Servicing Regulation

10555

Rules and Regulations

Federal Register
Vol. 85, No. 37
Tuesday, February 25, 2020

This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.

DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1752
[RUS–19–Telecom–0021]
RIN 0572–AC41

Special Servicing of
Telecommunications Programs Loans
for Financially Distressed Borrowers
Rural Utilities Service, USDA.
ACTION: Final rule; request for
comments.
AGENCY:

The Rural Utilities Service
(RUS), a Rural Development agency of
the United States Department of
Agriculture (USDA), hereinafter referred
to as ‘‘RUS’’ or ‘‘the Agency’’, is issuing
a final rule with request for comments
to outline the general policies for
servicing actions associated with
financially distressed borrowers from
the Telecommunications Infrastructure
Loan Program, Rural Broadband
Program, Distance Learning and
Telemedicine Program, Broadband
Initiatives Program, and Rural eConnectivity Pilot Program. This rule
will ensure recipients comply with any
revised terms in repayment on loans
and ensures serving actions are handled
by RUS consistently across programs.
DATES: Effective date: This final rule is
effective February 25, 2020.
Comment date: Comments are due by
April 27, 2020.
ADDRESSES: Comments may be
submitted on this rule by the following
method:
• Federal eRulemaking Portal: Go to
http://www.regulations.gov and, in the
lower ‘‘Search Regulations and Federal
Actions’’ box, select ‘‘Rural Utilities
Service’’ from the agency drop-down
menu, then click on ‘‘Submit.’’ In the
Docket ID column, select RUS–19–
Telecom-0021 to submit or view public
comments and to view supporting and
related materials available

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SUMMARY:

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electronically. Information on using
Regulations.gov, including instructions
for accessing documents, submitting
comments, and viewing the docket after
the close of the comment period, is
available through the site’s ‘‘User Tips’’
link.
• Other Information: Additional
information about RUS and its programs
is available on the internet at https://
www.usda.gov/topics/rural.
FOR FURTHER INFORMATION CONTACT: For
general inquiries, contact Laurel
Leverrier, Acting Assistant
Administrator Telecommunications
Program, Rural Utilities Service, U.S.
Department of Agriculture (USDA),
email: [email protected],
telephone: (202) 720–3416.
SUPPLEMENTARY INFORMATION:
Executive Order 12866, Regulatory
Impact Analysis
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, a
Regulatory Impact Analysis was
completed, outlining the costs and
benefits of implementing this program
in rural America. The complete analysis
is available in Docket RUS–19–Telecom0021 on Regulations.gov. The following
is a summary discussion of the
Analysis:
RUS is publishing this rulemaking
action to codify a new servicing
regulation which outlines policies for
servicing actions associated with
distressed borrowers from the
Telecommunications Infrastructure
Loan Program, Rural Broadband
Program, Distance Learning and
Telemedicine Program, Broadband
Initiatives Program, and Rural eConnectivity Pilot Program (collectively
referred to as the ‘‘RUS
Telecommunications Programs’’). The
challenges in providing high-quality,
but high-cost, telecommunications
services to sparsely populated and
remote rural areas are well known.
Historically, most RUS
Telecommunications Program borrowers
have operated in a highly regulated
industry with predictable revenue
streams, which served to mitigate the
risks associated with these loans. As
technologies and services evolve, new
competitors and alternative technology
packages are changing the industry. Due

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to these recent changes in the
telecommunications industry and
regulatory environment, this rulemaking
will ensure recipients comply with any
revised terms in repayment on loans
and ensures serving actions are handled
by RUS consistently across the RUS
Telecommunications Programs.
The new regulation is consistent with
the Administration’s efforts to
streamline Government functions,
improve the efficiency and effectiveness
of Government activities, and strive to
be more borrower-friendly. The new
regulation will ensure consistency and
appropriateness of the Agency’s actions
when borrowers default on their debts.
Specifically, it will:
(1) Ensure that RUS, under its own
authority, will quickly address servicing
actions for its RUS Telecommunications
Programs;
(2) Ensure servicing actions are
handled by RUS consistently across all
RUS Telecommunications Programs;
(3) Maximize Risk Management of the
loan portfolio;
(4) Improve the Agency’s capacity to
identify, address, and provide guidance
to distressed Borrowers in the early
stages of distress;
(5) Result in more timely responses by
setting forth clear standards for
identifying and mitigating material
defaults;
(6) Improve the probability of
repayment, and reduce legal costs on its
borrowers and improve overall customer
service;
(7) Ensure that servicing recipients
comply with any revised terms in
repayment on loans.
(8) Provide efficient recovery of debt
which may mitigate negative impacts on
program subsidy rates; and
(9) Reduces duplication of staff effort
and costs of duplicative labor between
federal Agencies.
Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs
designated this rule as not a major rule,
as defined by 5 U.S.C. 804(2).
Executive Order 12988, Civil Justice
Reform
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. The Agency has determined
that this rule meets the applicable
standards provided in section 3 of the

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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.
Executive Order 12372,
Intergovernmental Consultation
This 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)
advising that RUS loans and loan
guarantees were not covered by
Executive Order 12372.
Regulatory Flexibility Act Certification
RUS certifies that this rule will not
have a significant economic impact on
a substantial number of small entities,
as defined in the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.). The RUS
telecommunications program provides
loans to borrowers at interest rates and
on terms that are more favorable than
those generally available from the
private sector. RUS borrowers, as a
result of obtaining federal financing,
receive economic benefits that exceed
any direct economic costs associated
with complying with RUS regulations
and requirements.

