Rural Telephone Bank and Telecommunications Program Loan Policies, Types of Loans, Loan Requirements

DEPARTMENT OF AGRICULTURE

Rural Telephone Bank

7 CFR Part 1610

Rural Utilities Service

7 CFR Parts 1735, 1737, 1739, and 1746

Rural Telephone Bank and Telecommunications Program Loan

Policies, Types of Loans, Loan Requirements

AGENCY: Rural Utilities Service and Rural Telephone Bank, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Rural Utilities Service (RUS) proposes to amend its

regulations to incorporate changes to the telecommunications loan

program

[[Page 10484]]

required by the 1996 Farm Bill and the regulatory reinvention

initiative of the Vice President's National Performance Review. RUS has

reviewed the regulations concerning the telecommunications program and

the Rural Telephone Bank loan policies and requirements to determine

whether they are necessary, impose the least possible burden consistent

with safety and soundness, and are written in a clear, straightforward

manner. As a result of this review, the RUS telecommunications program

proposes to update and streamline its regulations and policy

statements. In addition, this regulation proposes to eliminate some

policies and procedures that have become obsolete.

DATES: Written comments must be received by RUS or carry a postmark or

equivalent not later than May 6, 1997.

ADDRESSES: Submit written comments to Jonathan Claffey, Acting Deputy

Director, Advanced Telecommunications Services Staff, Rural Utilities

Service, 1400 Independence Ave., SW., STOP 1701, Room 2919, South

Building, Washington, DC 20250-1701. RUS requests a signed original and

three copies of all comments (7 CFR part 1700). All comments received

will be made available for public inspection at room 4034, South

Building, U.S. Department of Agriculture, Washington, DC, between 8:00

a.m. and 4:00 p.m. (7 CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Cheryl Gamboney, Analyst, Advanced

Telecommunications Services Staff, (address as above). Telephone: (202)

720-0415. Facsimile: (202) 720-2734.

SUPPLEMENTARY INFORMATION:

Classification

This proposed rule has been determined to be not significant and

has not been reviewed by the Office of Management and Budget under

Executive Order 12866.

Civil Justice Reform

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. RUS has determined that this proposed rule meets

the applicable standards provided in Sec. 3. of the Executive Order.

Regulatory Flexibility Act Certification

Pursuant to section 605(b) of the Regulatory Flexibility Act, 5

U.S.C. 605(b), RUS certifies that this proposed rule will not have a

significant economic impact on a substantial number of small entities.

If a rule has a significant economic impact on a substantial number of

small entities, the Regulatory Flexibility Act requires agencies to

analyze regulatory options that would minimize any significant impact

of a rule on small entities. The application for loans under the RUS

telecommunications program are discretionary, regulatory requirements

will, therefore, apply only to those entities which choose to apply for

funding.

This action is being taken as part of the National Performance

Review program to eliminate excess regulations and to improve the

quality of those that remain in effect. This proposed rule simply

reduces the Times Interest Earned Ratio requirement for all borrowers,

simplifies current cash distribution and investment requirements for

all borrowers, and standardizes determination of loan maturity. This

proposed rule is consistent with RUS' continuing effort to devolve, in

particular, cash management authority to the borrowers. It is also

consistent with the goals of the regulatory reinvention initiative of

the National Performance Review.

Information Collection and Recordkeeping Requirements

A notice of public comments was issued in the Federal Register on

February 25, 1997, at 62 FR 8421 requesting approval by the Office of

Management and Budget (OMB) pursuant to the Paperwork Reduction Act of

1995 (44 U.S.C. Chapter 35, as amended) under control number 0572-0079.

Send questions or comments regarding this burden or any other

aspect of these collections of information, including suggestions for

reducing the burden, to F. Lamont Heppe, Jr., Director, Program Support

and Regulatory Analysis, Rural Utilities Service, STOP 1522,

Washington, DC 20250-1522.

National Environmental Policy Act Certification

RUS has determined that this proposed rule will not significantly

affect the quality of the human environment as defined by the National

Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). Therefore,

this action does not require an environmental impact statement or

assessment.

Program Affected

The program described by this proposed rule is listed in the

Catalog of Federal Domestic Assistance Programs under 10.851, Rural

Telecommunications Loans and Loan Guarantees, and 10.582, Rural

Telephone Bank Loans. This catalog is available on a subscription basis

from the Superintendent of Documents, the United States Government

Printing Office, Washington, DC 20402.

