OneRD Guaranteed Loan Regulation

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

Rural Housing Service

Rural Business-Cooperative Service

7 CFR Parts 1779, 3575, 4279, 4287, and 5001

[Docket No. RUS-19-Agency-0030]

RIN 0572-AC43

OneRD Guaranteed Loan Regulation

AGENCY:

Rural Business-Cooperative Service, Rural Housing Service, Rural Utilities Service, USDA.

ACTION:

Final rule; request for comments.

SUMMARY:

The Rural Business-Cooperative Service, Rural Housing Service, and the Rural Utilities Service, agencies of the Rural Development mission area within the U.S. Department of Agriculture (USDA), hereinafter collectively referred to as the Agency, are proposing a unified guaranteed loan platform for enhanced delivery of four of its existing guaranteed loan programs: Community Facilities (CF) administered by the Rural Housing Service; Water and Waste Disposal (WWD) administered by the Rural Utilities Service; and, Business and Industry (B&I) and Rural Energy for America (REAP) administered by the Rural Business-Cooperative Service. Collectively, these four Rural Development's guaranteed loan programs work to assist in building and maintaining sustainable rural communities. This rule incorporates new and revised provisions intended to simplify, improve, expand and enhance the delivery of the four guaranteed loan programs. These provisions include, among others, clearly defining specific project eligibility criteria, revising the requirements for lenders to participate in the programs, and streamlining the documentation requirements for submission of guaranteed loan applications.

DATES:

Effective date:

This final rule is effective October 1, 2020.

Comment date:

Comments are due September 14, 2020.

ADDRESSES:

You may submit comments, identified by docket number RUS-19-Agency-0030 and Regulatory Information Number (RIN) number 0572-AC43 through

https://www.regulations.gov.

Instructions:

All submissions received must include the Agency name and docket number or RIN for this rulemaking. All comments received will be posted without change to

https://www.regulations.gov,

including any personal information provided.

Docket:

For access to the docket to read background documents or comments received, go to

https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Thomas P. Dickson, Regulations Management Division Team 2, Rural Development Innovation Center, U.S. Department of Agriculture, 1400 Independence Ave. SW, Stop 1522, Washington, DC 20250; telephone 202-690-4492; email

thomas.dickson@usda.gov

.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Abbreviations

II. Background

A. Rural Development's Mission.

B. Composition of the OneRD Guaranteed Loan Program

1. Community Facilities Guaranteed Loan Program

2. Water and Waste Disposal Guaranteed Loan Program

3. Business and Industry Guaranteed Loan Program

4. Rural Energy for America Program

5. Similarities Between the Four Guaranteed Loan Programs

III. Basis and Purpose

IV. Discussion of the Rule

A. Organization of the Rule

B. Delivery of the OneRD Guaranteed Loan Program

C. Changes of Note

V. Public Participation and Discussion of Comments From Listening Sessions

VI. Regulatory Impact Analyses

A. Executive Orders 12866 and 13563

B. Unfunded Mandates Reform Act

C. Environmental Impact Statement

D. Executive Order 12988, Civil Justice Reform

E. Executive Order 13132, Federalism

F. Regulatory Flexibility Act Certification

G. Executive Order 12372, Intergovernmental Consultation

H. Executive Order 13175, Consultation and Coordination With Indian Tribal Governments

I. Programs Affected

J. Catalog of Federal Domestic Assistance

K. Paperwork Reduction Act and Recordkeeping Requirements

L. E-Government Act Compliance

M. Civil Rights Impact Analysis

I. Abbreviations

CDE Community Development Entity

CFDA Catalog of Federal Domestic Assistance

CFR Code of Federal Regulations

CONAct Consolidated Farm and Rural Development Act

FCRA Federal Credit Reform Act of 1990

FDIC Federal Deposit Insurance Corporation

FIRREA Financial Institutions Reform, Recovery and Enforcement Act of 1989

FR Federal Register

FSRIA Farm Security and Rural Investment Act of 2002

GAAP Generally accepted accounting principles

GPO Government Printing Office

ICBA Independent Community Bankers of America

LNG Loan Note Guarantee

NEPA National Environmental Policy Act

NMTC New Markets Tax Credit

OGC Office of General Counsel

OMB Office of Management and Budget

OneRD OneRD Guaranteed Loan Program

PER Preliminary Engineering Reports

QALICB Qualified Active Low Income Community Business

RD Rural Development

REAP Rural Energy for America Program

RFA Regulatory Flexibility Act

RMA Risk Management Association

SAM System for Award Management

§ Section

TBSE Tangible Balance Sheet Equity

UMRA Unfunded Mandates Reform Act 1995

U.S.C. United States Code

USDA U.S. Department of Agriculture

USPAP Uniform Standards of Professional Appraisal Practice

II. Background

Through this regulation, Rural Development (RD) is consolidating and standardizing the rules associated with making and servicing of four guaranteed loan programs. The new regulation eliminates existing regulations in six areas: 7 CFR part 3575, subpart A which is the existing regulation for making and servicing Community Facilities (CF) guaranteed loans; 7 CFR part 1779 which is the existing regulation for making and servicing Water and Waste Disposal (WWD) guaranteed loans; 7 CFR part 4279, subparts A and B which are the existing regulations for making Business and Industry (B&I) guarantee loans; 7 CFR part 4280, subpart B which is the existing regulation for making Rural Energy for America (REAP) guarantee loans; and, 7 CFR 4287 subpart B which is the existing regulation for servicing B&I and REAP guarantee loans. This regulation replaces those removed sections with the OneRD guarantee loan regulation (“OneRD”), a unified regulation for making and servicing the four guaranteed loan programs, codified at 7 CFR 5001. To ensure that the drafting of OneRD was a customer-centric process, the Agency invited public input through six listening sessions and a Human Experience Lab. The public participation provided input on ways to simplify, improve, enhance and expand the delivery of the four guarantee programs. Through this process, the Agency identified eight broad areas of

improvement on which to focus its efforts: Community impact; Agency staff training and empowerment; enabling technology; USDA-lender relationship; simplicity and consistency; speed of approval process; communication and transparency; and marketing and outreach. Comments and Agency responses to comments received are provided in section V. Public Participation and Discussion of Comments from Listening Sessions.

A. Rural Development's Mission

By statutory authority, Rural Development is an advocate for rural America, administering a multitude of programs, ranging from housing and community facilities to infrastructure and business development. The Agency's mission is to increase economic opportunity and improve the quality of life in rural communities by providing the leadership, infrastructure, capital, and technical support that enables rural communities to prosper.

To achieve its mission, the Agency provides financial support, including loan guarantees, direct loans and grants, and technical assistance to enhance the quality of life and provide the foundation for economic development in rural areas. This final rule with comment addresses the use of a unified guaranteed loan regulation for four programs to support Rural Development's mission. The regulation implements changes to current guarantee practices to make the processes and procedures consistent across the four programs. As a loan-making agency, Rural Development is exempt from prior notice and comment (5 U.S.C. 553(a)(2)) to implement policies and procedures governing loan programs. Nevertheless, we are providing the public the opportunity to comment on the requirements found in this Final Rule. During the comment period, the Agency will host listening sessions and the schedule will be available on the website. Comments received will be considered and addressed in a future rulemaking.

B. Composition of the OneRD Guaranteed Loan Program

This section briefly describes the scope of each of the four individual programs with regard to eligible projects, borrowers, and lenders, application processes, guarantee and loan terms, and how the four programs are combined into a unified guaranteed loan platform.

(1)

Community Facilities Guaranteed Loan Program.

The CF guaranteed loan program guarantees loans to develop essential community facilities in rural areas and towns with a population of up to 50,000, depending on the level of appropriated funding for a respective fiscal year. Loan funds may be used to construct, enlarge, extend or otherwise improve essential community facilities including health care, public safety, and public services. Eligible borrowers include public entities, such as municipalities, counties, special-purpose districts, Indian tribes, and not-for-profit corporations who are unable to obtain commercial credit at reasonable rates and terms without the Federal Government's guarantee.

(2)

Water and Waste Disposal Guaranteed Loan Program.

The Water and Waste Disposal Guaranteed Loan program guarantees loans to construct, enlarge, extend or otherwise improve water and waste disposal systems, including wastewater treatment, solid waste disposal, and storm drainage, in rural areas and in cities and towns with a population of up to 50,000. Eligible borrowers include public entities, such as municipalities, counties, special-purpose districts, and Indian tribes, as well as not-for-profit corporations and tribal governments who are unable to obtain commercial credit at reasonable rates and terms without the Federal Government's guarantee.

(3)

Business and Industry Guaranteed Loan Program.

The B&I Guaranteed Loan program guarantees loans that further job creation and stimulate rural economies by providing financial backing for rural businesses. Eligible borrowers include cooperatives, corporations, partnerships, trusts or other profit or not-for-profit entities, Indian tribes, municipalities, counties, or other political subdivisions of a state.

(4)

Rural Energy for America Program.

The Rural Energy for America Program is a guaranteed loan program, providing loan guarantees for the purchase and installation of renewable energy systems, energy efficiency improvements and energy efficient equipment. Eligible borrowers include farmers, ranchers, and rural small businesses.

(5)

Similarities Between the Four Guaranteed Loan Programs.

While each program has some different requirements based on statutory authorizations (

e.g.,

borrower and project eligibility, necessary documentation, and funding limits), the same basic framework for making loan guarantees applies to each of the programs.

• In accordance with rural area definition and reservation requirements found at 7 U.S.C. 1991(a) and 7 U.S.C. 1926(a)(24), projects must be located in any area of a state not in a city or town that has a population of more than 50,000 inhabitants, according to the latest decennial census of the United States and not in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants.

• Lenders requesting loan guarantees from the Agency under OneRD must meet the definition of either a regulated lending entity or a non-regulated lending entity as specified in § 5001.130.

• A borrower works with a lender to obtain a loan for a project eligible under one or more of the four programs, providing the lender with necessary information on the borrower and the project.

• A lender evaluates borrower and project eligibility and performs a detailed credit evaluation and, as applicable, an economic or financial analysis of the project to ensure that the borrower will be able to repay the loan.

• A lender applies to the Agency for a loan guarantee and submits the credit evaluation for the project and borrower, and all required application documentation.

• The Agency reviews each guaranteed loan application package in accordance with the OneRD program requirements and approves or denies the guarantee. Subject to the availability of funds, each approved package is provided a conditional commitment for a loan guarantee.

• Each lender is responsible for the origination and servicing of its guaranteed loan portfolio and for working with the Agency, as necessary, to resolve borrower issues (such as default).

Using this framework allows the Agency to support rural economic development effectively and efficiently through loan guarantees and combines the four programs into one unified guaranteed loan program in OneRD.

III. Basis and Purpose

As noted earlier, prior to implementation of this final rule, the four guaranteed loan programs origination and servicing processes appeared in separate regulations and required users to become familiar with the individual provisions. The four loan programs share many common elements and the Agency has reviewed opportunities to increase commonalities among processes to improve efficiency and customer experience while maintaining the distinct purposes of the authorized programs.

The four guaranteed loan programs and their respective regulations combined under this final rule

developed over time and, in some respects, independently of each other. A review of these programs and their regulations, individually and collectively, has identified four key operational issues that this final rule aims to resolve. These issues and the OneRD regulation's approach related to them are as follows:

Increased Efficiency:

Many lenders and, in some cases, borrowers, seek loan guarantees under more than one of the four RD loan guarantee programs, for example, a small town builds a senior day center with a CF loan guarantee, and then adds solar panels through a REAP loan guarantee. Therefore, under the current conditions, they are required to learn multiple, similarly regulated, but differently operated, loan guarantee programs. For lenders, the benefit of using a program must be worth the cost of investing in learning and adapting to its rules, thus if the bulk of a lender's business is in one program, any differences may disincentivize, through decreased efficiency and increased costs, the use of the other programs should the opportunity arise.

Under this final rule, the Agency expects that lenders (and to a lesser extent borrowers) will find all four loan guarantee programs easier and more efficient to use because (1) a single set of forms and application process is used for the four programs being consolidated, (2) the common elements for origination, processing, and servicing have been consolidated into a single part of this final rule, and (3) this final rule relies more on common lending practices, which may reduce the lender's and borrower's costs. Consolidating requirements is expected to reduce burden for lenders, borrowers, and the Agency's staff, easing delivery and increasing efficiency. Additionally, those borrowers who may only utilize one of the guaranteed programs will benefit when the Agency is better able to leverage scarce IT resources for improvements to the application system.

Overall, a common platform like the OneRD regulation is expected to be easier to administer, improve consistency and thus customer experience, and reduce Agency and lender risk. Internally, OneRD will reduce the time, effort, and training necessary to guarantee a loan, especially through efficiencies realized through common forms, rules, and information technology platforms. With OneRD, internal management controls will improve through standardized servicing and oversight. Common elements assist lenders in managing a diverse portfolio while meeting Federal requirements. Uniform processes facilitate electronic commerce between the Agency and its customers.

Improved Flexibility:

Maintaining separate sets of basic requirements for different loan guarantee programs creates inflexibilities, including the burden of ensuring new crosscutting requirements are incorporated into separate regulations or incorporating new efficiencies where they apply. Additionally, the single regulation allows for the addition of other loan guarantee programs without having to build a completely new structure and instead only incorporating any unique factors into the existing OneRD regulation. General provisions, which apply to all guaranteed loan programs, are contained in subpart A of the final rule and additional guaranteed loan programs can be added as needed in the remaining or new subparts. Additionally, each of the four subparts corresponding to the four programs includes an introductory section describing requirements that apply to the specific program.

Efficient use of Agency Resources:

Previously, the separate programs did not encourage a streamlined and cross-program use of Agency resources. For programs that issued fewer guarantees, staff might lack familiarity with the applicable regulations and commercial lender practices and standards, creating inconsistencies in delivery as the program was relearned for each loan. For programs that issued many guarantees, staff might experience significant workloads that could be alleviated by cross-trained colleagues. The Agency has worked to make consistent its approach to evaluating risk relative to the program, industry, and conditions applicable to the loan guarantee. This final rule allows the Agency to more effectively utilize its resources via implementation of a OneRD model, which emphasizes consistency, reliance on lender expertise, refocusing time spent on loan processing to time spent servicing clients, and increasing access to its programs by eliminating regulatory redundancy.

Improved Risk Management:

In developing a portfolio of loan guarantees, consideration must be given to credit risk management. The “5 Cs of Credit”: character; capacity; capital; collateral; and, conditions are industry recognized credit evaluation standards. OneRD emphasizes that the lender's credit evaluation relies on the professional judgement of the lender and their review of the credit factors in determining risk. These credit factors, while implied in the existing regulations are now defined and specific Agency standards are provided at § 5001.202(a) and (b). Providing a single set of credit evaluation factors with defined meanings improves consistency in Agency reviews which improves response and delivery times.

In addition to credit risk management, institutional risk management has been addressed and codified. Institutional risk, in this regulation, refers to the quality of the lender seeking the loan guarantee. Currently, each program area has its own set of criteria that lending entities must meet to be determined eligible. A lending entity can be eligible under one program but not another which creates confusion and inefficiencies for all parties. By implementing one defined, comprehensive set of criteria across all four programs to assess lender performance, the unified guaranteed loan platform allows the Agency to improve its management of lenders participating in these programs and provide a one-stop shop for lenders. With this final rule, the Agency implements lender eligibility criteria based on the status, regulated or non-regulated, of the lending entity. These criteria are in 7 CFR 5001.130 through 5001.132, which discuss lender eligibility requirements, the lender's agreement, and maintenance of approved lender status.

