[Federal Register Volume 62, Number 68 (Wednesday, April 9, 1997)]
[Proposed Rules]
[Pages 17107-17108]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8993]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
7 CFR Parts 4279 and 4287
RIN 0570-AA25
Rural Venture Capital Demonstration Program
AGENCY: Rural Business-Cooperative Service (RBS), USDA.
ACTION: Advanced notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: Section 761 of the Federal Agriculture Improvement and Reform
Act of 1996 (Pub. L. 104-127) adds section 381O to the Consolidated
Farm and Rural Development Act (7 U.S.C. 1921 et seq.) which authorizes
a demonstration program using Federal loan guarantees to attract
venture capital funds to rural areas. RBS is preparing to develop
regulations to implement this program.
In order to afford the public the maximum opportunity to contribute
to the development of this new program and to enable the Agency to
consider as many options as possible, RBS is requesting comments to
assist in drafting the proposed rule.
DATES: The advance notice of proposed rulemaking is subject to written
comments received on or before May 9, 1997.
The Agency is limiting the comment period on this advanced notice
to 30 days in order to expedite the rulemaking process. The proposed
rule will have a longer comment period.
ADDRESSES: Submit written comments in duplicate to the Chief,
Regulations and Paperwork Management Division, Rural Development, U.S.
Department of Agriculture, Stop Box 0743, 1400 Independence Avenue SW.,
Washington, DC 20250-0743. All written comments will be available for
public inspection during regular work hours at the above address.
Comments may be submitted via the internet by addressing them to
comments@rus.usda.gov'' and must contain ``venture'' in the subject.
FOR FURTHER INFORMATION CONTACT: Rick Bonnet, Senior Commercial Loan
Specialist, RBS, U.S. Department of Agriculture, Stop 3221, 1400
Independence Avenue SW., Washington, DC 20250-3221, Telephone (202)
720-1804.
SUPPLEMENTARY INFORMATION:
Classification
This rule will be determined to be ``significant'' and will be
reviewed by OMB under Executive Order 12866.
[[Page 17108]]
The statute calls for the Secretary of Agriculture to designate for
each fiscal year up to 10 community development venture organizations
to demonstrate the utility of guarantees to attract increased private
investment in rural private business enterprises.
To be eligible to participate in the demonstration program, an
organization shall establish a rural business private investment pool
(referred to as a `pool') for the purpose of making equity investment
in rural private business enterprises.
From amounts in the national reserve account of the Trust Fund
authorized under Subtitle E--Rural Community Advancement Program,
section 381E, the Secretary shall guarantee the funds in a pool against
loss, except that the guarantee shall not exceed an amount equal to 30
percent of the total funds in the pool. The Secretary shall issue
guarantees covering not more than $15,000,000 of contingent liabilities
for each of fiscal years 1996 through 2002. The term of a guarantee
shall not exceed 10 years.
To be eligible to participate in the demonstration program, an
organization shall submit a plan that describes potential sources and
uses of the pool to be established by the organization; the utility of
the guarantee authority in attracting capital for the pool; and, on
selection, mechanisms for notifying State, local, and private nonprofit
business development organizations and business of the existing pool.
The Secretary shall conduct a competition for the designation and
establishment of pools. In conducting the competition, the Secretary
shall give priority to organizations that have a demonstrated record of
performance or have a board and executive director with experience in
venture capital, small business equity investment, or community
development finance; propose to serve low-income communities; propose
to maintain an average investment of not more than $500,000 from the
pool of the organization; invest funds statewide or in a multicounty
region; and propose to target job opportunities resulting from the
investments primarily to economically disadvantaged individuals, as
determined by the Secretary. To the extent practicable, the Secretary
shall designate organizations in diverse geographic areas.
Programs Affected
No program in the Catalog of Federal Domestic Assistance is
impacted by this action.
Intergovernmental Review
As set forth in the final rule and related Notice to 7 CFR part
3015, subpart V, 48 FR 29112, June 24, 1983, Rural Venture Capital
Demonstration Program investments are subject to the provisions of
Executive Order 12372 which requires intergovernmental consultation
with state and local officials. RBS conducts intergovernmental
consultation in the manner delineated in RD Instruction 1940-J,
``Intergovernmental Review of Farmers Home Administration Programs and
Activities.''
Comments Invited
Interested parties are invited to participate in the making of the
proposed rule by submitting such written data, views, arguments, or
proposal as they may desire. Comments and proposals may include
illustrations or references to forms and procedures utilized in other
program areas in the industry.
Comments are specifically solicited concerning the choice and
relative importance of selection criteria, structuring of the
guarantee, when and under what circumstances the Agency will make
payment under the guarantee, requirements of the community development
venture organization's proposed workplan, rights and restrictions of
investors in the rural business private investment pools, requirements
for the organizational structure of the community development venture
organizations, Agency oversight responsibilities, investment pool
management, and any other comments concerning this issue.
Dated: April 1, 1997.
Inga Smulkstys,
Acting Under Secretary for Rural Development.
[FR Doc. 97-8993 Filed 4-8-97; 8:45 am]
BILLING CODE 3410-XY-U
