35245

Rules and Regulations Federal Register Vol. 77, No. 114

Wednesday, June 13, 2012

This section of the FEDERAL REGISTER addition, all State and local laws and Guarantees; 10.851, Rural Telephone contains regulatory documents having general regulations that are in conflict with this Loans and Loan Guarantees, 10.855, applicability and legal effect, most of which rule will be preempted. No retroactive Distance Learning and Telemedicine are keyed to and codified in the Code of effect will be given to the rule and, in Loans and Grants; 10.857, State Bulk Federal Regulations, which is published under accordance with section 212(e) of the Fuel Revolving Fund Grants, 10.859, 50 titles pursuant to 44 U.S.C. 1510. Department of Agriculture Assistance to High Energy Cost Rural The Code of Federal Regulations is sold by Reorganization Act of 1994 (7 U.S.C. Communities; 10.861, Public Television the Superintendent of Documents. Prices of 6912(e)), administrative appeal Station Digital Transition Grant new books are listed in the first FEDERAL procedures must be exhausted before an Program; 10.862, Household Water Well REGISTER issue of each week. action against the Department or its System Grant Program 10.863, agencies may be initiated. Community Connect Grant Program; 10.864, Grant Program to Establish a Regulatory Flexibility Act Certification DEPARTMENT OF AGRICULTURE Fund for Financing Water and RUS has determined that this rule Wastewater Projects; 10.886, Rural Rural Utilities Service will not have a significant economic Broadband Access Loans and Loan impact on a substantial number of small Guarantees. 7 CFR Part 1700 entities, as defined in the Regulatory The Catalog is available on the RIN 0572–AC23 Flexibility Act (5 U.S.C. 601 et seq.). Internet at http://www.cfda.gov. RUS provides loans to borrowers at Executive Order 12372 Substantially Underserved Trust Areas interest rates and on terms that are more (SUTA) favorable than those generally available Most programs covered by this from the private sector. RUS borrowers, rulemaking are excluded from the scope AGENCY: Rural Utilities Service, USDA. as a result of obtaining federal of Executive Order 12372, ACTION: Final rule. financing, receive economic benefits Intergovernmental Consultation, which that exceed any direct economic costs may require consultation with State and SUMMARY: The Rural Utilities Service (RUS) is issuing regulations related to associated with complying with RUS local officials. See the final rule related loans and grants to finance the regulations and requirements. notice entitled ‘‘Department Programs and Activities Excluded from Executive construction, acquisition, or Information Collection and Order 12372,’’ (50 FR 47034). However, improvement of infrastructure projects Recordkeeping Requirements in Substantially Underserved Trust the Water and Waste Disposal Loan The information collection and Program, CFDA number 10.770, is Areas (SUTA). The intent is to recordkeeping requirements contained implement Section 306F of the Rural subject to the provisions of Executive in this rule are pending approval by Order 12372 which requires Act by providing the OMB and will be assigned OMB control process by which eligible applicants intergovernmental consultation with number 0572–0147 in accordance with State and local officials. may apply for funding by the agency. the Paperwork Reduction Act of 1995 DATES: Effective: July 13, 2012. (44 U.S.C. chapter 35). Unfunded Mandates FOR FURTHER INFORMATION CONTACT: This rule contains no Federal E-Government Act Compliance Michele Brooks, Director, Program mandates (under the regulatory Development and Regulatory Analysis, Rural Development is committed to provision of Title II of the Unfunded Rural Utilities Service, Rural the E-Government Act, which requires Mandate Reform Act of 1995) for State, Development, U.S. Department of Government agencies in general to local, and tribal governments or the Agriculture, 1400 Independence Avenue provide the public the option of private sector. Thus, this rule is not SW., STOP 1522, Room 5162–S, submitting information or transacting subject to the requirements of sections Washington, DC 20250–1522. business electronically to the maximum 202 and 205 of the Unfunded Mandate Telephone number: (202) 690–1078, extent possible. Reform Act of 1995. Facsimile: (202) 720–8435. Catalog of Federal Domestic Assistance National Environmental Policy Act SUPPLEMENTARY INFORMATION: The programs described by this rule Certification Executive Order 12866 are listed in the Catalog of Federal Rural Development has determined This rule has been determined to be Domestic Assistance Programs under that this rule will not significantly affect not significant for purposes of Executive number 10.759, Special Evaluation the quality of the human environment Order 12866 and, therefore, has not Assistance for Rural Communities and as defined by the National been reviewed by the Office of Households Program (SEARCH); 10.760, Environmental Policy Act of 1969 (42 Management and Budget. Water and Waste Disposal Systems for U.S.C. 4321 et seq.). Therefore, this Rural Communities; 10.761, Technical action does not require an Executive Order 12988 Assistance and Training Grants; 10.762, environmental impact statement or This rule has been reviewed under Solid Waste Management Grants; assessment. Executive Order 12988, Civil Justice 10.763, Emergency Community Water Reform. Rural Development has Assistance Grants; 10.770, Water and Executive Order 13132, Federalism determined that this rule meets the Waste Disposal Loans and Grants The policies contained in this rule do applicable standards provided in (Section 306C); 10.850; Rural not have any substantial direct effect on section 3 of that Executive Order. In Electrification Loans and Loan states, on the relationship between the

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national government and the states, or conditions that can enhance Disposal Loans, Guaranteed Loans and on the distribution of power and infrastructure financing options in areas Grants; Telecommunications responsibilities among the various that are underserved by electric, water Infrastructure Loans and Guaranteed levels of government. Nor does this rule and waste, and telecommunications and Loans; Distance Learning and impose substantial direct compliance broadband utilities. Given the Telemedicine Loans and Grants; and costs on state and local governments. challenges, dynamics, and opportunities Broadband Loans and Guaranteed Therefore, consultation with the states in implementing the SUTA initiative, Loans. is not required. RUS has aimed to foster a process that In addition to its discretionary includes the voices of tribal leaders, authority to implement the SUTA Executive Order 13175 tribal community members, Alaska provisions, RUS is under a continuing The policies contained in this rule do Native Regional and Village obligation to make annual reports to not impose substantial unreimbursed Corporations, , American Samoa Congress on (a) the progress of the direct compliance costs on Indian tribal, and the Commonwealth of the Northern SUTA initiative, and (b) Alaska native, or native Hawaiian Mariana Islands, and other stakeholders. recommendations for any regulatory or governments and sovereign institutions Preliminary research by RUS legislative changes that would be or have tribal implications that preempt identified various reports that provided appropriate to improve services to tribal law. Prior to development of this