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Environmental Impact Statement
This rule has been examined under
Agency environmental regulations at 7
CFR part 1970. The Administrator has
determined that this is not a major
Federal action significantly affecting the
environment. Therefore, in accordance
with the National Environmental Policy
Act of 1969 (42 U.S.C. 4321 et seq.), an
Environmental Impact Statement is not
required.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance (CFDA) number assigned to
the RUS Telecommunications Programs
are as follows: 10.752, Rural eConnectivity Pilot Program; 10.851,
Rural Telephone Loans and Loan
Guarantees; 10.855, Distance Learning
and Telemedicine Loans and Grants;
10.863 Community Connect Grant
Program and 10.886, Rural Broadband
Access Loans and Loan Guarantees. The
Catalog is available on the internet at
https://beta.sam.gov/. The Government
Publishing Office (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

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at 866–512–1800, or access GPO’s
online bookstore at https://
bookstore.gpo.gov.
Unfunded Mandates
This rule contains no Federal
mandates (under the regulatory
provisions of Title II of the Unfunded
Mandates Reform Act of 1995) for state,
local, and tribal governments or the
private sector. Therefore, this rule is not
subject to the requirements of sections
202 and 205 of the Unfunded Mandates
Reform Act of 1995.
E-Government Act Compliance
RUS is committed to the EGovernment Act, which requires
Government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible.
Executive Order 13132, Federalism
The policies contained in this rule do
not have any substantial direct effect on
states, on the relationship between the
national government and the states, or
on the distribution of power and
responsibilities among the various
levels of government. Nor does this rule
impose substantial direct compliance
costs on state and local governments.
Therefore, consultation with the states
is not required.
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
Governments.’’ Executive Order 13175
requires Federal agencies to consult and
coordinate with tribes on a governmentto-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.
Rural Development, a mission area for
which RUS is an agency, has assessed
the impact of this rule on Indian tribes.
Given that no tribal entity has requested
servicing actions in the past, and the
limited impact this rule could have on
such entities should they request such
a servicing action, the agency has
determined that to the best of our
knowledge, this rule does not, have
tribal implications that require tribal

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consultation under E.O. 13175. If a tribe
would like to engage in consultation
with Rural Development on this rule,
please contact Rural Development’s
Native American Coordinator at (720)
544–2911 or [email protected].
Civil Rights Impact Analysis
Rural Development, a mission area for
which RUS is an agency, has reviewed
this rule in accordance with USDA
Regulation 4300–4, Civil Rights Impact
Analysis,’’ to identify any major civil
rights impacts the rule might have on
program participants on the basis of age,
race, color, national origin, sex, or
disability. After review and analysis of
the 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 neither
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.
Paperwork Reduction Act and
Recordkeeping Requirements
The Information Collection and
Recordkeeping requirements contained
in this rule have been approved by an
emergency clearance under OMB
Control Number 0572–0153. In
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
chapter 35), RUS invites comments on
this information collection for which
the Agency intends to request approval
from the Office of Management and
Budget (OMB). RUS invites comments
on any aspect of this collection of
information including suggestions for
reducing the burden. Comments may be
submitted regarding this information
collection by the following method:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov and, in the
lower ‘‘Search Regulations and Federal
Actions’’ box, select ‘‘Rural Utilities
Service’’ from the agency drop-down
menu, then click on ‘‘Submit.’’ In the
Docket ID column, select RUS–19–
Telecom-0021 to submit or view public
comments and to view supporting and
related materials available
electronically. Information on using
Regulations.gov, including instructions
for accessing documents, submitting
comments, and viewing the docket after
the close of the comment period, is
available through the site’s ‘‘User Tips’’
link. Comments on this information
collection must be received by April 27,
2020.

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Federal Register / Vol. 85, No. 37 / Tuesday, February 25, 2020 / Rules and Regulations
Comments are invited on (a) the
accuracy of the agency’s estimate of
burden including the validity of the
methodology and assumption used; (b)
ways to enhance the quality, utility, and
clarity of the information to be
collected; and (c) ways to minimize the
burden of the collection of information
on those who are to respond, including
using appropriate automated, electronic,
mechanical, or other technological
collection techniques on other forms
and information technology.
Title: Special Servicing of
Telecommunications Programs Loans
for Financially Distressed Borrowers.
OMB Control Number: 0572–0153.
Type of Request: New.
Abstract: The RUS
Telecommunications Programs provides
loan funding to build and expand
broadband service into unserved and
underserved rural communities, along
with very limited funding to support the
costs to acquire equipment to provide
distance learning and telemedicine
service. While each program has its own
regulation, which outlines general
program policies and requirements,
types of assistance, and the
requirements for advance of funds, there
is no regulation currently in place to
address how RUS will handle servicing
actions associated with distressed loans.
The information collected from
borrowers that need servicing
assistance, as required by this new
servicing regulation, will give RUS
greater authority to address servicing
actions and will streamline and
expedite servicing actions, improve the
government’s recovery on such loans,
and improve overall customer service.
Examples of information that will be
collected by the Agency from the
borrower include, but are not limited to,
a request and explanation for servicing
action, various financial, subscriber and
organizational information, as well as
other documents and information that
may be relevant as determined by RUS.
Estimate of Burden: Public reporting
burden for this collection of information
is estimated to average 5 hours per
responses.
Estimated Number of Respondents: 5.
Estimated Number of Total Annual
Responses per Respondents: 137.
Estimated Total Annual Burden on
Respondents: 694.50 hours.
Copies of this information collection
can be obtained from MaryPat Daskal,
Regulatory Division Team 2, Rural
Development Innovation Center, U.S.
Department of Agriculture, 1400
Independence Ave. SW, Stop 1522,
Washington, DC 20250. Phone: 202–
720–7853.

