[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2014 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]



          Title 7

Agriculture


________________________

Parts 1600 to 1759

                         Revised as of January 1, 2014

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2014
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 7:
    SUBTITLE B--Regulations of the Department of Agriculture 
      (Continued)
          Chapter XVI--Rural Telephone Bank, Department of 
          Agriculture                                                5
          Chapter XVII--Rural Utilities Service, Department of 
          Agriculture                                               17
  Finding Aids:
      Table of CFR Titles and Chapters........................     813
      Alphabetical List of Agencies Appearing in the CFR......     833
      List of CFR Sections Affected...........................     843

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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 7 CFR 1600.1 refers 
                       to title 7, part 1600, 
                       section 1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
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parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
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LEGAL STATUS

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HOW TO USE THE CODE OF FEDERAL REGULATIONS

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[[Page vi]]

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[[Page vii]]

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    Director,
    Office of the Federal Register.
    January 1, 2014.

                                
                                      
                            

  

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                               THIS TITLE

    Title 7--Agriculture is composed of fifteen volumes. The parts in 
these volumes are arranged in the following order: Parts 1-26, 27-52, 
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-
1599, 1600-1759, 1760-1939, 1940-1949, 1950-1999, and part 2000 to end. 
The contents of these volumes represent all current regulations codified 
under this title of the CFR as of January 1, 2014.

    The Food and Nutrition Service current regulations in the volume 
containing parts 210-299, include the Child Nutrition Programs and the 
Food Stamp Program. The regulations of the Federal Crop Insurance 
Corporation are found in the volume containing parts 400-699.

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199.

    For this volume, Robert J. Sheehan, III was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of the 
Managing Editor, assisted by Ann Worley.

[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1600 to 1759)

  --------------------------------------------------------------------

  SUBTITLE B--Regulations of the Department of Agriculture (Continued)

                                                                    Part

chapter xvi--Rural Telephone Bank, Department of Agriculture        1600

chapter xvii--Rural Utilities Service, Department of 
  Agriculture...............................................        1700

[[Page 3]]

  Subtitle B--Regulations of the Department of Agriculture (Continued)

[[Page 5]]



      CHAPTER XVI--RURAL TELEPHONE BANK, DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1600            General information.........................           7
1610            Loan policies...............................          10

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PART 1600_GENERAL INFORMATION--Table of Contents



     Meetings of the Board of Directors of the Rural Telephone Bank

Sec.
1600.1  General.
1600.2  Definitions.
1600.3  Open meetings.
1600.4  Scheduling of meetings.
1600.5  Public announcement of meetings.
1600.6  Bases for closing a meeting to the public.
1600.7  Procedures for closing a meeting to the public.
1600.8  Transcript, recording or minutes; availability to the public.

    Authority: 7 U.S.C. 941 et seq.; Pub. L. 103-354, 108 Stat. 3178 (7 
U.S.C. 6941 et seq.).

    Source: 56 FR 49134, Sept. 27, 1991, unless otherwise noted.

     Meetings of the Board of Directors of the Rural Telephone Bank



Sec. 1600.1  General.

    The purpose of this part is to effectuate the provisions of the 
Government in the Sunshine Act. This part applies to the deliberations 
of a quorum of the Directors of the Bank required to take action on 
behalf of the Bank where such deliberations determine or result in the 
joint conduct or disposition of official Bank business. Any deliberation 
to which this part applies is hereinafter in this part referred to as a 
meeting of the Board of Directors.



Sec. 1600.2  Definitions.

    As used in this part:
    Board means Board of Directors of the Rural Telephone Bank (Bank).
    Director means an individual who is a member of the Board.
    Legal Counsel means the legal counsel of the Bank.
    Meeting means the deliberations (including those conducted by 
conference telephone call or by any other method) among a quorum of the 
Directors, where such deliberations determine or result in joint conduct 
of official business of the Board. For purposes of this part, each item 
on the agenda of a meeting is considered a meeting or a portion of a 
meeting. To the extent that the discussions do not result in the 
beginning of deliberations or achieve a consensus on a matter of 
official agency business or effectively predetermine official actions, 
the term Meeting does not include:
    (1) Deliberations to determine whether a meeting or portions of a 
meeting will be open or closed or whether information pertaining to 
closed meetings will be disclosed;
    (2) Calling a meeting at a date earlier than announced as provided 
in Sec. 1600.5;
    (3) Changing the subject matter of a publicly announced meeting as 
provided in Sec. 1600.5;
    (4) Disposition of Board business by circulation of materials to 
individual Board members;
    (5) Staff briefings of Board members;
    (6) Informal background discussions among Board members and staff 
which clarify issues and expose varying views; or
    (7) Sessions with individuals from outside the Bank where Board 
members listen to a presentation and may elicit additional information.
    Open to public observation means the right of any member of the 
public to attend and observe, but not participate or interfere in any 
way in an open meeting of the Board.