several insights. In 2007, the United communities located in substantially rulemaking, the agency held Tribal States Census Bureau Facts for Features underserved trust areas. RUS has Consultations at seven (7) USDA article (dated 10/29/07) reported that submitted three reports to Congress, regional consultations, conducted the poverty rate of people who reported dated June 18, 2009, June 21, 2010, and sixteen (16) SUTA specific being sole race American Indian and August 23, 2011. consultations and hosted three (3) Alaska Native (AI/AN) was 27 percent. The USDA Office of Native American Internet and toll free teleconference Additionally, in 2006, the United States Programs (since renamed the Office of based webinars in order to determine Government Accountability Office Tribal Relations, hereinafter OTR) and the impact of this rule on Tribal reported that based on the 2000 RUS began exploring SUTA initiative governments, communities, and decennial census, the telephone implementation in 2008 after passage of individuals. Reports from these sessions subscribership rate for Native American the Farm Bill. RUS in conjunction with for consultation will be made part of the households on tribal lands was OTR interpreted implementation to USDA annual reporting on Tribal substantially below the national level of include formal USDA Tribal Consultation and Collaboration, the about 98 percent. Specifically, about 69 Consultations and working with annual SUTA Report to Congress and percent of Native American households stakeholders that are federally were used extensively throughout the on tribal lands in the lower 48 states recognized tribes. Pursuant to this drafting of this proposed rule. and about 87 percent in Alaska Native determination and in accordance with President Obama’s November 5, 2009, Background villages had telephone service. Additionally, in 2000, the United States Memorandum on Tribal Consultation, USDA Rural Development (Rural Census Bureau reported that on Native RUS conducted sixteen (16) direct tribal Development) is a mission area within American lands, 11.7 percent of consultations, seven (7) regional the U.S. Department of Agriculture residents lack complete plumbing consultations, one listening session and comprising the , facilities, compared to 1.2 percent of the three (3) Internet and toll free Rural Business/Cooperative Service and general U.S. population. teleconference based webinars on Rural Utilities Service. Rural There are special considerations and implementation of the SUTA provision Development’s mission is to increase challenges in implementing an initiative with Indian tribes from across the economic opportunity and improve the to communities residing on trust lands. country. Additionally, the agency heard quality of life for all rural Americans. Many American Indians, Alaska from six Federal agencies at three Rural Development meets its mission by Natives, Native Hawaiians, and Pacific separate consultations on how best to providing loans, loan guarantees, grants Islanders have a deep spiritual, cultural, implement the SUTA provision. and technical assistance through more and historical relationship with the Federal agencies that were consulted than forty programs aimed at creating land. In certain circumstances, the include: The Department of the Interior, and improving housing, businesses and objectives of economic and as the primary Federal agency with infrastructure throughout rural America. infrastructure development can be at many direct responsibilities to Native Rural Utilities Service (RUS) loan, odds with spiritual, cultural, historical, American and Pacific Islander loan guarantee and grant programs act and environmental values. Additionally, stakeholders; the Department of as a catalyst for economic and there are special legal considerations Veterans Affairs, for its clarification of community development. By financing inherent in financing projects in areas the definition of ‘‘trust land’’; the improvements to rural electric, water where the land itself cannot be used as Environmental Protection Agency, and waste, and telecom and broadband security. because it has information regarding infrastructure, RUS also plays a big role The SUTA initiative identifies the underserved trust areas with in improving other measures of quality need to improve utility service and environmental challenges; the of life in rural America, including seeks to improve the availability of RUS Department of Energy, because it has an public health and safety, environmental programs to reach communities within interest in promoting energy protection, conservation, and cultural trust areas when communities are development and conservation in trust and historic preservation. determined by the Secretary of areas; the Department of Commerce and The 2008 Farm Bill (Pub. L. 110–246, Agriculture (such authority has been the Federal Communications codified at 7 U.S.C. 936f) authorized the delegated to the Administrator of RUS) Commission, because each agency has Substantially Underserved Trust Area to be substantially underserved. The an interest in telecommunications (SUTA) initiative. The SUTA initiative RUS programs that are affected by this service in trust areas; the Department of gives the Secretary of Agriculture provision include: Health and Human Services, because it certain discretionary authorities relating Loans and Guaranteed Loans, and High has a long standing interest in providing to financial assistance terms and Cost Energy Grants; Water and Waste health care services and promoting the

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adoption of health IT in native current service providers to demonstrate application reviewers, the agency has communities; and the Office of that they are actually providing service and will continue to train staff on the Management and Budget. at reasonable prices, (3) refrain from SUTA provision and a wide range of As a result of categorizing and requiring tribal communities to issues affecting tribal participation in analyzing the comments received document significant health risks when RUS program including the sovereign through tribal consultations and filed a significant proportion of the nation status of tribes. RUS has comments, RUS was able to identify community is unserved, and (4) ensure provided service to numerous tribes as certain issues that impact both the that RUS applicant reviewers have some sovereign nations, and understands the underserved communities that seek tribal training on special legal status of legal status and collateral challenges to better access to RUS programs, and the tribes as sovereign nations before develop solutions that provide for federal agencies that have similar yet reviewing these types of applications. program participation and the balance sometimes competing interests in trust The Society also suggested that the to protect taxpayer investments. areas. This regulation is informed by the SUTA Farm Bill provisions ensure that Regarding amendments to the Farm insight gained through consultations tribes are automatically eligible to Bill, under SUTA the RUS may make and comments, and is designed to receive waivers from the agency’s non- legislative recommendations and will complement existing loan, grant, and duplication policies when a tribe take our experience with the new combination loan and grant programs applies to serve their own areas. authorities into account. with the SUTA provisions that RUS Response Waimea Hawaiian Homesteaders authorize the Administrator