Rule2022-25554
Electric Program Streamlining and Improvement
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 30, 2022
Effective
February 28, 2023
Issuing agencies
Agriculture DepartmentRural Utilities Service
Abstract
The Rural Utilities Service (RUS or Agency), a Rural Development agency of the United States Department of Agriculture (USDA), is issuing a final rule with comment. The intent of this rule is to revise several regulations to streamline procedures for Electric Program borrowers, including its loan application requirements, approval of work plans and load forecasts, use of approved contracts and system design procedures and reporting requirements.
Full Text
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[Federal Register Volume 87, Number 229 (Wednesday, November 30, 2022)]
[Rules and Regulations]
[Pages 73433-73443]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25554]
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Rules and Regulations
Federal Register
________________________________________________________________________
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.
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Federal Register / Vol. 87, No. 229 / Wednesday, November 30, 2022 /
Rules and Regulations
[[Page 73433]]
DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Parts 1710, 1714, 1717, 1724, and 1730
[Docket No. RUS-22-ELECTRIC-0031]
RIN 0572-AC57
Electric Program Streamlining and Improvement
AGENCY: Rural Utilities Service, U.S. Department of Agriculture (USDA).
ACTION: Final rule; request for comments.
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SUMMARY: The Rural Utilities Service (RUS or Agency), a Rural
Development agency of the United States Department of Agriculture
(USDA), is issuing a final rule with comment. The intent of this rule
is to revise several regulations to streamline procedures for Electric
Program borrowers, including its loan application requirements,
approval of work plans and load forecasts, use of approved contracts
and system design procedures and reporting requirements.
DATES: This final rule with comment is effective February 28, 2023.
Comments are due on or before January 30, 2023.
ADDRESSES: You may submit comments, identified by docket number RUS-22-
ELECTRIC-0031 and Regulatory Information Number (RIN) number 0572-AC57
through <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Instructions: All submissions received must include the Agency name
and docket number or RIN for this rulemaking. All comments received
will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>, including
any personal information provided.
Docket: For access to the docket to read background documents or
comments received, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Robert Coates, Branch Chief, Policy
and Outreach Branch, Office of Customer Service and Technical
Assistance, Rural Utilities Service, U.S. Department of Agriculture,
STOP 1569, 1400 Independence Ave. SW, Washington, DC 20250-0787,
telephone: (202) 720-1900. Email: <a href="/cdn-cgi/l/email-protection#70222523351c15130402191330050314115e171f06"><span class="__cf_email__" data-cfemail="dc8e898f99b0b9bfa8aeb5bf9ca9afb8bdf2bbb3aa">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
Rural Development is a mission area within the U.S. Department of
Agriculture (USDA) comprising the Rural Utilities Service, Rural
Housing Service, and Rural Business-Cooperative Service. Rural
Development's mission is to increase economic opportunity and improve
the quality of life for all rural Americans. Rural Development meets
its mission by providing loans, loan guarantees, grants, and technical
assistance through numerous programs aimed at creating and improving
housing, business, and infrastructure throughout rural America. The
Rural Utilities Service (RUS) loan, loan guarantee, and grant programs
act as a catalyst for economic and community development. By financing
improvements to rural electric, water and waste, and telecommunications
and broadband infrastructure, RUS also plays a significant role in
improving other measures of quality of life in rural America, including
public health and safety, environmental protection and culture and
historic preservation.
RUS Electric Program loans, loan guarantees and grants finance the
construction and improvement of rural electric infrastructure. In an
effort by the RUS Electric Program to administer its program in an
efficient and effective manner while improving its customer service and
experience, and in response to requests from the RUS Electric Program
borrowers, the Electric Program undertook a systematic review of
regulations and procedures in place to administer its program. The
Electric Program has completed two streamlining efforts to date:
(a) On July 9, 2019, Streamlining Electric Program Procedures (84
FR 32607) was published in the Federal Register. That regulation
streamlined some pre- and post-loan procedures to adopt efficiencies
and to reduce regulatory burden on Electric Program borrowers while
still ensuring RUS loans remained adequately secured and ensuring that
loan funds would be repaid in the time agreed upon.
(b) On July 9, 2021, Streamlining Electric Program Procedures (86
FR 24857) was published in the Federal Register. That regulation
streamlined its procedures for borrowers, including its loan
application requirements, approval of construction work plans, contract
bidding procedures, contact approval procedures, system operation and
maintenance reviews, long-range engineering plans and system design
procedures. It also removed unnecessary sections from the regulations.
This rulemaking is part of the Electric Program's continuing effort
to improve customer service for its borrowers and to create a more
efficient work process for its staff. This rulemaking will continue to
streamline Electric Program procedures and revise regulations,
including removing unnecessary and outdated regulations and simplifying
other policies and procedures that impose burdensome requirements on
borrowers and applicants.
To implement this change, the Agency will publish this as a final
rule with comment. The Administrative Procedure Act exempts from prior
notice rules, any actions, ``relating to agency management or personnel
or to public property, loans, grants, benefits, or contracts'' (5
U.S.C. 553(b)(A)).
II. Summary of Changes to Rule
Part 1710--General and Pre-Loan Policies and Procedures Common to
Electric Loans and Guarantees
(a) Section 1710.1 was modified to remove outdated references and
bulletins.
(b) Section 1710.2 was modified to delete the definitions for
approved load forecast workplan, load forecast workplan, and PRS
workplan. The requirement for borrowers to maintain a load forecast
workplan has been eliminated. This reduces the number of documents that
must be submitted by the applicants/borrowers and reviewed by Agency
employees. In addition, Sec. Sec. 1710.200; 1710.202(a) and (b);
1710.203(a), (b), and (e); 1710.205; and 1710.209 have been revised to
remove the references to load forecast workplans.
(c) Section 1710.101(a) and (b) were updated to include Tribes as
eligible entities to receive RUS funding and added Tribes to the list
of entities that receive preference from RUS in making loans. These
changes were made for
[[Page 73434]]
clarification and to codify current practices.
(d) Section 1710.105 was updated to include Tribal areas as places
where borrowers may need to obtain Tribal approval prior to loans being
approved or funds advanced. It was also updated to include
reaffirmation of the project and its financing from Tribal authorities
prior to additional loan funds being advanced when the borrower has
failed to proceed with the project in a timely manner. These changes
will help ensure that projects are feasible, as without the commitment
of support from the Tribal entity, the viability of those projects
could be in question. These changes are also aligned with the
Administration's priorities.
(e) Section 1710.106(a)(3) was modified to include headquarters
office and other headquarters facilities which reflects RUS's current
acceptance of financing headquarters office and other headquarters
facilities. This update codifies the Agency's current practice of
funding headquarters buildings as a typical project instead of only in
cases of financial hardship. Thus, the provisions of Sec.
1710.106(b)(1) was moved to a new Sec. 1710.106(a)(3). Paragraphs
(c)(2) and (3) were updated to correct punctuation.
(f) Sections 1710.202(a) and 1710.203(a) through (e) were modified
to define a current load forecast as having been prepared within the
last 2 years. The 2 years is being added to provide clarity and
consistency. A load forecast is a primary support document for
developing construction workplans and should be current.
(g) Section 1710.205 was modified to include information that is
required to be included in the load forecast. It is being included in
this section due to Sec. Sec. 1710.206 and 1710.209 being deleted as
the requirement for borrowers to maintain a load forecast workplan has
been eliminated. These deleted sections will be reserved.