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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.
Background
The Agency improves the quality of
life in rural America by providing
investment capital for deployment of
rural telecommunications infrastructure.
To achieve the goal of increasing
economic opportunity in rural America,
the Agency finances infrastructure that
enables access to a seamless, nationwide
telecommunications network. With
access to the same advanced
telecommunications networks as its
urban counterparts—especially those
designed to accommodate distance
learning, telework, and telemedicine
—rural America will eventually see
improving educational opportunities,
health care, economies, safety and
security, and ultimately higher
employment. The Telecommunications
Infrastructure Loan Program, Rural
Broadband Program, Distance Learning
and Telemedicine Program, Broadband
Initiatives Program and ReConnect
Program (hereinafter collectively
referred to as the ‘‘RUS
Telecommunications Programs’’)
provide loan funding to build and
expand broadband and
telecommunications services in rural
communities.
The RUS Telecommunications
Programs currently take servicing
actions on approximately 10–12 projects
each year. While each program has its
own regulation, which outlines general
program policies and requirements,
types of assistance, and the
requirements for advance of funds, there
is no regulation currently in place to
address how RUS will handle special
servicing actions associated with
financially distressed loans. At present,
when a Borrower is financially
distressed, the Agency must rely on the
authority of the Department of Justice
(DOJ) for many of these actions. This
servicing regulation will be located in 7
CFR part 1752 and will give RUS greater
authority to address servicing actions
directly, without the additional
transactions costs associated with
coordinating with DOJ. RUS will still
work closely with DOJ on cases
involving foreclosure or bankruptcy, but
this rule will enable RUS to resolve
many servicing actions without having
to involve DOJ. This will streamline and
expedite servicing actions, improve the
Government’s recovery on such loans,
and improve overall customer service.
Since most RUS Telecommunications

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Program borrowers are utilities, faster
resolution of servicing actions will
ensure that rural Americans continue to
receive service.
Regulation Objective
This rule outlines the general policies
and procedures for servicing actions
associated with the RUS
Telecommunications Programs
Borrowers in financial distress. The
agency views this rule as narrowly
applying to loan servicing procedures
within RUS. It will ensure recipients
comply with the established objectives
and requirements for loans, repaying
loans on schedule or within the revised
terms as agreed to by the Agency, and
act in accordance with any necessary
agreements. The rule will also ensure
that servicing actions are handled by the
Agency in a consistent approach across
all RUS Telecommunications Programs,
as well as protect the financial interest
of the Agency. To implement these
changes, RUS is publishing this action
as a final rule with request for
comments.
To help inform RUS on the effects of
the new regulation, RUS is taking this
opportunity to request public comment
on the regulation.
• How can RUS improve the review
of servicing requests, including the
documentation needed to request a
servicing action, to avoid placing
unnecessary burden or duplicative
requirements on borrowers?
• Are there other servicing options
that the agency has not addressed in the
rulemaking?
• Given the amount of debt and
complexity of borrower’s other debt
arrangements, what is an appropriate
amount of time to be given to respond
to agency requests, understanding that
the Government has a responsibility to
address the default timely?
Conclusion
RUS already acts to address servicing
needs as they arise but, in many cases,
must rely on DOJ since the
Telecommunications Programs lack
their own servicing regulations. RUS
believes that a stand-alone regulation
will minimize the programs’ reliance on
DOJ and the regulatory change will give
RUS the authority to quickly address
servicing actions without having to
involve DOJ, which will simplify the
process and reduce the burden and costs
on Borrowers. This regulation will
maximize the ability of the Borrowers to
use and understand the available
servicing tools under the applicable
program. It will also ensure Borrowers
comply with the established objectives
and requirements for loans, repay loans

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on schedule, and act in accordance with
any necessary agreements. Additionally,
this regulation will ensure serving
actions are handled consistently, and
protect the financial interest of the
Agency.
List of Subjects in 7 CFR Part 1752
Broadband, Community development,
Grant programs-education, Grant
programs-health, Loan programs—
communications, Reporting and
recordkeeping requirements, Rural
areas, Telephone, Telecommunications.
Accordingly, for reasons set forth in
the preamble, chapter XVII, title 7, the
Code of Federal Regulations is amended
by adding part 1752 to read as follows:
PART 1752—SERVICING OF
TELECOMMUNICATIONS PROGRAMS
Sec.
1752.1 Purpose.
1752.2 Objectives.
1752.3 Definitions.
1752.4 Availability of forms, bulletins, and
procedures.
1752.5 Monetary default by Borrower.
1752.6 Request for special servicing action.
1752.7 Civil rights and requirements.
1752.8—1752.10 [Reserved]
1752.11 Consent to additional, unsecured
debt.
1752.12 Parity lien.
1752.13 Reamortization of or rescheduling
of the debt payments.
1752.14 Deferment of principal and/or
interest payments.
1752.15 Interest rate adjustments.
1752.16 Transfer of collateral and
assumption of debt.
1752.17 Sale or exchange of loan collateral.
1752.18 Sale of the note.
1752.19 Debt settlement.
1752.20—1752.24 [Reserved]
1752.25 Special terms.
1752.26 No rights to special servicing
actions.
1752.27 Confidentiality of borrower
information.
1752.28 Interest accrual.
1752.29 Communications laws.
1752.30 Information collection and
reporting requirements.
1752.31 Authorized signatories.
Authority: 7 U.S.C. 1981(b)(4), 7 U.S.C. 901
et seq. and 7 U.S.C. 950aaa et seq.

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§ 1752.1

Purpose.