to apply With regard to trust land status, the Association, Council for Native certain discretionary authorities (2 Hawaiian Advancement, Lalamilo percent interest and extended RUS does not have the authority to adjust the statutory definition of trust Community Association and the repayment terms; waivers of Department of Hawaiian Homelands nonduplication restrictions, matching lands. RUS understands the unique fund requirements, or credit support ‘‘checker board’’ character of trust and The agency received comments from requirements; and highest funding non-trust lands in tribal communities several entities in support of RUS’ priority) for the benefit of eligible The agency, consistent with its current historic consultation efforts to implement the SUTA provisions to communities, and the entities that serve practice, may consider SUTA related communities residing on trust lands them, in underserved Trust areas. applications that include non-Trust territories when the service to or managed by the Department of Discussion of Proposed Rule and through those areas are ‘‘necessary and Hawaiian Home lands. The agency has Comments Received incidental’’ to improving service to a a long history of providing access to In its Proposed Rule, published in the covered Trust area. In other cases, the capital for infrastructure projects to Federal Register October 14, 2011, (76 agency could allocate SUTA benefits to communities throughout the Hawaiian FR 63846), the agency requested SUTA eligible territories. home lands. The current statute only comments regarding implementing the With regard to data requirements applies the SUTA provisions to RUS Substantially Underserved Trust Areas under § 1700.107, the proposed rule programs. The Rural Development provision of the 2008 Farm Bill. The provides that the ‘‘explanation and mission area will likely learn from the agency received nine comments from documentation of the high need for the implementation of SUTA by the RUS the following organization/individuals: benefits of the eligible program * * * and may outline important best • Society of American Indian may’’ include data from the list of practices in its annual report to Government Employees proxies. As such the list is not exclusive Congress. • Lalamilo Community Association and applicants are welcome to provide In comments submitted by the state of • NANA Regional Corporation additional information which could Hawaii’s Department of Hawaiian • Winnebago Tribe of Nebraska demonstrate to the Administrator that Homelands (DHHL), recommendations • WAIMEA Hawaiian Homesteaders the high need for the benefits of the were made requesting the agency to (1) Assoc., Inc. eligible program exists. The agency interpret § 1700.104 to apply feasibility • State of Hawaii, Department of understands the burden; however, the requirements on the specific project Hawaiian Home Lands applicant is in the best position to at rather than the applicant and (2) • Council for Native Hawaiian least make an initial case that current interpret § 1700.107 to permit USDA to Advancement services are inadequate. The agency can provide grant assistance of up to 75 • National Tribal then attempt to document the service percent for communities on Trust lands Telecommunications Association delivery by incumbent providers and in Alaska and Hawaii that have a • Cheyenne River Sioux Tribe the agency will make an independent median family income of 80 percent. These comments have been determination based on the information RUS Response summarized and are addressed below: that is available. With regard to areas unserved by Regarding the feasibility Society of American Indian Government water utilities, the agency certainly recommendation, the agency points to Employees supports the general proposition that its response to the NTTA (below) which The Society expressed support and the absence of clean sources of drinking raised similar recommendations. The appreciation for the hard work water poses serious health risks, but the RUS is bound under Section 306F(c)(4) performed by the RUS staff. The Society specific details of the types of health of the Rural Electrification Act (RE Act) recommended that the agency (1) risks a community faces due to water which states that the Secretary ‘‘shall affirmatively proclaim that all land quality and availability in that specific only make loans or loan guarantees that (including all ‘‘fee land’’) within tribal location both helps the agency meet the are found to be financially feasible’’ reservation boundaries to be qualified as finding of ‘‘substantially underserved’’ under the SUTA amendments to the RE trust lands for the SUTA provision, (2) and target limited funding to areas Act and it does not expand other designate the data requirements under where it is needed the most. discretions. The SUTA discretionary § 1700.107 as burdensome and require As for training on the special legal authorities defined by these provisions that the burden of proof be on the status of tribes as sovereign nations for of the RE Act are summarized earlier.

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The RUS will continue its long standing and 3(j) of the Alaska Native Claims economic development mission which practice of working collaboratively with Settlement Act * * *.’’ The RUS does will be accelerated by this regulation. native communities to find solutions not have the authority to adjust the National Tribal Telecommunications that balance federal loan security statutory definition of trust lands. RUS Association requirements with the unique understands the many unique circumstances facing native infrastructure challenges that rural The National Tribal communities. Therefore, DHHL’s communities (both Native and non- Telecommunications Association recommendations regarding loan Native) face throughout Alaska. The commended USDA for its diligence security and financial feasibility will be agency, consistent with current practice, implementing the SUTA provisions and addressed in the application review however, may consider SUTA related offered specific comment on the process. applications that include non-Trust following topics: With regard to DHHL’s territories when the service to or Disparity Analysis recommendation to authorize grant through those areas are ‘‘necessary and assistance of up to 75 percent for incidental’’ to improving service to a The National Tribal communities on Trust lands in Alaska covered Trust area. In other cases, the Telecommunications Association and Hawaii with a median family agency could allocate SUTA benefits to (NTTA) suggested that the USDA adopt income of 80 percent, the agency points SUTA eligible territories. RUS is also a metric of ‘‘disparity’’ to assess to its response to NTTA regarding the legislatively mandated to report to infrastructure ‘‘underservice’’ and level of grant funds dedicated for a Congress annually on its recommended a comparison of access to particular provision in the statute. The implementation of the SUTA legislation. infrastructure in a Trust Area and an amount of loan and grant funds that can As part of that report, RUS may suggest area of community immediately be dedicated for any single purpose are ‘‘recommendations for any regulatory or contiguous to the Trust Area. generally defined by the authorizing legislative changes that would be RUS Response statutes the agency administers and the appropriate to improve services to In § 1700.108(i) of the proposed rule, annual appropriations laws which substantially underserved trust areas.’’ the agency seeks data from the applicant allocate budget authority (BA) to various In this regard, the NANA suggestions on documenting a lack of service or programs. The SUTA provisions of the coverage of non-Trust territories are inadequate service in the affected RE Act do not grant the agency any new very helpful. authorities to convert BA among and community (§ 1700.108(i)). The relative between grant, direct loan or loan Winnebago Tribe of Nebraska level of service between Trust and non- Trust territories as well as the relative guarantee categories. Where it has such The Winnebago Tribe of Nebraska authority, the agency takes into account cost between those areas are relevant expressed support for the SUTA factors and could be provided by the needs of eligible communities. regulations championing waivers of We also note DHHL’s support for applicants in a SUTA request. A matching requirements and giving the § 1700.108 which covers application disparity analysis may be very helpful highest priority to SUTA projects to requirements that invite SUTA in demonstrating a lack of service. If facilitate expedient construction, applicants to provide a variety of data disparity information is provided in a acquisition or improvements of sets that are already provided to other RUS application, the agency will take infrastructure throughout tribal federal agencies who work closely with such information into consideration communities. The Tribe noted the native communities. With the inclusion when reviewing SUTA requests. RUS ongoing need for access to robust of subsection (H), RUS recognizes the believes that codifying a disparity test broadband service to be deployed in need for native communities to may have the unintended consequence order for economic capacity building to articulate their unique circumstances to of signaling that SUTA authorities occur throughout the Winnebago federal agencies for purposes of program would be less available where a Trust community. Specifically, the Tribe eligibility. Area exists and its surrounding non- highlighted the inadequate level of Trust areas all suffer from a lack of NANA Regional Corporation mobile wireless and broadband coverage service. The NANA Regional Corporation (an in their region. The tribe’s listed ANCSA Regional Corporation in Alaska) priorities in health, education, safety Overlapping or Incumbent Service filed comments expressing concern over and economic capacity building and Provider Areas the current eligibility requirements recommend that tribal governments The NTTA recommends that the contained in the Proposed Rule on merit the right to control the planning, proposed definition of ‘‘underserved’’ in SUTA. NANA argues that the current adoption, utilization and sustainability section 1700.101 be amended to add the requirements may preclude villages in of any and all services that advance phrase, ‘‘notwithstanding that a service its region and across Alaska for SUTA their goals. provider is an RUS borrower.’’ consideration since many Alaska Native RUS Response RUS Response villages are not located on large tracts of trust land. SUTA will give the RUS new tools to A change in the definition of make financial resources more ‘‘underserved’’ is not necessary to RUS Response accessible to entities seeking to bring address the concern of the commenter The definition of trust areas in the modern utility services to tribal areas. and is addressed elsewhere. Whether an Proposed Rule is taken directly from the We share the concerns expressed by the area is determined to be ‘‘underserved’’ current statute (7 U.S.C. 306F (B)(2)) Tribe that unserved native communities does not depend on the relationship of added to the RE Act as part of the Food, can no longer be ignored and that the the incumbent service provider to the Conservation and Energy Act of 2008 availability of adequate broadband RUS. However, among the discretionary (the Farm Bill). This definition includes access remains an important national powers given to the agency under land that ‘‘is owned by a Regional priority. USDA has made the section 306F(c)(2) of the RE Act and Corporation or a Village Corporation, as deployment of advanced services on under section 1700.106 of the proposed such terms are defined in Section 3(g) Tribal lands a central pillar to our rural rule, is the power to waive ‘‘non-

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duplication restrictions.’’ That core The proposed regulation faithfully if it could not demonstrate tribal discretionary authority is not limited to codifies those authorities and the support, at a governmental or areas served by RUS borrowers or non- constraint of financial feasibility is also community level. borrowers. aligned with the RUS programs to Grant Authority assure debt repayment and protect Financial Feasibility Considerations taxpayer funds. The agency does not The NTTA recommends that RUS NTTA makes several comments and have the administrative ability to exceed convert loan funds to grant options for recommended changes regarding that authority. However, the the benefit of ‘‘underserved’’ or financial feasibility, loan security and commenter’s concerns about finding ‘‘unserved’’ trust communities. risk assessments as well as weighing creative solutions to feasibility issues RUS Response financial feasibility against a are well taken. The RUS has a long community’s lack of essential history of working closely with tribal The availability of loan and grant infrastructure. Specifically, NTTA communities to address loan security funds are generally defined by the recommends changing proposed section issues. Since the earliest days of the authorizing statutes the agency 1700.104 from ‘‘the financial feasibility Rural Electrification Administration and administers and the annual of an application will be determined now the RUS, the agency has found appropriations laws which allocate pursuant to normal underwriting ways to reconcile taxpayer’s expectation budget authority (BA) to various practices for a particular eligible of loan security with the sovereign programs. The SUTA provisions of the program’’ to ‘‘pursuant to normal rights of tribal governments. In this RE Act do not grant the agency any new underwriting practices, and such regard, the agency has adapted its authorities to convert BA among and reasonable alternative practices as may mortgage documents and its loan between loan, grant or loan guarantee support financial feasibility contracts to accommodate unique tribal categories. Where it has such authority, determination for a particular eligible needs and circumstances. the agency takes into account the needs program.’’ NTTA also proposes to add The agency intends to continue to of eligible communities. work with tribal organizations to find additional discretionary authorities Flexible Proxies for Infrastructure creative ways to address tribal needs related to collateral, security and risk Underservice assessment and Times Interest Earned while preserving loan security. Ratio (TIER) calculations. Therefore, the final rule will adapt the The NTTA commends the RUS for language proposed by NTTA for providing a list of proxies for RUS Response § 1700.104 to read, ‘‘pursuant to normal determining ‘‘underservice’’ and The Section 306F(c)(4) of the Rural underwriting practices, and such recommends that an additional Electrification Act states that the reasonable alternatives within the provision be added to allow for Secretary ‘‘shall only make loans or loan discretion of RUS that contribute to a additional data to be submitted. financial feasibility determination for a guarantees that are found to be RUS Response financially feasible’’ under the SUTA particular eligible program or project.’’ The proposed rule provides that the amendments to the Rural Electrification Eligible Communities ‘‘explanation and documentation of the Act and it does not expand other NTTA proposes that consistent with high need for the benefits of the eligible discretions. The SUTA discretionary its advocacy before the Federal program * * * may’’ include data from authorities defined by these provisions Communications Commission (FCC), the list of proxies. As such the list is not of the Rural Electrification Act are Tribes be given an option to choose the exclusive and applicants are welcome to summarized here. service provider serving a Trust provide additional information which • AUTHORITY OF SECRETARY.—In community or providing services for its could demonstrate to the Administrator carrying out subsection (b), the own community and that the Trust Area that the high need for the benefits of the Secretary— Æ governments be permitted to engage eligible program exists. May make available from loan or service providers on quality of service loan guarantee programs administered standards. Technical Assistance by the Rural Utilities Service to The NTTA recommends that RUS qualified utilities or applicants RUS Response implement a technical assistance financing with an interest rate as low as All RUS applicants are required to program. On a related matter, the NTTA 2 percent, and with extended repayment demonstrate in their application that also recommends that the RUS terms; they have secured all regulatory recommend to entities seeking to serve Æ May waive nonduplication approvals necessary to construct Trust Areas that they apply under restrictions, matching fund infrastructure and deliver services. The SUTA. requirements, or credit support RUS does not have the power to define requirements from any loan or grant the jurisdiction of tribal governments RUS Response program administered by the Rural and is mindful of their sovereignty. The ‘‘While the RUS has limited formal Utilities Service to facilitate the agency engages with tribes on a technical assistance funding for some of construction, acquisition, or government to government basis. An its programs,’’ the RUS is committed to improvement of infrastructure; applicant must demonstrate that they expanding outreach to tribal Æ May give the highest funding have secured all necessary regulatory communities and applicants on all of its priority to designated projects in approvals on the federal, tribal, state programs. The RUS appreciates the substantially underserved trust areas; and local levels. Furthermore, suggestion and shares the commenter’s and applicants must demonstrate that their concern about technical assistance. That Æ Shall only make loans or loan projects are financially feasible. The is why in the Broadband Initiatives guarantees that are found to be agency notes that an applicant seeking Program of the American Recovery and financially feasible and that provide to finance infrastructure on trust Reinvestment Act of 2009, the RUS eligible program benefits to territory would likely have a difficult dedicated $3,384,202 of budget substantially underserved trust areas. time demonstrating financial feasibility authority to fund 19 technical assistance

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grants. The majority of those awards under SUTA authority on a case-by-case grant funding to be used to address were to Native American communities basis. The decision to consider a waiver requests for additional grants pursuant and organizations. does not waive the over-arching to SUTA, as well as total Agency grant USDA State Rural Development requirement for a finding of need or investment in the project. Offices, RUS General Field feasibility pursuant to program Percentage of Project on SUTA-Defined Representatives, Rural Water Circuit regulations. The final determination of Trust Lands Riders and RUS headquarters staff all grant assistance will be made based on offer assistance to applicants and are the following factors: Grant determinations will factor in integral parts of the rural development 1. Eligibility requirements, including the percentage of the proposed project program delivery. SUTA is an important credit elsewhere certifications pursuant that is located on substantially initiative and RUS and RD staff to 1780.7(d); underserved trust lands as defined members have been trained on the 2. Underwriting and demonstration of under SUTA. need for grant, including the use of the provision and will be trained on the List of Subjects in 7 CFR Part 1700 final rule. prevailing program interest rate and the discretionary as low as 2% interest rates Authority delegations (Government Cheyenne River Sioux Tribe on loans pursuant to SUTA; agencies), Electric power, Freedom of In comments filed pursuant to the 3. Availability of funds, including information, Loan programs— proposed SUTA regulation, the those funds available pursuant to the communications, Loan programs- Cheyenne River Sioux Tribe requests Section 306C grant set-aside for Native energy, Organization and functions that the RUS interpret the statutory American Tribes or other applicable (Government agencies), Rural areas, language for SUTA to allow a waiver of congressional set-asides; and Telecommunications, Broadband loan the statutory limitation on provision of 4. Percentage of the project that is and grant programs, water and waste grant in 7 U.S.C. 1926(a)(2) for Water located on SUTA eligible trust lands. loan and grant program, and the and Waste Disposal grants. Distance Learning and Telemedicine Eligibility Requirements 7 U.S.C. 1926(a)(2)(A)(ii) states that program. ‘‘the amount of any grant made under Eligibility requirements pursuant to 7 For reasons set out in the preamble, the authority of this subparagraph shall CFR 1780, such as credit elsewhere the agency amends chapter XVII of title not exceed 75 per centum of the certifications (§ 1780.7(d)) and 7 of the Code of Federal Regulations by development cost of the project to serve restrictions on the use of grant to reduce amending part 1700 to read as follows: the area which the association equivalent dwelling unit costs to a level determines can be feasibly served by the less than similar systems cost (§ 1780.10 PART 1700—GENERAL INFORMATION facility and to adequately serve the (b)(1)), will apply to applicants seeking reasonably foreseeable growth needs of a waiver of the loan component under ■ 1. The authority citation continues to the area.’’ SUTA. read as follows: The commenter writes that the Finding of Need and Feasibility Authority: 5 U.S.C. 301, 552; 7 U.S.C. 901 authority provided to the Secretary Through Underwriting et seq., 1921 et. seq., 6941 et seq.; 7 CFR 2.7, pursuant to Section 6105(C)(2) of the 2.17 and 2.47. 2008 Farm Bill, allows the Secretary to To ensure that limited grants funds waive the 75 percent grant limitation are awarded to those projects with the §§ 1700.59 through 1700.99 [Reserved] when considering financial assistance greatest need, financial analysis and ■ 2. Add reserved §§ 1700.59 through pursuant to 7 CFR 1780. underwriting will continue to be used to 1700.99 to Subpart C of part 1700. Neither authorizing statute for the determine the need for grant, including ■ 3. Add subpart D, consisting of Water and Waste Disposal loan and grant above the 75 percent level. The §§ 1700.100 to 1700.150, to read as grant program, nor the program analysis will include the applicant’s follows: regulations, specifically state that a ability to incur debt at the prevailing program interest rate and the Subpart D—Substantially Underserved match is required. By way of contrast, Trust Areas in 7 U.S.C. 1926(a)(2)(C)(ii)(II), Congress discretionary as low as 2 percent specifically refers to matching funds interest rates on loans pursuant to Sec. related to Special Evaluation Assistance SUTA. 1700.100 Purpose. 