(h) Sections 1710.400(b)(2), 1710.404, 1710.408(h) and 1710.500(a)
were modified to address spelling, punctuation errors, and formatting
and to correct an email address.
(i) Section 1710.501(a)(1)(v) was updated to replace DUNS number
with Unique Entity Identifier. Paragraphs (a)(1)(viii), (x), (xiii),
and (xvi), and (a)(2) and (8) were updated to require that borrowers
indicate if Tribal approval is needed and to provide Tribal resolutions
when needed. These changes help ensure compliance with Tribal law when
doing business on Tribal land and help develop strong working
partnerships with Tribes. These changes are also in line with the
Administration's priorities. Paragraph (a)(4) was deleted due to being
outdated and no longer relevant. The RUS Form 740g is no longer being
required because it duplicates information provided in the Construction
Workplan (CWP) or CWP Amendment and on the RUS Form 740c. This change
reduces the number of forms submitted by applicants/borrowers and
reviewed by Agency staff. The references to Form 740g are being removed
from 7 CFR 1717.855(g) and 1724.54(f)(2).
(j) In 7 CFR 1714, subpart B was removed in its entirety and
incorporated into 7 CFR 1710 as subpart J. The word ``Insured'' was
removed from the titles of the Subpart and of 7 CFR 1714.55 (now Sec.
1710.601). Outdated language from 7 CFR 1714.58 (now Sec. 1710.604)
was removed and the rules on principal deferment were revised. The
outdated language that was removed referred to loans approved before
and after February 21, 1995. Principal deferment was revised to include
a written request from the borrower to the Administrator to defer
amortization of the principal. Additionally, 7 CFR 1714.59(a) (now
Sec. 1710.605(a)) was revised to allow the borrower to request a
rescission of a loan without the additional requirement of a formal
Board Resolution. 7 CFR part 1714, subpart B referred only to insured
loans but these processes are related to all loans and were added to 7
CFR part 1710, subpart J. These changes will help to eliminate possible
confusion and conflicts in the regulations. Removing the requirement
for a formal Board Resolution permits the General Manager, Board
President or other individual authorized by the Board of Directors to
request such rescission without having to have a formal resolution
prepared.
(k) Section 1717.616 was revised to include language from Bulletin
1717 M-2, Sale or Transfer of Capital Assets by Electric Borrowers.
This language was removed from the bulletin because the purpose of
bulletins is to provide additional guidance, not requirements.
Therefore, the Agency made these changes to codify the requirements in
the regulation.
(l) Section 1717.855(g) was updated to remove reference to the Form
740g as referenced in (i) above.
(m) Section 1724.9 was updated to add ``or any successor
regulations that implement the provisions of the National Environmental
Policy Act''. This update was made to provide flexibility should 7 CFR
part 1970 change.
(n) Section 1724.40 was updated to include a web page for copies of
the bulletins in lieu of a physical mailing address.
(o) Section 1724.51(f)(1) was updated to clarify that the provision
does not apply to cybersecurity projects.
(p) Section 1724.54(d)(1)(ii) was updated to provide an additional
option for the required notification. Paragraphs (e)(2) and (g)(2) were
updated to provide clarification that this provision may have been
waived for those borrowers who have indentures or other specialized
loan security documents. Paragraph (f)(2) was updated to remove the
reference to RUS Form 740g which will no longer be used. Paragraph
(g)(1) was updated to clarify that the provision does not apply to
cybersecurity projects.
(q) Section 1724.70(b) was updated to incorporate the program's
streamlining measures that a borrower may deviate from the standard RUS
contract without RUS approval provided that essential terms remain in
the contract.
(r) Section 1724.71(a), (b), and (c) was updated to clarify that a
borrower that is subject to an indenture is not subject to the
provisions in the standard RUS loan contract. These changes are related
to those made in Sec. 1724.70(b).
(s) Sections 1730.27 and 1730.28 were updated to remove obsolete
dates and outdated language. These changes were made to help alleviate
confusion for borrowers.
(t) Section 1730.63(a)(5) was modified to change the update period
of Interconnection of Distributed Resources (IDR) policy compliance
from five years to as needed. The IDR policy generally does not change
once implemented. This change will provide the borrower with more
flexibility. Paragraph (b)(2) was deleted in order to remove outdated
IDR language.
(u) Section 1730.65 was modified to eliminate obsolete compliance
dates. This change will help alleviate confusion for applicants and
borrowers as it will now be clear that the letter of certification is
required for everyone.
III. Executive Orders and Acts
Executive Order 12866
This final rule has been determined to be non-significant for
purposes of Executive Order (E.O.) 12866 and therefore has not been
reviewed by the Office of Management and Budget (OMB).
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).
[[Page 73435]]
Assistance Listing Number (Formally Known as the Catalog of Federal
Domestic Assistance)
The Assistance Listing Number assigned to the Rural Electrification
Loans and Loan Guarantees Program is 10.850. The Assistance Listings
are available on the internet at <a href="https://sam.gov/">https://sam.gov/</a>.
Executive Order 12372, Intergovernmental Review of Federal Programs
This rule is excluded from the scope of E.O. 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 E.O. 12372'' (50 FR
47034) advising that RUS loans and loan guarantees were not covered by
E.O. 12372.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
The Agency has determined that this final rule has a substantial
direct effect on one or more Indian tribe(s) or on either the
relationship or the distribution of powers and responsibilities between
the Federal Government and Indian Tribes. Thus, this final rule is
subject to the requirements of E.O. 13175. Tribal specific amendments
in Sec. Sec. 1710.101(a) and (b), 1710.105(a) and (b), and 1710.501
were based on feedback from Tribal Leaders heard during virtual Tribal
Consultation events hosted by USDA in March of 2021 and April of 2022.
For additional information Tribes can contact USDA's Office of Tribal
Relations or USDA Rural Development's Tribal Coordinator at (720) 544-
2911 or <a href="/cdn-cgi/l/email-protection#bdfcf4fcf3fdc8ced9dc93dad2cb"><span class="__cf_email__" data-cfemail="6f2e262e212f1a1c0b0e41080019">[email protected]</span></a>. If Tribes request consultation on provisions not
required by law, Rural Development will collaborate with the Office of
Tribal Relations to ensure that meaningful consultation occurs.
Executive Order 12988, Civil Justice Reform
This final rule has been reviewed under E.O. 12988, Civil Justice
Reform. In accordance with this final rule: (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 of the National Appeals Division (7 CFR
part 11) must be exhausted before bringing suit in court challenging
action taken under this rule.
National Environmental Policy Act
In accordance with the National Environmental Policy Act of 1969,
Public Law 91-190, this final rule has been reviewed in accordance with
7 CFR part 1970 (``Environmental Policies and Procedures''). The Agency
has determined that (i) this action meets the criteria established in 7
CFR 1970.53(f); (ii) no extraordinary circumstances exist; and (iii)
the action is not ``connected'' to other actions with potentially
significant impacts, is not considered a ``cumulative action'' and is
not precluded by 40 CFR 1506.1. Therefore, the Agency has determined
that the action does not have a significant effect on the human
environment, and therefore neither an Environmental Assessment nor an
Environmental Impact Statement is required.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 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, RUS
generally 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 one
year. When such a statement is needed for a rule, section 205 of the
UMRA generally requires RUS to identify and consider a reasonable
number of regulatory alternatives and adopt the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule.
This final 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. Therefore, this final rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally
requires an agency to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act (APA) or any other statute. This final
rule; however, is not subject to the APA under 5 U.S.C. 553(a)(2) and 5
U.S.C. 553(b)(3)(A) nor any other statute.