This part prescribes the policies and
procedures for loan and grant servicing
for financial assistance made under the
Rural Utilities Service (RUS)
Telecommunications Infrastructure
Loan Program, Rural Broadband
Program, Distance Learning and
Telemedicine Program, Broadband
Initiatives Program, and the Rural eConnectivity Pilot Program (in this part
collectively referred to as the ‘‘RUS
Telecommunications Programs’’).

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§ 1752.2

Objectives.

The purpose of loan and grant
servicing functions is to assist recipients
to meet the objectives of loans and
grants, repay loans on schedule, comply
with agreements and protect RUS’
financial interests. The provisions of
this part will ensure recipients comply
with any revised terms in repayment on
loans and ensures serving actions are
handled consistently by the Agency.
§ 1752.3

Definitions.

The terms and conditions provided in
this section are applicable to this part
only. All financial terms not defined in
this section shall have the commonlyaccepted meaning under Generally
Accepted Accounting Principles.
Acceleration. A written notice
informing the Borrower that the total
unpaid principal and interest is due and
payable immediately.
Administrator. Administrator of the
Rural Utilities Service.
Agency. The Rural Utilities Service,
an agency of the United States
Department of Agriculture’s Rural
Development mission area.
Assumption of debt. Agreement by
one party to legally bind itself to repay
the debt of the RUS borrower.
Borrower. Recipient of loan funding
under a RUS Telecommunications
Program.
Broadband system. The
telecommunications or broadband
network financed with RUS loan and/or
grant funding or maintained by the
Borrower and contained as part of the
collateral to the loan.
Cancellation. Final discharge of debt
with a release of liability.
Charge-off. Write-off of a debt and
termination of servicing activity without
release of liability. A charge-off is a
decision by the Agency to remove debt
from Agency receivables, however,
future payments may be received.
Collateral. Means the assets,
equipment and/or revenues pledged as
security for the loan as defined in the
loan documents.
Disposition of facility. Relinquishing
control of a facility to another entity.
Loan Documents. All associated loan
agreements, loan and security
agreements, loan/grant agreements,
mortgages, and promissory notes, as
applicable.
Liquidation. Satisfaction of a debt
through the sale of a Borrower’s assets
and cancellation of liabilities.
Parity lien. A lien having an equal
lien position to another lender’s lien on
a Borrower’s asset.
Rural Utilities Service (RUS). An
agency of the United States Department
of Agriculture’s Rural Development
mission area.

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Settlement. Compromise, adjustment,
cancellation, or charge-off of a debt
owed to the Agency. The term
‘‘settlement’’ is used to refer to any of
these actions, whether individually or
collectively.
Unliquidated obligations. Obligated
loan funds that have not been advanced.
Voluntary conveyance. A method by
which title to security is voluntarily
transferred to the Federal Government.
§ 1752.4 Availability of forms, bulletins,
and procedures.

Forms, bulletins, and procedures
referenced in this part are available
online at https://www.rd.usda.gov/
publications/regulations-guidelines.
§ 1752.5

Monetary default by Borrower.

A defaulting Borrower’s primary
responsibility is to expeditiously bring
the delinquent account current. If a
monetary default exceeds 60 days, RUS
will attempt to discuss the situation
with the Borrower and make the
Borrower aware of options that may be
available. In considering options, the
prospects for providing a permanent
cure without adversely affecting the risk
to the Agency is the paramount
objective. RUS will also work with
entities that are not in monetary default
but whose financial position is such
that, without RUS action, a monetary
default is imminent within the next 24
months, as evidenced by a financial
forecast provided by the Borrower. RUS
receives quarterly financial reports and
annual audits from borrowers and
actively monitors the borrower’s Times
Interest Earned Ratio (TIER), Current
Ration, Debt Service Coverage Ratio,
and Net Worth.
§ 1752.6
action.

Request for special servicing

(a) Special servicing actions include,
but are not limited to, one or more of
the following:
(1) Consent to additional, unsecured
debt;
(2) Parity lien;
(3) Reamortization or rescheduling of
debt payments;
(4) Deferment of principal and/or
interest;
(5) Interest rate adjustment;
(6) Transfer of collateral and
assumption of debt;
(7) Sale or exchange of loan collateral;
(8) Sale of the note; and
(9) Debt settlement.
(b) In order for the Agency to consider
one or more of the curative actions cited
in paragraph (a) of this section, the
Borrower must submit a written request
to RUS.
(1) The written request must contain
the following items:

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(i) A detailed explanation of the
request and why it is needed.
(ii) Most recent audited financial
statements for the Borrower.
(iii) Borrower’s Pro Forma 5-year
financial forecast, which includes an
Income Statement, Balance Sheet, and
Statement of Cash Flows, 2 years of
historical data, current year data and a
5-year forecast, with detailed supporting
assumptions. Additionally, in order to
request assistance under this paragraph
(b)(1)(iii), the Borrower must make a
showing that the account is delinquent
and cannot be brought current within
one year, or that the Borrower will
become delinquent within 24 months,
as demonstrated in the Pro Forma.
(iv) Existing and projected subscriber
numbers and service tiers, along with
pricing for each tier. Additionally, for
companies receiving support from the
Federal Communications Commission, a
detailed forecast of the support revenue,
certified by a cost consultant, must be
included.
(v) Current organizational chart for
the Borrower, related entities, and
affiliated companies, as well as
information relating to ownership
interest in the Borrower and its related
entities.
(vi) A complete list of all collateral
and steps the Borrower is taking to
preserve the collateral.
(2) The Agency may request the
additional documents in paragraphs
(b)(2)(i) through (iv) of this section after
reviewing the Borrower’s servicing
request:
(i) An appraisal in order to determine
the adequacy of loan security or
repayment ability;
(ii) An itemized list of estimated
liquidation expenses expected to be
incurred along with justification for
each expense;
(iii) A legal opinion regarding RUS’
interests in the impacted collateral and
supporting evidence, in the form of
Uniform Commercial Code Statements
and filed Mortgages, that RUS maintains
a first lien position on all assets of the
Borrower, or such collateral as
mandated by the Loan Documents; and
(iv) Such other documents that may
be relevant in individual cases, as
determined by RUS.
(3) When submitting a request for a
servicing action, the distressed
Borrower must consent to the following
during the request and for the duration
of the servicing action:
(i) On-site visit. A Management
Analysis Profile (MAP) visit of the
Borrower’s entire operation;
(ii) RUS priority payment. Borrowers
must agree that no other creditors will
be paid without RUS consent, if RUS is