Intergovernmental Review

This program is excluded from the scope of Executive Order 12372,

Intergovernmental Consultation. A Notice of Final Rule entitled

Department Programs and Activities Excluded from Executive Order 12372

(50 FR 47034) exempts RUS and Rural Telephone Bank loans and loan

guarantees to governmental and non-governmental entities from coverage

under this Order.

Unfunded Mandate

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the Unfunded Mandate Reform Act) for State,

local, and tribal governments or the private sector. Thus today's rule

is not subject to the requirements of sections 202 and 205 of the

Unfunded Mandate Reform Act.

Background

The Federal Agriculture Improvement and Reform Act of 1996 (Pub. L.

104-127) amended Section 309 of the Rural Electrification Act of 1936,

as amended (7 U.S.C. 901 et seq.)(RE Act), by eliminating the provision

that allows RUS telecommunications borrowers to determine the term of a

loan made under Title 3 of the RE Act at the time the loan application

is submitted.

The present maximum loan period is 35 years. With rapidly changing

technology, obsolescence is occurring more quickly; therefore,

borrowers are depreciating their facilities at a faster rate. If plant

financed is retired and replaced by new plant before the loan is

repaid, earnings from this new plant will have to be used to pay the

old loan and any new loan used to finance the replacement facilities.

If the loan period is longer than the depreciation period and the

capital recovered through depreciation is not used to replace plant,

the loan could be undercollateralized and the borrower's rate base

would be eroded.

RUS is, therefore, proposing that the loan period for RUS and Rural

Telephone Bank (Bank) loans not exceed the expected composite economic

life of the facilities to be financed; expected composite economic life

means the depreciated life plus three years. Bank borrowers may request

a repayment period that is longer than the expected composite economic

life of

[[Page 10485]]

the facilities financed by the loan. Such borrowers, however, will be

required to provide additional security for the loan by maintaining a

funded reserve. The maximum loan period for all loans will remain at 35

years.

Further, under existing regulations, if the loan maturity period

selected by the borrower exceeds the expected composite economic life

of the facilities financed by a period of more than three years, the

loan would be conditioned upon the borrower electing to maintain either

a net plant to secured debt ratio of at least 1.2, or a funded reserve

in such amount that the balance of the reserve plus the value of the

facilities less depreciation be at least equal to the remaining

principal payments on the loan. RUS is proposing to offer, subject to

certain conditions, borrowers subject to the funded reserve or net

plant to secured debt ratio requirements an option to replace those

notes with notes that match the remaining composite economic life of

the facilities financed, as determined by the feasibility study

prepared in connection with the loan. Borrowers meeting these

conditions replacing Bank notes will not be required to pay a

prepayment premium, if such requirement is contained in the original

note.

To optimize the use of loan funds, RUS proposes to limit the size

of RUS cost-of-money loans and Bank loans made to individual borrowers

in order to distribute the amount of RUS cost-of-money and Bank funds

appropriated among a greater number of borrowers. Section 201 of the RE

Act, in part, clearly states that, ``* * * The Administrator in making

such loans shall, insofar as possible, obtain assurance that the

telecommunications service to be furnished or improved thereby will be

made available to the widest practical number of rural users * * *''.

In fiscal years 1991 through 1995, the Agriculture Appropriation

Acts had established loan levels for the Bank in amounts insufficient

to provide for the total number of applications completed and on hand

at the end of those fiscal years. If the Bank had limited the amount of

individual loans to no more than 10 percent of the lending authority,

approximately $35.6 million of Bank funding over those five years would

have been available to other borrowers. Correspondingly, approximately

$25.6 million of RUS cost-of-money funding also would have been

available to other borrowers.

Moreover, recent Federal action affecting RUS and Bank borrowers is

the Telecommunications Act of 1996, a broad and far-reaching reform of

communications law that is expected to change notably the

telecommunications industry. The Telecommunications Act will provide

for a more competitive, deregulated national telecommunications policy

framework. Of greatest immediate relevance for RUS and Bank borrowers

are forthcoming regulations by the Federal Communications Commission

concerning certain provisions of the Telecommunications Act. Pending

the outcome of these forthcoming regulations, RUS borrowers have

temporarily delayed plans for major network construction. However, now

more than ever, the need and importance of RUS telecommunications loans

is crucial for future development of telecommunications infrastructure

in rural America. As a direct result of RUS's telecommunications loans,

rural communities have been enjoying access to advanced

telecommunications services.