Executive Order 13132, Federalism
It has been determined, under E.O. 13132, Federalism, that the
policies contained in this final 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
final rule impose substantial direct compliance costs on State and
local governments. Therefore, consultation with the States is not
required.
E-Government Act Compliance
The Agency is committed to complying with the E-Government Act of
2002, Public Law 107-347, which requires Government agencies in general
to provide the public the option of submitting information or
transacting business electronically to the maximum extent possible and
to promote the use of the internet and other information technologies
to provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Information Collection and Recordkeeping Requirements
The information collection and record-keeping requirements
contained in this rule are approved by the Office of Management and
Budget (OMB) under OMB Control Numbers 0572-0032, 0572-0089, 0572-0100,
0572-0118, 0572-0140, and 0572-0141.
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 is not likely to
negatively 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. No major civil rights impact is likely
to result from this rule.
USDA Non-Discrimination Statement
In accordance with Federal civil rights laws and U.S. Department of
Agriculture (USDA) civil rights regulations and policies, the USDA, its
[[Page 73436]]
Mission Areas, agencies, staff offices, 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).
Remedies and complaint filing deadlines vary by program or incident.
Program information may be made available in languages other than
English. Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language) should contact the
responsible Mission Area, agency, or staff office; the USDA TARGET
Center at (202) 720-2600 (voice and TTY); or the 711 Relay Service.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, <a href="https://www.usda.gov/sites/default/files/documents/usda-program-discrimination-complaint-form.pdf">https://www.usda.gov/sites/default/files/documents/usda-program-discrimination-complaint-form.pdf</a>, which can be
obtained online at <a href="https://www.usda.gov/sites/default/files/documents/usda-program-discrimination-complaint-form.pdf">https://www.usda.gov/sites/default/files/documents/usda-program-discrimination-complaint-form.pdf</a>, from any USDA office,
by calling (866) 632-9992, or by writing a letter addressed to USDA.
The letter must contain the complainant's name, address, telephone
number, and a written description of the alleged discriminatory action
in sufficient detail to inform the Assistant Secretary for Civil Rights
(ASCR) about the nature and date of an alleged civil rights violation.
The completed AD-3027 form or letter must be submitted to USDA by:
(1) Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410; or
(2) Fax: (833) 256-1665 or (202) 690-7442; or
(3) Email: <a href="/cdn-cgi/l/email-protection#5424263b332635397a3d3a20353f3114212730357a333b22"><span class="__cf_email__" data-cfemail="7101031e1603101c5f181f05101a1431040215105f161e07">[email protected]</span></a>.
List of Subjects
7 CFR Part 1710
Electric power, Grant programs-energy, Loan programs-energy,
Reporting and recordkeeping requirements, Rural areas.
7 CFR Part 1714
Electric power, Loan programs-energy, Rural areas.
7 CFR Part 1717
Administrative practice and procedure, Electric power, Electric
power rates, Electric utilities, Intergovernmental relations,
Investments, Loan programs-energy, Reporting and recordkeeping
requirements, Rural areas.
7 CFR Part 1724 and 1730
Electric power, Loan programs-energy, Reporting and recordkeeping
requirements, Rural areas.
For the reasons set forth in the preamble, RUS amends 7 CFR parts
1710, 1714, 1717, 1724, and 1730 as follows:
PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO
ELECTRIC LOANS AND GUARANTEES
0
1. The authority citation for part 1710 continues to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Subpart A--General
0
2. Revise Sec. 1710.1 to read as follows:
Sec. 1710.1 General statement.
This part establishes general and pre-loan policies and
requirements that apply to both insured and guaranteed loans to finance
the construction and improvement of electric facilities in rural areas,
including generation, transmission, and distribution facilities.
Sec. 1710.2 [Amended]
0
3. Amend Sec. 1710.2 by removing the definitions for ``Approved load
forecast work plan'', ``Load forecast work plan'', and ``PRS work
plan''.
Subpart C--Loan Purposes and Basic Policies
0
4. Amend Sec. 1710.101 by revising paragraphs (a) introductory text
and (b) to read as follows:
Sec. 1710.101 Types of eligible borrowers.
(a) RUS makes loans to corporations, States, Tribes, territories,
and subdivisions and agencies thereof; municipalities; people's utility
districts; and cooperative, nonprofit, limited-dividend, or mutual
associations that provide or propose to provide:
* * * * *
(b) In making loans, RUS gives preference to States, Tribes,
territories, and subdivisions and agencies thereof; municipalities;
people's utility districts; and cooperative, nonprofit, or limited-
dividend associations. RUS does not make direct loans to individual
consumers.
* * * * *
0
5. Revise Sec. 1710.105 to read as follows:
Sec. 1710.105 State and Tribal regulatory approvals.
(a) In States or in Tribal areas where a borrower is required to
obtain approval of a project or its financing from a State or Tribal
regulatory authority, RUS requires that such approvals be obtained
before the following types of loans are approved by RUS:
(1) Loans requiring an Environmental Impact Statement;
(2) Loans to finance generation and transmission facilities, when
the loan request for such facilities is $25 million or more; and
(3) Loans for the purpose of assisting borrowers to implement
demand side management and energy conservation programs and on and off
grid renewable energy systems.
(b) In Tribal areas all borrowers are required to obtain approval
of the project from the Tribal government or relevant Tribal regulatory
body, before any loan is approved by RUS.
(c) At minimum, in the case of all loans in States or Tribal areas
where State regulatory approval is required of the project or its
financing, such State or Tribal approvals will be required before loan
funds are advanced.
(d) In cases where State regulatory authority or Tribal government
or relevant Tribal regulatory body approval has been obtained, but the
borrower has failed to proceed with the project in a timely manner
according to the schedule contained in the borrower's project design
manual, or if there are cost overruns or other developments that
threaten loan feasibility or security, RUS may require the borrower to
obtain a reaffirmation of the project and its financing from the State
or Tribal authority before any additional loan funds are advanced.
0
6. Amend Sec. 1710.106 by:
0
a. Revising paragraph (a)(3);
0
b. Removing paragraph (b)(1);
0
c. Redesignating paragraphs (b)(2) and (3) as paragraphs (b)(1) and
(2); and
0
d. Revising paragraphs (c)(2) and (3).
The revisions read as follows:
Sec. 1710.106 Uses of loan funds.
(a) * * *
(3) Headquarters Offices, Warehouse, and garage facilities. The
purchase,
[[Page 73437]]
remodeling, or construction of headquarters office, other headquarters
facilities, warehouse, and garage facilities required for the operation
of a borrower's system. See paragraph (b) of this section.
* * * * *
(c) * * *
(2) Facilities to serve consumers who are not RE Act beneficiaries
unless those facilities are necessary and incidental to providing or
improving electric service in rural areas (See Sec. 1710.104).
(3) Any facilities or other purposes that a State regulatory
authority having jurisdiction will not approve for inclusion in the
borrower's rate base or will not otherwise allow rates sufficient to
repay with interest the debt incurred for the facilities or other
purposes.
* * * * *
Subpart E--Load Forecasts
0
7. Amend Sec. 1710.200 by revising the first sentence to read as
follows:
Sec. 1710.200 Purpose
This subpart contains RUS policies for the preparation, review,
approval and use of load forecasts. * * *
0
8. Amend Sec. 1710.202 by revising paragraphs (a) and (b) to read as
follows:
Sec. 1710.202 Requirement to prepare a load forecast--power supply
borrowers.