1700.101 Definitions. for Rural Communities and Households Availability of Funds 1700.102 Eligible programs. (SEARCH). In addition, in Section 306C 1700.103 Eligible communities. of the Consolidated Farm and Rural The commenter correctly noted that 1700.104 Financial feasibility. Development Act (ConAct), Congress the Agency has limited grant funding 1700.105 Determining whether land meets specifically authorized the Secretary to available in the regular loan and grant the statutory definition of ‘‘trust land.’’ provide up to 100 percent grants for program and a backlog of requests that 1700.106 Discretionary provisions. water and waste infrastructure to Native exceeds $3 billion. In addition, 1700.107 Considerations relevant to the American Tribes to address health and reductions in program funds will impact exercise of SUTA discretionary sanitary issues. the ability of the Agency to provide provisions. 1700.108 Application requirements. However, the commenter further needed grant funding. To support SUTA efforts to increase tribal participation in 1700.109 RUS review. suggests that ‘‘a restriction of the total 1700.110—1700.149 [Reserved] amount of project cost that would be the program, the Agency will maximize 1700.150 OMB Control Number. funded with grant funds creates a the use of the Section 306C grant matching requirement whether the word program, and other appropriate grant Subpart D—Substantially Underserved ‘‘matching’’ is used. program set-asides to meet the grant Trust Areas needs of projects seeking waivers of the RUS Response 75 percent grant limitation under SUTA. § 1700.100 Purpose. The Agency will consider requests for To ensure that grant funds are available This subpart establishes policies and waiver of some, or all, of the loan to fund as many projects as possible, the procedures for the Rural Utilities portion of a loan-grant combination agency may limit the total amount of Service (RUS) implementation of the

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Substantially Underserved Trust Areas Substantially underserved trust area (b) Title Status Reports issued by the (SUTA) initiative under section 306F of means a community in trust land with U. S. Department of the Interior, Bureau the Rural Electrification Act of 1936, as respect to which the Administrator of Indian Affairs showing that title to amended (7 U.S.C. 906f). The purpose of determines has a high need for the such land is held in trust or is subject this rule is to identify and improve the benefits of an eligible program. to restrictions imposed by the United availability of eligible programs in Trust land means ‘‘trust land’’ as States; communities in substantially defined in section 3765 of title 38, (c) Trust Asset and Accounting underserved trust areas. United States Code as determined by the Management System data, maintained Administrator under 7 CFR 1700.104. by the Department of the Interior, § 1700.101 Definitions. Underserved means an area or ; Administrator means the community lacking an adequate level or (d) Official maps of the Department of Administrator of the Rural Utilities quality of service in an eligible program, Hawaiian Homelands of the State of Service, or designee or successor. including areas of duplication of service Hawaii identifying land that has been Applicant means an entity that is provided by an existing provider where given the status of Hawaiian home lands eligible for an eligible program under such provider has not provided or will under the provisions of section 204 of that program’s eligibility criteria. not provide adequate level or quality of the Hawaiian Homes Commission Act, Borrower means any organization that service. 1920; has an outstanding loan or loan (e) Official records of the U.S. guarantee made by RUS for a program § 1700.102 Eligible programs. Department of the Interior, the State of purpose. SUTA does not apply to all RUS Alaska, or such other documentation of Completed application means an programs. SUTA only applies to eligible ownership as the Administrator may application that includes the elements programs. An eligible program means a determine to be satisfactory, showing specified by the rules for the applicable program administered by RUS and that title is owned by a Regional eligible program in form and substance authorized in paragraph (a) of the RE Corporation or a Village Corporation as satisfactory to RUS. Act, or paragraphs (b)(1), (2), (14), (22), such terms are defined in the Alaska ConAct means the Consolidated Farm or (24) of section 306(a) (7 U.S.C. Native Claims Settlement Act (43 U.S.C. and Rural Development Act, as 1926(a)(1), (2), (14), (22), (24)), or 1601 et seq); amended (7 USC 1921 et seq.). sections 306A, 306C, 306D, or 306E of (f) Evidence that the land is located Credit support means equity, cash the Con Act (7 U.S.C. 1926a, 1926c, on Guam, American Samoa or the requirements, letters of credit, and other 1926d, 1926e). Commonwealth of the Northern Mariana financial commitments provided in § 1700.103 Eligible communities. Islands, and is eligible for use in the support of a loan or loan guarantee. Veteran’s Administration direct loan An eligible community is a Eligible community means a program for veterans purchasing or community as defined by 7 CFR community that: (a) Is located on Trust land; constructing homes on communally- 1700.103. owned land; and Eligible program means a program as (b) May be served by an RUS administered program; and (g) Any other evidence satisfactory to defined by 7 CFR 1700.102. the Administrator to establish that the Financial assistance means a grant, (c) Is determined by the Administrator as having a high need for benefits of an land is ‘‘trust land’’ within the meaning combination loan and grant, loan of 38 U.S.C. 3765(1). guarantee or loan. eligible program. Financial feasibility means the ability § 1700.104 Financial feasibility. § 1700.106 Discretionary provisions. of a project or enterprise to meet Pursuant to normal underwriting (a) To improve the availability of operating expenses, financial practices, and such reasonable eligible programs in eligible performance metrics, such as debt alternatives within the discretion of communities determined to have a high service coverage requirements and RUS that contribute to a financial need for the benefits of an eligible return on investment, and the general feasibility determination for a particular program, the Administrator retains the ability to repay debt and sustain eligible program or project, the discretion, on a case-by-case basis, to continued operations at least through Administrator will only make grants, use any of the following SUTA the life of the RUS loan or loan loans and loan guarantees that RUS authorities individually or in guarantee. finds to be financially feasible and that combination to: Matching fund requirements means provide eligible program benefits to (1) Make available to qualified the applicant’s financial or other substantially underserved trust areas. applicants