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not receiving full principal and interest
payments;
(iii) Additional reporting and
monitoring. Throughout the term of the
servicing action(s), RUS will require
increased frequency and/or additional
details to the reporting and monitoring
required under the terms of the Loan
Documents; and
(iv) Additional controls and
limitations. RUS may require additional
controls and limitations such as
segregation of accounts, RUS review of
expenditures, etc.
(c) False information provided by a
Borrower, or by entities acting on behalf
of the Borrower, will give rise to the
immediate termination of any servicing
action(s).
§ 1752.7

Civil rights and requirements.

(a) Equal opportunity and
nondiscrimination. The Agency will
ensure that equal opportunity and
nondiscriminatory requirements are met
in accordance with the Equal Credit
Opportunity Act and 7 CFR part 15. In
accordance with Federal civil rights law
and U.S. Department of Agriculture
(USDA) civil rights regulations and
policies, the USDA, its agencies, offices,
and employees, and institutions
participating in or administering USDA
programs are prohibited from
discriminating based on race, color,
national origin, religion, sex, gender
identity (including gender expression),
sexual orientation, disability, age,
marital status, family/parental status,
income derived from a public assistance
program, political beliefs, or reprisal or
retaliation for prior civil rights activity,
in any program or activity conducted or
funded by USDA (not all bases apply to
all programs).
(b) Civil rights compliance. Recipients
of Federal assistance under this part
must comply with the Americans with
Disabilities Act of 1990, Title VI of the
Civil Rights Act of 1964, and Section
504 of the Rehabilitation Act of 1973.
Prior to determining eligibility of any
servicing action under this part, the
Agency will determine that the
Borrower is in compliance with all civil
rights requirements of the latest Civil
Rights Compliance Review conducted
by the Agency.
(c) Discrimination complaints.
Persons believing they have been
subjected to discrimination prohibited
by this section may file a complaint
personally, or by an authorized
representative with USDA, Director,
Office of Adjudication, 1400
Independence Avenue SW, Washington,
DC 20250. A complaint must be filed no
later than 180 days from the date of the
alleged discrimination, unless the time

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for filing is extended by the designated
officials of USDA or the Agency.
§§ 1752.8—1752.10

[Reserved]

§ 1752.11 Consent to additional,
unsecured debt.

(a) An additional, unsecured loan
from another lender to the Borrower
may be approved subject to the
conditions set forth in this section. In
order to request assistance under this
section, the Borrower must make a
showing that the additional debt will
cure any existing or projected
delinquency. Additionally, the
following requirements must be met, as
determined by RUS:
(1) The additional debt will not
disadvantage RUS’s standing or lien on
any of the collateral already pledged to
RUS;
(2) The additional debt will not
adversely impact the continued
financial viability of the Borrower or the
Borrower’s ability to carry out the
purposes of the RUS loan;
(3) The debt is needed to resolve
short-term, negative cashflow problems;
and
(4) The Borrower is in good standing
with the Agency or will become so with
the additional debt.
(b) In the case where all assets of the
Borrower are not secured by the
Government’s debt, the Borrower may
request additional debt that is secured
by collateral that is not subject to the
Government’s security interest.
§ 1752.12

Parity lien.

A Borrower’s request for parity may
be approved subject to the conditions
set forth in this section. In order to
request assistance under this section,
the Borrower must make a showing that
the amount of new debt is at least equal
to the amount of the collateral being
added and will cure any existing or
projected delinquency. The following
factors will be considered in assessing
whether the request is in the
Government’s best interest:
(a) The value of the added assets
compared with the amount of new debt
to be secured;
(b) The value of the assets already
pledged under the Loan Documents, and
any effects of the proposed transaction
on the value of those assets;
(c) The ratio of the total outstanding
debt secured under the Loan Documents
to the value of all assets pledged as
security under the Loan Documents;
(d) The Borrower’s ability to repay its
debt owed to the Government;
(e) The overall financial viability of
the Borrower; and

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(f) That the Borrower is in good
standing with the Agency or will
become so with the parity lien; and
(g) Such other conditions as may be
imposed by the Agency on a case-bycase basis, as determined by RUS.
§ 1752.13 Reamortization of or
rescheduling of the debt payments.

A reamortization or rescheduling of
debt payments may be approved subject
to the conditions set forth in this
section. In order to request a
reamortization or rescheduling of debt
payments, the Borrower must make a
showing that the Borrower does not
have access to other sources of capital
or alternatives for resolving the
delinquency, and that the
reamortization or rescheduling of debt
payment will cure any existing or
projected delinquency. Reamortizations
or rescheduling of debt will be limited
to 10 years beyond the original maturity
date. Additionally, the following
requirements must be met, as
determined by RUS:
(a) The Borrower has cooperated with
RUS in exploring alternative servicing
options and has acted in good faith with
regard to eliminating the delinquency
and complying with its loan agreements
and Agency regulations;
(b) Any management deficiencies
identified by RUS have been corrected
or the Borrower has submitted a plan
acceptable to RUS to correct any
deficiencies;
(c) The Borrower has presented a
budget which clearly indicates that it is
able to meet the proposed payment
schedule and the reamortization or
rescheduling of debt payments will
ensure the continued financial viability
of the Borrower;
(d) The Agency will consider the
useful life of the facilities along with the
level of debt service payments that the
Borrower can contribute when
determining the appropriate term to
place on any reamortized loan; and
(e) Such other conditions as may be
imposed by the Agency on a case-bycase basis, as determined by RUS.