(a) A power supply borrower with a total utility plant of $500
million or more must maintain and provide a current (prepared within
the last 2 years) load forecast in support of any request for RUS
financial assistance.
(b) A power supply borrower that is a member of another power
supply borrower that has a total utility plant of $500 million or more
must provide an approved load forecast in support of any request for
RUS financial assistance. The member power supply borrower may comply
with this requirement by participation in and inclusion of its load
forecasting information in the load forecast of its power supply
borrower.
* * * * *
0
9. Revise Sec. 1710.203 to read as follows:
Sec. 1710.203 Requirement to prepare a load forecast--distribution
borrowers.
(a) A distribution borrower that is a member of a power supply
borrower, with a total utility plant of $500 million or more must
provide a current (prepared within the last 2 years) load forecast in
support of any request for RUS financial assistance. The distribution
borrower may comply with this requirement by participation in and
inclusion of its load forecasting information in the approved load
forecast of its power supply borrower.
(b) A distribution borrower that is a member of a power supply
borrower which is itself a member of another power supply borrower that
has a total utility plant of $500 million or more must provide a
current (prepared within the last 2 years) load forecast in support of
any request for RUS financial assistance. The distribution borrower may
comply with this requirement by participation in and inclusion of its
load forecasting information in the load forecast of its power supply
borrower.
(c) A distribution borrower that is a member of a power supply
borrower with a total utility plant of less than $500 million must
provide a current (prepared within the last 2 years) load forecast that
meets the requirements of this subpart in support of an application for
any RUS loan or loan guarantee that exceeds $3 million or 5 percent of
total utility plant, whichever is greater. The distribution borrower
may comply with this requirement by participation in and inclusion of
its load forecasting information in the load forecast of its power
supply borrower.
(d) A distribution borrower with a total utility plant of less than
$500 million and that is unaffiliated with a power supply borrower must
provide a current (prepared within the last 2 years) load forecast that
meets the requirements of this subpart in support of an application for
any RUS loan or loan guarantee which exceeds $3 million or 5 percent of
total utility plant, whichever is greater.
(e) A distribution borrower with a total utility plant of $500
million or more must provide a current (prepared within the last 2
years) load forecast in support of any request for RUS financing
assistance. The distribution borrower may comply with this requirement
by participation in and inclusion of its load forecasting information
in the load forecast of its power supply borrower.
0
10. Amend Sec. 1710.205 by revising paragraphs (a) and (c) to read as
follows:
Sec. 1710.205 Minimum requirements for all load forecasts.
(a) Contents of load forecast. All load forecasts submitted by
borrowers for approval must include:
(1) Scope of the load forecast. The narrative shall address the
overall approach, time periods, and expected internal and external uses
of the forecast. Examples of internal uses include providing
information for developing or monitoring demand side management
programs, supply resource planning, load flow studies, wholesale power
marketing, retail marketing, cost of service studies, rate policy and
development, financial planning, and evaluating the potential effects
on electric revenues caused by competition from alternative energy
sources or other electric suppliers. Examples of external uses include
meeting State and Federal regulatory requirements, obtaining financial
ratings, and participation in reliability council, power pool, regional
transmission group, power supplier or member system forecasting and
planning activities.
(2) Resources used to develop the load forecast. The discussion
shall identify and discuss the borrower personnel, consultants, data
processing, methods, and other resources used in the preparation of the
load forecast. The borrower shall identify the borrower's members and,
as applicable, member personnel that will serve as project leaders or
liaisons with the authority to make decisions and commit resources
within the scope of the current and future load forecasts.
(3) A comprehensive description of the database used in the study.
The narrative shall describe the procedures used to collect, develop,
verify, validate, update, and maintain the data. A data dictionary
thoroughly defining the database shall be included. The borrower shall
make all or parts of the database available or otherwise accessible to
RUS in electronic format if requested.
(4) A narrative for each new load forecast or update of a load
forecast. The narrative shall discuss the methods and procedures used
in the analysis and modeling of the borrower's electric system loads.
The narrative shall also describe the borrower's system, service
territory, and consumers.
(5) A narrative discussing the borrower's past, existing, and
forecast of future electric system loads. The narrative must identify
and explain substantive assumptions and other pertinent information
used to support the estimates presented in the load forecast.
(6) A narrative discussing load forecast uncertainty or alternative
futures that may determine the borrower's actual loads. The narrative
shall describe examples of uncertainties such as economic scenarios,
weather conditions, and others that borrowers may decide to address in
their analysis including:
(i) Most-probable assumptions, with normal weather;
(ii) Pessimistic assumptions, with normal weather;
(iii) Optimistic assumptions, with normal weather;
[[Page 73438]]
(iv) Most-probable assumptions, with severe weather;
(v) Most-probable assumptions, with mild weather;
(vi) Impacts of wholesale or retail competition; or
(vii) New environmental requirements.
(7) A summary of the forecast's results on an annual basis. Include
alternative futures, as applicable: This summary shall be designed to
accommodate the transfer of load forecast information to a borrower's
other planning or loan support documents. Computer-generated forms or
electronic submissions of data are acceptable. Graphs, tables,
spreadsheets or other exhibits shall be included throughout the
forecast as appropriate.
(8) A narrative discussing the coordination activities conducted
between a power supply borrower and its members, as applicable, and
between the borrower and RUS.
(9) Borrowers with a residential demand of 50 percent or more of
total kWh should include in the Load Forecast a Residential Consumer
Survey that is performed at least every 5 years to obtain data on
appliance and equipment saturation and electricity demand. Any such
borrower that is experiencing or anticipates changes in usage patterns
shall consider surveys on a more frequent schedule. Power supply
borrowers shall coordinate such surveys with their members.
(10) Residential consumer surveys may be based on the aggregation
of member-based samples or on a system-wide sample, provided that the
latter provides relevant regional breakdowns as appropriate.
(11) A load forecast for a power supply borrower and its members
must cover all member systems, including those that are not borrowers.
Each borrower is individually responsible for forecasting all its RE
Act beneficiary and non-RE Act beneficiary loads.
(12) A narrative description of the borrower's load forecast
including future load projections, forecast assumptions, and the
methods and procedures used to develop the forecast.
(13) Projections of usage by consumer class, number of consumers by
class, annual system peak demand, and season of peak demand for the
number of years agreed upon by RUS and the borrower.
(14) A summary of the year-by-year results of the load forecast in
a format that allows efficient transfer of the information to other
borrower planning or loan support documents.
(15) The load impacts of a borrower's demand side management and
energy efficiency and conservation program activities, if applicable.
(16) Graphic representations of the variables specifically
identified by management as influencing a borrower's loads.
(17) A database that tracks all relevant variables that might
influence a borrower's loads.
* * * * *
(c) Documentation retention. The borrower must retain its latest
load forecasts and supporting documentation.
* * * * *
Sec. 1710.206 [Removed and Reserved]
0
11. Remove and reserve Sec. 1710.206.
Sec. 1710.209 [Removed and Reserved]
0
12. Remove and Reserve Sec. 1710.209.
Subpart H--Energy Efficiency and Conservation Loan Program
0
13. Amend Sec. 1710.400 by revising paragraph (b)(2) to read as
follows:
Sec. 1710.400 Purpose.
* * * * *
(b) * * *
(2) Although not a goal, RUS recognizes that there will be a
reduction of greenhouse gases with energy efficiency improvements.