To continue fulfilling RUS's mission of ensuring that rural

telecommunications providers have the means to modernize their

networks, to fully effect the mandated area coverage provision of the

RE Act, and to achieve maximum use of funds available, RUS is proposing

to limit the loan amount to any single borrower in a fiscal year to,

generally, no more than 10 percent of the lending authority from

appropriations in any fiscal year. This proposed regulation would

optimize the use of a limited source of loan funding by distributing

the amount of funding available among the greatest number of applicants

in an economical, efficient, and orderly manner.

In general, the security documents required in connection with RUS

loans, Bank loans, and RUS guarantees contain provisions requiring

borrowers to maintain a certain Times Interest Earned Ratio (TIER)

level. In particular, under existing regulations, borrowers are

required to maintain after the end of the Forecast Period a TIER equal

to the projected TIER determined by the feasibility study prepared in

connection with the loan, but not greater than 1.75. RUS proposes to

reduce the maximum TIER maintenance requirement to no more than 1.50

for all borrowers receiving any type of loan after the effective date

of the final rule. In 1995 almost ninety percent of RUS's reporting

borrowers had a TIER greater than 1.5.

Section 205 of the RE Act and the RUS mortgage documents, contain

RUS's policy regarding investments and distributions of assets by

borrowers. In general, borrowers with a certain minimum net worth

requirement are permitted to make capital distributions without RUS

approval in a cumulative amount up to a limit set by a formula that

considers the borrowers past financial performance. The calculation

used to determine a borrower's allowable distribution level has, over

the years, become exceedingly complex. RUS is simplifying its policy by

eliminating the complex formula used to determine the allowable level

of distributions and investments and replacing it with a more

straightforward process which can readily be calculated from a

borrower's current financial statements. The new requirements limit the

amount of distributions and investments relative to the borrower's

current net worth. To facilitate the availability of cash flow to

support diversified activities, RUS proposes predefined tests, using

current annual financial data only, for determining the level of

permitted distributions and investments. This approach would recognize

and provide for diversity among borrowers without creating undue

complexity. RUS's new policy regarding investments and distributions of

assets by borrowers will be in all mortgages for loans approved after

the effective date of the final rule. Borrowers that have not received

a loan after the effective date of the final rule may request the

Administrator to apply the new requirements to them.

For over 25 years it has been the RUS preferred design to bury

outside plant (e.g., buried wire and cable telecommunications

facilities and associated material) whenever economically feasible.

This method of construction minimizes potential impairment of

borrowers' facilities due to damage caused by storms and other natural

catastrophes. Based on its long experience in this type of design, RUS

proposes to adopt the policy that it will finance only buried plant for

all loans unless RUS determines that buried plant is not economically

feasible.

RUS further proposes to make technical corrections to final

regulations which were reorganized and redesignated on September 27,

1990, at 55 FR 39393. In particular, certain regulations contained

cross references which inadvertently had not been updated. This action

is simply a correction to these regulations with no change to

substance. Changes to regulatory text are merely to update cross

references. As currently published, the final regulations may prove to

be misleading.

On August 27, 1991, at 56 FR 42461, RUS published 7 CFR parts 1739

and 1746 that established pre-and post-loan policies for 90 percent RUS

guarantees

[[Page 10486]]

of certain loans from qualified private lenders. This program was

authorized under section 314 of the RE Act. The Rural Electrification

Loan Restructuring Act of 1993, Public Law 103-129, signed by President

Clinton on November 1, 1993, amended section 314 of the RE Act to

abolish this 90 percent guarantee program. RUS is, therefore, removing

7 CFR parts 1739 and 1746.

List of Subjects

7 CFR Part 1610

Accounting, Loan programs--communications, Reporting and

recordkeeping requirements, Rural areas, Telecommunications.

7 CFR Part 1735

Accounting, Loan programs--communications, Reporting and

recordkeeping requirements, Rural areas, Telecommunications.

7 CFR Part 1737

Accounting, Loan programs--communications, Reporting and

recordkeeping requirements, Rural areas, Telecommunications.

7 CFR Part 1739

Accounting, Guaranteed program, Loan programs--communications,

Reporting and recordkeeping requirements, Rural areas,

Telecommunications.

