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Federal Register / Vol. 86, No. 235 / Friday, December 10, 2021 / Rules and Regulations
Section III, Summary of Changes to Rule.

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Section 5001.105 Eligible B&I Projects and Requirements Comment: The Agency received several comments that the OneRD rule language is much stricter for project eligibility than what the existing Business and Industry regulation, 7 CFR
4279, had been.
Agency Response: Upon evaluation, it was not the Agencys intention to further restrict project eligibility.
Several clarifications have been identified and are included in Section III, Summary of Changes to Rule.
Comment: Several comments were received on the revised equity requirements under 7 CFR 5001.105d.
The commenters believed the equity requirement for new businesses has increased from 20% to 25% of the total eligible project costs under Table 1 to 5001.105d. They believe this additional 5% makes it even more difficult for new businesses to open in rural America. They recommended that the equity requirements for new businesses be 20% regardless if calculated as balance sheet equity or as a percentage of the total eligible project costs.
Agency Response: The Agency believes that there may have been some confusion over the requirementits 25% of project cost OR 20% balance sheet equity at loan closing. In fact, there are 3 other options available to meet the equity requirements. This issue has been addressed with Lenders during monthly office hours the Agency held for lenders. Therefore, the Agency believes the issue has been resolved and no regulatory amendments are needed.
Section 5001.115 Ineligible Projects General Comment: Several commenters requested that 7 CFR 5001.115a any investment or arbitrage be removed as an ineligible purpose as it seems to be excluding. They believe that excluding arbitrage from program eligibility, in its strictest sense, would leave many businesses, that it would seem the Agency would want to promote ineligible for program assistance.
Agency Response: The Agency does not agree. The intent of the provision is to prevent borrowing money to buy stock and holding such stock for future increases in value, therefore the regulation will not be amended.
Comment: Seven comments were received in reference to 7 CFR
5001.115n which states owneroccupied housing or self-storage facilities are ineligible. The
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commentors felt that the intent is for the owner to have control over the facility, which the owners would if determining who can and cannot be a lessee. Self-storage facilities provide construction jobs, permanent jobs, and increase the tax base in rural communities.
Agency Response: The Agency agrees with the comments in part and is therefore amending 5001.115n to clarify when owner occupied housing is considered eligible and removed the ineligibility of self-storage facilities.
Section 5001.121 Eligible Uses of Loan Funds Agency Comment: The Agency issued a final rule with comment on September 15, 2020, after the publication of the OneRD Guarantee regulation on July 1, 2020, promulgating Special Authority to Enable Funding of Broadband and Smart Utility Facilities Across Select Rural Development Programs Smart Utility. A cross reference to 7 CFR
1980, subpart M has been added to the opening paragraph of Section 5001.121
as discussed in Section III, Summary of Changes to Rule.
Section 5001.126 Borrower Eligibility Agency Comment: The Agency revised 7 CFR 4280 to remove references to the guarantee loan program and cross referencing to 7 CFR 5001. In the process of this revision, it was determined that 7 CFR 5001.126e needed to be amended to add New Users to conform with the revisions to 7 CFR 4280.
Section 5001.130 Lender Eligibility Requirements Agency Comment: The Office of Management and Budget promulgated revisions to 7 CFR 25, Universal Identifier and System for Award Management on August 13, 2020, after the publication of the OneRD regulation on July 14, 2020. Therefore, a cross reference to 7 CFR 25 is needed in 5001.130 which requires an awardee of Federal financial assistance be registered in and maintain an active account in the System for Award Management SAM. Section 5001.130a is amended to include the new requirements for lenders to be registered in and maintain an account in SAM in accordance with 7 CFR 25.200.
Section 5001.202 Lenders Credit Evaluation Comment: The Agency Received a couple of comments on the need for the Lender to discuss the feasibility study, as well as other applicable studies and reports in the credit presentation
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pursuant to 5001.202b5 and submit such supporting documentation when applicable. However, the commenter felt that it appeared that the Agency will have its own policy. The commenter felt it is incumbent on the Agency to disclose its feasibility study policy to Lenders.
Agency Response: The Agency agrees with the comment and therefore is amending 7 CFR 5001.202b2 to further clarify when feasibility studies are required.
Section 5001.204 Personal, Partnership, and Corporate Guarantees Agency Comment: The Agency has identified a revision needed to improve consistency and clarity of Section 5001.204; this revision is included in Section III, Summary of Changes to Rule.
Section 5001.205 General Project Monitoring Requirements Comment: Six lenders commented that they are happy to see that the Agency is allowing Loan Note Guarantees LNG prior to construction, however they feel the adoption of the current procurement process and standards to regulate construction loan guarantees is not in the borrower, lender or governments interest. They believe the adoption of the federal process would be an injurious and crippling barrier to entry into the LNG prior to construction, defeating the whole purpose of this rule. They stated all lenders have a construction policy in place to mitigate risk and by adding the requirements to mirror the USDA
construction disbursement only increases the burden for the lender and urged us to reconsider this approach.
Agency Response: The Agency agrees with the comments that the lenders have the capacity and experience to manage this issue and therefore is amending Section 5001.205e2ii to allow the lender the flexibility when it documents the loan to include provisions to disburse funds and monitor progress of the construction project.
Section 5001.207 Environmental Responsibilities Comment: The Agency received five comments pertaining to the Council for Environmental Quality CEQ
publication in the Federal Register on July 16, 2020. The commenters requested the Agency to comply with newly published CEQ requirements.
Agency Response: The Agency is in the process of reviewing the new requirements and has determined not to make any changes to OneRD at this
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