Agency operational risk refers to internal weaknesses that can occur in administering separate guaranteed loan programs using a variety of regulations that require unique sets of processes and procedures. OneRD uses commonalities, consistency in regulatory language, and integration of information management systems to reduce Agency operational risk. The use of electronic reporting and standardized forms also allows the Agency to manage its portfolio of outstanding guaranteed loans better.

Ultimately, the OneRD guarantee loan regulation provides a framework to ensure consistent implementation of the four guaranteed loan programs and full utilization of all four guarantee programs for the benefit of rural communities.

IV. Discussion of the Rule

A. Organization of the Rule

To help the public locate existing regulatory provisions found in the new rule, the Agency provides the following table showing new sections and subparts under the OneRD Guaranteed Loan program and where the information and requirements were previously located.

Table 1—OneRD Guaranteed Loan Program CFR Sections and Subparts

OneRD section No. and title

Current section Nos. and titles

Subpart A—General Provisions

§ 5001.1 General.

§ 5001.2 Structure of Regulation.

§ 5001.3 Definitions

B&I:

§ 4279.2 Definitions and abbreviations.

REAP:

§ 4280.103 Definitions.

CF:

§ 3575.2 Definitions.

WWD:

§ 1779.2 Definitions.

§ 5001.4 Exception authority

B&I:

§ 4279.15 Exception authority.

REAP:

§ 4280.104 Exception authority.

CF:

§ 3575.17 Exception authority.

WWD:

§ 1779.17 Exception authority.

§ 5001.5 Appeal and review rights

B&I:

§ 4279.16 Appeals.

REAP:

§ 4280.105 Review or appeal rights.

CF:

§ 3575.13 Appeals.

WWD:

§ 1779.13 Appeals.

§ 5001.6 General Lender responsibilities

B&I:

§ 4279.30 Lenders' functions and responsibilities.

§ 5001.7 Agency special initiatives.

§ 5001.8 Approvals, regulations, and forms

B&I:

§ 4279.1 Introduction.

REAP:

§ 4280.107 Statute and regulation references.

CF:

§ 3570.257 Statute and regulation references.

§ 5001.9 Standards for Financial information

B&I:

§ 4279.137 Financial statements.

REAP:

§ 4280.132 Financial statements.

Subpart B—Eligibility Provisions

§ 5001.101 Introduction.

§ 5001.102 Project eligibility—general

B&I:

§ 4279.113 Eligible uses of funds.

REAP:

§ 4280.113 Project eligibility.

CF:

§ 3575.20 Eligibility.

WWD:

§ 1779.20 Eligibility.

§ 5001.103 Eligible Community Facility (CF) Projects and requirements

CF:

§ 3575.24 Eligible loan purposes; § 3575.20 Eligibility.

§ 5001.104 Eligible Water and Waste Disposal (WWD) Projects and requirements

WWD:

§ 1779.24 Eligible loan purposes; § 1779.20 Eligibility.

§ 5001.105 Eligible Business and Industry (B&I) Projects and requirements

B&I:

§ 4279.113 Eligible uses of funds.

§ 5001.106 Eligible Rural Energy for America Program (REAP)—Renewable Energy System (RES) Projects and requirements

REAP:

§ 4280.128 Project eligibility.

§ 5001.107 Eligible Rural Energy for America Program (REAP)—Energy Efficiency Improvement (EEI) Projects and requirements

REAP:

§ 4280.128 Project eligibility.

§ 5001.108 Rural Energy for America Program (REAP)—Energy Efficient Equipment and Systems (EEE) Projects and requirements.

§ 5001.115 Ineligible Projects General

B&I:

§ 4279.117 Ineligible purposes and entity types.

CF:

§ 3575.25 Ineligible loan purposes.

WWD:

§ 1779.25 Ineligible loan purposes.

§ 5001.116 Ineligible CF Projects

CF:

§ 3575.25 Ineligible loan purposes.

§ 5001.117 Ineligible WWD Projects

WWD:

§ 1779.25 Ineligible loan purpose.

§ 5001.118 Ineligible B&I Projects

B&I:

§ 4279.117 Ineligible purposes and entity types.

§ 5001.119 Ineligible REAP Projects.

§ 5001.121 Eligible uses of loan funds

B&I:

§ 4279.113 Eligible uses of funds.

REAP:

§ 4280.114 RES and EEI grant funding.

CF:

§ 3575.24 Eligible loan purposes.

WWD:

§ 1779.24 Eligible loan purposes.

§ 5001.122 Ineligible uses of loan funds

B&I:

§ 4279.210 Project eligibility requirements; § 4279.117 Ineligible purposes and entity types.

REAP:

§ 4280.114 RES and EEI grant funding.

CF:

§ 3575.24 Eligible loan purposes; § 3575.25 Ineligible loan purposes.

WWD:

§ 1779.25 Ineligible loan purposes.

§ 5001.126 Borrower eligibility

B&I:

§ 4279.108 Eligible borrowers.

REAP:

§ 4280.127 Borrower eligibility.

CF:

§ 3575.20 Eligibility.

WWD:

§ 1779.20 Eligibility.

§ 5001.127 Borrower ineligibility conditions

B&I:

§ 4279.117 Ineligible purposes and entity types.

REAP:

§ 4280.109 Ineligible Applicants, borrowers, and owners.

§ 5001.130 Lender eligibility requirements

B&I:

§ 4279.29 Eligible lenders.

REAP:

§ 4280.125(b).

CF:

§ 3575.27 Eligible lenders.

WWD:

§ 1779.27 Lenders.

§ 5001.131 Lender's Agreement

B&I:

§ 4279.29 Eligible lenders.

REAP:

.

CF:

§ 3575.64 Issuance of Lender's Agreement, Loan Note Guarantee, and Assignment Guarantee Agreement.

WWD:

§ 1779.64 Issuance of Lender's Agreement, Loan Note Guarantee, and Assignment Guarantee Agreement.

§ 5001.132 Maintenance of approved Lender status

B&I:

§ 4279.29 Eligible lenders.

§ 5001.140 Cooperative Stock/Cooperative equity

B&I:

§ 4279.115 Cooperative stock/cooperative equity.

§ 5001.141 New Markets Tax Credit

B&I:

§ 4279.116 New Markets Tax Credit program.

Subpart C—Origination Provisions

§ 5001.201 General origination requirements

B&I:

§ 4279.30 Lenders' functions and responsibilities.

§ 5001.202 Evaluation of Credit Underwriting

B&I:

§ 4279.30 Lenders' functions and responsibilities; § 4279.131 Credit quality.

REAP:

§ 4280.131 Credit quality.

WWD:

§ 1779.47 and § 1779.48 Collateral.

§ 5001.203 Appraisals

B&I:

§ 4279.144 Appraisals.

REAP:

§ 4279.144 Appraisals.

§ 5001.204 Personal, partnership, and corporate guarantees

B&I:

§ 4279.132 Personal and corporate guarantees.

REAP:

§ 4280.134 Personal and corporate guarantees.

§ 5001.205 General monitoring requirements

B&I:

§ 4279.167 Planning and performing development.

REAP:

§ 4279.167 Planning and performing development.

CF:

§ 3575.42 Design and construction requirements; § 3575.12 Inspections; § 3575.63 Conditions precedent to issuance of the Loan Note Guarantee.

WWD:

§ 1779.12 Inspections; § 1779.42 Design and construction requirements.

§ 5001.206 Compliance with USDA Departmental Regulations, Policies, and other Federal laws

B&I:

§ 4279.167 Planning and performing development.

REAP:

§ 4280.36 Other laws that contain compliance requirements for these Programs; § 4280.36 Other laws that contain compliance requirements for these Programs.

CF:

§ 3575.42 Design and construction requirements.

WWD:

§ 1779.42 Design and construction requirements.

§ 5001.207 Environmental responsibilities

B&I:

§ 4279.59 Environmental requirements; § 4279.167 Planning and performing development.

REAP:

§ 4280.36 Other laws that contain compliance requirements for these Programs.; § 4280.41 Environmental review of the application.; § 4280.124 Construction planning and performing development.

CF:

§ 3575.9 Environmental review requirements.

WWD:

§ 1779.9 Environmental review requirements.

§ 5001.208 Conflicts of Interest

REAP:

§ 4280.106 Conflict of interest.

CF:

§ 3575.27 Eligible lenders.

WWD:

§ 1779.27 Lenders.

Subpart D—Guarantee Application Provisions

§ 5001.301 Beginning the application process.

§ 5001.302 Preliminary eligibility review

B&I:

§ 4279.161 Filing preapplications and applications.

CF:

§ 3575.52 Processing.

WWD:

§ 1779.52 Processing.

§ 5001.303 Applications for loan guarantee

B&I:

§ 4279.261 Application for loan guarantee content.

CF:

§ 3575.52(b) Applications.

WWD:

§ 1779.52(b) Applications.

§ 5001.304 Specific Application Requirements for Community Facility Projects

CF:

§ 3575.47 Economic feasibility requirements.

§ 5001.305 Specific Application Requirements for Water and Waste Disposal Projects

WWD:

§ 1779.42 Design and construction requirements; § 1779.47 Economic feasibility requirements.

§ 5001.306 Specific Application Requirements for Business and Industry Projects

B&I:

§ 4279.161 Filing preapplications and applications.

§ 5001.307 Specific Application Requirements for Rural Energy for America Program Projects

REAP:

§ 4280.137 Application and documentation.

§ 5001.315 Application evaluation and award provisions

B&I:

§ 4279.260 Guarantee applications—general.

REAP:

§ 4280.110 General Applicant, application, and funding provisions.

CF:

§ 3575.53 Evaluation of application.

WWD:

§ 1779.53 Evaluation of application.

§ 5001.316 Community Facility Project priority point system and reservation of funds

CF:

§ 3575.53 Evaluation of application.

§ 5001.317 Water and Waste Disposal Project priority points system.

§ 5001.318 Business and Industry Project priority points system

B&I:

§ 4279.166 Loan priority scoring.

§ 5001.319 Rural Energy for America Program Project priority points system

REAP:

§ 4280.135 Scoring RES and EEI Guaranteed Loan-only applications.

Subpart E—Loan and Guarantee Provisions

Loan Provisions

§ 5001.401 Interest rate provisions

B&I and REAP:

§ 4279.125 Interest rates; § 4279.233 Interest rates.

CF:

§ 3575.33 Interest rates.

WWD:

§ 1779.33 Interest rates.

§ 5001.402 Term length, loan schedule, repayment

B&I and REAP:

§ 4279.126 Loan terms.

CF:

§ 3575.34 Terms of loan repayment.

WWD:

§ 1779.34 Terms of loan repayment.

§ 5001.403 Lender fees

B&I:

§ 4279.120 Fees and charges; § 4279.231 Fees.

REAP:

§ 4280.129 Guaranteed loan funding.

CF:

§ 3575.29 Fees and charges by lender.

WWD:

§ 1779.29 Fees and charges by lender.

§ 5001.406 Loan amounts

B&I:

§ 4279.119 Loan guarantee limits.

REAP:

§ 4280.129 Guaranteed loan funding.

§ 5001.407 Percent of guarantee

B&I:

§ 4279.119 Loan guarantee limits.

REAP:

§ 4280.129 Guaranteed loan funding.

CF:

§ 3575.30 Loan guarantee limitations.

WWD:

§ 1779.30 Loan guarantee limitations.

§ 5001.408 Sale or assignment of Guaranteed Loan

B&I:

§ 4279.75 Sale or assignment of guaranteed loan; § 4279.223 Sale or assignment of guaranteed loan.

CF:

§ 3575.65 Lender's sale or assignment of the guaranteed portion of loan.

WWD:

§ 1779.65 Lender's sale or assignment of the guaranteed portion of loan.

Guarantee Provisions

§ 5001.450 General

B&I:

§ 4279.72 Conditions of guarantee.

REAP:

§ 4280.131 Credit quality.

CF:

§ 3575.3 Full faith and credit; § 3575.4 Conditions of guarantee.

WWD:

§ 1779.3 Full faith and credit; § 1779.4 Conditions of guarantee.

§ 5001.451 Conditional Commitment

B&I:

§ 4279.173 Loan Approval and obligating funds.

§ 5001.452 Loan closing and conditions precedent to issuance of Loan Note Guarantee

B&I:

§ 4279.181 Conditions precedent to issuance of the Loan Note Guarantee; § 4279.281 Conditions precedent to issuance of Loan Note Guarantee.

REAP:

§ 4280.142 Conditions precedent to issuance of loan note guarantee.

CF:

§ 3575.63 Conditions precedent to issuance of the Loan Note Guarantee.

WWD:

§ 1779.63 Conditions precedent to issuance of the Loan Note Guarantee.

§ 5001.453 Issuance of the guarantee

B&I:

§ 4279.181 Conditions precedent to issuance of the Loan Note Guarantee; § 4279.281 Conditions precedent to issuance of Loan Note Guarantee.

REAP:

§ 4280.142 Conditions precedent to issuance of loan note guarantee.

CF:

§ 3575.63 Conditions precedent to issuance of the Loan Note Guarantee; § 3575.64 Issuance of Lender's Agreement, Loan Note Guarantee, and Assignment Guarantee Agreement.

WWD:

§ 1779.63 Conditions precedent to issuance of the Loan Note Guarantee; § 1779.64 Issuance of Lender's Agreement, Loan Note Guarantee, and Assignment Guarantee Agreement.

§ 5001.454 Guarantee fee

B&I:

§ 4279.120 Fees and charges; § 4279.231 Fees.

REAP:

§ 4280.126 Guarantee/annual renewal fee.

CF:

§ 3575.29 Fees and charges by lender.

WWD:

§ 1779.29 Fees and charges by lender.

§ 5001.455 Periodic Guarantee Retention fee

B&I:

§ 4279.120 Fees and charges; § 4279.231 Fees.

REAP:

§ 4280.126 Guarantee/annual renewal fee.

§ 5001.456 Other fees

B&I:

§ 4279.120 Fees and charges.

§ 5001.457 Changes prior to loan closing

B&I:

§ 4279.174 Transfer of lenders; § 4279.280 Changes in borrower.

REAP:

§ 4279.174 Transfer of lenders; § 4279.280 Changes in borrower.

§ 5001.458 Other Federal, State, and local requirements

CF:

§ 3575.43 Other Federal, State, and local requirements.

WWD:

§ 1779.43 Other Federal, State, and local requirements.

§ 5001.459 Replacement of Loan Note Guarantee and Assignment Guarantee Agreement

B&I:

§ 4279.84 Replacement of document; § 4279.226 Replacement of document; § 4279.84 Replacement of document; § 4279.226 Replacement of document.

REAP:

§ 4279.84 Replacement of document; § 4279.226 Replacement of document; § 4279.84 Replacement of document; § 4279.226 Replacement of document.

CF:

§ 3575.73 Replacement of loss, theft, destruction, mutilation, or defacement of Loan Note Guarantee or Assignment Guarantee Agreement.

WWD:

§ 1779.73 Replacement of loss, theft, destruction, mutilation, or defacement of Loan Note Guarantee or Assignment Guarantee Agreement.

Subpart F—Servicing Provisions

§ 5001.501 General

B&I:

§ 4287.107 Routine servicing.

REAP:

§ 4287.107 Routine servicing.