Sec. 1600.3  Open meetings.

    (a) Except as provided for in Sec. 1600.6 every portion of every 
meeting of the Board shall be open to public observation. Observation 
does not include participation or disruptive conduct by observers, and 
persons engaging in such conduct will be removed from the meeting. 
Documents being considered at meetings of the Board may be obtained 
subject to the exemptions set forth in Sec. 1600.8.
    (b) Board members shall not jointly conduct or dispose of official 
Board business other than in accordance with this part.
    (c) The Secretary of the Board shall be responsible for assuring 
that ample space, sufficient visibility, and adequate acoustics are 
provided for public observation of meetings of the Board.



Sec. 1600.4  Scheduling of meetings.

    A decision to hold a meeting of the Board should be made as provided 
in the bylaws of the Bank and at least ten days prior to the scheduled 
meeting date in order for the Secretary of the

[[Page 8]]

Bank to give the public notice required by Sec. 1600.5. Special meetings 
of the Board may be held on less than ten days notice if a majority of 
the Board determines by a recorded vote that Bank business requires that 
the special meeting be held on less than ten days notice. After public 
announcement of a meeting of the Board under the provisions of 
Sec. 1600.5, the subject matter thereof, or the determination to open or 
close a meeting, or portion thereof, may only be changed if a majority 
of the Directors determines by a recorded vote that business so requires 
and that no earlier announcement of the change is possible.



Sec. 1600.5  Public announcement of meetings.

    (a) Except as otherwise provided in this section, public 
announcement of open meetings and meetings or portions thereof closed 
under Sec. 1600.7 will be made at least seven days in advance of each 
meeting. Except to the extent that such information is determined to be 
exempt from disclosure under Sec. 1600.6, each such public announcement 
will state the time, place, and subject matter of the meeting, whether 
it is to be open or closed to the public, and the name and telephone 
number of the official designated to respond to requests for information 
about the meeting. Each such announcement shall be submitted for 
publication in the Federal Register. Copies of the announcement shall 
also be mailed to holders of Class B and Class C Bank stock.
    (b) If a meeting is closed, the Board may omit from the announcement 
information usually included, if and to the extent that it finds that 
disclosure would be likely to have any of the consequences listed in 
Sec. 1600.6.
    (c) Where a majority of the Board members determine by recorded vote 
that Bank business requires that a meeting be called on less than ten 
days notice, public announcement shall be made at the earliest 
practicable time. Such announcement will state the time, place, and the 
subject matter of the meeting, whether it is to be open or closed to the 
public, and the name and telephone number of the official designated to 
respond to requests for information about the meeting.
    (d) The time or place of a meeting may be changed following the 
public announcement required by paragraph (a) of this section only if 
the Secretary publicly announces such change at the earliest practicable 
time. The subject matter of a meeting, or the determination of the Board 
to open or close a meeting, or portion of a meeting, to the public, may 
be changed following the public announcement required by this section 
only if:
    (1) A majority of the Directors determines by a recorded vote that 
business so requires and that no earlier announcement of the change was 
possible; and
    (2) The Secretary publicly announces such change and the vote of 
each Director upon such change at the earliest practicable time.
    (e) The earliest practicable time, as used in this subsection, means 
as soon as possible, which should in few, if any, instances be later 
than the commencement of the meeting or portion in question.
    (f) Each person interested in attending an open meeting of the Board 
should notify the Assistant Secretary of the Board at least one business 
day prior to the open meeting of their intention to attend the meeting. 
Any person who fails to do so may not be accommodated if there is 
insufficient space in the meeting room.



Sec. 1600.6  Bases for closing a meeting to the public.