7 CFR Part 1746

Accounting, Guaranteed program, Loan programs--communications,

Reporting and recordkeeping requirements, Rural areas,

Telecommunications.

For the reasons set forth in the preamble, and under the authority

of 7 U.S.C. 901 et. seq., chapters XVI and XVII of Title 7 of the Code

of Federal Regulations are proposed to be amended as follows:

CHAPTER XVI

PART 1610--LOAN POLICIES

1. The authority citation for part 1610 continues to read as

follows:

Authority: 7 U.S.C. 941 et seq.; Pub. L. 103-354, 108 Stat. 3178

(7 U.S.C. 6941, et. seq.).

2. In Sec. 1610.6, new paragraph (d) is added to read as follows:

Sec. 1610.6 Concurrent Bank and RUS cost-of-money loans.

* * * * *

(d) Generally, no more than 10 percent of lending authority from

appropriations in any fiscal year for Bank and RUS cost-of-money loans

may be loaned to a single borrower. The Bank will publish by notice in

the Federal Register the dollar limit that may be loaned to a single

borrower in that particular fiscal year based on approved Bank and RUS

lending authority.

3. In Sec. 1610.11, a new paragraph (c) is added to read as

follows:

Sec. 1610.11 Prepayments.

* * * * *

(c) Borrowers that qualify to issue a refunding note or notes in

accordance with 7 CFR 1735.43, Payments on loans, shall not be required

to pay a prepayment premium on all payments made in accordance with the

new payment schedule.

CHAPTER XVII

PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--

TELECOMMUNICATIONS PROGRAM

1. The part heading for part 1735 is revised as set forth above.

1a. The authority citation for part 1735 is revised to read as

follows:

Authority: 7 U.S.C. 901 et seq., 1921 et seq.; Pub. L. 103-354,

108 Stat. 3178 (7 U.S.C. 6941 et. seq.).

2. In Sec. 1735.2, the definition of Construction fund is amended

by removing the reference ``See 7 CFR part 1758.'', the definitions for

Adjusted assets and Adjusted net worth are removed, and new definitions

Cash distribution, Net worth, and Total assets are added in

alphabetical order to read as follows:

Sec. 1735.2 Definitions.

* * * * *

Cash distribution means investments, guarantees, extensions of

credit, advances, loans, non-affiliated company joint ventures, and

affiliated company investments. Not included in this definition are

qualified investments (see 7 CFR part 1744, subpart D).

* * * * *

Net worth has the meaning as defined in the mortgage with RUS.

* * * * *

Total assets has the meaning as defined in the mortgage with RUS.

3. In Sec. 1735.3, the first sentence is revised to read as

follows:

Sec. 1735.3 Availability of forms.

Single copies of RUS forms and publications cited in this part are

available from Program Support Regulatory Analysis, Rural Utilities

Service, STOP 1522, 1400 Independence Ave., SW., Washington, DC 20250-

1522. * * *

4. In Sec. 1735.17, paragraph (c) is revised to read as follows:

Sec. 1735.17 Facilities financed.

* * * * *

(c) RUS will not make any type of loan to finance the following

items:

(1) Station apparatus (including PBX and key systems) not owned by

the borrower and any associated inside wiring;

(2) Certain duplicative facilities, see Sec. 1735.12;

(3) Facilities to serve subscribers outside the local exchange

service area of the borrower unless those facilities are necessary to

furnishing or improving telecommunications service within the

borrower's service areas;

(4) Facilities to provide service other than 1-party; and

(5) System designs or facilities to provide service that cannot

withstand or are not designed to minimize damage caused by storms and

other natural catastrophes, including, but not limited to hurricanes,

floods, tornadoes, mudslides, lightning, windstorms, hail, fire, and

smoke.

* * * * *

5. In Sec. 1735.22, paragraph (g) is redesignated as new paragraph

(i), paragraph (f) is revised, and new paragraphs (g) and (h) are added

to read as follows:

Sec. 1735.22 Loan security.

* * * * *

(f) For purposes of determining compliance with TIER requirements,

unless a borrower whose existing mortgage contains TIER maintenance

requirements notifies RUS in writing differently, RUS will apply the

requirements described in paragraph (g) of this section to the borrower

regardless of the provisions of the borrower's existing mortgage.