CF:

§ 3575.69 Loan servicing.

WWD:

§ 1779.69 Loan servicing.

§ 5001.502 Oversight and monitoring

B&I:

§ 4279.217 Oversight and monitoring.

REAP:

§ 4287.107 Routine servicing.

§ 5001.503 Project completion requirements

REAP:

§ 4280.143 Requirements after project construction.

§ 5001.504 Financial reports

B&I and

REAP:

§ 4287.107(d) Borrower financial reports.

CF:

§ 3575.69 Loan servicing.

WWD:

§ 1779.69 Loan servicing.

§ 5001.505 Collateral inspection and release

B&I:

§ 4287.113 Release of Collateral.

REAP:

§ 4287.113 Release of Collateral.

CF:

§ 3575.12 Inspections; § 3575.69 Loan servicing.

WWD:

§ 1779.12 Inspections; § 1779.69 Loan servicing.

§ 5001.506 Loan transfers and assumptions

B&I:

§ 4287.134 Transfer and Assumption.

REAP:

§ 4287.134 Transfer and Assumption.

CF:

§ 3575.88 Transfers and assumptions.

WWD:

§ 1779.88 Transfers and assumptions.

§ 5001.507 Lender transfer

B&I:

§ 4279.174 Transfer of lenders; § 4279.279 Transfer of Lenders.

§ 5001.508 Mergers

CF:

§ 3575.89 Mergers.

WWD:

§ 1779.89 Mergers.

§ 5001.509 Servicing fees

B&I:

§ 4279.120 Fees and charges.

REAP:

§ 4287.334 Transfer and Assumption.

§ 5001.510 Subordination of lien position

B&I:

§ 4287.123 Subordination of lien position.

REAP:

§ 4287.323 Subordination of lien position.

§ 5001.511 Repurchases from Holders

B&I:

§ 4279.78 Repurchase from holder; § 4279.225 Repurchase from Holder.

REAP:

§ 4279.78 Repurchase from holder; § 4279.225 Repurchase from Holder.

CF:

§ 3575.78 Repurchase of loan.

WWD; § 1779.78 Repurchase of loan.

§ 5001.512 Additional expenditures and loans

CF:

§ 3575.84 Additional loans or advances.

WWD:

§ 1779.84 Additional loans or advances.

§ 5001.513 Interest rate changes

B&I:

§ 4287.112 Interest rate changes.

REAP:

§ 4287.112 Interest rate changes.

CF:

§ 3575.80 Interest rate changes after loan closing.

WWD:

§ 1779.80 Interest rate changes after loan closing.

§ 5001.514 Lender failure

B&I:

§ 4287.136 Lender failure.

REAP:

§ 4287.136 Lender failure.

§ 5001.515 Default by Borrower

B&I:

§ 4287.145 Default by Borrower.

REAP:

§ 4287.145 Default by borrower.

WWD:

§ 1779.75 Defaults by borrower.

§ 5001.516 Protective Advances

B&I:

§ 4287.156 Protective Advances.

REAP:

§ 4287.156 Protective advances.

CF:

§ 3575.83 Protective advances.

WWD:

§ 1779.83 Protective advances.

§ 5001.517 Liquidation

B&I:

§ 4287.157 Liquidation.

REAP:

§ 4287.157 Liquidation.

CF:

§ 3575.81 Liquidation.

WWD:

§ 1779.81 Liquidation.

§ 5001.519 Bankruptcy

B&I:

§ 4287.170 Bankruptcy.

REAP:

§ 4287.170 Bankruptcy.

CF:

§ 3575.85 Bankruptcy.

WWD:

§ 1779.85 Bankruptcy.

§ 5001.520 Litigation.

§ 5001.521 Loss calculations and payment

B&I:

§ 4287.158 Determination of loss and payment.

REAP:

§ 4287.158 Determination of loss and payment.

CF:

§ 3575.34 Terms of loan repayment; § 3575.81 Liquidation; § 3575.94 Determination and payment of loss.

WWD:

§ 1779.34 Terms of loan repayment; § 1779.42 Design and construction requirements; § 1779.81 Liquidation; § 1779.94 Determination and payment of loss.

§ 5001.522 Future recovery

B&I: § 4287.169 Future Recovery.

REAP: § 4287.169 Future Recovery.

CF:

§ 3575.95 Future recovery.

WWD:

§ 1779.95 Future recovery.

§ 5001.523 Property acquired by the Lender

CF:

§ 3575.90 Disposition of acquired property.

WWD:

§ 1779.90 Disposition of acquired property.

§ 5001.524 Termination of Loan Note Guarantee

B&I: § 4287.180 Termination of Guarantee.

REAP:

§ 4287.180 Termination of Guarantee.

CF:

§ 3575.96 Termination of Loan Note Guarantee.

WWD:

§ 1779.96 Termination of Loan Note Guarantee.

As noted in table 1 above, this final rule is divided into six major subparts:

(1) Subpart A contains general provisions that are applicable to each guaranteed loan made under 7 CFR part 5001, except as may be otherwise indicated. Topics covered include definitions; exception authority; appeal and review rights; general lender responsibilities; special initiatives; approvals, regulations, and forms; and standards for financial information.

(2) Subpart B contains provisions for determining project, borrower, and lender eligibility. It also contains a list of ineligible projects, both general and program specific, and a set of conditions that would make an otherwise eligible borrower ineligible. This subpart addresses the lender's agreement, along with provisions associated with a lender maintaining its approved lender status. This subpart also addresses specific project requirements for the Business and Industry, Community Facility, and Water and Waste Disposal guaranteed loan programs, and Renewable Energy System Projects, Energy Efficiency Improvement Projects and Energy Efficient Equipment and Systems projects under REAP.

(3) Subpart C contains provisions for origination requirements, credit evaluations and underwriting, appraisals, guarantees, monitoring requirements, compliance with other laws, environmental responsibilities, and conflicts of interest.

(4) Subpart D contains application provisions for a loan guarantee under this part, including preliminary eligibility reviews and applications, application evaluation, and application award processes. This subpart also includes more specific application requirements and priority point systems for Community Facility, Water and Waste Disposal, Business and Industry, and REAP projects.

(5) Subpart E contains loan and guarantee provisions. Loan provisions cover interest rates, term length, loan schedule, repayment, lender fees, loan amounts, percentage of guarantee, eligible and ineligible uses of loan funds, and sale or assignment of a guaranteed loan. Guarantee provisions cover the conditional commitment, loan closing and conditions precedent to issuing the loan note guarantee (LNG), the issuance of the LNG, periodic retention and other fees, replacement of documents, reorganizations, and other legal requirements.

(6) Subpart F contains provisions for servicing the loan guaranteed under this part, including oversight, monitoring, and reporting requirements, and project completion requirements. Servicing topics covered include audits and financial reports, collateral, loan transfer and assumption, lender transfer, mergers, servicing fees, subordination of lien position, repurchases, additional expenditures and loans, interest rate changes, lender failure and borrower default, protective advances, liquidation, bankruptcy, litigation, loss calculations and payments, future recovery, property acquired by the lender, and termination of the LNG.

Lastly, we included appendices with information about financial feasibility studies and reports and technical reports for Renewable Energy Systems and Energy Efficiency Improvement projects under various project cost thresholds.

B. Delivery of the OneRD Guaranteed Loan Program

While each of the four loan programs remain substantially the same under OneRD, the way they will be delivered to the Agency's customers has changed to improve consistency, accountability and transparency. In delivering OneRD, the Agency will publish

Federal Register

notices annually containing specific information associated with the guaranteed loan programs, such as fee amounts, or project priorities based on Agency initiatives. Additional programs that may become part of OneRD in the future will also be announced via

Federal Register

notice and this rule will be amended to incorporate those additional programs.

The following paragraphs address OneRD by examining the delivery mechanisms and include a discussion of the

Federal Register

notices that will be used as part of the implementation of the unified platform.

Eligibility.

Under OneRD, four basic types of eligibility are identified in subpart B: Project eligibility, eligible use of loan funds, borrower eligibility, and lender eligibility.

•

Project eligibility

is based on the proposed project benefiting a rural area, on the ability of the activity to be funded to meet the requirements of the applicable program, on meeting a minimum set of project criteria, and, when applicable, on the boundaries of the proposed service area meeting a nondiscrimination criterion. Projects that do not meet these criteria would be ineligible under OneRD. In addition, these criteria cannot be voided under the exception authority provided in this final rule. The applicable project eligibility requirements, located in §§ 5001.102 through 5001.108 of this final rule, remain essentially unchanged for each of the four loan programs. However, some differences are discussed in section III of this preamble. One of the most important differences discussed is that OneRD uses three

minimum project financial conditions to reduce project risk by screening out those projects less likely to achieve a level of success. These three financial conditions establish minimum requirements for debt-service coverage ratio, cash equity or community support, and loan-to-value ratio. While the four loan programs currently address cash equity or community support, separately, they do not have requirements associated with debt-service coverage ratios and loan-to-value ratios. By specifying these project financial conditions in this final rule, borrowers and lenders can determine a project's eligibility for a loan guarantee early in the process.

In addition to identifying eligible projects, this final rule identifies specific projects and purposes that are not eligible to receive a loan guarantee. The Agency assembled this list based on analyses of its current portfolio and historic loan defaults as well as the list of ineligible projects and purposes identified in the existing regulations for the four loan programs.

•

Borrower eligibility

is based on the borrower meeting the common requirements outlined in § 5001.126(a) as well as the program-specific requirements of § 5001.126(b) through (e). This final rule also identifies borrowers who would be categorically ineligible in § 5001.127. In terms of eligible and ineligible entities, there is little change under OneRD compared to the four current programs.

•

Lender eligibility

is based on the criteria provided in § 5001.130. Requirements to be an approved lending participant vary for regulated and non-regulated lending entities.

Regulated lending entities, listed at § 5001.130(b)(1) through (9), who are subject to supervision and credit examination by an applicable agency of the United States or a state, who meet the requirements of § 5001.130(a), are eligible to receive a loan guarantee without additional documentation being sent to the Agency. The list of regulated lending entities as well as requirements is essentially the same as that in the four existing regulations with one exception. The language, “. . . or were created specifically by state statute and operated under the direct supervision of a state government authority” were added to allow the issuance of loan guarantees to state bond banks or state bond pools better clarifying the status of these entities. Previous language listed these entities; however, restricting eligibility to lending entities to those “. . . subject to supervision and credit examination by the applicable agency . . .” effectively made them ineligible as they are quasi-state agencies and not, in most cases, subject to credit examination. State bond banks and state bond pools have approached the Agency numerous times and have been declined due to the limiting language.

A non-regulated lending entity that seeks to become an approved lender must submit a written request to the Agency. The request must address the criteria listed at § 5001.130(c)(1) and (2).

To address the unique situation of providing capital on tribal trust lands, the Agency has added a category of “non-regulated lending entities servicing tribal trust lands” at § 5001.130(d). This designation provides a modified set of criteria that must be met to become an approved lending entity but restricts lending activity to tribal trust lands only. Any lending activity proposed outside of tribal trust lands requires the lending entity to apply and meet the requirements of § 5001.130(c)(1) and (2).

Approved lender status for all non-regulated lending entities will last for not more than five years

Currently, each guarantee program has a separate and distinct process of approving lenders so that a lender approved to originate a B&I loan is not approved to originate a CF loan and vice versa. This creates confusion and adds an additional burden to lenders wishing to participate in multiple guarantee programs. The process described streamlines the approval process for lenders by providing one unified approach that approves them for all four guarantee programs. The Agency believes this approach will expand program usage by enabling lenders to participate in programs they may not have otherwise been participating in due to the additional cost and time of being approved.

Guaranteed loan approval.

Under the four loan programs, the Agency views proper loan origination as a responsibility of the lender. OneRD reinforces the concept of negligent loan origination throughout this Part to help lenders understand the importance of conducting proper credit analysis and sound loan origination. The policy regarding negligence in the origination and servicing of loans is found in § 5001.521(d). The Agency anticipates that the clarification for negligent loan origination will reduce loan defaults through improved loan origination. However, in the event of a default, this regulation provides the Agency remedies for negligent loan origination and servicing, up to and including a total reduction of the loss claim payable. However, in the event of loan default, loss claims paid under the guarantee will be collected from the lender, as stated in § 5001.521.

With OneRD, the Agency has standardized, to the extent possible, the types of information to be included in the loan guarantee application, although some additional information is required by some of the programs described in subpart B of this final rule. In general, the information associated with a loan guarantee application under subpart D of OneRD is not significantly different from that originally required under the existing regulations.

The main difference in the application for a loan guarantee under OneRD is the amount of supporting documentation that is required to be submitted with or accompany the application for certain projects. Project risk will drive the amount of documentation required versus total project cost thresholds, which were utilized in previous regulations.

The Agency will examine the lender's analysis of the project, the technical merit, any business plans or feasibility studies required, and environmental information. If the Agency disapproves the application, the lender and borrower have the right to appeal the decision per 7 CFR 1900, subpart B.

Servicing.

Once RD approves a loan guarantee, the lender is responsible for servicing the entire loan. The lender's servicing responsibilities under the provisions of OneRD, including those regarding negligent servicing, are essentially the same as are currently required under the four loan programs. This information is in subpart F.

Oversight and monitoring.

Under OneRD, as under the four loan programs, the Agency conducts all oversight and monitoring activities necessary to ensure that lenders are originating, and servicing Agency guaranteed loans in a manner consistent with lender and Agency standards. These activities include, but are not limited to, conducting lender visits and meetings and requiring various reports and notifications as discussed throughout subpart C. There are a few differences in these activities under OneRD compared to those previously required under the four loan programs. Sections II.1 through II.4 of this preamble discuss each program in detail.

The Agency also uses this oversight and monitoring to ensure that lenders maintain the qualification criteria for being an Agency-approved lender.

Managing Risks.

As noted earlier in this preamble, the Agency has incorporated into the provisions of OneRD certain features to help manage project, operational, and institutional

risks, and loss exposure. Those various provisions are discussed in detail in section III of this preamble.

Federal Register

notices.

To implement OneRD, the Agency will publish at least one

Federal Register

notice each year. Each annual notice will address the following items as necessary:

Funding Availability.

RD will issue notices each year specifying the amount of funds available for OneRD guarantees. Notices may also include the following information, should there be change from prior notices:

◦

Maximum loan amounts.

The Agency will identify in the

Federal Register

notice the maximum loan amount per loan guarantee that will be available under each of the four guaranteed loan programs within OneRD.

◦

Percent of Loan Guarantee.

The maximum guarantee is 90 percent of eligible guaranteed loan loss pursuant to statutory authority. The Agency will set annually a guarantee percentage by program that will apply to loans guaranteed within each program. The Agency will announce annual guarantee percentages for each program by publishing a notice in the

Federal Register

in accordance with Section 5001.10. The annual guarantee percentage may be set at or below the maximum allowed authorized by statute. The annual guarantee percentage will take current Federal credit policy into consideration and may be set at or below the maximum allowed authorized by statute.

◦

Fees.

The Agency will identify the fees, including but not limited to, the initial guarantee fee rate and the renewal fee that will be used for the fiscal year for each program in an annual notice published in the

Federal Register

.

◦

Priority Scoring.

The Agency will identify in the

Federal Register

notice the scoring criteria (

e.g.,

Agency priorities) that will be used, if necessary, to allocate funds when funds are insufficient to cover all funding requests within a program.

