Intermediary Relending Program, 31884-31886 [2014-12632]

Agencies

• DEPARTMENT OF AGRICULTURE
• Farm Service Agency
• Rural Business-Cooperative Service
• Rural Housing Service
• Rural Utilities Service

[Federal Register Volume 79, Number 106 (Tuesday, June 3, 2014)]
[Proposed Rules]
[Pages 31884-31886]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-12632]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

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.

========================================================================


Federal Register / Vol. 79, No. 106 / Tuesday, June 3, 2014 / 
Proposed Rules

[[Page 31884]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Part 1951

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Part 4274

RIN 0570-AA86


Intermediary Relending Program

AGENCY:  Rural Business-Cooperative Service, Rural Housing Service, 
Rural Utilities Service, and Farm Service Agency, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Business-Cooperative Service (RBS) proposes to amend 
its regulations for the Intermediary Relending Program (IRP). This 
action is needed to address several items based on an Office of 
Inspector General (OIG) audit: Removing part of the definition of 
revolved funds to eliminate public confusion on its applicability; 
providing stronger guidance on items that should be taken into 
consideration when approving subsequent loans; defining what is meant 
by promptly relending collections from loans made from the revolving 
loan fund account; and providing clarification when prior Agency 
concurrence is needed to make loans. Finally, the Agency is removing 
provisions for Rural Development Loan Fund (RDLF) servicing as there 
are no longer any active RDLF.

DATES: Comments on this proposed rule must be received by August 4, 
2014 to be considered.

ADDRESSES: You may submit comments to this proposed rule by any of the 
following methods:
    Federal eRulemaking Portal: https://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, Business Loan and 
Grant Analyst, 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, Email 
lori.washington@wdc.usda.gov.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866--Classification

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and has not 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.

Executive Order 12372--Intergovernmental Review of Federal Programs

    The IRP is subject to the provisions of Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials. 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.

Executive Order 12988--Civil Justice Reform

    This proposed 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 proposed rule has been reviewed in accordance with 7 CFR part 
1940, subpart G, ``Environmental Program.'' 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, 
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 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 proposed 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, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

[[Page 31885]]

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act, 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). 
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.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on Rural Development in 
the development of regulatory policies that have tribal implications or 
preempt tribal laws. Rural Development has determined that the rule 
does not have a substantial direct effect on one or more Indian 
tribe(s) or on either the relationship or the distribution of powers 
and responsibilities between the Federal Government and the Indian 
tribes. Thus, the rule is not subject to the requirements of Executive 
Order 13175. Additionally, on April 17, 2013, USDA Rural Development 
focused its quarterly webinar and teleconference based Tribal 
Consultation on its Rural Business Revolving Loan Fund Programs, 
including the IRP. No adverse, nor material comments were received 
regarding the IRP during, or as a result of, that event. Tribal 
Consultation inquiries and comments should be directed to Rural 
Development's Native American Coordinator at aian@wdc.usda.gov or (720) 
544-2911.

Paperwork Reduction Act

    This rule does not revise or impose any new information collection 
or recordkeeping requirements.

E-Government Act Compliance

    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.

Background

    In this rule, the Agency is addressing the OIG audit findings 
conducted in fiscal year 2010 involving several issues that require 
strengthening the Agency's oversight controls of the IRP program. The 
Agency is also removing provisions for RDLF since there are no longer 
any active RDLF.

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 BUSINESS-COOPERATIVE 
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT 
OF AGRICULTURE

PART 1951--SERVICING AND COLLECTIONS

0
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; 31 
U.S.C. 3716; 42 U.S.C. 1480.

Subpart R--Rural Development Loan Servicing


Sec.  1951.851  [Amended]

0
2. Section 1951.851 is removing paragraph (c) and redesignating 
paragraphs (d) and (c) as paragraphs (c) and (d), respectively:
    Sec. Sec.  1951.853, 1951.854, 1951.860, 1951.867, 1951.871, 
1951.872 and 1951.877 [Removed and Reserved]
0
3. Sections 1951.853, 1951.854, 1951.860, 1951.867, 1951.871, 1951.872 
and 1951.877 are removed and reserved.
0
4. Section 1951.881 is amended by adding the last sentence in 
subsection (a) to read as follows:


Sec.  1951.881  Loan servicing.

    (a) These regulations do not negate contractual arrangements that 
were previously made by the HHS, Office of Community Services (OCS), or 
the intermediaries operating relending programs that have already been 
entered into with ultimate recipients under previous regulations. Pre-
existing documents control when in conflict with these regulations. The 
loan is governed by terms of existing legal documents of each 
intermediary. The RDLF/IRP intermediary is responsible for compliance 
with the terms and conditions of the loan agreement. Other than 7 CFR 
1951.709(d)(1)(B)(iv), intermediaries receiving an unauthorized loan or 
using their revolving fund for unauthorized purposes will be serviced 
in accordance with 7 CFR part 1951, subpart O.
* * * * *
0
5. Section 1951.884 is revised to read as follows:


Sec.  1951.884  Revolved funds.

