Direct final rule.
The Rural Business-Cooperative Service is amending its regulations for the Business and Industry Guaranteed Loan Program to clarify that the Agency guarantee does not cover default and penalty interest or late charges. The Agency's regulations are currently silent on this issue. However, it has always been the Agency's policy not to pay out additional cost for default interest, penalty interest, and late charges calculated and submitted on a final report of loss claim under the Loan Note Guarantee. The Agency does permit the lender to charge default interest with prior Agency approval. By defining “interest” in the definition section of the regulation and clarifying the Agency's policy as it relates to default interest, penalty interest, and late charge, this will avert any misunderstandings.
This rule will become effective April 13, 2012 without further action unless the Agency receives written adverse comments or written notices of intent to submit adverse comments on or before March 14, 2012. If the Agency receives adverse comments or notices, the Agency will publish a timely document in the Federal Register withdrawing the amendment.
Any adverse comments received will be considered under the proposed rule published in this edition of the Federal Register in the proposed rule section. A second public comment period will not be held. Written comments must be received by the Agency or carry a postmark or equivalent no later than March 14, 2012.
You may submit adverse comments or notice of intent to submit adverse comments to this rule by any of the following methods:
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 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 the 300 7th Street SW., 7th Floor address listed above.
FOR FURTHER INFORMATION CONTACT:
Mr. David Lewis, Rural Development, Business Programs, U.S. Department of Agriculture, 1400 Independence Avenue SW., Stop 3221, Washington, DC 20250-3221; email: email@example.com; telephone (202) 690-0797.
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).
The Catalog of Federal Domestic Assistance Program number assigned to the Business and Industry Guaranteed Loan Program is 10.768. The Catalog of Federal Domestic Assistance Program number assigned to the Biorefinery Assistance is 10.865. The Catalog of Federal Domestic Assistance Program number assigned to the Rural Energy for America Program is 10.868.
Environmental Impact Statement
This document 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 (NEPA) of 1969, 42 U.S.C. 4321 et seq., an Environmental Impact Statement is not required.
Executive Order 12372, Intergovernmental Consultation
The program is subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Consultation will be completed at the time of the action performed.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Agency has determined that this rule meets the applicable standards provided in section 3 of the Executive Order. Additionally, (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 to the rule; and (3) administrative appeal procedures, if any, must be exhausted before litigation against the Department or its Agencies may be initiated, in accordance with the regulations of the National Appeals Division of USDA at 7 CFR part 11.
The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this final rule impose substantial direct compliance costs on State and local Governments. Therefore, consultation with States is not required.
Regulatory Flexibility Act Certification
Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Agency certifies that this rule will not have a significant economic impact on a substantial number of small entities. The Agency 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.
This rule contains no Federal mandates (under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995) 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 Unfunded Mandates Reform Act of 1995.
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 final 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 Indian tribes. Thus, this final rule is not subject to the requirements of Executive Order 13175. If a tribe determines that this rule has implications of which Rural Development is not aware and would like to engage with Rural Development on this rule, please contact Rural Development's Native American Coordinator at AIAN@wdc.usda.gov.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, the information collection activities associated with this rule are covered under the Business and Industry Guaranteed Loan Program, OMB Number: 0570-0017.
This rule contains no new reporting or recordkeeping burdens under OMB control number 0570-0017 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
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 citizens to access Government information and services electronically.
The Agency reviewed 7 CFR 4279.2 which is composed of two paragraphs, the first of which is pertinent.
Section 4279.2(a) discusses the definitions, which has thirty-seven terms used in the Guaranteed Loanmaking. The definitions and abbreviations contained in § 4279.2 also apply to the Business and Industry Guaranteed Loan Servicing regulations and, unless otherwise noted, the Biorefinery Assistance Loan Program and the Rural Energy for America Program. Currently, the Agency regulations do not define or otherwise address “interest”, “default interest”, “penalty interest”, or “late charges”. However, it is the Agency's policy not to pay out additional cost for default interest, penalty interest, and late charges calculated and submitted on a final report of loss claim under the Loan Note Guarantee. However, lender's Promissory Note may contain provisions for default or penalty interest, or late charges with prior Agency approval.
II. Discussion of Change
The Agency is revising § 4279.2(a), to address the situation discussed in the “Background” section. Specifically, the Agency is adding a paragraph in § 4279.2(a), after the term “Holder” and before the term “Interim Financing”, which will define “Interest.” The change being made by this rule is to clarify that “interest” does not include default or penalty interest, or late fees. The lender may charge the borrower these fees with prior Agency approval. Accordingly, the Agency is making the changes in this direct final rule.
For the reasons set forth in the preamble, chapter XLII, title 7, of the Code of Federal Regulations is amended as follows:
CHAPTER XLII—RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
PART 4279—GUARANTEED LOANMAKING
1. The authority citation for part 4279 continues to read as follows:
2. Paragraph (a) of § 4279.2 is amended by adding a new definition of
Definitions and abbreviations.
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Interest. A fee paid by a borrower to the lender as a form of compensation for the use of money. When money is borrowed, interest is paid as a fee over a certain period of time (typically months or years) to the lender as a percentage of the principal amount owed. “Interest” does not include default or penalty, or late fees or charges. The lender may charge these fees and interest with prior Agency approval, but they are not covered by the Loan Note Guarantee.
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Dated: February 2, 2012.
Under Secretary, Rural Development.
[FR Doc. 2012-3244 Filed 2-10-12; 8:45 am]
BILLING CODE 3410-XY-P