Additionally, if there are any changes to the OneRD Guaranteed Loan Program, this rule will be amended accordingly.

C. Changes of Note

The Agency has identified changes, including, but not limited to lender eligibility, and annual notice contents throughout section III and IV. Additional items, considered major changes, not addressed elsewhere include:

• The Agriculture Improvement Act of 2018 (Pub. L. 115-334) amended the definition of rural and rural area in the Consolidated Farm and Rural Development Act (Pub. L. 92-419) for the CF and WWD guarantee programs to align the population limit with B&I and REAP. The definition of rural and rural area, which is unchanged for the B&I and REAP programs, is any area of a state not in a city or town that has a population of more than 50,000 inhabitants according to the latest decennial census of the United States and not in the urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants; it is codified in this regulation at § 5001.3. This definition is subject to reservation requirements for the CF Program found at 7 U.S.C. 1926(a)(24).

To align the Agency's guarantee programs purposes with its customer's needs, the Agency will allow refinancing as an eligible project purpose. Included in the regulation is the ability to refinance lender, other lender and federally guaranteed, including Agency, debt. There are specific thresholds that must be met for debt to be considered for refinancing. Refinancing may allow a lender to improve an applicant's cash flow position or obtain a more favorable lien position, but the Agency does not anticipate frequent use of this provision. For a request for refinancing to be eligible for a loan guarantee, it must meet the requirements of § 5001.102(d)(1) through (5) as well as those in the applicable program sections §§ 5001.103 through 5001.108. This change expands funding options for refinancing for some programs and creates a consistent approach for guaranteeing loans for debt refinancing across all four programs. Additionally, as CF and WWD direct loans have a statutory “graduation” requirement per 7 CFR 1942(b)(5) and 7 CFR 1780.1(c) Refinancing provides a “stepping stone” for those direct borrowers that may wish to refinance their direct Agency debt but may not meet all the requirements of a commercial lender without a guarantee.

Recognizing that equity serves a valuable role in providing stability against unforeseen changes to cash flow or profitability and is one of the five factors in credit analysis, the OneRD regulation at § 5001.105(d) removes the B&I program's requirement for tangible balance sheet equity and replaces it with a requirement for sufficient equity for all businesses. The tangible balance sheet equity requirement and calculation is not common in the lending community and created confusion. The OneRD regulation provides a 10 percent equity position for a typical existing business and a capital injection based on projected revenue for new businesses. This change removes a cumbersome calculation for lenders and aligns the Agency with current industry practices.

• New Markets Tax Credit (NMTC) provisions are included at § 5001.141. Currently, NMTC requirements are only codified in the B&I regulation at § 4279.116 even though projects in other programs may be eligible to participate. By incorporating NMTC requirements into the OneRD regulation, the Agency ensures a standardized approach to project, borrower and lender eligibility.

• The Agency, recognizing that the lender is familiar with and understands the nature of the collateral being offered for their guarantee loan request, and has removed the collateral discounting requirements currently found at § 4279.131(b)(1)(i) through (iv) in favor of a lender driven process at § 5001.202(b)(4)(ii). The lender will rely on discounts that are consistent with sound loan-to-discounted value practices while ensuring that adequate security exists for the guaranteed loan. Satisfactory justification of the discounting factors used must be provided to the Agency. The change will simplify the discounting process and allow the lender to customize the discount for each loan. Placing the collateral discounting responsibility on the lenders and requiring them to justify their discounting factor is a better alternative than a `strict' standard as currently in the B&I regulation. For example, currently in the B&I program to meet our collateral requirements, equipment can be valued no greater than 70% and real estate no greater than 80% of its value which is generally considered standard discounting factors. However, these stated factors may be too low for some collateral and too high for others. Therefore, OneRD allows some subjectivity, as requested by the lenders, and we will rely on the proper training of our staff to recognize when collateral is not discounted on sound discounting practices.

• The Agency currently allows the issuance of the loan note guarantee prior to project completion in the B&I program only. OneRD, at § 5001.205(e)(2), expands this option to CF, WWD and REAP. There are additional construction contract, contractor performance and lender monitoring (§ 5001.205(e)(2)(i) through (viii)), and reporting (§ 5001.205(f)) requirements and fees (§ 5001.454(c)) associated with this opportunity; however, when requested and approved, issuing the LNG prior to construction completion allows the lender the

flexibility to conduct one loan closing for a project involving both construction and long-term financing.

• Currently for CF and WWD guarantee projects, preliminary architectural and engineering reports (PAR and PER respectively) or plans must be approved by the lender and concurred on by the Agency. The Agency provides at § 5001.205(a) the removal of that requirement and allows the lender to provide engineering or architectural documentation that meets the level of detail the lender would typically require for a standard commercial loan. The Agency will provide assistance to clarify any Agency requirements; however, no technical oversight or recommendations as to the technical feasibility of the project will be provided. This change will reduce time and expenses incurred by the borrower to produce planning documents as well as reducing processing time as the Agency will rely on the state's regulatory agency's review and permitting process rather than their own, duplicative, review.

• Currently each of the four programs included in the OneRD regulation have separate term limit requirements with B&I having the most prescriptive. The Agency provides at § 5001.402 to allow the lender to establish and justify the guaranteed loan term for each individual loan. The term will be based on the justified useful economic life of the asset being financed, not to exceed 40 years, or limitations imposed by state statute, whichever is less. The Agency must concur with the term proposal. This change provides consistency between the programs and provides flexibility to the lender in proposing and setting the term of the loan based on their knowledge of the funding request.

• In order to reduce portfolio risk, the OneRD regulation introduces, at § 5001.406, maximum guaranteed loan amounts to the CF and WWD programs. The guaranteed loan limits for B&I and REAP are statutory and remain unchanged from previous regulations.

○ The four programs included in the OneRD regulation currently have separate maximum guarantee percentages. The OneRD regulation, at § 5001.407, sets the maximum guarantee at 90 percent of eligible guaranteed loan loss across the four programs. However, the Agency will set annually a guarantee percentage by program that will apply to loans guaranteed within each program for the fiscal year. The Agency will announce annual guarantee percentages for each program by publishing a notice in the

Federal Register

in accordance with § 5001.10. The annual guarantee percentage may be set at or below the maximum allowed authorized by statute This change provides consistency and certainty for lenders and gives the Agency the flexibility necessary to effectively manage its portfolio. Although the guarantee percentage may vary from program to program, the guarantee percentage will be the same for all loan guarantees within a program for the year. The annual guarantee percentage will take current Federal credit policy into consideration and may be set at or below the maximum allowed authorized by statute. This will provide certainty for program participants and consistency across program offices.

• To ensure lender responsibility and commitment throughout the life of the loan, the Agency has increased the minimum retention percentage from 5 percent to 7.5 percent of the unguaranteed portion of the loan amount at § 5001.408(a)(3)(i).

At § 5001.454, § 5001.455 and § 5001.456 the Agency discusses and provides guidance on the various fees and charges that are currently in place or will be implemented with OneRD, at § 5001.454 and § 5001.455 or that may be implemented in the future, at § 5001.456. The OneRD sections outline the types of fees that may be charged and whether those fees may be passed on to the borrower; however, OneRD does not provide the fee amount. The Agency will establish actual fee amounts and provide to the public in an annual notice published in the

Federal Register

.

The fee to be charged and the fee rate may vary by program. The agency may establish higher fees for larger loans. By defining the fees that may be charged in the regulation, and including the specific fee amounts in an annual

Federal Register

publication, the Agency is provided the flexibility to implement administration or congressionally mandated changes quickly and better respond to changes in its portfolio.

The Agency, at § 5001.454 adds maximum guarantee fee level for each of the OneRD programs. The Agency feels that setting a maximum fee, above which a technical change to the rule is required, provides flexibility to raise fees within a reasonable range without creating a barrier to participation. As with the fee itself, the maximum fee varies by program to account for differences in risk by sector and business models of various project types.

V. Public Participation and Discussion of Comments From Listening Sessions

The Agency has worked to develop a regulation that is customer driven and simplifies the processes involved with loan guarantees. From the application to servicing, the Agency critically reviewed every process to draft this final rule. The Agency hosted listening sessions throughout the West, South, Midwest, and Northeast regions with a focus on improving customer experience with RD's loan guarantee programs. In addition, RD held a National listening session in Washington, DC, and a virtual listening session for Tribal communities. From those sessions, the Agency collected 314 comments and consistently heard that customers were looking for a more streamlined and refined process. The Agency appreciates all comments and has considered suggestions from each commenter.

The following sections discuss each comment and the Agency's responses, organized by subpart of the new regulations with each section organized by comment paragraph and then Agency response paragraph. Sections with multiple comments will continue the comment/response paragraph pairing format until all comments for that section are addressed. Comments are as received from listening session participants. The Agency has done its best to interpret the context and meaning of each comment or question.

Subpart A—General Provisions

Definitions

One commenter asked for a definition of affiliates for B&I loan documentation. The commenter's interpretation of the current regulations is to obtain financial statements for any affiliate of the borrower, regardless of the ownership percentage. The commenter then said that there should be a threshold of 50 percent or more ownership to be considered an affiliate.

Agency's Response:

Per § 5001.3, this final rule defines an affiliate as a person or entity with control over the borrower, with no specific ownership percentage identified.

Definition of Rural and Population Limits

The Agency received comments asking to standardize rural population standards and definition across all programs.

Agency's Response:

The Agricultural Improvement Act of 2018 expanded the population limit for the CF and WWD guarantee programs, in agreement with this comment. The new population

limits have been incorporated into OneRD, so all four guarantee programs now have the same definition of rural and rural area.

Subpart B—Eligibility Provisions

Program Specific Requirements and Concerns

One commenter asked if Risk Management Association (RMA) statements are required for the B&I guaranteed loan program. The commenter added that lenders do not analyze RMA statements and questioned if RMA statements were necessary as a result.

Agency's Response:

The Agency uses the RMA information as an industry comparison to the borrower's financial statements. However, the Agency does not require that lender submit RMA statements as part of the application. The regulation states that spreadsheets and analysis of the financial statements are accepted in a credit evaluation if they comply with industry standards. Standards for financial information are also discussed in § 5001.9.

Eligibility

The Agency received several comments with concerns about eligibility for OneRD guaranteed loans programs. We divided the comments into subcategories regarding eligibility for borrowers, lenders, loan purposes, and projects, and respond point by point.

Borrowers

Commenters discussing eligibility for guaranteed loan borrowers recommended the Agency revise or simplify its “credit elsewhere” requirements. One commenter said that the Small Business Administration's version of credit elsewhere requirements is better tailored to rural markets.

Agency's Response:

In accordance with 7 U.S.C. 1983, the Agency has a statutory requirement for the CF and WWD program to document that the applicant is unable to obtain the required credit from private, commercial, or cooperative sources at reasonable rates and terms without the RD loan guarantee. The lender also has a responsibility to evaluate and certify to the Agency that it would not make the loan without a guarantee (Community Facilities and Water and Waste Disposal Programs only). The Agency considered the commenters' remarks in developing the regulation and accompanying guidance to address the proper analysis and documentation of this eligibility criterion.

One commenter asked if Alaska Native Corporations are considered Tribal governments.

Agency's Response:

Under the OneRD Guarantee regulation, applicant eligibility will vary from program to program based on the authority provided by Congress. Based on the definition of Indian tribe at 25 U.S.C. 5304(e), if the Alaska Native Corporation is defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601

et seq.

) they would meet the definition of Indian tribe and potentially be eligible.

Lenders

Regarding the Community Facilities and Water and Waste Disposal programs, one commenter said that for non-regulated lenders, the Agency should “issue a statement of good standing so new application is not needed” and, “if no loss claim is made, process an automatic renewal.” Another commenter said that Rural Development should consider using Aeris Ratings (formerly the Community Development Financial Institution Assessment and Rating System) for outside credit examination of non-regulated entities like the B&I Guaranteed Loan program.

Agency's Response:

Under the OneRD Guarantee regulation, the approval and renewal process for non-regulated entities will be the same across all programs. Currently, Rural Development does not allow an automatic renewal as suggested by the commenter, but the regulation does provide a streamlined renewal process for non-regulated lenders that meet certain thresholds. Regarding the suggestion from the second commenter, Rural Development already considers Aeris to be an approved credit examination entity and does accept the use of Aeris to evaluate outside credit of non-regulated entities.

Projects

Some comments suggested the Agency eliminate, modify, or clarify how projects will “primarily serve rural areas” in the Community Facilities program.

Agency's Response:

7 U.S.C. 1926(a)(1) under which the Community Facilities guarantee program operates authorizes assistance to entities “primarily serving” rural businesses and other rural residents. Therefore, in addition to the location of the facility (

i.e.,

rural area) we must also determine who is being served by the facility or service in order to determine eligibility. While we cannot eliminate this provision due to statutory requirements, as was suggested by one commenter, more clarity on meeting this eligibility criterion has been provided.

Loan Purposes

Some comments received inquired about refinancing Community Facility loans. One comment specifically recommended the Agency allow refinancing of over more than 50 percent on Community Facilities loans.

Agency's Response:

In the CF program.

Maintenance of Approved Lender Status: Preferred Lenders

There were comments in the docket regarding a preferred lender program. The commenters suggested adding a preferred lending program to the OneRD program. One commenter noted that under a preferred lender program “banks that use USDA lending can be put in SBA categories.” Another commenter added that a preferred lender program should contain “uniform requirements across all programs.”

Agency's Response:

The Agency has determined that it will not implement a preferred lender program with this regulation. As the regulation covers varying types of eligible projects, it would be difficult to develop a common preferred lender program. We want to encourage lenders of all sizes and capacities to utilize the program and ensure funds are available to all to the extent possible, and a preferred lender program may affect our ability to fund projects with smaller lenders. The OneRD regulation provides consistent lender eligibility criteria for the guaranteed loan programs. The Agency also added a new provision for non-regulated lenders providing loans to entities located on Tribal Trust lands. Rural Development monitors lenders for liquidity and reviews their guaranteed loan quality and activity on a regular basis.

Lender Participation

The Agency received one comment regarding lender participation in OneRD. The commenter said that this final rule should not disadvantage small lenders. Instead, the commenter said the Agency should ensure the maximum number of lenders use the programs so that the maximum number of rural communities are served via these loan programs under OneRD. The commenter added that maximizing the number of lenders using the program rather than promoting fewer, larger lenders will result in a “broad base of support for the program from stakeholders.”

Agency's Response:

The Agency wishes to maximize the number of

lenders using the programs and therefore, the OneRD final rule looks to increase application efficiency, which will benefit all lenders regardless of size.

New Markets Tax Credit

A commenter expressed concern that a 7-year foreclosure forbearance period makes it difficult to pair lender programs with New Market Tax Credit (NMTC) benefits, particularly for community banks. Another commenter said that banks would like to use the “B&I guarantee product on the leverage loan piece of the NMTC structure”.

Agency's Response:

OneRD allows a leveraged lender in the NMTC leveraged equity structure of that transaction to receive guaranteed loans. The 7-year forbearance agreement is protection for the NMTC investor, typical of all NMTC transactions, and must be factored as a credit risk by the lender in their analysis.

Regarding another commenter's concern about recognizing forbearance limitations, we added a provision to OneRD that the sub-Community Development Entity (sub-CDE) must include in its operating agreement that the investor fund entity has approval rights to certain loan servicing actions by the sub-CDE lender. The intention of this addition is to allow the guaranteed loan lender the ability to monitor any forbearance or servicing actions by the sub-CDE lender and protect their interests in the project.

