02-32241. Business and Industry Loans; Revision to Definition of Rural Area

AGENCY:

Rural Business-Cooperative Service, USDA.

ACTION:

Final rule.

SUMMARY:

The Rural Business-Cooperative Service (RBS) revises its regulations to amend the definition of rural area. This action is taken to comply with the amendment to section 343(a) of the Consolidated Farm and Rural Development Act. The intended effect of this action is to implement the revised definition of rural area for the Business and Industry Guaranteed and Direct Loan Programs mandated by section 6020 of the Farm Security and Rural Investment Act of 2002.

EFFECTIVE DATE:

December 23, 2002.

FOR FURTHER INFORMATION CONTACT:

Brenda Griffin, Loan Specialist, Business and Industry Division, Rural Business-Cooperative Service, U.S. Department of Agriculture, STOP 3224, 1400 Independence Ave. SW., Washington, DC 20250, Telephone [phone]. The TDD number is [phone] or [phone].

SUPPLEMENTARY INFORMATION:

Classification

This rule has been determined to be non-significant and was reviewed by the Office of Management and Budget under Executive Order 12866.

Programs Affected

The Catalog of Federal Domestic Assistance number for the program impacted by this action is 10.768, Business and Industry Loans.

Paperwork Reduction Act

There are no reporting and recordkeeping requirements associated with this rule.

Intergovernmental Review

The Business and Industry loan programs are subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with state and local officials. RBS will conduct intergovernmental consultation in the manner delineated in RD Instruction 1940-J, “Intergovernmental Review of Rural Development Programs and Activities,” and in 7 CFR part 3015, subpart V.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the undersigned has determined and certified by signature of this document that this rule will not have a significant economic impact on a substantial number of small entities. New provisions included in this rule will not impact a substantial number of small entities to a greater extent than large entities. Therefore, a regulatory flexibility analysis was not performed.

Civil Justice Reform

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. In accordance with this Executive Order: (1) All State and local laws and regulations that are in conflict with this rule will be preempted, (2) no retroactive effect will be given to this rule, and (3) administrative proceedings in accordance with the regulations of the Agency at 7 CFR part 11 must be exhausted before bringing litigation challenging action taken under this rule unless those regulations specifically allow bringing suit at an earlier time.

Environmental Impact Statement

This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” RBS has determined that this action does not constitute a major Federal action significantly affecting the quality of the human environment and, in accordance with the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq, an Environmental Impact Statement is not required.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, RBS must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year. When such a statement is needed for a rule, section 205 of UMRA generally requires RBS to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective, or least burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13132

It has been determined under Executive Order 13132, Federalism, that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have a substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government.

Background

Section 6020 of the Farm Security and Rural Investment Act of 2002, Public Law 107-424, amended section 343(a) of the Consolidated Farm and Rural Development Act (Con Act) to change the definition of rural area for several programs under that Act, including the RBS Business and Industry loan programs. Section 343(a)(13) of the Con Act provides, in part, as follows:

(13) Rural and Rural Area.

(A) In General. Except as otherwise provided in this paragraph, the terms ‘rural’ and ‘rural area’ mean any area other than

(i) A city or town that has a population of greater than 50,000 inhabitants; and

(ii) The urbanized area contiguous and adjacent to such a city or town.

The revised definition in section 343(a)(13) of the Con Act supercedes the current definition for rural area used for the Business and Industry loan program. The current definition includes all territory of a State that is not within the outer boundary of any city having a population of 50,000 or more and its immediately adjacent urbanized and urbanizing area with a population density of more than 100 persons per square mile, as determined by the Secretary of Agriculture according to the latest decennial census of the United States. The new definition in section 343(a)(13) expands eligibility to include urbanizing areas; adds “town” to an area which can have a population of 50,000 or more; and deletes the requirement that the urbanized area be “immediately” adjacent to the city requiring only that it be “contiguous and adjacent” to the city or town. Cities or towns with populations greater than 50,000 inhabitants and the urbanized areas which are contiguous and adjacent to such cities and towns are ineligible for Business and Industry program loans.

This regulation is being published as a final rule without a Notice of Prior Rulemaking because the change being made is mandated by section 6020 which provides no administrative discretion in choosing the language to be used. Therefore, public comment is unnecessary and impracticable and contrary to the public interest. For this same reason, this final rule will be effective immediately upon publication.

List of Subjects

7 CFR Part 1980

• Loan programs—Business and industry—Rural development assistance
• Rural areas

7 CFR Part 4279

• Loan programs—Business and industry
• Loan programs—Rural development assistance
• Rural areas

Accordingly, Chapters XVIII and XLII, Title 7, Code of Federal Regulations, are amended as follows:

Chapter XVIII—Rural Housing Service, Rural Business-Cooperative Service, Rural Utilities Service, and Farm Service Agency, Department of Agriculture

PART 1980—GENERAL

1. The authority citation for part 1980 is amended to read as follows:

Authority: 7 U.S.C. 1989.

Subpart E—Business and Industrial Loan Program

2. Section 1980.402 is amended by removing the definition of “Rural area.”

3. Section 1980.405 is revised to read as follows:

§ 1980.405

Rural areas.

The business financed with a B&I loan must be located in a rural area. Loans to borrowers with facilities located in both rural and non-rural areas will be limited to the amount necessary to finance the facility located in the eligible rural area. Cooperatives that are headquartered in a non-rural area may be eligible for a B&I loan if the loan is used for a project or venture that is located in a rural area. Rural areas are any areas other than:

(a) A city or town that has a population of greater than 50,000 inhabitants; and

(b) The urbanized area contiguous and adjacent to such a city or town, as defined by the U.S. Bureau of the Census using the latest decennial census of the United States.

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

PART 4279—GUARANTEED LOANMAKING

4. The authority citation for part 4279 is amended to read as follows:

Authority: 7 U.S.C. 1989.

Subpart B—Business and Industry Loans

5. Section 4279.108 is amended by revising paragraph (c) to read as follows:

§ 4279.108

Eligible borrowers.

* * * * *

(c) Rural area. The business financed with a B&I Guaranteed Loan must be located in a rural area. Loans to borrowers with facilities located in both rural and non-rural areas will be limited to the amount necessary to finance the facility located in the eligible rural area. Rural areas are any areas other than:

(1) A city or town that has a population of greater than 50,000 inhabitants; and

(2) The urbanized area contiguous and adjacent to such a city or town, as defined by the U.S. Bureau of the Census using the latest decennial census of the United States.

* * * * *

Dated: December 6, 2002.

Thomas C. Dorr,

Under Secretary, Rural Development.