[Federal Register Volume 62, Number 105 (Monday, June 2, 1997)]
[Proposed Rules]
[Pages 29678-29679]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13930]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 62, No. 105 / Monday, June 2, 1997 / Proposed
Rules
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Service Agency
7 CFR Part 1951
RIN 0572-AB23
Servicing of Community and Insured Business Programs Loans and
Grants
AGENCIES: Rural Housing Service; Rural-Business Cooperative Service;
Rural Utilities Service; and Farm Service Agency, USDA.
ACTION: Proposed rule.
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SUMMARY: The Rural Utilities Service (RUS) hereby proposes to amend the
regulations utilized to service loans and grants. The proposed rule
will permit loan reamortization with interest rate adjustment for
eligible delinquent borrowers. The proposed rule will provide debt
relief to troubled borrowers and encourage these organizations to
remain in operation and resume scheduled loan payments. The proposed
rule will also provide RUS greater flexibility to service problem loans
and permit a viable, cost effective alternative to debt write-offs.
DATES: Comments must be submitted on or before August 1, 1997.
ADDRESSES: Submit written comments in duplicate to the Branch Chief,
Regulations and Paperwork Management Branch, Rural Development, U.S.
Department of Agriculture, Stop 0743, Room 6345-S, 1400 Independence
Ave. SW, Washington, DC 20250. Comments may also be submitted via the
Internet by addressing them to ``[email protected]'' and must
contain ``reamortization'' in the Subject. All comments made pursuant
to this notice will be made available for public inspection during
regular work hours at the above address.
FOR FURTHER INFORMATION CONTACT: John Purcell, Rural Utilities Service,
Stop 1570, 1400 Independence Ave. SW, Washington, DC 20250, telephone
(202) 720-9634.
SUPPLEMENTARY INFORMATION:
Classification
This rule has been determined to be significant and was reviewed by
the Office of Management and Budget under Executive Order 12866.
Regulatory Flexibility Act
Pursuant to section 605 (b) of the Regulatory Flexibility Act, 5
U.S.C. 605 (b), the head of the Agencies certify that this rule will
not have a significant economic impact on a substantial number of small
entities.
Intergovernmental Review
This program is listed in the Catalog of Federal Domestic
Assistance under number 10.760, Water and Waste Disposal Systems for
Rural Communities, subject to the provisions of Executive Order 12372
which requires intergovernmental consultation with State and local
officials.
Environmental Impact Statement
This action has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' It has been determined that the
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.
Civil Justice Reform
This proposed rule has been reviewed under Executive Order 12998,
Civil Justice Reform. If this proposed rule is adopted: (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
bringing suit.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (44 U.S.C. 3507),
the information collection requirements included in this rule have been
approved through 7 CFR part 1951, subpart E. The assigned OMB number is
0575-0066. This rule does not revise or impose any new information
collection or recordkeeping requirements from those approved by the
Office of Management and Budget.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review program to eliminate unnecessary regulations and
improve those that remain in force.
Unfunded Mandate Reform Act
Title II of the Unfunded Mandate 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, the
Agency generally 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, and tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When such a statement is needed for a
rule, section 205 of the UMRA generally requires the Agency 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 today's rule is not subject to
the requirements of sections 202 and 205 of the UMRA.
Discussion
The Rural Utilities Service is the result of a reorganization of
programs administered by the former Farmers Home Administration and the
former Rural Development Administration. As currently written, 7 CFR
part 1951, subpart E does not permit loan reamortization with interest
rate adjustment on outstanding loans. Accordingly, RUS is unable to
provide debt relief to borrowers that become seriously delinquent on
their loan payments. The proposed rule will provide debt relief to
troubled
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borrowers and encourage these organizations to remain in operation and
resume scheduled loan payments. The proposed rule will also provide RUS
greater flexibility to service problem loans and permit a viable, cost
effective alternative to debt write-offs.
List of Subjects in 7 CFR Part 1951
Accounting, Grant programs--housing and community development,
Reporting and recordkeeping requirements, Rural areas.
Accordingly, chapter XVIII of title 7 of the Code of Federal
Regulations is proposed to be amended as follows:
PART 1951--SERVICING AND COLLECTIONS
1. The authority citation for part 1951 is revised to read as
follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 1981, 1989; 31 U.S.C. 3711; 42
U.S.C. 1480.
Subpart E--Servicing of Community and Insured Business Programs
Loans and Grants
2. Section 1951.223(d) is added to read as follows:
Sec. 1951.223 Reamortization.
* * * * *
(d) Reamortization with interest rate adjustment--water and waste
borrowers only. A borrower that is seriously delinquent in loan
payments may be eligible for loan reamortization with interest rate
adjustment. The purpose of loan reamortization with interest rate
adjustment is to provide relief for a borrower that is unable to
service the outstanding loan in accordance with its existing terms and
to enhance recovery on the loan. A borrower must meet the conditions of
this subpart to be considered eligible for this provision.
(1) Eligibility determination. The State Director, Rural
Development, may submit to the Administrator for approval an adjustment
in the rate of interest charged on outstanding loans only for those
borrowers who meet the following requirements:
(i) The borrower has exhausted all other servicing provisions
contained in this subpart;
(ii) The borrower is experiencing severe financial problems;
(iii) Any management deficiencies must have been corrected or the
borrower must submit a plan acceptable to the State office to correct
any deficiencies before an interest rate adjustment may be considered;
(iv) Borrower user rates must be comparable to similar systems. In
addition, the operating expenses reported by the borrower must appear
reasonable in relation to similar system expenses;
(v) The borrower has cooperated with Rural Development in exploring
alternative servicing options and has acted in good faith with regard
to eliminating the delinquency and complying with its loan agreements
and agency regulations; and
(vi) The borrower's account must be delinquent at least one annual
debt payment for 180 days.
(2) Conditions of approval. All borrowers approved for an
adjustment in the rate of interest by the Administrator shall agree to
the following conditions:
(i) The borrower shall agree not to maintain cash or cash reserves
beyond what is reasonable at the time of interest rate adjustment to
meet debt service, operating, and reserve requirements.
(ii) A review of the borrower's management and business operations
may be required at the discretion of the State Director. This review
shall be performed by an independent expert who has been recommended by
the State Director and approved by the National Office. The borrower
must agree to implement all recommendations made by the State Director
as a result of the review.
(iii) If requested, a copy of the latest audited financial
statements or management report must be submitted to the Administrator.
(3) Reamortization. At the discretion of the Administrator, the
interest rate charged on outstanding loans of eligible borrowers may be
adjusted to no less than the poverty interest rate and the term of the
loans may be extended up to a new 40 year term or the remaining useful
life of the facility, whichever is less.
Dated: May 15, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-13930 Filed 5-30-97; 8:45 am]
BILLING CODE 3410-XV-U