0
14. Amend Sec. 1710.404 by:
0
a. Removing the definition for ``Certified energy auditor for
commercial and industrial energy efficiency improvements''; and
0
b. Adding a definition for ``Certified energy auditor'' in alphabetical
order.
The addition reads as follows:
Sec. 1710.404 Definitions.
* * * * *
Certified energy auditor means:
(1) A certified energy auditor for commercial and industrial energy
efficiency improvements shall mean an energy auditor who meets at least
one of the following criteria:
(i) An individual possessing a current commercial or industrial
energy auditor certification from a national, industry-recognized
organization;
(ii) A Licensed Professional Engineer in the State in which the
audit is conducted with at least 1 year experience and who has
completed at least two similar type Energy Audits;
(iii) An individual with a four-year engineering or architectural
degree with at least 3 years experience and who has completed at least
five similar type Energy Audits; or
(iv) Beginning in calendar year 2015, an energy auditor
certification recognized by the Department of Energy through its Better
Buildings Workforce Guidelines project.
(2) A certified energy auditor for residential energy efficiency
improvements shall mean an energy auditor that meets one of the
following criteria:
(i) The workforce qualification requirements of the Home
Performance with Energy Star Program, as outlined in Section 3 of the
Home Performance with Energy Star Sponsor Guide; or
(ii) An individual possessing a current residential energy auditor
or building analyst certification from a national, industry-recognized
organization.
* * * * *
0
15. Amend Sec. 1710.408 by revising the second sentence of paragraph
(h) to read as follows:
Sec. 1710.408 Quality assurance plan.
* * * * *
(h) * * * In these cases, utilities shall monitor the work done by
the contractors and confirm that the contractors are performing quality
work. * * *
* * * * *
Subpart I--Application Requirements and Procedures for Loans
0
16. Amend Sec. 1710.500 by revising the first sentence of paragraph
(a) to read as follows:
Sec. 1710.500 Initial contact.
(a) Loan applicants that do not have outstanding loans from RUS
should contact the Rural Utilities Service via Email at
<a href="/cdn-cgi/l/email-protection#3c6e696f7950595f484e555f7c494f585d125b534a"><span class="__cf_email__" data-cfemail="72202721371e171106001b1132070116135c151d04">[email protected]</span></a>, call RUS at (202) 720-9545 or write to the Rural
Utilities Service Administrator, United States Department of
Agriculture, 1400 Independence Ave. SW, STOP 1560, Room 4121,
Washington, DC 20250-1560. * * *
* * * * *
0
17. Amend Sec. 1710.501 by:
0
a. Revising paragraphs (a)(1)(v), (viii), (x), (xiii), and (xvi) and
(a)(2) and (8);
0
b. Removing paragraph (a)(4): and
0
c. Redesignating paragraphs (a)(5) through (17) as paragraphs (a)(4)
through (16).
The revisions read as follows:
Sec. 1710.501 Loan application documents.
(a) * * *
(1) * * *
(v) The Borrower's Unique Entity Identifier;
* * * * *
(viii) List of current counties and Tribal lands where real
property is located;
* * * * *
[[Page 73439]]
(x) Identify any new counties and Tribal lands with property since
last loan;
* * * * *
(xiii) Identify any State or Tribal regulatory approvals needed;
* * * * *
(xvi) Breakdown of loan funds by State and Tribal lands;
* * * * *
(2) Special resolutions. Included any special resolutions required
by Federal, State, or Tribal Authorities and any others as identified
and required by the RUS General Field Representative (for example, use
of contractors, corrective action plans, etc.). Resolutions of support
from Tribal government or Tribal regulatory authority are required by
any non-Tribal applicant intending to serve Tribal areas before any
loan is approved by RUS.
* * * * *
(8) Rate disparity and consumer income data. If the borrower is
applying under the rate disparity and consumer income tests for either
a municipal rate loan subject to the interest rate cap or a hardship
rate loan, the application must provide a breakdown of residential
consumers either by county, Tribal land, or by census tract. In
addition, if the borrower serves in 2 or more States, the application
must include a breakdown of all ultimate consumers by State. This
breakdown may be a copy of Form EIA 861 submitted by the Borrower to
the Department of Energy or in a similar form. See 7 CFR 1714.7(b) and
1714.8(a). To expedite the processing of loan applications, RUS
strongly encourages distribution borrowers to provide this information
to the GFR prior to submitting the application.
* * * * *
0
18. Add subpart J to read as follows:
Subpart J--Terms of Loans Common to Electric Loans and Guarantees
Sec.
1710.601 Advance of funds from loans.
1710.602 Fund advance period.
1710.603 Sequence of advances.
1710.604 Amortization of principal.
1710.605 Rescission of loans.
Subpart J--Terms of Loans Common to Electric Loans and Guarantees
Sec. 1710.601 Advance of funds from loans.
The borrower shall request advances of funds as needed. Advances
are subject to RUS approval and must be requested in writing on RUS
Form 595 or an RUS approved equivalent form. Funds will not be advanced
until the Administrator has received satisfactory evidence that the
borrower has met all applicable conditions precedent to the advance of
funds, including evidence that the supplemental financing required
under this part concurrent loan guaranteed by RUS is available to the
borrower under terms and conditions satisfactory to RUS.
Sec. 1710.602 Fund advance period.
(a) The fund advance period begins on the date of the loan note and
will last no longer than five years, after September 30 of the fifth
year after the fiscal year of obligation. The fiscal year of obligation
is identified in loan documentation associated with each loan. The
Administrator may extend the fund advance period on any loan if the
borrower meets the requirements of paragraph (b) of this section.
However, under no circumstances shall RUS ever make or approve an
advance, regardless of the last day for an advance on the loan note or
any extension by the Administrator, later than September 30 of the
fifth year after the fiscal year of obligation if such date would
result in the RUS obligating or permitting advance of funds contrary to
the Anti-Deficiency Act.
(b) The Administrator may agree to an extension of the fund advance
period for loans if the borrower demonstrates, to the satisfaction of
the Administrator, that the loan funds continue to be needed for
approved loan purposes (e.g., facilities included in a RUS approved
construction work plan). Policies for extension of the fund advance
period following certain mergers, consolidations, and transfers of
systems substantially in their entirety are set forth in 7 CFR
1717.156.
(1) To apply for an extension, the borrower must make a request to
RUS prior to the last date for advance as noted in the borrower's loan
documents and provide, the following:
(i) A certified copy of a board resolution requesting an extension
of the Government's obligation to advance loan funds;
(ii) Evidence that the unadvanced loan funds continue to be needed
for approved loan purposes; and
(iii) Notice of the estimated date for completion of construction.
(2) If the Administrator approves a request for an extension, RUS
will notify the borrower in writing of the extension and the terms and
conditions thereof. An extension will be effective only if it is
requested in writing prior to the last date for advance as provided in
the borrower's loan documents.
(3) Any request received after the last date for advance shall be
rejected.
(c) RUS will rescind the balance of any loan funds not advanced to
a borrower as of the final date approved for advancing funds.
Sec. 1710.603 Sequence of advances.
(a) Except as set forth in paragraph (b) of this section,
concurrent loan funds will be advanced in the following order:
(1) Fifty (50) percent of the RUS insured loan funds.
(2) One hundred (100) percent of the supplemental loan funds.
(3) The remaining amount of the RUS insured loan funds.
(b) At the borrower's request and with RUS approval, all or part of
the supplemental loan funds may be advanced before funds in paragraph
(a)(1) of this section.
Sec. 1710.604 Amortization of principal.
