From: KNUDSEN Larry

Sent: Thu Sep 10 14:32:21 2009

To: MCALLISTER Larry

Subject: RE: question re: proposed ARRA Permanent Rules

Importance: Normal

Larry, I think we can clarify 104(2). My thought, would be to add something like "and only to the extent consistent with OAR 340-054-0106." I think this is what was intended, or at least it's how the rules likely would have been interpreted by a court even without the change. In my mind, such a change simply makes the existing rule language clearer, essentially by adding a cross reference. Because I don't view this as injecting a new issue into the rulemaking, I wouldn't be worried about the fact that the comment period has closed. LK

-----Original Message-----

From: MCALLISTER Larry

Sent: Thursday, September 10, 2009 12:48 PM

To: KNUDSEN Larry

Subject: question re: proposed ARRA Permanent Rules

Importance: High

Hi Larry

You will recall the SRF program is developing permanent ARRA rulemaking to ensure DEQ is able to continue to administer ARRA funding once the temporary rules expire on Oct 28, 2009.

The proposed permanent rules were out for public comment in August and the EQC packet is scheduled to go to the Director’s Office tomorrow, 9/11. In reviewing the proposed rules with Neil and Judy this morning a question came up that we hope you can provide feedback/direction on. I have attached a copy of the proposed rules.

The “conventional” SRF rules indicate in 340-054-0025(6)(c) that “requests for increases to existing loans will be awarded first” (Prior to making new loans).

Because the ARRA funds are intended to stimulate economic activities, DEQ would want any future ARRA funding (above the $44 million we currently have received) to go first to new projects rather than directed to “increases” to existing loans.

As the permanent rules are written in 340-054-0098 thru 0108, any future ARRA funds would awarded first to eligible new projects on the priority list, (340-054-0106(1);

If after funding all eligible projects on the priority list, there was still ARRA funding remaining, that remaining ARRA funding would then be allocated to those same new applicants who had only received partial ARRA funding for their project (basically going back and “topping off” the new projects), 340-054-0106(3).

In 340-054-0104(2) it indicates “notwithstanding OAR 340-054-0025(6)(c) ARRA funds can be used to make increases. OAR 340-054-0104(2) clearly “overrides” the requirements of OAR 340-054-0025(6)(c) for increases to be awarded first, but doesn’t appear to indicate in what priority increases will be awarded.

So the question is: As funding priorities, how do 340-054-0106(1) and 340-054-0104(2) complete/indicate what types of projects get funds awarded first? Do we need to modify 340-054-0104(2) to stipulate a lower priority for making increases? For example: (2) Loan Increases. Notwithstanding OAR 340-054-0025(6)(c), ARRA funding can be used for loan increases to loans funded by the Act, only after funding eligible projects on the priority list.

We have to keep in mind that these rules have completed public comment.

Larry M.

<<AttachAProposedrules.pdf>>

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