow the Board to make a determination to issue a Guarantee to such Lender as set forth in § 500.201(c).
5. Section 500.210 is amended by revising paragraph (b), by removing the period at end of paragraph (c)(2)(iv) and adding “; or” in its place, and by adding a new paragraph (c)(3) to read as follows:
§ 500.210
(b) Under no circumstances will the Board permit an assignment or transfer of less than 100 percent of a Lender's interest in the Loan Documents and Guarantee, nor will it permit an assignment or transfer to be made to a party which the Board determines not to be an Eligible Lender pursuant to § 500.201.
6. Section 500.211 is amended by revising paragraphs (b), (c), (e), (f), (g)(1) and (g)(2) to read as follows:
7. Section 500.213 is amended by revising the section heading and paragraph (a) to read as follows:
§ 500.213
(1) The Guarantee fee required by § 500.208(d) shall not have been paid;
8. Section 500.211(g) introductory text is amended by adding the phrase “H2500,” immediately after the phrase “U.S. Department of Commerce,”.
[FR Doc. 00-9992 Filed 4-24-00; 8:45 am]