(a) Amortization of funds advanced during the first 2 years after
the date of the note shall begin no later than 2 years from the date of
the note. Except as set forth in paragraph (b) of this section,
amortization of funds advanced 2 years or more after the date of the
note shall begin with the scheduled loan payment billed in the month
following the month of the advance.
(b) For advances made 2 years or more after the date of the note,
the Administrator may, upon written request from the borrower,
authorize deferral of amortization of principal for a period of up to 2
years from the date of the advance if the Administrator determines that
failure to authorize such deferral would adversely affect either the
Government's financial interest or the achievement of the purposes of
the Rural Electrification Act. Such deferral shall not extend the loan
maturity period.
Sec. 1710.605 Rescission of loans.
(a) A borrower may request rescission of a loan with respect to any
funds unadvanced by submitting a letter signed by the General Manager,
Board President or other individual authorized by the Board of
Directors to request such rescission.
(b) RUS may rescind loans pursuant to Sec. 1710.602(c).
(c) Borrowers who prepay RUS loans at a discounted present value
pursuant to subpart F of 7 CFR part 1786 are required to rescind the
unadvanced balance of all outstanding electric notes pursuant to 7 CFR
1786.158(j).
PART 1714--PRE-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC
LOANS
0
19. The authority citation for part 1714 continues to read as follows:
Authority: 7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.
[[Page 73440]]
Subpart B [Removed and Reserved]
0
20. Remove and reserve subpart B, consisting of Sec. Sec. 1714.50
through 1714.59.
PART 1717--POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND
GUARANTEED ELECTRIC LOANS
0
21. The authority citation for part 1717 continues to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Subpart M--Operational Controls
0
22. Revise Sec. 1717.616 to read as follows:
Sec. 1717.616 Sale, lease, or transfer of capital assets.
(a) The term ``disposition'' in this part shall mean any sale,
lease, or any other transaction in which the borrower transfers an
interest in a capital asset to another entity or person.
(b) A borrower may, without the prior approval of RUS, sell, lease,
transfer, or otherwise dispose of any capital asset if the following
conditions are met:
(1) The borrower is not in default on any of its obligations to
RUS;
(2) In the most recent year for which data is available, the
borrower has met its coverage ratios as set forth in 7 CFR 1710.114(b)
or other financial requirements as established by their mortgages, loan
contracts, or other security agreements;
(3) The sale, lease, transfer, or disposition of assets will not
reduce the borrower's existing or future requirements for energy or
capacity being furnished to the borrower under any wholesale power
contract which has been pledged as security to the government;
(4) Fair market value is obtained for the assets;
(5) No employee or board member of the organization has a direct
personal financial interest in the disposition of the capital assets;
(6) The aggregate value of assets sold, leased, transferred, or
disposed of in any 12-month period is less than 10 percent of the
borrower's net utility plant prior to the disposition, not to exceed
$10,000,000.00; and
(7) If the disposition of the capital asset:
(i) Results in the borrower not retaining an interest in the asset;
or
(ii) Constitutes a ``capital lease'' under 7 CFR 1767.15(s)(1) and
the borrower does not retain the right to utilize the asset during the
term of the lease, and the borrower disposes of the proceeds, less
ordinary and reasonable expenses incident to such disposition, in a
manner consistent with paragraph (e) of this section.
(c) The requirements for all dispositions include:
(1) The borrower shall receive fair market value for the
disposition of capital assets;
(2) The sale shall be in the best interests of the creditors;
(3) All approvals required by law, by the articles of
incorporation, by the bylaws of the seller, or by all the creditors,
shall be obtained prior to delivery of the assets;
(4) In the case of dispositions involving exchanges or trades of a
plant in place between an RUS borrower and a non-RUS borrower, the
borrower must provide evidence, satisfactory to RUS, that the exchange
or trade is equitable to the RUS borrower and that the plant acquired
in the exchange or trade can be economically integrated into the
borrower's system; and
(5) Unless the seller, as an existing RUS borrower is dissolved,
its electric system after the disposition will constitute a
satisfactory operating unit and the disposition of the asset will not
jeopardize the repayment of the seller's RUS loan and other loans or
impair the collateral serving as security for all RUS loans. If the
purchaser is a RUS borrower, the same determinations shall also be made
with respect to the purchaser's operations and loan repayment.
(d) The methods of handling disposition include:
(1) Dispositions of capital assets generally shall be for cash
except as otherwise approved by RUS in writing.
(2) If the disposition of the assets is not subject to RUS approval
as provided in paragraph (b) of this section but the purchaser requires
the government to release its lien on the assets subject to the
disposition, the following shall apply:
(i) The borrower shall prepare either:
(A) A transmittal letter to RUS requesting a partial release of the
lien with respect to the assets to be disposed; or
(B) RUS Form 369, Request for Approval to Sell Capital Assets, or
its successor.
(ii) The partial release of lien should be prepared by the attorney
for the borrower or the purchaser. It is the borrower's responsibility
to assure the accuracy and legal effectiveness of a proposed release.
When a partial release of lien requires execution and acknowledgement
by a creditor, such execution and acknowledgment by the other creditor
should be obtained by the borrower.
(iii) If the borrower elects to submit a transmittal letter to
request the release of lien, the letter should contain the following
information:
(A) Insert address of property or assets being sold;
(B) Name and address of purchaser;
(C) Approximate original cost or book value;
(D) The consideration the borrower is receiving in exchange for the
disposition of the assets' prices;
(E) A statement that the borrower received fair market value for
the property being disposed;
(F) A statement from the borrower that the net proceeds have been
or will be deposited into the Construction Fund Trustee Account or will
be applied as a prepayment on all debt secured under the mortgage or
other security agreement applicable to the assets being disposed,
equally and proportionally,
(iv) A statement from the borrower's manager stating that there was
no distribution of funds to any employees and/or board members. If any
amount of funds arising from the disposition have been distributed to
employees and/or board members, specific identification of the
employees and/or board members, and reasons why funds were provided to
those persons (if applicable) must be stated in the transmittal letter.
Include borrower contact information, including email address, for
questions.
(v) A statement of how or if the disposition will affect the
borrower's existing customers.
(3) If the disposition does not fall within the ambit of paragraph
(b) of this section so that RUS Approval is required, the following
then apply:
(i) If the Federal Government is the sole lien holder of the
borrower's capital assets, approval of the disposition by the Federal
Government will be indicated on RUS Form 369, when returned to the
seller.
(ii) If the Federal Government holds a lien jointly with
supplemental lenders, joint approval for the disposition will be
necessary and the borrower will forward the following:
(A) Information should be forwarded directly to RUS and one copy to
all supplemental lenders;
(B) When approved by RUS, the information will be forwarded by RUS
to the supplemental lenders (and a notice letter advising that RUS has
forwarded this information to supplemental lenders will be issued by
RUS to the borrower); and
(C) The supplemental lenders will be instructed, in the RUS
transmittal memorandum, to execute the
[[Page 73441]]
documents and return them to the seller. The supplemental lenders will
also be instructed to notify RUS when the completed documents are
returned to the seller.
(e) The disposition of proceeds will be handled as follows:
(1) The disposition of proceeds from the disposition of a capital
asset shall be the same regardless of whether or not RUS approval of
the sale is required.
(2) If the gross proceeds from the disposition of the assets total
less than $50,000 the borrower shall deposit the proceeds in its
general fund account and are to be used for purposes related to the
utility business as determined by the management of the borrower.
