Source: https://www.federalregister.gov/documents/2008/09/19/E8-22003/intermediary-relending-program
Timestamp: 2018-03-22 07:09:46
Document Index: 472531962

Matched Legal Cases: ['art 3015', 'art 1940', 'art 4274', 'art 1951', '§\u20091951', '§\u20091951', '§\u20094274', '§\u20094274', 'art 4274', '§\u20094274', '§\u20094274']

A Rule by the Rural Business-Cooperative Service on 09/19/2008
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.
54305-54307 (3 pages)
https://www.federalregister.gov/d/E8-22003 https://www.federalregister.gov/d/E8-22003
The Rural Business-Cooperative 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.
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.
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).
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.
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.
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 cost-benefit 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 Start Printed Page 54306provisions 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.
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.
USDA Rural Development is committed to complying with the E-Government 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.
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.
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.
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.
(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
(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 Start Printed Page 54307duration 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.
4. The authority citation for part 4274 continues to read as follows:
5. Section 4274.314 is amended by revising paragraph (b)(10)(i) and by adding paragraph (b)(15) to read as follows:
§ 4274.314
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
7. Section 4274.338 is amended by adding paragraph (b)(4)(ii)(D) to read as follows:
[FR Doc. E8-22003 Filed 9-18-08; 8:45 am]