financing with an interest required contribution to the project for All income and assets available to and rate as low as 2 percent; approved purposes. under the control of the Applicant will (2) Extend repayment terms; (3) Waive (individually or in Nonduplication generally means a be considered as part of the Applicant’s combination) non-duplication restriction on financing projects for financial profile. services in a geographic area where restrictions, matching fund reasonably adequate service already § 1700.105 Determining whether land requirements, and credit support exists as defined by the applicable meets the statutory definition of ‘‘trust requirements from any loan or grant program. land.’’ program administered by RUS; and Project means the activity for which The Administrator will use one or (4) Give the highest funding priority financial assistance has been provided. more of the following resources in to designated projects in substantially RE Act means the Rural Electrification determining whether a particular underserved trust areas. Act of 1936, as amended (7 U.S.C. 901 community is located in Trust land: (b) Requests for waivers of et seq.). (a) Official maps of Federal Indian nonduplication restrictions, matching RUS means the Rural Utilities Reservations based on information fund requirements, and credit support Service, an agency of the United States compiled by the U. S. Department of the requirements, and requests for highest Department of Agriculture, successor to Interior, Bureau of Indian Affairs and funding priority will be reviewed on a the Rural Electrification Administration. made available to the public; case-by-case basis upon written request

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of the applicant filed pursuant to 7 CFR (2) The extent to which the (B) Local area unemployment and not- 1700.108. requirement is shown to be a barrier to employed statistics in the community, (c) Notwithstanding the requirements the applicant’s participation in the as documented by the U.S. Department in paragraph (b) of this section, the program; and of Labor, Bureau of Labor Statistics and/ Administrator reserves the right to (3) The alternatives to waiving the or the U.S. Department of the Interior, evaluate any application for an eligible requirements. Bureau of Indian Affairs; program for use of the discretionary (e) The Administrator may adapt the (C) Supplemental Nutrition provisions of this subpart without a manner of assigning highest funding Assistance Program participation and formal, written request from the priority to align with the selection benefit levels in the community, as applicant. methods used for particular programs or documented by the U.S. Department of funding opportunities. Agriculture, Economic Research § 1700.107 Considerations relevant to the (1) Eligible programs which use exercise of SUTA discretionary provisions. Service; priority point scoring may, in a notice (a) In considering requests to make (D) National School Lunch Program of funds availability or similar notice, participation and benefit levels in the available financing with an interest rate assign extra points for SUTA eligible as low as 2 percent, and extended community, as documented by the U.S. applicants as a means to exercise a Department of Agriculture, Food and repayment terms, the Administrator will discretionary authority under this evaluate the effect of and need for such Nutrition Service; subpart. terms on the finding of financial (E) Temporary Assistance for Needy (2) The Administrator may announce Families Program participation and feasibility. a competitive grant opportunity focused (b) In considering a request for a non- benefit levels in the community, as exclusively or primarily on trust lands duplication waiver, the Administrator documented by the U.S. Department of which incorporates one or more will consider the offerings of all existing Health and Human Services, discretionary authorities under this service providers to determine whether Administration for Children and subpart into the rules or scoring for the or not granting the non-duplication Families; waiver is warranted. A waiver of non- competition. (F) Lifeline Assistance and Link-Up duplication restrictions will not be § 1700.108 Application requirements. America Program participation and given if the Administrator determines as (a) To receive consideration under benefit levels in the community, as a matter of financial feasibility that, this subpart, the applicant must submit documented by the Federal taking into account all existing service to RUS a completed application that Communications Commission and the providers, an applicant or RUS borrower includes all of the information required Universal Service Administrative would not be able to repay a loan or for an application in accordance with Company; successfully implement a grant the regulations relating to the program (G) Examples of economic agreement. Requests for waivers of non- for which financial assistance is being opportunities which have been or may duplication restrictions will be sought. In addition, the applicant must be lost without improved service. reviewed by taking the following factors notify the RUS contact for the (H) Data maintained and supplied by into consideration: applicable program in writing that it Indian tribes or other tribal or (1) The size, extent and demographics seeks consideration under this subpart jurisdictional entities on ‘‘trust land’’ to of the duplicative area; the Department of Interior, the (2) The cost of service from existing and identify the discretionary authorities of this subpart it seeks to Department of Health and Human service providers; Services and the Department of Housing (3) The quality of available service; have applied to its application. The required written request memorandum and Urban Development that illustrates and a high need for the benefits of an (4) The ability of the existing service or letter must include the following eligible program. provider to serve the eligible service items: (4) The impact of the specific area. (1) A description of the applicant, (c) Requests for waivers of matching documenting eligibility. authorities sought under this subpart. fund requirements will be evaluated by (2) A description of the community to (b) The applicant must provide any taking the following factors into be served, documenting eligibility in additional information RUS may consideration: accordance with 7 CFR 1700.103. consider relevant to the application (1) Whether waivers or reductions in (3) An explanation and which is necessary to adequately matching or equity requirements would documentation of the high need for the evaluate the application under this make an otherwise financially infeasible benefits of the eligible program, which subpart. project financially feasible; may include: (c) RUS may also request (2) Whether permitting a matching (i) Data documenting a lack of service modifications or changes, including requirement to be met with sources not (i.e. no service or unserved areas) or changes in the amount of funds otherwise permitted in an affected inadequate service in the affected requested, in any proposal described in program due to regulatory prohibition community; an application submitted under this may be allowed under a separate (ii) Data documenting significant subpart. statutory authority; and health risks due to the fact that a (d) The applicant must submit a (3) Whether the application could be significant proportion of the completed application within the ranked and scored as if the matching community’s residents do not have application window and guidelines for requirements were fully met. access to, or are not served by, adequate, an eligible program. (d) Requests for waivers of credit affordable service. support requirements will be evaluated (iii) Data documenting economic need § 1700.109 RUS review. taking the following factors into in the community, which may include: (a) RUS will review the application to consideration: (A) Per capita income of the residents determine whether the applicant is (1) The cost and availability of credit in the community, as documented by eligible to receive consideration under support relative to the loan security the U.S. Department of Commerce, this subpart and whether the derived from such support; Bureau of Economic Analysis; application is timely, complete, and