(3) Proceeds from individual dispositions of property where the
gross proceeds total $50,000 or more, should be distributed and
accounted for as follows:
(i) Deposited into the Construction Fund Trustee Account. When
funds are deposited into the Construction Fund Trustee Account, the
borrower shall notify RUS in writing so that the budget records can be
adjusted. The funds are to be used for the construction or acquisition
of the borrower's utility system;
(ii) Paid to RUS and any secured supplemental lenders if the
borrower has concurrent loans outstanding, by application of such funds
as a prepayment on the notes of all lenders pro-rata according to the
aggregate unpaid principal amount of the notes then outstanding, as
designated by the noteholders, and in accordance with the borrower's
loan documents;
(iii) If the borrower has no concurrent supplemental loans
outstanding, applied to RUS as a payment to be applied to the note or
notes issued with respect to loans made or guaranteed by RUS, or any
portion of a note with respect to a loan made by RUS, and designated by
the borrower or RUS; or
(iv) In the case of dispositions of SO<INF>2</INF> allowances, the
funds from the sale of allowances should be deposited into the
Construction Fund Trustee Account. If any entity prefers to deposit the
funds into the General Fund Account, specific RUS approval will be
given on a case-by-case basis. Accompanying any request for approval to
deposit the funds into the General Fund Account should be a completed
RUS Form 369 along with a summary of the anticipated disposition of
funds from the General Fund Account;
(v) In the case of dispositions of equipment, materials, or scrap,
all proceeds (regardless of the amount) from the sale should be
deposited into the General Fund Account to be used for the purchase of
other property useful in the mortgagor's utility business, not
necessarily of the same kind as the property disposed, which is subject
to the lien of the mortgage;
(vi) The Administrator may allow a borrower to deposit the proceeds
of the disposition of the asset directly into the General Funds Account
instead of the Construction Fund Trustee Account if the borrower has no
`Balance in Reserve' on its most recent loan advances 605 report and
does not anticipate submitting any new loan applications to RUS. The
borrower must receive written approval from RUS before it deposits any
proceeds into its General Funds Account.
(f) The borrower must provide the following to RUS for any
disposition of a capital asset that does not fall within the scope of
paragraph (b) of this section and requires RUS approval:
(1) RUS Form 369 with original signature;
(2) If the disposition involves a condemnation, the borrower must
attach a copy of the petition or complaint in the condemnation suit to
the RUS Form 369. Items 10, 11, and 12 of the RUS Form 369 may be
completed by referring to the attachment. Item 14 need not be
completed. The RUS Form 369 and a copy of the petition or complaint in
condemnation cases should be submitted to RUS promptly after the
petition or complaint has been received by the borrower;
(3) If the purchaser will require the disposition of the asset be
free and clear of liens, the partial release of the lien should be
prepared by the attorney for the seller or purchaser. It will be the
responsibility of the borrower and the borrower's attorney to ensure
the accuracy and legal effectiveness of a proposed partial release of
the lien;
(4) If the disposition involves real estate or plant in place, in
addition to the information required for all dispositions, the seller
will provide a brief description of the property being disposed and a
statement explaining why the asset is no longer needed for the
borrower's system. The borrower shall also provide the following
information to RUS for the disposition of real estate and plant in
place:
(i) Except in condemnation cases, a statement of agreement between
the seller and the purchaser on the proposed selling price. When
applicable, include adjustments such as capital additions and
retirements, depreciation, taxes, distribution of membership fees,
deposits and contributions, prepaid and delinquent bills and accounts,
insurance, assignment of easements, the proposed closing date, and
other pertinent information. Generally, the closing date selected
should not be less than 90 days after the date the required information
is forwarded to RUS;
(ii) A complete legal description or real property supported by key
and detail maps showing the location of lines or other capital assets
to be disposed;
(iii) A breakdown of consumers by classification showing number,
mileage, average kWh usage, and revenues for the portion of lines being
disposed;
(iv) An inventory of lines on a priced assembly or record unit
basis, or, in the case of facilities other than lines, a detailed
breakdown of separable units and their costs;
(v) Description and estimated costs of changes, if any, which must
be made in the seller's system in order to maintain satisfactory
operations after the sale has been completed;
(vi) Other pertinent data such as the physical condition of the
property to be disposed, a copy of the lease if facilities to be
disposed of are on leased land, and the approval of applicable
regulatory bodies where required;
(vii) The retail rates to be applied to the consumers on the lines
being disposed (comparative rate schedules); and
(viii) If the purchaser is another RUS borrower or a borrower from
a supplemental lender, a description and the estimated costs of the
changes, if any, necessary to integrate the properties being acquired
with the purchaser's existing system for satisfactory operations.
(5) If the purchaser is to pay the seller in installments, such
information should be noted on Item 9 of the RUS Form 369. A sales
agreement between the seller and the purchaser, a note or other debt
instrument in favor of the seller, and a security agreement in favor of
the seller should be executed and collaterally assigned by the seller
to the U.S. Government and the supplemental lenders, if applicable. The
partial release of the lien will not be executed by RUS, if applicable,
until the final installment payment has been received by the seller.
The disposition of the proceeds from installment sales will be the same
as from cash dispositions);
(6) Dispositions involving exchanges or trades of real estate or
plant in place between a borrower and a non-RUS borrower will be
considered on an individual case-by-case basis.
(g) Expenditures by the seller in conjunction with the dispositions
of capital assets will be properly accounted for and all associated
documents shall be retained for review
[[Page 73442]]
when RUS conducts its next Loan Fund and Accounting Review.
Subpart R--Lien Accommodations and Subordinations for 100 Percent
Private Financing
0
23. Amend Sec. 1717.855 by revising paragraph (g) to read as follows:
Sec. 1717.855 Application contents: Advance approval--100 percent
private financing of distribution, subtransmission and headquarters
facilities, and certain other community infrastructure.
* * * * *
(g) RUS Form 740c, Cost Estimates and Loan Budget for Electric
Borrowers;
* * * * *
PART 1724--ELECTRIC ENGINEERING, ARCHITECTURAL SERVICES AND DESIGN
POLICIES AND PROCEDURES
0
24. The authority citation for part 1724 continues to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Subpart A--General
0
25. Revise Sec. 1724.9 to read as follows:
Sec. 1724.9 Environmental review requirements.
Borrowers must comply with the environmental review requirements in
accordance with 7 CFR part 1970. or any successor regulations that
implement the provisions of the National Environmental Policy Act.
Subpart D--Electric System Planning
0
26. Amend Sec. 1724.40 by revising the last sentence to read as
follows:
Sec. 1724.40 General.
* * * These bulletins are available at <a href="https://www.rd.usda.gov/resources/regulations/bulletins">https://www.rd.usda.gov/resources/regulations/bulletins</a>.
Subpart E--Electric System Design
0
27. Amend Sec. 1724.51 by revising paragraph (f)(1) to read as
follows:
Sec. 1724.51 Design requirements
* * * * *
(f) * * *
(1) This section covers microwave and powerline carrier
communications systems, load control, and supervisory control and data
acquisition (SCADA) systems but does not include cybersecurity
measures.
* * * * *
0
28. Amend Sec. 1724.54 by revising paragraphs (d)(1)(ii), (e)(2),
(f)(2), and (g)(1) and (2) to read as follows:
Sec. 1724.54 Requirements for RUS approval of plans and
specifications.
* * * * *
(d) * * *
(1) * * *
(ii) The borrower shall notify RUS in writing, which may include
the Construction Work Plan or amendment thereto that contains the
proposed new substation, that a previously approved design will be
used, including identification of the previously approved design.
