Rural Business-Cooperative Service, USDA.
The Rural Business-Cooperative Service (RBS) proposes to amend its regulation for the Business and Industry (B&I) Guaranteed Loans by modifying the regulations regarding personal and corporate guarantors. This action will standardize the guarantor process. The Agency will create a guarantor form which will be used to obtain the personal or corporate guarantee of anyone owning greater than 20 percent interest in the borrower. The effect of this rule is to allow the Agency to use all remedies available to pursue collection from guarantors, including offset under the Debt Collection Improvement Act.
Written or e-mail comments must be received on or before June 6, 2005, to be assured of consideration.
You may submit comments to this rule by any of the following methods:
- Agency Web site: http://rdinit.usda.gov/regs/. Follow instructions for submitting comments on the Web site.
- E-Mail: email@example.com. Include RIN No. 0570-AA54 in the subject line of the message.
- Federal eRulemaking Portal: http://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 20205-0742.
- 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.Start Further Info
FOR FURTHER INFORMATION CONTACT:
David Lewis, Business and Industry Loan Servicing Branch, Rural Business-Cooperative Service, U.S. Department of Agriculture, STOP 3224, 1400 Independence Avenue, SW., Washington, DC 20250-3224, telephone (202) 690-0797, or by e-mail to firstname.lastname@example.org.End Further Info End Preamble Start Supplemental Information
This proposed rule has been reviewed under Executive Order 12866 and determined not to be significant and has not been reviewed by the Office of Management and Budget (OMB).
The Catalog of Federal Domestic Assistance number for the program impacted by this action is 10.768, Business and Industry Loans.
Business and Industry Guaranteed Loans are subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. RBS will conduct intergovernmental consultation in the manner delineated in and 7 CFR part 3015, subpart V, “Intergovernmental Review of Rural Development Programs and Activities.”
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 of the National Appeals Division (7 CFR Start Printed Page 17617part 11) must be exhausted before bringing suit in court challenging action taken under this rule.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” RBS 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 (NEPA) of 1969, 42 U.S.C. 4321 et seq, this regulation is a Categorical Exclusion. Loan applications will be reviewed individually to determine compliance with NEPA.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act 1995 (UMRA) of, Pub. L. 104-4 of 1995, 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, RBS 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, 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 RBS 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, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.
Regulatory Flexibility Act
In compliance with the Regulatory Flexibility Act, RBS 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). RBS 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.
It has been determined that, under Executive Order 13132, Federalism, 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, imposes requirements on USDA in the development of regulatory policies that have tribal implications or preempt tribal laws. USDA has determined that the proposed regulation does not have a substantial direct effect on one or more Indian tribe or on either the relationship or the distribution of powers and responsibilities between the Federal Government and the Indian tribes. Thus, the proposed rule is not subject to the requirements of Executive Order 13175.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, the Agency will seek OMB approval of the reporting requirements contained in this regulation. These reporting and recordkeeping requirements have been previously approved under OMB control number 0570-0017. The estimate of burden is as follows:
Estimate of Burden: Public reporting burden for this collection of information is estimated to average 30 minutes per response.
Respondents: Lenders and business owners.
Estimated Number of Respondents: 142 (based on 1 year).
Estimated Number of Responses per Respondent: 1.
Estimated Number of Responses: 142.
Estimated Total Annual Burden of Respondents: 71 hours.
Copies of this information collection can be obtained from Cheryl Thompson, Regulations and Paperwork Management Branch, Support Services Division at (202) 692-0043.
Comments: Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of RBS, including whether the information will have practical utility; (b) the accuracy of RBS's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of the information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to Cheryl Thompson, Regulations and Paperwork Management Branch, Support Services Division, U.S. Department of Agriculture, Rural Development, STOP 0742, 1400 Independence Ave., SW., Washington DC 20550. All responses to the notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
Pursuant to the Debt Collection Improvement Act of 1996 (DCIA), the Agency is required to send debt owed to the Government to the Department of the Treasury (Treasury) for collection. The DCIA covers both guaranteed and direct loans made by the Agency. Some ambiguity has existed regarding the Agency's ability to collect from guarantors of the borrower's loan. This rule will end that ambiguity by clearly making guarantors personally liable for any claims paid by the Government.
The Agency proposes to establish more uniformity in the guarantees being obtained by lenders. This should result in the program being administered more consistently and the Government recovering more of its loss claims. Currently, guaranteed lenders prepare non-uniform, personal, or corporate guarantees. When there is a loss on the guaranteed loan, the lender pursues these guarantees with mixed recovery results. By implementing this rule, the Agency will treat all guarantors consistently, collect more money on its loss claims, and rectify any ambiguities regarding its ability to refer these debts to Treasury.Start List of Subjects
List of Subjects in 7 CFR Part 4279
- Loan programs—business and industry—rural development assistance
- Rural areas
Therefore, chapter XLII, title 7, Code of Federal Regulations, is amended as follows:Start Part
PART 4279—GUARANTEED LOANMAKING
1. The authority citation for part 4279 continues to read as follows:Start Printed Page 17618
Subpart B—Business and Industry Loans
2. Section 4279.149 is revised to read as follows:
(a) Unconditional personal and corporate guarantees are part of the collateral for the loan but are not considered in determining whether a loan is adequately secured for loanmaking purposes. Agency approved personal and corporate guarantees for the full term of the loan and at least equal to the guarantor's percent interest in the borrower, times the loan amount are required from those owning greater than a 20 percent interest in the borrower, unless the lender documents to the Agency's satisfaction that collateral, equity, cashflow, and profitability indicate an above-average ability to repay the loan. The guarantors will execute Form RD 4279-14, “Unconditional Guarantee.” A signature section must be created and in accordance with applicable law. The signature block must include the legal name of the individual or entity signing the Guarantee and, where applicable, the name and title of the authorized representative who will execute the document on its behalf. For instructions on how to complete an enforceable signature block that complies with applicable state law, consult with the Regional Attorney. When warranted by an Agency assessment of potential financial risk, Agency approved guarantees may also be required of parent, subsidiaries, or affiliated companies (owning less than a 20 percent interest in the borrower) and require security for any guarantee provided under this section.
(b) Exceptions to the requirement for personal guarantees must be requested by the lender and concurred by the Agency approval official on a case-by-case basis. The lender must document that collateral, equity, cashflow, and profitability indicate an above-average ability to repay the loan.
Dated: March 24, 2005.
Peter J. Thomas,
Administrator, Rural Business—Cooperative Service.
[FR Doc. 05-6869 Filed 4-6-05; 8:45 am]
BILLING CODE 3410-XY-P