One commenter indicated that requiring a lender upfront to state its plan to allow for debt forgiveness could create NMTC compliance issues. Qualified Low-Income Community Investments must meet the “true debt” requirement under Internal Revenue Service rules. Another commenter wanted the Agency to address the impact of unwinding the NMTC structure at the end of the 7-year compliance period based on a reference in the regulations. The commenter wanted clarification that the unwind plan could include the transfer of the guaranty between debt instruments.

Agency's Response:

The Agency has taken into consideration the two comments related to sub-CDE. With this regulation, we have added a provision that the sub-CDE must include in its operating agreement that the investor fund entity has approval rights to certain loan servicing actions by the sub-CDE lender. We have also eliminated the requirement to provide an exit strategy for the NMTC investor.

Another commenter said regulations in 7 CFR 4279.126(a) that require that loan terms must be equal in length create issues because the B-note is usually longer than the A-note in NMTC projects.

Agency's Response:

The provision referenced by the commenter requires that the maturity and related payment schedule of the lender's guaranteed loan to the borrower must be no longer than the maturity and related payment schedule of the sub-CDE's loan to the Qualified Active Low Income Community Business (QALICB) funded by the direct tracing method in a leveraged equity structure. This requirement allows a smooth transfer and assumption of the leveraged lender's loan, if necessary, and retains the guarantee. The regulation does not require equal terms between the two loans from the CDE to the QALICB, see § 5001.141.

Subpart C—Origination Provisions

Environmental Responsibilities

The Agency received some comments regarding National Environmental Policy Act (NEPA) requirements to apply for a OneRD loan guarantee. Most of the commenters suggested that environmental reporting slows down the process of application approval because of its complexity. One commenter noted that the Agency provides sufficient guidance on environmental reporting, but now lenders need to hire a consulting firm to get the loan approved, citing a $15,000 fee that needs to be paid up front. Another commenter added that the Agency's environmental requirements for New Markets Tax Credits (NMTC) “are more stringent and time intensive than the other financing entities, which often include multiple banks.” A commenter recommended the USDA revert to completing this requirement in-house, which was supported by another commenter who said the previous environmental regulations were “much less costly and didn't take as long to approve” and asked if a National Office review of the project would be possible if the State Office evaluation is delayed. A commenter said that it would be “more appropriate for the lender to have the flexibility to run environmental lien searches and have questionnaires completed by the borrowers to determine what environmental risks are present.” Overall, the commenter did not believe a blanket Phase 1 requirement is the best way to address environmental risks.

Agency's Response:

The Agency's environmental policies and procedures regulation (7 CFR 1970) has decreased the number of Environmental Assessments required and has reduced the time to complete environmental reviews across all programs. A few programs have seen an increase in the level of environmental review. Environmental site assessments that are not part of compliance with NEPA are completed only when the Agency will finance real estate and are a risk management decision made on a case-by-case basis by the agency and offer protection to the lender, borrower, and agency. RD is continually evaluating and implementing ways to improve efficiency of all environmental review and will continue to do so.

Standards for Financial Information

One commenter shared concern that onerous costs include environmental reports and account financials.

Agency's Response:

Environmental compliance is statutory, and compliance has been improved through the expanded capability to provide a categorical exclusion for eligible projects. The list of categorical exclusions can be found at 7 CFR 1970.53 and 1970.54. The list of projects referenced in § 5001.102 “Project eligibility—general” will often fall under §§ 1970.53 (which may require additional information) and 1970.54 (which will always require an environmental report) list of categorical exclusions. We encourage lenders and borrowers to work with RD staff to ensure that any environmental reports are focused on projects and impacts that need analysis and not pay for assessments related to projects and impacts that are unnecessary. Standards for financial information in § 5001.9 provide flexibility to provide financial information that is prepared and submitted in accordance with accounting practices acceptable to the Agency. They include, but are not limited to, GAAP and the industry's standard accounting practices.

Origination and Credit Evaluations

Two commenters suggested that the Agency should consider using tax returns as a more consistent approach to analyze underwriting and as the basis of historical financial statement for B&I guaranteed loans.

Agency's Response:

Standards for financial information as noted in § 5001.9 provides flexibility to provide financial information that is prepared and submitted in accordance with accounting practices acceptable to the Agency. Those include, but are not limited to, GAAP and the industry's standard accounting practices. Tax returns often include accelerated depreciation and other tax treatments that impact a borrower's balance sheet,

or they are too generally summarized and do not contain details about the description of assets (

e.g.,

fixed assets and liabilities).

The Agency received some comments about lender autonomy and responsibilities during the application process. Some commenters said that there are too many offices involved in the approval process, and that the Agency must allow the lender to be the primary point of contact, especially regarding credit analysis and underwriting.

Agency's Response:

The Agency respects the role of the lender and their relationship to the borrower and has established a process that is respectful of that relationship. The Agency has streamlined and standardized its credit risk evaluation and continues to review its policies.

One commenter suggested methods for lender responsibility and commitment during the application process for OneRD. The commenter said that the application process should clearly outline the responsibility of the lender and timeline and review process of the Agency. Not only should the lender be responsible for underwriting the project, the lender should be required to keep “skin in the game” for the life of the project. The commenter closed with suggesting that encouraging a commitment to deep rural customer relationships has been a hallmark of USDA programs, and should continue to be encouraged with a new lending partner.

Agency's Response:

The OneRD regulation defines lender and Agency roles. The Agency will also be providing training to lenders and field staff on their individual roles and responsibilities including time frames. The Agency is developing an electronic application intake system, which will communicate with the lender as the application progresses through each phase of processing. The desire is that the electronic system will help provide a consistent processing timeframe and enhance the lender's relationship with the Agency. The minimum retention percentage has been increased to 7.5 percent of the unguaranteed portion of the loan amount from 5% at § 5001.408(a)(3)(i). By raising the percentage to 7.5%, which is a nominal increase, we believe that this will help ensure lender responsibility and commitment throughout the life of the loan. Other lender responsibilities are outlined in § 5001.6 “General Lender responsibilities.”

A commenter asked if it was possible for a company working on a OneRD project to use tax credit programs for building marine transportation vessels that transport agricultural resources.

Agency's Response:

OneRD will help leverage Agency programs to suit the needs of the credit. Due to OneRD and tax credit program requirements, each structure is reviewed independently to ensure eligibility and compliance; therefore, the Agency cannot comment on a specific project's eligibility.

Appraisals

The Agency received three comments regarding appraisal process for OneRD loans. One commenter suggested that appraisal reviews conducted by a Certified General Appraiser should not require additional review by USDA. Another commenter said that to use market value, appraisals would need to be done “as-is,” and not as an ongoing concern value. A third commenter recommended that the Agency should provide lenders with a list of approved appraisers so that two appraisals are unnecessary.

Agency's Response:

We agree that qualified and licensed appraisers provide valuable insight to asset value. The Agency requires appraisals to meet the Financial Institution Reform, Recover, and Enforcement Act (FIRREA) and Uniform Standards of Professional Appraisal Practice (USPAP) requirements, and the lender to provide an independent review of the appraisal—both of which are also required by banking regulators. The regulation requires real estate appraisals when the value of the collateral exceeds $500,000 or the current limitation under the Financial Institutions Reform, Recovery and Enforcement Act Public Law 101-73, 103 Stat. 183 (1989).

Tangible Balance Sheet Equity Requirements

The Agency received comments about current Tangible Balance Sheet Equity (TBSE) requirements for B&I guaranteed loans. For B&I guaranteed loans, one commenter suggested the Agency allow NMTC Equity to serve as a TBSE for easier leveraging of NMTC investment with Community Facilities and other Rural Development project financing. Other comments suggested simply revising TBSE requirements or providing additional options outside of TBSE requirements, such as market-based financial statements “based on current appraised value” or using tax returns “with verifications for financial information.” One commenter said eliminating the TBSE requirement would benefit lenders because “[n]o other lender uses this practice and it creates a huge distortion of market asset value.”

Agency's Response:

Equity serves a valuable role in providing business stability against unforeseen changes to cash flow or profitability and is one of the five factors of credit analysis. The OneRD regulation of the B&I program will require sufficient equity for an existing business, stated as a 10-percent balance sheet equity position or capital investment into the project to at least 10 percent of the project cost for a typical business, with criteria for issuance of an exception to the minimum equity requirement. Typical new businesses will have the option of meeting equity requirements by contributing either 20 percent balance sheet equity or injection of capital equal to at least 25 percent of the project costs.

USDA Partnerships

We received two comments about USDA partnerships. A commenter requested the Agency continue to create Memorandums of Understanding with guaranteed loan programs across the government. The commenter added that these partnerships “will help create greater flexibility for lenders, which ultimately helps their customers.”

Agency's Response:

The Agency agrees with this comment and has participated in an MOU with the Small Business Administration since 2018. This is a focus of OneRD's outreach plans. However, the process for engaging in a Memorandum of Understanding is separate from the rulemaking process.

Subpart D—Guarantee Application Provisions

Application Evaluation

One commenter stated that the B&I application process is cumbersome and recommended that the Agency use bank-provided information to meet Rural Development application financial requirements instead.

Agency's Response:

The Agency must obtain information to enable it to expeditiously complete its review process and ensure compliance with statutory and regulatory requirements. While receipt of the information is required, the format for presenting that information to the Agency is not specified and may include lender's documents and forms.

Reservation of Funds

One commenter suggested the Agency allow lenders to request reservation of funds for loans in progress to ensure they obtain the guarantees.

Agency's Response:

The Agency reviews the pipeline of applications on a regular basis but is not authorized to

hold funds for a specific project. Project awards will continue to be made with available funds only after credit approval by the Agency. The Agency reviews applications as they are received; however, depending on the completeness of the application or the complexity of the proposal, applications may not receive conditional commitments in that same order. This is especially common near the end of a federal fiscal year when the value of applications received exceeds the funds remaining. The Agency does not propose a reservation of funds process as that could potentially “tie up” funding for a reserved application that might or might not be ready to obligate to the detriment of an application that is complete and ready to move forward.

Feasibility Studies

Seven comments were received pertaining to the Agency's process in conducting feasibility studies. All of the comments had some type of recommendation on how to revise the feasibility study requirements, such as increasing the length of the validity period, specifying requirements to the intended industry or business, being more flexible for third-party feasibility studies, requiring third-party feasibility studies only on requests over $10 million and providing more resources for compliance.

Agency's Response:

This final rule provides consistency in the application of the feasibility study requirements across all four programs. The Agency will rely upon the lender's analysis of the five feasibility study components provided in the lender's analysis, borrower's business plan, or other project information, to determine a basis for successful repayment of the guaranteed loan. Projects not adequately documented and that pose a higher risk to the Agency will be subject to the requirements of a third-party feasibility study. The requirements will vary depending on items such as the nature of the project, the project's impact to the borrower's operation and financial stability, size of guarantee loan request, borrower history, market conditions, collateral, and other factors.

Guarantee Thresholds

The Agency received comments about the threshold for guarantees on an eligible loan. The comments suggested that all programs under OneRD should have a maximum guarantee of 90 percent of eligible loans like the Community Facilities guaranteed loan.

Agency's Response:

The Agency has considered various approaches to bring uniformity across all four programs in the maximum amount of loan guarantee percentages established in the OneRD Guarantee regulation. Consideration was given to statutory authority that limits some program's options. The maximum guarantee is 90 percent of eligible loan loss. The annual guarantee percentage will take current Federal credit policy into consideration and may be set at or below the maximum allowed authorized by statute. The Agency will announce, annually, guarantee percentages for each program by publishing a notice in the

Federal Register

.

Priority Scoring

The Agency received comments suggesting changes to OneRD's priority point system. One commenter suggested priority points for loans of more than $1 million, and a second commenter requested more guidance on priority scoring.

Agency's Response:

We have considered the commenter's suggestion to add priority points for loans of more than $1 million. Loan size, where larger guarantee loan requests receive greater priority over smaller guarantee loan requests, is not a priority factor the Agency will use in any of its OneRD Guarantee programs. However, priority factors may change. Any changes will be published in a

Federal Register

notice.

Regarding the second commenter's concern, this final rule provides consistent language as it relates to the purpose and use of assigning points in order to prioritize guarantee loan awards for funding. Priority points are assigned to all applications and play an important role when funds requested by otherwise potentially successful applications and guarantee loan requests exceed the lending authority of guarantee funds available. Due to the varying purposes of each guarantee program within OneRD Guarantee, there are differences in each program's priorities. For example, the B&I Guarantee Program focuses on creating jobs, while the Water and Environmental Program focuses on providing safe reliable drinking water.

Application Evaluation

One commenter suggested that, for small loans under $100,000, the Agency should consider a less detailed application. Another commenter suggested the Agency provide a short application form for small loans under $1 million to $2 million in size. The commenter also said the Agency should have one “Master application” for the overall single platform.

Agency's Response:

The Agency has created a single application for all four programs, which we believe will streamline the process for lenders. B&I has provisions for loans of less than $600,000 to provide a lower document application, if they meet certain criteria; however, there is not an overall “low doc” application process as loan size is not necessarily an indicator of project complexity or risk. The Agency is developing an on-line application process that they believe will streamline the process further.

One commenter expressed concern about the Agency's need for due diligence to mitigate risk.

Agency's Response:

The Agency relies on the lender's due diligence and underwriting to mitigate credit risk and performs a secondary review of the loan to assure credit quality and regulatory adherence. The Agency also monitors the lender's guaranteed loan portfolio to evaluate the borrower's loan performance and timely lender reporting. The Agency believes that OneRD provides a balance between the lender's and the Agency's needs.

Application Award Process

One commenter asked the Agency to not require System for Award Management (SAM) registration for guaranteed loans based on the commenter's understanding that other Federal guarantee programs do not require SAM registration for guaranteed loans. Another commenter suggested eliminating the need for SAM registration, specifically for Rural Energy for America Program (REAP). The commenter said that SAM registration inhibits the number of small applications because the REAP program is inaccessible for areas that do not have internet access.

Agency's Response:

The Agency acknowledges this concern; however SAM requirements are outside the scope of this rulemaking.

Approval Authority

The Agency received comments about allowing more State, district, and county offices to approve loan applications. One commenter recommended that the Agency allow county, district, or State Offices to approve all loans that are smaller in size. Another commenter suggested having various levels within Rural Development approve loans of certain dollar amounts and categories and provided the example of Water and Waste Disposal Loan Guarantee of less than $5 million could be approved by the local Rural Development office, while a loan of greater than $5 million would need to be approved by the National Office. A comment suggested that there could be an option for lenders

to send loan approvals to the National Office if there have been approval issues at the local office. The reasoning for this option is that it would help to keep local projects locally controlled but allow for a lender to move projects up the chain if necessary. A commenter suggested that the multiple levels of loan review done between the state and National Office are duplicative and time-consuming. Two more levels of review are done after the state offices have reviewed and approved the loans. This is duplicative, time consuming, and prevents timely approval.

Agency's Response:

The Agency's internal operations, such as loan approval authority, are governed by a separate regulation and not part of this regulatory process; however, the comments will be taken under advisement.