    For ultimate recipients assisted by the intermediary with FmHA or 
its successor agency under Public Law 103-354, revolved funds derived 
from IRP funds shall be required to comply with the provisions of these 
regulations and/or loan agreement.

CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
SERVICE, DEPARTMENT OF AGRICULTURE

PART 4274--DIRECT AND INSURED LOANMAKING

0
6. 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)

0
7. Section 4274.302 is amended by removing the last sentence in the 
definition of ``Agency IRP loan funds,'' removing the last sentence in 
the definition of ``Revolved funds,'' and removing the definition of 
``Rural area'' and adding in its place a definition of ``Rural or rural 
area'' to read as follows:


Sec.  4274.302  Definitions and abbreviations.

    (a) * * *
    Rural or rural area. As described in 7 U.S.C. 1991(a)(13), as 
amended.
* * * * *
0
8. A new Sec.  4274.304, is added to read as follows:

[[Page 31886]]

Sec.  4274.304  Prior loans.

    Any loan made under this program prior to September 2, 2014 may 
submit to the Agency a written request for an irrevocable election to 
have the loan serviced in accordance with this subpart.
0
9. Section 4274.331 is amended by revising paragraph (a)(3)(ii) to read 
as follows:


Sec.  4274.331  Loan limits.

* * * * *
    (a) * * *
    (3) * * *
    (ii) The intermediary is promptly relending all collections from 
loans made from its IRP revolving fund in excess of what is needed for 
required debt service, reasonable administrative costs approved by the 
Agency, and a reasonable reserve for debt service and uncollectible 
accounts. The intermediary provides documentation to demonstrate that 
funds available for relending do not exceed the greater of $150,000 or 
the total amount of loans closed during a calendar quarter on average, 
over the last 12 months.
* * * * *
0
10. Section 4274.332 is amended by revising paragraphs (b)(2) and 
(b)(4) to read as follows:


Sec.  4274.332  Post award requirements.

* * * * *
    (b) * * *
    (2) The intermediary must submit an annual budget of proposed 
administrative costs for Agency approval. The annual budget should 
itemize cash income and cash out-flow. Projected cash income should 
consist of, but is not limited to, collection of principal repayment, 
interest repayment, interest earnings on deposits, fees, and other 
income. Projected cash out-flow should consist of, but is not limited 
to, principal and interest payments, reserve for bad debt, and an 
itemization of administrative costs to operate the IRP revolving fund. 
Proceeds received from the collection of principal repayment cannot be 
used for administrative expenses. The amount removed from the IRP 
revolving fund for administrative costs in any year must be reasonable, 
must not exceed the actual cost of operating the IRP revolving fund, 
including loan servicing and providing technical assistance, and must 
not exceed the amount approved by the Agency in the intermediary's 
annual budget.
* * * * *
    (4) Any cash in the IRP revolving fund from any source that is not 
needed for debt service, approved administrative costs, or reasonable 
reserves must be available for additional loans to ultimate recipients. 
Funds may not be used for any investments in securities or certificates 
of deposit of over 30-day duration without the concurrence of Rural 
Development. If funds in excess of $250,000 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.
* * * * *
0
11. Section 4274.338 is amended by revising paragraph (b)(9) and adding 
paragraph (b)(10) to read as follows:


Sec.  4274.338  Loan agreements between the Agency and the 
Intermediary.

* * * * *
    (b) * * *
    (9) If any part of the loan has not been used in accordance with 
the intermediary's work plan by a date 3 years from the date of the 
loan agreement, the Agency may cancel the approval of any funds not yet 
delivered to the intermediary and the intermediary will return, as an 
extra payment on the loan, any funds delivered to the intermediary that 
have not been used by the intermediary in accordance with the work 
plan. The Agency, at its sole discretion, may allow the intermediary 
additional time to use the loan funds. Regular loan payments will be 
based on the amount of funds actually drawn by the intermediary.
    (10) For IRP intermediaries, IRP funds in excess of $250,000 that 
have not been used to make loans to ultimate recipients for 6 months or 
more 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.
* * * * *
0
12. Section 4274.361 is amended by revising paragraph (a) to read as 
follows:


Sec.  4274.361  Requests to make loans to ultimate recipients.

    (a) An intermediary may use revolved funds to make loans to 
ultimate recipients in accordance with Sec.  4274.314(b) without 
obtaining prior Agency concurrence. Prior Agency concurrence is 
required when an intermediary proposes to use Agency IRP loan funds to 
make a loan to an ultimate recipient.
* * * * *

     Dated: May 20, 2014.
Douglas J. O'Brien.
Deputy Under Secretary, Rural Development.
     Dated: May 15, 2014.
Michael T. Scuse,
Under Secretary, Farm and Foreign Agricultural Services.
[FR Doc. 2014-12632 Filed 6-2-14; 8:45 am]
BILLING CODE 3410-XY-P