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responsive to the requirements set forth reliance on, credit ratings and substitute reliance on, credit ratings and substitute in 7 CFR 1700.107. such standard of creditworthiness as such standard of creditworthiness as (b) If the Administrator determines each agency determines is appropriate. each agency determines is appropriate. that the application is eligible to receive The statute further provides that the The statute further provides that the consideration under this subpart and agencies shall seek to establish, to the agencies shall seek to establish, to the one or more SUTA requests are granted, extent feasible, uniform standards of extent feasible, uniform standards of the applicant will be so notified. creditworthiness, taking into account creditworthiness, taking into account (c) If RUS determines that the the entities the agencies regulate and the the entities the agencies regulate and the application is not eligible to receive purposes for which those entities would purposes for which those entities would further consideration under this rely on such standards. rely on those standards. subpart, RUS will so notify the On November 29, 2011, the OCC On November 29, 2011, the OCC applicant. The applicant may withdraw issued a notice of proposed rulemaking issued a notice of proposed rulemaking its application or request that RUS treat (NPRM), seeking comment on a (NPRM), seeking comment on a its application as an ordinary proposal to revise its regulations proposal to revise its regulations application for review, feasibility pertaining to investment securities, pertaining to investment securities, analysis and service area verification by securities offerings, and foreign bank securities offerings, and foreign bank RUS consistent with the regulations and capital equivalency deposits to replace capital equivalency deposits to replace guidelines normally applicable to the references to credit ratings with references to credit ratings with relevant program. alternative standards of alternative standards of creditworthiness. creditworthiness. The OCC also §§ 1700.110–1700.149 [Reserved] The OCC also proposed to amend its proposed to amend its regulations pertaining to financial subsidiaries of § 1700.150 OMB Control Number. regulations pertaining to financial national banks to better reflect the The reporting and recordkeeping subsidiaries of national banks to better reflect the language of the underlying language of the underlying statute, as requirements contained in this part have amended by section 939(d) of the Dodd- been approved by the Office of statute, as amended by section 939(d) of the Dodd-Frank Act. Frank Act. Management and Budget and have been The proposal generally pertained to assigned OMB control number 0572– Today, the OCC is finalizing those rules as proposed. rules that require national banks and 0147. Federal savings associations to DATES: The final rule amending 12 CFR Dated: May 23, 2012. determine whether a particular security part 5 is effective on July 21, 2012. The or issuance qualifies, or does not Jonathan Adelstein, final rules amending 12 CFR parts 1, 16, Administrator, Rural Utilities Service. qualify, for a specific treatment. For 28, and 160 are effective on January 1, example, except for U.S. government [FR Doc. 2012–14255 Filed 6–12–12; 8:45 am] 2013. securities and certain municipal BILLING CODE P FOR FURTHER INFORMATION CONTACT: securities, the OCC’s investment Kerri Corn, Director for Market Risk, securities regulations generally require a Credit and Market Risk Division, (202) national bank or Federal savings DEPARTMENT OF THE TREASURY 874–4660; Michael Drennan, Senior association to determine whether or not Advisor, Credit and Market Risk a security is ‘‘investment grade’’ in Office of the Comptroller of the Division, (202) 874–4660; Carl Currency order to determine whether purchasing Kaminski, Senior Attorney, or Kevin the security is permissible. Korzeniewski, Attorney, Legislative and The OCC received 11 comments on 12 CFR Parts 1, 5, 16, 28, and 160 Regulatory Activities Division, (202) the proposed rules from banks, bank [Docket ID OCC–2012–0005] 874–5090; or Eugene H. Cantor, trade groups, individuals, and bank Counsel, Securities and Corporate RIN 1557–AD36 service providers. The majority of the Practices Division, (202) 874–5210, commenters generally supported the Alternatives to the Use of External Office of the Comptroller of the proposed rules and stated that they Credit Ratings in the Regulations of Currency, 250 E Street SW., presented a workable alternative to the the OCC Washington, DC 20219. use of credit ratings. A few commenters SUPPLEMENTARY INFORMATION: raised specific issues, which are AGENCY: Office of the Comptroller of the addressed in more detail below. Currency, Treasury (OCC). I. Background After considering the comments and ACTION: Final rule. Section 939A of the Dodd-Frank Wall the issues raised, the OCC has decided Street Reform and Consumer Protection to finalize the rules as proposed. In SUMMARY: Section 939A of the Dodd- Act 1 (the Dodd-Frank Act) contains two order to assist national banks and Frank Wall Street Reform and Consumer directives to Federal agencies including Federal savings associations in making Protection Act (Dodd-Frank Act) the OCC. First, section 939A directs all these ‘‘investment grade’’ contains two directives to Federal Federal agencies to review, no later than determinations, the OCC also is agencies including the OCC. First, one year after enactment, any regulation publishing a final guidance document section 939A directs all Federal that requires the use of an assessment of today in this issue of the Federal agencies to review, no later than one creditworthiness of a security or money Register. year after enactment, any regulation that market instrument and any references to II. Description of the Final Rules requires the use of an assessment of or requirements in such regulations creditworthiness of a security or money regarding credit ratings. Second, the For the purposes of its regulations at market instrument and any references agencies are required to remove 12 CFR parts 1, 16, 28, and 160, the OCC to, or requirements in, such regulations references to, or requirements of is amending the definition of regarding credit ratings. Second, the ‘‘investment grade’’ to remove agencies are required to remove any 1 Public Law 111–203, Section 939A, 124 Stat. references to credit ratings and references to, or requirements of 1376, 1887 (July 21, 2010). nationally recognized statistical rating

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