Preliminary Engineering Report (PERs)

The Agency received comments requesting a change to the PER (also referred to as engineering reports or engineering documentation) review process. Some comments suggested the Agency allow expedited PER reviews for guaranteed Water and Environmental Program loans, such as Water and Waste Disposal. One commenter explained, “The lender is making the loans and has credit policies in place to make sound loans. Consulting engineers are licensed, and the projects are regulated by their state and local agencies so additional review by RD is not needed.” Another commenter said “that the Agency should provide a waiver of engineering or architectural reports for small equipment type only projects like solar panel installation, waterflow meters, and lift stations”, while another commenter suggested the Agency not require PER reviews for loans under $1 million in size. Some commenters added that PER reviews are a barrier to potential lenders who want to use USDA lending programs.

Agency's Response:

The Agency requires project information as part of its application review process; however, it has scaled back the specific information requested and leaves the level of detail required for the planning documents to the lender. Section 5001.305(a) discusses the details that must be included in a lender's engineering documentation. The Agency will, if requested, provide assistance on Agency requirements and regulations but will not provide technical oversight or recommendations. In the event of default, the Agency may review the planning documents as part of the loss claim process. If it is determined that the project was not designed utilizing accepted engineering practices, the loss claim may be reduced.

Subpart E—Loan and Guarantee Provisions

Underwriting

One commenter suggested the Agency consider credit quality of borrowers applying to OneRD, adding that borrowers in high default industries are still being approved by the Agency.

Agency's Response:

The Agency resolves these issues by reviewing each application for credit quality and monitoring its loan portfolio to mitigate industry concentrations. It is the intent of OneRD to assist the lender in preparing and the Agency in reviewing all applications based on sound lending practices, even those in high default or risk industries.

Regarding automation and application processing, one commenter suggested that the Agency share underwriting expertise between States to reduce the learning curve for loan specialists in understanding many different industries and business types.

Agency's Response:

The commenter's suggestion describes an existing process. Throughout this final rule, we state the responsibilities of State and National Offices. Agency field staff can readily use the National Office for support and analysis of industries unfamiliar to them. OneRD lays out credit evaluation factors for the lender and staff instructions and training will assist the processing staff in evaluating the credit factors and the risk of each credit factor.

One commenter said that the Agency should establish regulatory thresholds for loan reviews based on the funding amount requested, and that small amounts should have less regulatory burden.

Agency's Response:

The Agency has considered this comment. The Agency is obligated to continue to review all loans for statutory and regulatory compliance; however, we have streamlined the application process and believe that it will improve the process for all applications, not just small ones.

Capital and Secondary Market Concerns

The Agency received many comments about how capital and secondary market concerns affect the implementation of OneRD. Most comments expressed concern about the Agency's focus on its Community Facilities Direct Loan Program. One commenter said the “current over-emphasis by USDA on the Community Facilities Direct Loan program has become a very real threat to the continued viability of the Community Facilities Guaranteed Loan program” and recommended “strengthening” the Community Facilities Guaranteed Loan Program to “increase the participation of the banking industry in these types of loans.”

Agency's Response:

The intent of the OneRD Guarantee program is to increase the usage of the Agency's guarantee programs and provide needed capital in rural areas. The new regulation and streamlined application process should encourage more lender participation. With respect to the Community Facilities Direct loan program, the Agency is required by statute to consider the availability of commercial credit at reasonable rates and terms for each direct loan applicant. We routinely review the “other credit” requirement with staff and train them on the proper analysis and documentation to support the Agency's decision. The Agency welcomes the participation of lenders to finance community facility projects either with or without a guarantee in conjunction with a direct loan.

One commenter said that for B&I guaranteed loans, stoppage of interest at 90 days dissuades secondary markets from working with lenders and causes reluctance on the part of lenders to work with borrowers on workout agreements; thus, increasing work for USDA.

Agency's Response:

The Agency is, under certain circumstances, increasing the 90-day interest termination date to 180-days (see § 5001.450(g)(1) for specific criteria) to allow lenders time for development of a restructuring plan. Lenders would retain the option to repurchase the loan guarantee from a Holder to allow for debt servicing, including restructuring of the loan.

One commenter suggested providing a “separate section” in the regulation for loans that involve the capital markets or “underwritten” deals. The commenter said that providing a separate section would allow these loans to be made as they always have been made but would also allow borrowers and lenders to “take advantage of the lower rates and better terms in the capital markets” accordingly.

Agency's Response:

This comment appears to relate to the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program (Section 9003) that was included in this regulation at the time of the listening sessions. Due to significant differences between this program and the CF, WWD, B&I and REAP programs, the Section 9003 program was removed from consideration in this rule. The only other capital markets items in this regulation are for investors in the New

Markets Tax Credit program which has a separate section, § 5001.141, in the OneRD regulation.

One commenter suggested the Agency allow an Assignment Guarantee Agreement to be assigned to a trustee for the benefit of investors. The commenter said this would “increase participation in guarantee programs and capital markets.”

Agency's Response:

The Agency acknowledges this comment for consideration. The Agency must ensure that the Lender or Holder retains ownership of the loan. While Lenders can assign all or part of the guaranteed portion of the loan and Holders can reassign the note in full, this final rule does not allow for further subdivision of the loan. The OneRD regulation removes the limit on the number of promissory notes that may be assigned. The regulation does not limit the number of holder transfers that can occur on the maximum of the five notes, though the Agency must be notified when transferred.

One commenter recommended the Agency rate the secondary market debt and include rating agencies in its analysis discussions to create a global market instead of a local market.

Agency's Response:

The secondary market has provided analysis of the commenter's suggestion. The process of rating secondary market debt would be outside of USDA's oversight as we work directly with the Lender making the loan, who then choses to engage or not engage the secondary market.

Subsidy Rates

The Agency received comments about balancing subsidy rates within the OneRD programs. One commenter suggested the Agency balance higher subsidy rates versus lower level of funding, while another commenter said that the subsidy rate factor “is low and on the decline.”

Agency's Response:

Sec. 6418 of the 2018 Farm Bill mandated the Secretary of Agriculture to use lender fees to charge and collect various amounts to bring down the costs of subsidies for guaranteed loans under Section 333 of the CONAct. However, the fees must not act as a bar to participation, nor be inconsistent with current practices in the marketplace. The Secretary was directed to conduct a study of several guaranteed lending programs to determine the appropriate fee structure, as a result. Therefore, this final rule implements the 2018 Farm Bill's requirements regarding guaranteed loan fees.

One commenter asked the Agency to share additional information regarding the program's subsidy rates.

Agency's Response:

The Federal Credit Reform Act of 1990 (FCRA) requires agencies to estimate the cost to the government of extending or guaranteeing credit. Agencies generally update—or re-estimate—subsidy costs annually to reflect both actual loan performance and changes in expected future loan performance. More information on this can be found in Part 5 of OMB Circular A-11, “Preparation, Submission and Execution of the Budget.”

A commenter recommended the Agency consider expressly allowing leverage loans to be made on an interest-only basis for up to 7 years. The commenter's reasoning is that “such loans could provide for a `balloon' payment at the end of that period to make up for the amortization that would otherwise have occurred during that period.” The commenter said that “assurance that the funds would be available when needed to make that balloon payment could be provided, at least in substantial part, by reserves established at the Project Loan level, or perhaps by other means.” The commenter added that in some NMTC transactions, “amortization of leverage loans is accomplished by having another (subordinate) Leverage Lender make advances to the Investment Fund during the compliance period, which the Investment Fund uses to make amortization payments on the primary (senior) leverage loan.” The commenter reasoned that, in these situations, “the total amount of debt of the Investment Fund remains constant—the junior leverage loan balance just increases as the senior leverage loan decreases.” The commenter expressed uncertainty as to whether the solution provided would be reasonable in the case of USDA guaranteed loans, “partly due to the complication of having subordinated debt, and partly due to the fact that the source of funds is not directly related to the underlying Project Loan or the performance of the underlying project,” and added that, rather, “it would depend on the credit evaluation of the junior leverage lender.”

Agency's Response:

OneRD includes a provision allowing interest-only payments by a borrower pursuant to an interest-only term not to exceed 7 years on a loan made under a NMTC structure if the lender requires: (1) A debt payment reserve fund or sinking fund in an amount equal to the guaranteed loan's principal amortization that would have otherwise applied to the loan if equally amortized payments were collected during the seven year term, and (2) such reserve funds or sinking funds are applied to the guaranteed loan as an additional payment of principal to the guaranteed loan at the end of the interest-only term.

Funding Availability

The Agency received comments about funding availability and managing community resources.

Some commenters expressed a lack of confidence in terms of program availability, which prevents lenders from committing resources.

Agency's Response:

The Agency receives funding through Congressional appropriations, and subsidy rates establish the level of program funding available. Program revenues, delinquency rate, losses, anticipated revenues and other factors affect these subsidy rates. The use of Continuing Resolutions instead of a full fiscal year budget also affects when funds are available to the program areas.

Another commenter suggested increasing flexibility on the ability to shift funding between Rural Development loan programs.

Agency's Response:

The ability to transfer funds within a program are established by statute and moving funds from one guaranteed loan program to another program requires statutory authorization and Congressional approval. Therefore, the Agency cannot approve loan program transfers without the requisite authority and congressional approval.

One commenter wanted the Agency to allow the approval and issuance of Conditional Commitments, which would be subject to funding availability to help when funding runs out at the end of the fiscal year and projects are waiting for funding obligations.

Agency's Response:

Issuing a Conditional Commitment prior to funding availability is not authorized under law.

A commenter suggested additional guidance for lenders from the Agency regarding funding situations and the scoring model.

Agency's Response:

The availability of program funding is communicated to field staff on a weekly basis. Priority scoring is essential to determine worthy projects when programs have limited funding, with projects being funded from the highest to lowest scores using the amount of available funds. State Offices are made aware of this process before enactment.

Loan Threshold

One commenter asked the Agency to consider increasing the current cap of

$25 million on REAP, as it is often too low for larger projects.

Agency's Response:

The $25 million cap on REAP is statutory; therefore, the cap cannot be increased by the OneRD final rule.

Subpart F—Servicing Provisions

Loan Note Guarantee Construction

The Agency received comments discussing the effects of OneRD on LNG construction projects.

Some commenters suggested that, for the Community Facilities and Water and Environmental Programs, the Agency follow the B&I guaranteed loan system by issuing the LNG at the closing and signing process or during construction instead of at the end of construction. One commenter said that this would create a “clearer path for holders if default occurs” and another commenter said this change would “help smaller lenders mitigate construction risk.” Other commenters supported the upfront guarantee for some of OneRD's programs.

Agency's Response:

The Agency will provide a consistent approach across all programs under OneRD Guarantee to allow for the issuance of the LNG during construction. As this poses more risk to the Agency, it will be mitigated with additional lender documentation and enhanced lender oversight along with a lower guarantee percent and additional lender fee.

Of the comments the Agency received specifically about LNG fees, most of the commenters asked to lower the fees, or to remove them altogether. One commenter said that the current 3-percent fee is too high and asked the Agency to consider reverting to a 1-percent fee that “resulted in great impact and turned the economy around.” A commenter suggested that continuing servicing fees will negatively impact borrowers. Other recommendations included raising fees on the largest RD loans while lowering fees on the smaller sized loans; providing fee waivers for loan guarantees in excess of $5 million that promote fresh fruits and vegetables; and reducing initial and annual fees to match the REAP program, which has an initial fee of 1 percent and annual fees of 0.25 percent, while the B&I program has fees of 3 percent initially and 0.50 percent annually.

Agency's Response:

The 2018 Farm Bill requires the Agency to “charge and collect from the lender fees in such amounts as to bring down the costs of subsidies . . .” The Agency is reviewing its fee structure for all the programs included in the proposed regulation to ensure it meets the requirements set out by Congress.

A commenter asked if this new rule will look at one overall guarantee fee or if it will still be based on the specific program. Another commenter asked if the Agency puts the model in the calculation, could the public see how these fees are calculated so they can also comment on those calculations.

Agency's Response:

Subsidies will still be set individually for each program and are internal operations decisions. Therefore, we are not adding a one-size-fits-all fee structure to this final rule. Federal credit polices stipulate that fees should be set at levels that minimize default and other subsidy costs of the loan guarantee, while supporting achievement of the program's policy objectives.

LNG Validity

One comment suggested providing registration or official Government approval on the LNG to evidence the validity of the document.

Agency's Response:

The Agency has a form to address certification of approval—currently Form RD 4279-7, “Certificate of Incumbency and Signature.” This form can be requested by the lender or secondary market holder.

Servicing Requirements

One commenter suggested streamlining servicing requirements for loans that are performing.

Agency's Response:

OneRD has streamlined servicing requirements to include lender discretion regarding submitting annual financial statements for loans totaling $600,000 or less. Furthermore, frequency of borrower visits is not mandated, but this final rule states “periodic borrower visits” are required.

One commenter asked that the Agency provide in the sub-CDE operating agreement that, in all decisions and actions with respect to the servicing and enforcement of the Project Loan, the sub-CDE will do so in compliance with the requirements imposed upon a “lender” under the regulations. The commenter reasoned that the leverage lender might also be engaged as the servicing agent for the Project Loan, so that it could be involved in the servicing and enforcement of the Project Loan (although due to limitations under the NMTC program, it would not be permitted to control such matters). According to the commenter, such contractual rights and obligations could provide the basis on which a Leverage Lender could be treated as able to carry out its responsibilities as a “Lender” under the Guaranty Program, despite the limitations described above. However, the commenter added that, for any such approach to work, the regulations would need to recognize that responsibilities of the “Lender” regarding its “loan” can only be carried out indirectly through the sub-CDE.

Agency's Response:

This final rule includes a provision that the sub-CDE operating agreement allows the investor fund entity approval rights with respect to certain loan servicing actions undertaken by the sub-CDE in their loan to the QALICB.

The same commenter as above said that, consistent with the “look-through” provisions in 7 CFR 4279.126(a), the Agency should base the determination of loss on (1) the amount realized from foreclosure and collection at the Project Loan level and (2) a hypothetical distribution of the proceeds to the Investment Fund and then the leverage lender. The commenter suggested that the guaranty payment would be made to the Leverage Lender based on that determination. The commenter said if this approach is acceptable to USDA, the Agency should clarify the regulations to reflect this.

Agency's Response:

A determination of loss is made after liquidation of all assets. The lender must identify the borrower's assets in a liquidation plan, and then account for all liquidation proceeds when requesting payment of a guaranteed loan loss. The asset of an investor fund entity is its ownership interest in the sub-CDE; thus, any proceeds paid to the sub-CDE, including and liquidation of the QALICB assets in a default situation, become assets of the sub-CDE, and should be used to reduce any investment balance owed to the investor fund entity.

The same commenter then said that there is nothing in the regulations that recognizes the forbearance limitations, to which leverage loans are almost universally subject.

Agency's Response:

The forbearance agreement is typical of a NMTC transaction and must be considered as a credit factor by the lender. A provision has been added to OneRD that the sub-CDE must include in its operating agreement that the investor fund entity has approval rights to certain loan servicing actions by the sub-CDE lender. The intention of this addition is to allow the guaranteed loan lender the ability to monitor any forbearance or servicing actions by the sub-CDE lender and protect their interests in the project.

Collateral Requirements

The Agency received comments regarding collateral requirement concerns. One commenter said that while Community Facilities loans are the most flexible, B&I's loans are the most restrictive. Another commenter suggested that the Agency adopt FDIC supervisory requirements on collateral value (primarily on real estate) for consistent collateral measurement, while another commenter recommended a similar approach instead of maximum requirements set in B&I regulation, adding that lenders can be more conservative if necessary (

i.e.,

if “specialized equipment” is involved.).