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§ 1752.14 Deferment of principal and/or
interest payments.

A deferment of principal and/or
interest payments which will continue
the original purpose of the loan may be
approved subject to the conditions set
forth in this section.
(a) Principal-only deferrals. In order
to request a principal deferral, the
Borrower must make a showing that at
the end of the deferment period the
Borrower’s financial position has
improved and the Borrower is able to
make full principal and interest

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payments, curing any delinquency or
projected delinquency. Deferments of
principal will be limited to no more
than 36 months. Additionally, the
following requirements must be met, as
determined by RUS:
(1) Any management deficiencies
identified by RUS have been corrected
or the Borrower has submitted a plan
acceptable to RUS to correct any
deficiencies;
(2) The Borrower has presented a
budget which clearly indicates that it is
able to meet the new proposed payment
schedule and after the end of the
deferral period is able to resume making
full principal and interest payments
while maintaining a positive cashflow
position;
(3) Unless authorized by prior RUS
written consent, the Borrower will only
use funds otherwise due and payable
under the RUS Note for the benefit of
the broadband system. Such
expenditures include, but are not
limited to, costs to complete any
necessary construction of the Project,
costs to connect additional subscribers,
marketing and sales costs, and other
such costs that are necessary to
maximize the value of the broadband
system; and
(4) The Borrower will comply with
such other conditions as may be
imposed by the Agency on a case-bycases basis, as determined by RUS.
(b) Principal and interest deferrals. A
principal and interest deferral shall only
be approved when the Borrower has
demonstrated that it is the only option
for the Agency to avoid foreclosure and
is in the best interest of the Government
to avoid a substantial loss to the
Government. Additionally, principal
and interest deferrals may be approved
if the Borrower and RUS have agreed to
a public sale of the broadband system
and such a deferral is needed to provide
time to complete the sale of the
broadband system. Principal and
interest deferrals will be limited to no
more than 24 months, unless extended
by the Agency for good cause and full
cooperation of the Borrower.
Additionally, the following
requirements must be met, as
determined by RUS:
(1) The Borrower has cooperated with
RUS in exploring alternative servicing
options and has acted in good faith with
regard to eliminating the delinquency
and complying with its Loan Documents
and Agency regulations;
(2) Any management deficiencies
identified by RUS have been corrected
or the Borrower has submitted a plan
acceptable to RUS to correct any
deficiencies; and

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(3) Unless authorized by prior RUS
written consent, the Borrower will only
use funds otherwise due and payable
under the RUS Note for the benefit of
the broadband system. Such
expenditures include, but are not
limited to, costs to execute a sale of the
broadband system, costs to complete
any necessary construction of the
Project, costs to connect additional
subscribers, marketing and sales costs,
and other such costs that are necessary
to maximize the value of the broadband
system for an eventual sale;
(4) In cases when the Borrower and
RUS have agreed to a public sale of the
broadband system, the Borrower agrees
that within 30 days of the execution of
the deferral agreement, the Borrower
will develop a process and timeline for
the sale of the broadband system, in
form and substance satisfactory to RUS,
and will continually execute on those
plans in order to effectuate a public sale
of the broadband system; and
(5) The Borrower will comply with
such other conditions as may be
imposed by the Agency on a case-bycases basis, as determined by RUS.
§ 1752.15

Interest rate adjustments.

Interest rate reductions may be
approved subject to the conditions set
forth in this section. In order to request
an interest rate reduction, the Borrower
must make a showing that the Borrower
does not have access to other sources of
capital or alternatives to resolve the
delinquency, and the interest rate
adjustment will cure any existing or
projected delinquency. Additionally,
the following requirements must be met,
as determined by RUS:
(a) The Borrower has cooperated with
RUS in exploring alternative servicing
options and has acted in good faith with
regard to eliminating the delinquency
and complying with its loan agreements
and Agency regulations;
(b) Any management deficiencies
identified by RUS have been corrected
or the Borrower has submitted a plan
acceptable to RUS to correct any
deficiencies;
(c) The Borrower has presented a
budget which clearly indicates that it is
able to meet the proposed payment
schedule and the interest rate reduction
will improve the financial viability of
the Borrower;
(d) The Borrower has agreed to not
maintain cash or cash reserves beyond
what is reasonable at the time of interest
rate adjustment to meet debt service,
operating, and reserve requirements;
and
(e) The Borrower will comply with
such other conditions as may be

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imposed by the Agency on a case-bycases basis, as determined by RUS.
§ 1752.16 Transfer of collateral and
assumption of debt.

A transfer of collateral and
assumption of debt may be approved
subject to the conditions set forth in this
section. In order to request assistance
under this section, the Borrower must
make a showing that the transfer of
collateral and assumption of debt will
improve the likelihood that the
government will be repaid and
maximize the Agency’s recovery on
such loans. Such actions will be subject
to the following requirements:
(a) The transfer will not be
disadvantageous to the Government, as
determined by RUS;
(b) The Agency has concurred to
plans for disposition of funds in any
reserve account, including project
construction bank accounts;
(c) The transferee will assume all of
the Borrower’s responsibilities regarding
the loan(s) and will accept the original
loan conditions, as well as any others
that may be imposed by the Agency;
(d) There must be no lien, judgement,
or similar claims of other parties against
the loan collateral being transferred, and
once transferred, such collateral may
not be subject to the lien, judgement, or
similar claims of other parties of the
transferee;
(e) Title to all assets must be
conveyed to the transferee; and
(f) The Borrower will comply with
such other conditions as may be
imposed by the Agency on a case-bycase basis, as determined by RUS.