(g) For loans approved after [effective date of final rule] loan

contracts and mortgages covering hardship loans, RUS cost-of-money

loans, RTB loans, and guaranteed loans will contain a provision

requiring the borrower to maintain a TIER of at least 1.0 during the

Forecast Period. At the end of the Forecast Period, the borrower shall

be required to maintain, at a minimum, a TIER at least equal to the

projected TIER determined by the feasibility study prepared in

connection with the loan, but at least 1.0 and not greater than 1.5.

(h) Nothing in this section shall affect any rights of supplemental

lenders under the RUS mortgage, or other creditors of the borrower, to

limit a borrower's TIER requirement to a level

[[Page 10487]]

above that established in paragraph (g) of this section.

* * * * *

6. In Sec. 1735.31, paragraphs (d) and (e) are redesignated as new

paragraphs (e) and (f), and new paragraph (d) is added to read as

follows:

Sec. 1735.31 RUS cost-of-money and RTB loans.

* * * * *

(d) Generally, no more than 10 percent of lending authority from

appropriations in any fiscal year for RUS cost-of-money and RTB loans

may be loaned to a single borrower. RUS will publish by notice in the

Federal Register the dollar limit that may be loaned to a single

borrower in that particular fiscal year based on approved RUS and RTB

lending authority.

* * * * *

7. Section 1735.33 is added to read as follows:

Sec. 1735.33 Variable interest rate loans.

After June 10, 1991, and prior to November 1, 1993, RUS made

certain variable rate loans at interest rates less than 5 percent but

not less than 2 percent. For those borrowers that received variable

rate loans, this section describes the method by which interest rates

are adjusted. The interest rate used in determining feasibility is the

rate charged to the borrower until the end of the Forecast Period for

that loan. At the end of the Forecast Period, the interest rate for the

loan may be annually adjusted by the Administrator upward to a rate not

greater than 5 percent, or downward to a rate not less than the rate

determined in the feasibility study on which the loan was based, based

on the borrower's ability to pay debt service and maintain a minimum

TIER of 1.0. Downward and upward adjustments will be rounded down to

the nearest one-half or whole percent. To make this adjustment,

projections set forth in the loan feasibility study will be revised

annually by RUS (beginning within four months after the end of the

Forecast Period) to reflect updated revenue and expense factors based

on the borrower's current operating condition. Any such adjustment will

be effective on July 1 of the year in which the adjustment was

determined. If the Administrator determines that the borrower is

capable of meeting the minimum TIER requirements of Sec. 1735.22(f) at

a loan interest rate of 5 percent on a loan made as described in this

section, then the loan interest rate shall be fixed, for the remainder

of the loan repayment period , at the standard interest rate of 5

percent.

8. In Sec. 1735.43, paragraph (a) is revised, paragraph (b) is

redesignated as new paragraph (f), and new paragraphs (b) through (e)

are added to read as follows:

Sec. 1735.43 Payments on Loans.

(a) Except as described in this paragraph (a), RUS loans approved

after [effective date of final rule] must be repaid with interest

within a period that, rounded to the nearest whole year, equals the

expected composite economic life of the facilities to be financed, as

calculated by RUS; expected composite economic life means the

depreciated life plus three years. The expected composite economic life

shall be based on the depreciation rates for the facilities financed by

the loan. In states where the borrower must obtain state regulatory

commission approval of depreciation rates, the depreciation rates used

shall be the rates currently approved by the state commission or rates

for which the borrower has received state commission approval. In cases

where a state regulatory commission does not approve depreciation

rates, the expected composite economic life shall be based on the most

recent median depreciation rates published by RUS for all borrowers

(see 7 CFR 1737.70). Borrowers may request a repayment period that is

longer or shorter than the expected composite economic life of the

facilities financed. If the Administrator determines that, if a shorter

period is likely to cause the borrower to experience hardship, the

Administrator may agree to approve a period longer than requested. A

shorter period may be approved as long as the Administrator determines

that the loan remains feasible.

(b) Borrowers with RTB loans approved after [effective date of

final rule] with a maturity that exceeds the expected composite

economic life of the facilities to be financed by the loan by a period

of more than three years, release of funds included in the loan shall

be conditioned upon the borrower establishing and maintaining, pursuant

to a plan approved by RUS, a funded reserve in such an amount that the

balance of the reserve plus the value of the facilities less

depreciation shall at all times be at least equal to the remaining

principal payments on the loan. Funding of the reserve must begin

within one year of approval of release of funds and must continue

regularly over the expected composite economic life of the facilities

financed.