Agency's Response:

The Agency took the comment under consideration and has changed its collateral discounting procedures. Lenders will discount collateral consistent with sound loan-to-discounted value practices as long as adequate security still exists for the guaranteed loan. Satisfactory justification of the discounts being used must be provided as part of the application package. This change will allow the lender to customize the discount for each loan, which will enhance the customer experience of both the lender and applicant.

One commenter suggested that if the non-guaranteed portion of the loan is more than the required 5-percent Lender of Record hold, that portion should have additional or separate credit enhancements, such as a Letter of Credit, another guarantee, or collateral. The commenter added that this would allow smaller and more rural bank lenders to participate in larger loans in their communities and the non-guaranteed portion of the loan can be more easily be sold, traded, or held in the secondary capital markets.

Agency's Response:

The Agency partially agrees. Currently, lenders can assign the loan guarantee to other parties and may participate the unguaranteed portion of the loan to other lenders or entities, so long as the lender of record retains a minimum of 5 percent of the loan amount. This will continue under the OneRD regulation except that the minimum amount retained by the lender is raised to 7.5 percent of the loan amount. To the commenter's request that separate credit enhancement be allowed on non-guaranteed loan portions over the minimum retention amount, the Agency specifically prohibits separate collateral for the guaranteed and unguaranteed portions of the guaranteed loan or requiring compensating balances or certificates of deposit as that reduces or possibly eliminates the lender's exposure on the unguaranteed portion of the guaranteed loan.

General OneRD Comments

New Online System

Many commenters suggested the Agency create more online application resources and recommended that Rural Development keep up with the technological advances and industry software that is available on the market for the financial service industry. One commenter specified using “a program similar to Farmer Mac's online application process, the Mortgagebot program, software solutions used by Moody Analytics and Wolters Kluwer, the Finastra program.” Furthermore, commenters said there should be an online application system that would “streamline loan making process, reduce approval time, and save time and money for lenders and RD.” Some commenters requested the Agency use a secure, encrypted, cloud-based system to upload documents for the application. One commenter, a lender, asked for “electronic signatures” to add to security.

Agency's Response:

We agree that our application process should be modernized, and that this modernization will save time and money for both the lender and the Agency. With this final rule, the Agency is developing an online application system—one system for all four programs included in the OneRD Guaranteed Loan regulation. The system will automate the application, obligation, loan closing, and servicing of the guarantee process. The system is being designed to improve the Lender experience by addressing concerns related to efficiency, transparency, and consistency that exist in the guarantee programs today. The new online platform will be used by all Rural Development offices that process guarantee loan applications under this final rule establishing the OneRD Guaranteed Loan program. This will save time and money for both the lender and the Agency as noted in the commenter's remarks.

Additionally, the Agency is engaged in evaluating online platforms to address the needs of the guarantee program requirements. The Agency acknowledges remarks regarding ease of uploading, network support, and bandwidth. These factors are being considered in the online solution.

We acknowledge the request to allow the online system to be accessible to multiple people within the lender's organization. The system will be designed with this feature while still maintaining the necessary security and integrity of the system.

The new online application system will have a system that automates the application process, including the ability to upload supporting application documents into a secure shared system, acknowledging commenters who suggested a cloud-based system. The online platform will have a secure and accessible storage system that will be used by all lenders and Rural Development processing offices. Application forms will be designed to work across all four programs associated with the OneRD Guarantee Loan program and will be generated through the online system. This method should address the commenter's request for a format that is flexible and specific to the project. Only information relevant for the application will be entered by the lender.

Rural Development will accept electronic signatures when a wet signature is not required. At any time during the online application process, the lender will have access to a Rural Development local representative to assist them. It is not the intent of the online application system to replace one-on-one contact between Rural Development and its customers, but for that contact to be about more substantive issues.

Regarding communication with applicants, one commenter suggested the Agency provide a verbal confirmation of eligibility. Another commenter inquired about a notice of interest determination letter.

Agency's Response:

The Agency's new online application system will allow the lender to view applications in process and track their status. The system will automatically notify the lender when the Agency reaches a key decision point (

i.e.,

application is complete, application is approved, etc.). The system will also generate correspondence documents to the lender including an interest determination letter, also known as a preliminary review letter.

Three commenters discussed the need to improve information on the USDA website regarding guaranteed loan programs under OneRD. Two commenters suggested revising, updating, and streamlining the USDA website to improve information about lending requirements across all programs. The third comment recommended adding a “chat” feature to quickly assist site visitors.

Agency's Response:

The OneRD project includes development of a new online portal for lenders to input loan application information and service

their guaranteed loans. In addition, borrowers may use the website to research available programs, but they will not be allowed to upload an application because the lenders are the Rural Development customer for purposes of Guarantee programs. The application process will guide lenders to what information is required for their specific project, allow them to upload information, and information will also be uploaded to the Rural Development legacy systems to ensure consistency of the information.

At this time, we are not considering adding a “chat” feature due to the implementation and operating costs of that feature. However, phone numbers for offices in the project state will be readily available to the user. The application portal will also have a link to the guaranteed loan regulations located in 7 CFR part 5001.

Some comments were directed toward the current RDApply online application system for the Water and Environmental program. Some suggestions included improving the online application process to remove the burden of paperwork and uploading documents. Others recommended posting USDA deadlines and status updates for application processing within RDApply and offering direct contact with a representative.

Agency's Response:

These comments referring to the current RDApply online application system currently used by the Water and Environmental Programs were considered as the Agency identifies system requirements for the OneRD Guarantee online application system. The OneRD Guarantee online application system will be developed specifically for lenders making application for a OneRD guarantee loan request. This new online application system will allow the lender to view applications in process and track their status. In addition, the system will automatically notify the lender when the Agency reaches a key decision point (

i.e.,

application is complete, application is approved, etc.). The online system is accessible to multiple people within the lender's organization but maintains the necessary security and integrity of the system.

As stated earlier, at any time during the online application process, the lender will have access to an RD local representative to assist them. Again, we note that it is not the intent of the online application system to replace one-on-one contact between RD and its customers.

The Agency received comments asking the Agency to develop a decision tree to assist customers to determine whether to pursue a loan guarantee or a direct loan. One commenter added that the decision tree should require RUS to “encourage private or cooperative lenders to finance rural and waste disposal facilities” based on the Consolidated Farm and Rural Development Act (CONAct) requirement from the 2014 Farm Bill.

Agency's Response:

The Agency understands the commenters' concern to provide the applicant with program eligibility criteria early in the application stage. The Agency understands the second commenter's concern to adhere to the CONAct requirements as well. While we support the development of a decision tree as suggested, this tool would be better utilized in an online application format for the Community Facilities and Water and Environmental direct loan programs.

The Agency received comments that suggested we follow the Small Business Administration's (SBA) “10-tab system” to process loans more efficiently. Generally, commenters wanted faster decisions on loans and clear and timely communication.

Agency's Response:

As stated earlier, the Agency engaged the services of a contractor to assist in evaluating online platforms to address the needs of the guarantee program requirements. The Agency's new online application system will improve the lender experience by addressing concerns related to efficiency, transparency, and consistency that exist in the guarantee programs today. The Agency evaluated the SBA system in the development of the new online system.

Some commenters expressed concern about rural access to high-speed, broadband internet, which may hinder access to OneRD's new online application system.

Agency's Response:

While the regulation requires the use of an online application system, the Agency is aware that not all lenders will have the capacity to use an online application system and will allow, on a case-by-case basis, the submission of paper application packages.

One commenter said that not all States accept electronic forms, which would be an issue when uploading documents for the OneRD online application.

Agency's Response:

The Agency's proposed online application system will be used by all Rural Development offices that process guarantee loan applications under this final rule.

Uniformity of New System and Streamlined Processes

The Agency received comments regarding concerns about transparency and complications and inconsistencies during loan processing and approval. Some of the commenters expressed concern that ease and speed of processing differs between State Offices and when applicants use more than one RD loan program. One commenter suggested the Agency develop a standardized closing process checklist to outline all requirements to issue an LNG and solve this issue.

Agency's Response:

In addition to addressing concerns related to efficiency, transparency, and consistency that exist in the guarantee programs today, Rural Development has established common processing timeframes. Staff training will be a significant part of the OneRD roll out process and consistency will be a common message. The Agency will create and provide checklists to field staff to ensure a consistent process across states. The implementation of an on-line application portal will also improve consistency between offices.

Rural Development acknowledges the third commenter's concern that the Agency not re-underwrite the lender's package. It is the intent of OneRD Guarantee that the Agency apply a consistent approach to the review of the lender's guarantee request to determine the funding recommendation made by the lender is acceptable and meets the regulations based on the lender's credit evaluation. The Agency will further train staff to address this issue.

The Agency acknowledges remarks about general inconsistencies as well and will consider what internal communication methods it should use in the future to support the OneRD Guarantee program, so all processing offices hear a consistent message from each OneRD Guarantee program area.

One commenter suggested the Agency streamline or simplify the draw process, which appears to be a comment on the Water and Waste Disposal direct loan program.

Agency Response:

For guarantee loans, the Agency should be minimally involved with construction draws. There are additional requirements for draws during the construction phase if the loan note guarantee is issued prior to the completion of construction and if a project combines Agency direct and guarantee funding, the more stringent direct requirements will prevail.

The Agency received additional comments asking to streamline the application process so that it is easier

and faster to close loans. Some commenters cited removing the PER requirement again, while others asked for a more “clear and concise” application. One commenter suggested that a “brief project description and budget should be sufficient for guaranteed program.” Another commenter added that “additional items needed for individual States should be included as part of the Conditional Commitment items needed prior to issuing the Loan Note Guarantee (LNG).” One comment said that the “10-day response time for application process should be shortened.”

Agency's Response:

As part of the initial rollout of the proposed regulation, the Agency is implementing a completely new application intake system. The new system will allow us to monitor closely application submission and processing times and provide consistent application package content across offices and programs. The proposed intake system will also provide full service for lenders, negating the requirement to log into different systems for different aspects of the guarantee. See Agency response on PERs under subpart D. In addition, the proposed regulation has pared down the requirements of an application package to program determined essentials. Ultimately, the proposed changes will streamline the application process.

One commenter recommended that the Agency use Regional Coordinators to handle concerns with processing and help lenders navigate the process to ensure a quick turnaround. The commenter's concern stems from projects in some states that “are not processed quickly” and “if regional coordinators could serve as mediators for lenders, the process would flow more smoothly.”

Agency's Response:

The Agency has considered this comment. Unfortunately, this is an internal operations item and cannot be addressed through regulatory means.

One commenter asked if the OneRD Guaranteed Loan processing time will be as lengthy as it has been in the past.

Agency's Response:

OneRD's goal is to streamline the application, processing, and servicing requirements for all loan programs within OneRD, and ultimately provide consistency among Rural Development guaranteed loan programs. The electronic system the Agency is developing will increase efficiencies for customers as well as Agency staff.

Transparency

One commenter recommended the Agency improve communication throughout the application process so that information can be passed to borrowers. Another commenter wanted the Agency to increase transparency during the approval process. A third commenter suggested improving the speed of the approval process across all programs to enhance transparency.

Agency's Response:

The Agency agrees. Staff training will emphasize continuing lender communication. The proposed electronic application process will improve communication with the lender and navigation of the Agency's approval process.

OneRD's Scope—Inclusion of Other Programs

One commenter suggested the Agency include telecom (Telecommunications Infrastructure Loan Program) and electric (Electric Infrastructure Loan Program) as “rural utilities.”

Agency's Response:

RD chose the programs included in this rule based on the commonalities in their current statutory authorization and regulatory implementation. The Agency may add other programs in the future.

Rulemaking Process

The Agency received comments about its rulemaking process. Most of the commenters were concerned about the public's ability to provide input regarding this final rule, suggesting that the Agency publish a proposed or interim rule instead of this final rule. Others suggested providing more opportunities for the public, specifically lenders, to engage with the Agency before publishing this final rule. One commenter was concerned that the Office of General Counsel (OGC) had not yet approved the OneRD program and this final rule.

Agency's Response:

The Agency decided to publish OneRD Guarantee as a final rule with comment. The Agency published a notice in the

Federal Register

on September 5, 2018 (83 FR 45091) announcing five listening sessions to be held with stakeholders in month of September 2018. The purpose of the listening session was to gather public input on how to simplify, improve, and enhance the delivery of our guarantee programs. The Agency recorded all listening session comments. Stakeholders were also given the opportunity to submit comments to an email box. All comments have been reviewed and were taken into consideration as this final rule was being drafted. This final rule is being published in the

Federal Register

with a 60-day comment period. During this period, the public can view the entire final rule and provide comment. All comments will be addressed and, if warranted, will result in modifications to this final rule prior to its effective date. This method of publishing a final rule with comments will help realize the benefits of a consolidated regulation quicker than would be achieved by first publishing a proposed rule. In addition, this final rule followed the Agency's clearance process, which included OGC review.

OneRD Marketing and Training

The Agency received comments requesting training programs regarding loan guarantees and additional guidance for offices and lenders for the various programs under OneRD.

Most commenters asked for lender training and coordination with State Offices. The commenters also suggested that the Agency should continue to strengthen the RD programs under OneRD.

Agency's Response:

The Agency agrees and has addressed these concerns along with this final rule. The Agency will be holding training sessions with RD staff prior to the effective date. Training needs will continue to be assessed after the OneRD Guarantee final rule is in effect. The regulation process includes training of not only the Agency's area and State Offices but also lenders. Implementing an online application and processing system should help alleviate inconsistencies that exist in the program today. We are confident that, with the publication of this final rule, new coordination amongst programs will occur as well.

Program Launch and Delivery

Some comments discussed the accessibility and rollout of the OneRD program. Most commenters suggested that the Agency avoid creating a more centralized regional office model. Commenters added that, while it may be cost effective to regionalize offices, keeping State Offices in place helps to maintain efficiency. One commenter suggested support for state-level staff involvement. Other commenters suggested that the Agency add more staff and training in certain industries to assist staff in other states who have never processed certain types of loans. However, two commenters did recommend decentralizing offices.

Agency's Response:

The Agency is looking at all possible options on how best to deliver all programs. We note that the regulation process includes training of not only the Agency's area and State Offices but also lenders.

One commenter said that a lack of responsiveness is burdensome to the Agency's current processes, resulting in

a lack of a uniform interpretation of OneRD.

Agency's Response:

The Agency appreciates the comment provided. While the new regulation will outline items to be reviewed, the level of risk associated with individual loans will always vary to the point that some require much more review than others do. The Agency will be providing training to the staff administering the programs and will emphasize the importance of thorough review of the lender's underwriting.

One commenter supported the concept of repackaging current Water and Waste Disposal Direct Loans and converting those loans to guaranteed loans.

Agency's Response:

This final rule will provide one platform across the main Rural Development guarantee programs. We expect that this will increase usage of all the programs by providing a common application and processing base. The Agency cannot repackage existing direct WWD loans and convert them to guaranteed loans at this time; however, direct loan borrowers are required to pursue “graduation” to commercial credit when it appears they are able. Refinancing direct Agency WWD loans is an eligible loan purpose under the guarantee program and borrowers are encouraged to take advantage of that provision.

Mission

There were two comments regarding OneRD's mission. One commenter said that the mission should be to provide capital to rural America.