* * * * *
(e) * * *
(2) The borrower shall obtain RUS approval, prior to issuing
invitations to bid, of the terms and conditions for all generating
plant equipment or construction contracts which will cost $5,000,000 or
more, provided however that the terms of any indenture or other
agreement between RUS and the borrower supersede the requirement of RUS
approval contained herein. Unless RUS approval is required by paragraph
(a) of this section, plans and specifications for generating plant
equipment and construction do not require RUS approval.
(f) * * *
(2) Unless RUS approval is required by paragraph (a) of this
section, plans and specifications for headquarters buildings do not
require RUS approval. The application must show floor area and
estimated cost breakdown between office building space and space for
equipment warehousing and service facilities, and include a one line
drawing (floor plan and elevation view), to scale, of the proposed
building with overall dimensions shown. The information concerning the
planned building may be included in the borrower's construction work
plan in lieu of submitting it with the application. (See 7 CFR part
1710, subpart F.) Prior to issuing the plans and specifications for
bid, the borrower shall also submit to RUS a statement, signed by the
architect or engineer, that the building design meets the Uniform
Federal Accessibility Standards (See Sec. 1724.51(e)(1)(i)).
(g) * * *
(1) This paragraph (g) covers microwave and powerline carrier
communications systems, load control, and supervisory control and data
acquisition (SCADA) systems, but does not include cybersecurity
systems.
(2) The borrower shall obtain RUS approval, prior to issuing
invitations to bid, of the terms and conditions for communications and
control facilities contracts which will cost $1,500,000 or more;
provided however that the terms of any indenture or other agreement
between RUS and the borrower supersede the requirement of RUS approval
contained herein. Unless RUS approval is required by paragraph (a) of
this section, plans and specifications for communications and control
facilities do not require RUS approval.
* * * * *
Subpart F--RUS Contract Forms
0
29. Amend Sec. 1724.70 by revising paragraph (b) to read as follows:
Sec. 1724.70 Standard forms of contracts for borrowers.
* * * * *
(b) Contract forms. RUS promulgates standard contract forms,
identified in the List of Required Contract Forms, Sec. 1724.74(c),
that borrowers are required to use in accordance with the provisions of
this part. A borrower may deviate from the Required Contract Form
provided the borrower certifies to RUS that the non-standard form
incorporates the provisions of the Required Contract Form that are
contained in the RUS Certification Form found at <a href="https://www.rd.usda.gov/resources/directives/electric-sample-documents">https://www.rd.usda.gov/resources/directives/electric-sample-documents</a>.
Further, a borrower may utilize a contract other than a Required
Contract Form if it is allowed to do so by an indenture or any other
agreement between the borrower and RUS. In addition, RUS promulgates
standard contract forms identified in the List of Guidance Contract
Forms contained in Sec. 1724.74(c) that the borrowers may but are not
required to use in the planning, design, and construction of their
electric systems. Borrowers are not required to use these guidance
contract forms in the absence of an agreement to do so.
0
30. Amend Sec. 1724.71 by revising paragraph (a), the first sentence
of paragraph (b), and paragraph (c) to read as follows;
Sec. 1724.71 Borrower contractual obligations.
(a) Loan agreement. As a condition of a loan or loan guarantee
under the RE Act, distribution borrowers are normally required to enter
into RUS loan agreements pursuant to which the borrower agrees to use
RUS standard forms of contracts for construction, procurement,
engineering services and architectural services financed in whole or in
part by the RUS loan. Normally, this obligation is contained in section
5.16 of the standard distribution loan contract. To comply with the
provisions of the loan agreements as implemented by this part,
borrowers must use those forms of contract (hereinafter sometimes
[[Page 73443]]
called ``listed contract forms'') identified in the List of Required
Standard Contract Forms contained in Sec. 1724.74(c), except as
provided in Sec. 1724.70(b). Power Supply borrowers typically execute
an indenture and loan contract as well. The terms and conditions of any
indenture and loan contract executed by a Power Supply borrower shall
govern its obligations with respect to the use of contract forms.
(b) * * * If a borrower is required by this part or by its loan
agreement with RUS to use a listed standard form of contract, the
borrower shall use the listed contract form in the format available
from RUS, either paper or electronic format, except as provided in
Sec. 1724.70(bc). * * *
(c) Amendment. Where a borrower has entered into a contract in the
form required by this part, no change may be made in the terms of the
contract, by amendment, waiver or otherwise, without the prior written
approval of RUS except as provided in Sec. 1724.70(b).
* * * * *
PART 1730--ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE
0
31. The authority citation for part 1730 continues to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Subpart B--Operations and Maintenance Requirements
0
32. Amend Sec. 1730.27 by:
0
a. Revising the first sentence of paragraph (a);
0
b. Removing paragraphs (b) and (c);
0
c. Redesignating paragraphs (d) and (e) as paragraphs (b) and (c)
0
d. Revising the first sentence of newly redesignated paragraph (b); and
0
e. Revising newly redesignated paragraph (c)(5); and
The revisions read as follows:
Sec. 1730.27 Vulnerability and Risk Assessment (VRA).
(a) Each borrower with an approved RUS electric program loan shall
perform an initial VRA of its electric system. * * *
(b) Each applicant that submits an application for an RUS electric
program loan or grant shall include with its application package a
letter certification that such applicant has performed an initial VRA
of its electric system. * * *
(c) * * *
(5) Threats to facilities and assets identified in paragraphs
(c)(1) through (4) of this section;
* * * * *
0
33. Amend Sec. 1730.28 by:
0
a. Revising the first and last sentences of paragraph (a);
0
b. Removing paragraphs (b) and (c);
0
c. Redesignating paragraphs (d) through (j) as paragraphs (b) through
(h);
0
d. Revising newly redesignated paragraph (b);
0
e. Removing the last sentence of newly redesignated paragraph (f); and
0
f. Revising newly redesignated paragraph (g)(1).
The revisions read as follows:
Sec. 1730.28 Emergency Restoration Plan (ERP).
(a) Each borrower shall have a written ERP. * * * If a joint
electric utility ERP is developed, each RUS borrower shall prepare an
addendum to meet the requirements of paragraphs (c) through (e) of this
section as it relates to its system.
* * * * *
(b) Each applicant that submits an application for an RUS electric
program loan or grant shall include with its application package a
letter certification that such applicant has a written ERP.
* * * * *
(g) * * *
(1) The modified ERP must be prepared in compliance with the
provisions of paragraphs (c) through (e) of this section; and
* * * * *
Subpart C--Interconnection of Distributed Resources.
0
34. Amend Sec. 1730.63 by:
0
a. Revising paragraph (a)(5);
0
b. Removing paragraph (b)(2); and
0
c. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(2) and
(3).
The revision reads as follows:
Sec. 1730.63 IDR policy criteria.
(a) * * *
(5) IDR policies should be reconsidered and updated periodically in
a manner that is consistent with prudent utility practice.
* * * * *
0
35. Revise Sec. 1730.65 to read as follows:
Sec. 1730.65 Effective dates.
All electric program applicants shall provide a letter of
certification executed by the General Manager stating that the borrower
meets the requirements of this subpart before such loan may be
approved.
Andrew Berke,
Administrator, Rural Utilities Service.
[FR Doc. 2022-25554 Filed 11-29-22; 8:45 am]
BILLING CODE 3410-15-P
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</html>Indexed from Federal Register on November 30, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.