(c) Borrowers that have demonstrated to the satisfaction of the

Administrator an inability to maintain the funded reserve or net plant

to secured debt ratio requirements, if any, contained in their

mortgage, may elect to replace notes with an original maturity that

exceeded the composite economic life of the facilities financed with

notes bearing a shorter maturity approximating the expected composite

economic life of the facilities financed, if this will result in a

shorter maturity for the loan. The principal balance of the notes

(hereinafter in this section called the ``refunding notes'') issued to

refund and substitute for the original notes would be the unpaid

principal balance of the original notes. The refunding notes would

mature at a date no later than the remaining economic life of the

facilities financed by the loan, plus three years. Interest on the

original note must continue to be paid through the closing date. All

other payment terms, including the rate of interest on the refunding

notes, would remain unchanged. Disposition of funds in the funded

reserve will be determined by RUS at the closing date. RUS will notify

the borrower in writing of the amendment of loan payment requirements

and the terms and conditions thereof.

(d) A borrower qualifying under paragraph (c) of this section shall

not be required to pay a prepayment premium on such portion of the

payments under its new notes as exceeds the payments required under the

notes being replaced.

(e) To apply for refunding notes, borrowers must send to the Area

Office the following:

(1) A certified copy of a board resolution requesting an amendment

of loan payment requirements and that certain notes be replaced;

(2) If applicable, evidence of approval by the regulatory body with

jurisdiction over the telecommunications service provided by the

borrower to issue refunding notes; and

(3) Such other documents as may be required by the RUS.

* * * * *

9. In Sec. 1735.46, paragraphs (b), (c) and (d) are revised,

paragraphs (e) and (f) are removed, and paragraphs (g) and (h) are

redesignated as paragraphs (e) and (f) to read as follows:

Sec. 1735.46 Loan security documents.

* * * * *

(b) Loan security documents of borrowers with loans approved after

[effective date of final rule] will provide limits on allowable cash

distributions in any calendar year as follows:

(1) No more than 25 percent of the prior calendar year's net

earnings or margins if the borrower's net worth is at

[[Page 10488]]

least 1 percent of its total assets after the distribution is made;

(2) No more than 50 percent of the prior calendar year's net

earnings or margins if the borrower's net worth is at least 20 percent

of its total assets after the distribution is made;

(3) No more than 75 percent of the prior calendar year's net

earnings or margins if the borrower's net worth is at least 30 percent

of its total assets after the distribution is made; or

(4) No limit on distributions if the borrower's net worth is at

least 40 percent of its total assets after the distribution is made.

(c) Borrowers that have not received a loan after [effective date

of final rule] may request the Administrator to apply these

requirements to them. Borrowers may request in writing that RUS

substitute the new requirements described in paragraphs (b)(1) through

(b)(4) of this section. Upon request by the borrower, the provisions of

the borrower's loan documents restricting cash distributions or

investments shall not be enforced to the extent that such provisions

are inconsistent with this section.

(d) Rural development investments meeting the criteria set forth in

7 CFR part 1744, subpart D, will not be counted against a borrower's

allowable cash distributions in any calendar year (7 U.S.C. 926).

* * * * *

Sec. 1735.60 [Amended]

10. Sec. 1735.60, paragraph (a) introductory text is amended by

removing the reference ``(see 7 CFR part 1758)'' and paragraph (a)(3)

is removed.

Sec. 1735.76 [Amended]

11. Sec. 1735.76, the second ``or'' is removed and the word ``of''

is added in its place.

PART 1737--PRE-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND

GUARANTEED TELECOMMUNICATIONS LOANS

12. The part heading for part 1737 is revised as set forth above.

13. The authority citation for part 1737 is revised to read as

follows:

Authority: 7 U.S.C. 901 et seq., 1921 et seq.; Pub. L. 103-354,

108 Stat. 3178 (7 U.S.C. 6941 et. seq.).

Sec. 1737.70 [Amended]

14. In Sec. 1737.70, paragraph (d) is removed and reserved.

PART 1739--[REMOVED]

15. Part 1739 is removed.

PART 1746--[REMOVED]

16. Part 1746 is removed.

Dated: February 24, 1997.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 97-5223 Filed 3-6-97; 8:45 am]

BILLING CODE 3410-15-P