Agency's Response:

Under this final rule, OneRD works to provide easier, customer-friendly access and increase lender participation, which will lead to greater access to capital in rural America.

Difference Between Statutory vs. Regulatory Requirements

One commenter asked for clarifications as to the difference between what is considered statutory and what is considered regulatory.

Agency's Response:

Statutory requirements are those passed by Congress for each program, while the Agency writes regulations to interpret statutes and provide additional details for program delivery.

Out of Scope

The Agency received some comments that we cannot address with this final rule because they are outside the scope of this final rule, but we have considered them. Some commenters asked questions regarding the direct loan programs, such as the possibility of a graduation or income requirement for direct loans.

Agency's Response:

Direct loan programs, graduation requirements, and income data sources for determining loan/grant eligibility of the direct loan program are not within the scope of this final rule.

One commenter inquired about a separate bank account requirement.

Agency's Response:

The comment is related to the Community Facilities Direct loan program and is not within the scope of this final rule.

A commenter suggested that the Agency does not need a loan program. Instead, banks should issue the loans operated by USDA.

Agency's Response:

The OneRD Guarantee Loan program addresses bank loans guaranteed by USDA and does not change how loans are distributed.

Finally, a commenter asked about OneRD's impact on lenders.

Agency's Response:

At the time of comment, the regulation had not been released, so no “unintended consequences” had been identified. While the Agency does not believe there will be any unintended consequences, we do believe there will be many benefits for lenders to having a consolidated regulation. This rule will provide a “one stop” shop for everything from eligibility to loss claims in any of the four programs. OneRD will provide clarity on what are the common requirements and what is needed for only a specific program, this should make it easier to apply for a guarantee. While the four guaranteed programs will remain independent, since they will share a common platform, it will allow lenders to move more easily from program to program and expand their lending into other programs.

While the rule provides guidance, it moves, in many areas, from dictating form and lender procedures to relying on lender specific and industry standard lending policies and practices, which allows the lender to spend less time on form and more time on the details of loan making. The regulation clarifies Agency requirements, such as when appraisals or feasibility studies are required, which reduces the time lenders must spend determining applicability or worse, revising or completely redoing a document that was completed incorrectly.

Most of all, the rule provides, where allowable, consistency between the four programs. This allows the Agency to provide a more consistent experience for lenders and borrower saving everyone time and frustration.

VI. Regulatory Impact Analysis

A. Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches to maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

This rule has been determined to be significant and was reviewed by the Office of Management and Budget under Executive Order 12866. In accordance with Executive Order 12866, the Agency conducted a Regulatory Impact Analysis, outlining the costs and benefits of implementing this program in rural America. The complete analysis is available in Docket No. RUS-19-Agency-0030. This analysis consists of a statement of need for a unified Rural Development (RD) guaranteed loan program, a baseline description of the current status of the four guaranteed loan programs administered by RD that are being consolidated under the unified RD guaranteed loan program, a summary of the provisions of the unified guaranteed loan program and alternative approaches that were considered, a list of the affected parties, and an analysis of the benefits and costs.

Much of the analysis is necessarily descriptive of the anticipated effects of this final rule. Benefits are described qualitatively, with some indication of the relative potential size. Most of the costs are quantified. Consequently, the analysis does not provide the exact magnitude of the resulting benefits and costs. Despite this, RD expects this final rule will provide cost savings and net benefits compared to the current situation by improved program and Agency management of the risks associated with the guaranteed loans that will be made under the unified guaranteed loan program.

B. Unfunded Mandates Reform Act

This final 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.

C. Environmental Impact Statement

This final rule has been reviewed in accordance with 7 CFR part 1970 “Environmental Program.” Rural Development has determined that this action was analyzed and meets the criteria established in 7 CFR 1970.53(f) and does not have any extraordinary circumstances and the action does not have a significant effect on the human environment, and therefore neither an Environmental Assessment nor an Environmental Impact Statement is required.

D. Executive Order 12988, Civil Justice Reform

This final 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. In addition, all State and local laws and regulations that conflict with this rule will be preempted. No retroactive effect will be given to this rule.

E. Executive Order 13132, Federalism

The policies contained in this final rule do not have a 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 rule impose substantial direct compliance costs on state and local governments. Therefore, consultation with the states is not required.

F. Regulatory Flexibility Act Certification

The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act (“APA”) or any other statute. This rule, however, is not subject to the APA under 5 U.S.C. 553(a)(2) and 5 U.S.C. 553(b)(3)(A) nor any other statue.

G. Executive Order 12372, Intergovernmental Consultation

This final rule is excluded from the scope of Executive Order 12372 (Intergovernmental Consultation), which may require a consultation with State and local officials. See the final rule related notice entitled, “Department Programs and Activities Excluded from Executive Order 12372” (50 FR 47034).

H. Executive Order 13175, Consultation and Coordination With Indian Tribal Governments

This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Government. Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The USDA's Office of Tribal Relations (OTR) has assessed the impact of this rule on Indian tribes and concluded that this rule does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes. OTR has determined that tribal consultation under E.O. 13175 is not required at this time.

If consultation is requested, OTR will work with the RD to ensure quality consultation is provided.

I. Programs Affected

The Catalog of Federal Domestic Assistance (CFDA) numbers assigned to this program are CFDA 10.760, Water and Waste Disposal Systems for Rural Communities; CFDA 10.766, Community Facilities Loans and Grants; 10.768, Business and Industry Loans; and CFDA 10.775, Renewable Energy Systems and Energy Efficiency Improvements Program.

J. Catalog of Federal Domestic Assistance

The CFDA numbers assigned to the 4 programs within this rule are: 10.766 for Community Facility Programs, 10.760 for Water and Waste Disposal Programs, 10.768 for Business and Industry Programs and 10.868 for Rural Energy for America Program. The Catalog is available on the internet at

https://beta.sam.gov.

The

SAM.gov

website also contains a PDF file version of the Catalog that, when printed, has the same layout as the printed document that the Government Publishing Office (GPO) provides. GPO prints and sells the CFDA to interested buyers. For information about purchasing the Catalog of Federal Domestic Assistance from GPO, call the Superintendent of Documents at 202-512-1800 or toll free at 866-512-1800, or access GPO's online bookstore at

http://bookstore.gpo.gov.

K. Paperwork Reduction Act and Recordkeeping Requirements

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended), RD invites comments on this information collection for which approval from the Office of Management and Budget (OMB) will be requested. These requirements have been approved by emergency clearance under OMB Control Number 0572-0155. Upon approval of this new final rule information collection package, RD will discontinue the following information collection packages: Community Facility Program (OMB No. 0570-0137), Water and Waste Disposal Program (OMB No. 0570-0122), Business and Industry Program, (OMB No. 0570-0069), and Renewable Energy Systems and Energy Efficiency Improvements Program, (OMB No. 0570-0067).

Comments must be received by September 14, 2020.

Comments are invited on (a) whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (b) the accuracy of the Agency's estimate of burden including the validity of the methodology and assumption 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 information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques on other forms of information technology.

Title:

7 CFR 5001, OneRD Guarantee Loan Program.

OMB Control Number:

0572-0155.

Abstract:

Rural Development is implementing a new consolidated guaranteed loan platform. The new guaranteed loan platform would combine the following four existing guaranteed loan regulations into a consolidated rule: (1) The Community Facility Program, (2) the Water and Waste Disposal Program, (3) the Business and Industry Program, and (4) the Renewable Energy Systems and Energy Efficiency Improvements Program under Title IX, Section 9006 of the Farm Security and Rural Investment Act of 2002 (FSRIA 2002). These programs provide loan guarantees for a

variety of projects intended to improve the economies of rural America.

The information required under this final rule is similar to much of the information currently being required under the four separate regulations. Under those four separate regulations, the current information being collected is approved under OMB control numbers 0570-0067, 0570-0069, 0572-0122, and 0575-0137. The final rule, however, requests some new information from lenders. The two primary examples are: (1) Lenders are required to supply information to Rural Development to be approved for participation in the program, and (2) lenders are required to more frequently report loans that are in default. On the other hand, the final rule does not include certain information previously requested. This is most evident for the Renewable Energy Systems and Energy Efficiency Improvements guaranteed loan program, where, under the final rule, technical reports are required only for higher cost renewable energy systems projects. This is because renewable energy projects of less than $200,000 are less complex, so the technical reports for these projects have only marginal value, and the energy audit requirements from energy efficiency improvement projects are sufficient so that separate technical reports also have only marginal value. The final rule creates a single set of common forms that lenders can use across all four programs, thereby creating efficiencies in reporting. On balance, the information requested to support the consolidated program is estimated to reduce burden and cost to lenders and borrowers compared to the information requested to support all four individual guaranteed loan programs combined.

As noted in the preceding paragraph, the information requirements contained in this final rule require information from lenders and borrowers. Rural Development requires this information to make prudent lending decisions regarding the eligibility of projects, borrowers, and lenders, to reduce the risks associated with making loan guarantees, to ensure compliance with the final rule and relevant statutory requirements, to ensure that the funds obtained from the Federal Government are used appropriately, and to effectively monitor the borrowers and lenders to protect the financial interests of the Federal Government. In summation, this collection of information is necessary to implement the consolidated guaranteed loan provisions in this final rule.

The following estimates are based on the average over the first 3 years the program is in place.

Estimate of Burden:

Public reporting burden for this collection of information is estimated to average 3.42 hours per response.

Respondents:

Rural developers, farmers and ranchers, rural businesses, public bodies, local governments, lenders.

Estimated Number of Respondents:

740.

Estimated Number of Responses per Respondent:

17.

Estimated Number of Responses:

12,380.

Estimated Total Annual Burden (hours) on Respondents:

50,242.

Copies of this information collection may be obtained from Thomas P. Dickson, Regulatory Division Team 2, Rural Development Innovation Center, U.S. Department of Agriculture, 1400 Independence Ave. SW, Stop 1522, Washington, DC 20250; telephone, 202-690-4492; email,

Thomas.dickson@usda.gov.

All responses to this information collection and recordkeeping notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

L. E-Government Act Compliance

Rural Development is committed to complying with the E-Government Act of 2002, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

M. Civil Rights Impact Analysis

Rural Development has reviewed this final rule in accordance with USDA Regulation 4300-4, Civil Rights Impact Analysis,” to identify any major civil rights impacts this final rule might have on program participants on the basis of age, race, color, national origin, sex or disability. After review and analysis of this final rule and available data, it has been determined that based on the analysis of the program purpose, application submission and eligibility criteria, issuance of this final rule will not likely adversely nor disproportionately impact very low, low and moderate-income populations, minority populations, women, Indian tribes, or persons with disability, by virtue of their race, color, national origin, sex, age, disability, or marital or familial status.

List of Subjects

7 CFR Part 1779

Loan programs, Waste treatment and disposal, Water supply.

7 CFR Part 3575

Loan programs-agriculture.

7 CFR Part 4279

Loan programs-business, Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 4287

Loan programs-business, Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 5001

Business and industry, Community facility, Energy efficiency improvement, Loan programs, Renewable energy, Rural areas, Rural development, Water and waste disposal.

For the reasons set forth in the preamble, under the authority at 5 U.S.C. 301 and 7 U.S.C. 1989, Chapters XVII, XXXV, and XLII of title 7 of the Code of Federal Regulations are amended and Chapter L is established as follows:

Chapter XVII—Rural Utilities Service, Department of Agriculture

PART 1779—[REMOVED AND RESERVED]

1. Under the authority of 5 U.S.C. 301 and 7 U.S.C. 1989, remove and reserve part 1779, consisting of §§ 1779.1 through 1779.100.

Chapter XXXV—Rural Housing Service, Department of Agriculture

PART 3575—[REMOVED AND RESERVED]

2. Under the authority of 5 U.S.C. 301 and 7 U.S.C. 1989, remove and reserve part 3575, consisting of §§ 3575.1 through 3575.100.

CHAPTER XLII—Rural Business— Cooperative Service and Rural Utilities Service, Department of Agriculture

PART 4279—GUARANTEED LOANMAKING

3. The authority citation for part 4279 continues to read as follows:

Authority:

5 U.S.C. 301; 7 U.S.C. 1989.

Subpart A—[Removed and Reserved]

4. Remove and reserve subpart A, consisting of §§ 4279.1 through 4279.100.

Subpart B—[Removed and Reserved]

5. Remove and reserve subpart B, consisting of §§ 4279.101 through 4279.200.

PART 4287—SERVICING

6. The authority citation for part 4287 continues to read as follows:

Authority:

5 U.S.C. 301; 7 U.S.C. 1932(a); 7 U.S.C. 1989.

Subpart B—[Removed and Reserved]

7. Remove and reserve subpart B, consisting of §§ 4287.101 through 4287.200.

PART 5001—GUARANTEED LOANS

8. Add chapter L, consisting of part 5001 to subtitle B, to read as follows:

Chapter L—Rural Business—Cooperative Service, Rural Housing Service, and Rural Utilities Service, Department of Agriculture

PART 5001—GUARANTEED LOANS

Subpart A—General Provisions

Sec.

5001.1

General.

5001.2

Structure.

5001.3

Definitions.

5001.4

Exception authority.

5001.5

Appeal and review rights.

5001.6

General Lender responsibilities.

5001.7

Agency's special initiatives.

5001.8

Approvals, regulations, and forms.

5001.9

Standards for financial information.

5001.10

Federal Register notices and amendments.

5001.11-5001.99

[Reserved]

5001.100

OMB control number.

Subpart B—Eligibility Provisions

5001.101

Introduction.

5001.102

Project eligibility—general.

5001.103

Eligible CF projects and requirements.

5001.104

Eligible WWD projects and requirements.

5001.105

Eligible B&I projects and requirements.

5001.106

Eligible REAP—Renewable Energy System (RES) projects and requirements.

5001.107

Eligible REAP—Energy Efficiency Improvement (EEI) projects and requirements.

5001.108

Eligible REAP—Energy Efficient Equipment and Systems (EEE) projects and requirements.

5001.109-5001.114

[Reserved]

5001.115

Ineligible projects—general.

5001.116

Ineligible CF projects.

5001.117

Ineligible WWD projects.

5001.118

Ineligible B&I projects.

5001.119

Ineligible REAP projects.

5001.120

[Reserved]

5001.121

Eligible uses of loan funds.

5001.122

Ineligible uses of loan funds.

5001.123-5001.125

[Reserved]

5001.126

Borrower eligibility.

5001.127

Borrower ineligibility conditions.

5001.128-5001.129

[Reserved]

5001.130

Lender eligibility requirements.

5001.131

Lender's agreement.

5001.132

Maintenance of approved lender status.

5001.133-5001.139

[Reserved]

5001.140

Cooperative stock/cooperative equity.

5001.141

New Markets Tax Credit.

5001.142-5001.200

[Reserved]

Subpart C—Origination Provisions

5001.201

General origination requirements.

5001.202

Lender's credit evaluation.

5001.203

Appraisals.

5001.204

Personal, partnership, and corporate guarantees.

5001.205

General project monitoring requirements.

5001.206

Compliance with USDA Departmental Regulations, Policies, and other Federal laws.

5001.207

Environmental responsibilities.

5001.208

Conflicts of interest.

5001.209-5001.300

[Reserved]

Subpart D—Guarantee Application Provisions

5001.301

Beginning the application process.

5001.302

Preliminary eligibility review.

5001.30

This text is long and has been trimmed here. Open the source document for the complete record.