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§ 1752.17 Sale or exchange of loan
collateral.

A cash sale of all or a portion of a
Borrower’s assets or an exchange of
security property for Borrowers in a
distressed situation may be approved
subject to the conditions set forth in this
section. In order to request assistance
under this section, the Borrower must
make a showing that the sale or
exchange of collateral is in the best
interest of the Government to avoid a
substantial loss to the Government.
Additionally, the following
requirements must be met, as
determined by RUS:
(a) If a sale of all of the assets, that the
consideration is for the full amount of
the debt or the present fair market value
as determined by an independent
appraiser that has been approved by
RUS, and which addresses any
conditions of the appraisal as may be
imposed by RUS; and
(b) If the sale is for a portion of the
assets, that the remaining property is

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adequate security for the loan and that
the transaction will not adversely affect
the Agency’s security position; and
provided that any proceeds remaining
after paying reasonable and necessary
selling expenses, as approved by the
Agency in advance, are to be used for
the following purposes:
(1) Repayment of the RUS debt, and
other non-RUS debt if secured by a
parity lien with the Agency; and/or
(2) Improvement of the broadband
network or other facilities of the
Borrower, including customer premise
equipment and other equipment needed
to upgrade the broadband network, if
necessary to improve the Borrower’s
ability to repay the loan; and
(c) Any grant assets in the sale of
collateral that were financed with
Agency grants must follow the
disposition rules as stated in the Loan
Documents or Grant/Loan Documents.
§ 1752.18

Sale of the note.

In the event of one or more incidents
of default by the Borrower that cannot
or will not be cured within a reasonable
period of time, the Agency may sell the
note. A decision to sell the note may be
made when the Agency determines that
the monetary default cannot be cured
through the other actions as outlined in
this part, or it has been determined that
it is in the best interest of the Agency.
The decision to sell the note should be
made as soon as possible when one or
more of the following exist:
(a) A loan is 90 days behind on any
scheduled payment and the Agency and
Borrower have not been able to cure the
delinquency through actions such as
those contained in this part;
(b) It is determined that delaying sale
of the note will jeopardize full recovery
on the loan; or
(c) The Borrower is uncooperative in
resolving the delinquency or the Agency
has reason to believe the Borrower is not
acting in good faith, and it would
improve the position of the Agency to
sell the note immediately.
§ 1752.19

Debt settlement.

Debts will not be settled directly by
the Agency if:
(a) Referral to the Office of Inspector
General and/or to Office of General
Counsel is contemplated or pending
because of suspected criminal violation;
(b) Civil action to protect the interest
of the Government is contemplated or
pending;
(c) An investigation for suspected
fiscal irregularity is contemplated or
pending;
(d) The Borrower is uncooperative in
resolving the delinquency or the Agency
has reason to believe the Borrower is not
acting in good faith; or

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(e) The debt has been referred to the
Department of Justice, such as in
bankruptcy proceedings.
§§ 1752.20–1752.24
§ 1752.25

[Reserved]

Special terms.

If the Administrator determines the
servicing actions in this part would not
protect the Government’s interest due to
unique circumstances of the debtor, the
Agency reserves the right to negotiate
special terms to maximize the
Government’s recovery on the debt.
§ 1752.26
actions.

No rights to special servicing

Nothing in this part should be
assumed guaranteed as a right to the
Borrower for any of the special servicing
actions noted in this part.
§ 1752.27 Confidentiality of borrower
information.

Borrowers are encouraged to identify
and label any confidential and
proprietary information contained in
their applications. The Agency will
protect confidential and proprietary
information from public disclosure to
the fullest extent authorized by
applicable law, including the Freedom
of Information Act, as amended (5
U.S.C. 552), the Trade Secrets Act, as
amended (18 U.S.C. 1905), the
Economic Espionage Act of 1996 (18
U.S.C. 1831 et seq.), and
Communications Assistance for Law
Enforcement Act (CALEA) (47 U.S.C.
1001 et seq.).
§ 1752.28

Interest accrual.

(a) The Agency may determine to stop
accruing interest if the account has
remained delinquent for a period of 18
months or more, and the Agency has
determined, in its sole discretion, that it
will not recover the full outstanding
principal balance on the loan.
(b) Notwithstanding paragraph (a) of
this section, the Administrator may
waive the accrual of interest on any
outstanding delinquent debt, if in the
sole determination of the Administrator,
such waiver facilitates and maximizes
the Government’s recovery of the debt,
such as under a voluntary foreclosure by
the Borrower.
§ 1752.29

Communications laws.

Borrowers must comply with all
applicable Federal and state
communications laws and regulations,
including, for example, the
Communications Act of 1934, as
amended (47 U.S.C. 151 et seq.), the
Telecommunications Act of 1996, as
amended (Pub. L. 104–104, 110 Stat. 56
(1996), and CALEA. For further
information see http://www.fcc.gov.

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§ 1752.30 Information collection and
reporting requirements.

Copies of all forms and instructions
referenced in this part may be obtained
from RUS. Data furnished by Borrowers
will be used to determine eligibility for
certain servicing actions. Furnishing the
data is voluntary; however, the failure to
provide data could result in a servicing
action being denied or the Agency
taking adverse action against the
Borrower to collect funds. The
collection of information is vital to RUS
to ensure compliance with the
provisions of this part. The information
collection requirements contained in
this part have been approved by the
Office of Management and Budget
(OMB) under OMB Control Number
0572–0153.
§ 1752.31

Authorized signatories.

Only the RUS Administrator can bind
the Government to the expenditure of
funds. Notwithstanding anything
contained in this part, however, any
settlement resulting in the reduction of
$500,000 or more in payment to the
Government, inclusive of attorney’s
fees, shall be approved by the Under
Secretary for Rural Development, or
higher.
Chad Rupe,
Administrator, Rural Utilities Service.
[FR Doc. 2020–01891 Filed 2–24–20; 8:45 am]
BILLING CODE P

DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection
Service
9 CFR Parts 160, 161, and 162
[Docket No. APHIS–2017–0065]
RIN 0579–AE40

National Veterinary Accreditation
Program
Animal and Plant Health
Inspection Service, USDA.
ACTION: Final rule.
AGENCY:

We are amending the
regulations governing the National
Veterinary Accreditation Program by
clarifying the veterinary programs for
which accredited veterinarians are
authorized to perform duties under the
Animal Health Protection Act. We are
also adding and revising certain
definitions and terms used in the
regulations. These changes will update
the program regulations.
DATES: Effective March 26, 2020.
FOR FURTHER INFORMATION CONTACT: Dr.
Todd Behre, Coordinator, National

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SUMMARY:

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Veterinary Accreditation Program;
National Animal Disease Traceability
and Veterinary Accreditation Center,
APHIS Veterinary Services; (518) 281–
2157; [email protected].
SUPPLEMENTARY INFORMATION:
Background
Under the Animal Health Protection
Act, or AHPA (7 U.S.C. 8301 et seq.), the
Secretary of Agriculture is authorized to
protect the health of U.S. livestock by
preventing the introduction and
interstate spread of diseases and pests of
livestock and by eradicating such
diseases from the United States when
feasible. The Secretary may also
establish a veterinary accreditation
program consistent with the AHPA,
which includes standards of conduct for
accredited veterinarians. The
administration of this program, known
as the National Veterinary Accreditation
Program (NVAP), has been delegated to
the Animal and Plant Health Inspection
Service (APHIS), Veterinary Services
(VS). The NVAP allows private
practitioners, once accredited by APHIS,
to assist Federal veterinarians with
performing certain tasks to control and
prevent the spread of animal diseases
throughout the United States and
internationally. Title 9 of the Code of
Federal Regulations (CFR), chapter I,
subchapter J (parts 160 through 162,
referred to below as the regulations),
contains regulations for accreditation of
veterinarians and suspension or
revocation of accreditation.
On March 8, 2019, we published in
the Federal Register (84 FR 8476–8479,
Docket No. APHIS–2017–0065) a
proposal 1 to amend the regulations
governing the NVAP. We proposed to
clarify the veterinary programs for
which accredited veterinarians are
authorized to perform duties under the
AHPA and update certain definitions.
We solicited comments concerning our
proposal for 60 days ending May 7,
2019. We received five comments by
that date. The comments were from
veterinarians, State departments of
agriculture, and a national veterinary
medical association. The comments are
discussed below.
General
A commenter, an accredited
veterinarian, expressed concern about
administrative obstacles associated with
performing NVAP-related tasks. The
commenter stated that these obstacles
are caused by States and asked that
1 To view the proposed rule, supporting
documents, and the comments we received, go to
http://www.regulations.gov/#!docketDetail;
D=APHIS-2017-0065.

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APHIS help reduce the amount of ‘‘red
tape’’ that accredited veterinarians
experience by encouraging reciprocity
agreements between States and taking
other actions to reduce burden.
While APHIS works to minimize
burden whenever practicable, we note
that veterinary licensing requirements
are controlled by, and specific to,
individual States and vary according to
the predominant animal industries and
diseases of concern in a State, as well
as each State’s separate reporting and
oversight requirements.
Definitions
In § 160.1, we proposed to revise the
definition for Category I animals to
clarify which animals fall under that
category and revise the definition for
Category II animals to read ‘‘all
animals.’’ As we noted in the proposed
rule, veterinarians accredited to work on
Category II animals are authorized to
perform duties on animals listed in both
categories.
A commenter recommended that we
revise the definition of Category I
animals by adding ‘‘Select animals,
excluding . . .’’ and removing ‘‘All
animals, except. . . .’’ The commenter
reasoned that the words ‘‘All animals’’
should be used exclusively for Category
II animals because the definition
actually includes all animals.
We acknowledge the commenter’s
reasoning but are making no changes to
the proposed definitions. APHIS has
been using the updated definitions in
online training modules with no
confusion observed as to which animals
are included in each of the categories.
We also proposed to replace the term
Veterinarian-in-Charge with Program
official in §§ 160.1, 161.2(a), 161.4,
161.6(c), 162.11, and 162.12. We
proposed this change to provide
flexibility to cover changes to official
titles in VS.
A commenter representing a national
veterinary medical association stated
that the current term Veterinarian-inCharge should not be replaced with the
proposed term Program official. The
commenter noted that, unlike
Veterinarian-in-Charge, the title of
Program official could conceivably be
held by a non-veterinarian who lacks
the knowledge and training required of
a veterinarian to competently assess or
oversee animal health. The commenter
cited a historical correspondence in
APHIS–VS between job titles and job
descriptions and stated that a nonveterinarian should not be in a position
to provide oversight of Federal or other
accredited veterinarians.
We agree with the commenter that
officials designated to oversee

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