    (a) A portion or portions of a Board meeting may be closed to the 
public and any information pertaining to such meeting otherwise required 
by Sec. 1600.3 to be disclosed to the public may be withheld, where the 
Board determines that public disclosure of information to be discussed 
at such meetings is likely to:
    (1) Disclose matters that are:
    (i) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interests of national defense 
or foreign policy; and
    (ii) In fact properly classified pursuant to such Executive Order.
    (2) Relate solely to the internal personnel rules and practices of 
the Bank;
    (3) Disclose matters specifically exempted from disclosure by 
statute

[[Page 9]]

(other than the Freedom of Information Act, 5 U.S.C. 552), provided that 
such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld.
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings;
    (ii) Deprive a person of a right to a fair trial or to an impartial 
adjudication;
    (iii) Constitute an unwarranted invasion of personal privacy;
    (iv) Disclose the identity of a confidential source, and, in the 
case of a record compiled by a criminal enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source;
    (v) Disclose investigative techniques and procedures; or
    (vi) Endanger the life or physical safety of law enforcement 
personnel.
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the Bank or any other agency responsible for the regulation or 
supervision of financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to significantly frustrate implementation of a proposed action of 
the Board or of another agency, except that this shall not apply in any 
instance where the content or nature of the proposed action has already 
been disclosed to the public or where the Board is required by law to 
make such disclosure on its own initiative prior to taking final action 
on such proposal; or
    (10) Specifically concern the Board's participation in a civil 
action or proceeding, an action in a foreign court or international 
tribunal, or an arbitration, or the initiation, conduct, or disposition 
by the Board of a particular case of formal agency adjudication pursuant 
to the procedures in 5 U.S.C. 554 or otherwise involving a determination 
on the record after opportunity for a hearing.
    (b) Any Board meeting or portion thereof, which may be closed, or 
any information which may be withheld under paragraph (a) of this 
section, will not be closed or withheld, respectively, in any case where 
the Board finds the public interest requires otherwise.



Sec. 1600.7  Procedures for closing a meeting to the public.

    (a) A majority of all Directors may vote to close a meeting or 
withhold information pertaining to that meeting. A separate vote shall 
be taken with respect to any action under Sec. 1600.6(a). A majority of 
the Board may act by taking a single vote with respect to a series of 
meetings, a portion or portions of which are proposed to be closed to 
the public, or with respect to any information concerning such series of 
meetings, so long as each meeting in such series involves the same 
particular subject matter and is scheduled to be held no more than 
thirty days after the initial meeting in such series. The vote of each 
Director participating in such vote shall be recorded and no proxy shall 
be allowed.
    (b) Whenever any person whose interests may be directly affected by 
a portion of the Board's meeting requests that the Board close such 
portion to the public on the basis of exemptions in paragraph (a)(5), 
(a)(6), or (a)(7) of Sec. 1600.6, the Board, upon request of any one of 
its members, will vote whether or not to close such portion of the 
meeting. The vote of each Director participating in such vote shall be 
recorded and no proxy shall be allowed.

[[Page 10]]

    (c) Before every Board meeting closed on the basis of one or more of 
the exemptions in Sec. 1600.6(a), the Legal Counsel will publicly 
certify that, in Counsel's opinion, the meeting may be closed to the 
public and shall state each relevant exemption.
    (d) Within one business day after any vote taken pursuant to 
paragraph (a), (b), or (c) of this section, the Board will make publicly 
available a written copy of the vote, reflecting the vote of each Board 
member. Except to the extent that such information is exempt from 
disclosure, if a meeting or portion of a meeting is to be closed to the 
public, the Board will make publicly available within one business day 
after the required vote a full written explanation of its action, 
together with a list of all persons expected to attend the meeting and 
their affiliation.



Sec. 1600.8  Transcript, recording or minutes; availability to the public.

    (a) The Secretary of the Board will maintain the following records 
for each Board meeting, or portion thereof which is closed to the public 
pursuant to a vote under Sec. 1600.7:
    (1) A copy of the Legal Counsel's certification required by 
Sec. 1600.7;
    (2) A copy of a statement from the presiding officer which sets 
forth the time and place of the closed meeting or portion thereof and a 
list of persons present; and
    (3) A complete verbatim transcript or electronic recording adequate 
to record fully the proceedings of each Board meeting or portion of a 
meeting, except that in the case of a meeting or portion of a meeting 
closed to the public on the basis of exemptions in paragraph (a)(8) or 
(a)(10) of Sec. 1600.6, the Secretary of the Board will maintain either 
a transcript, electronic recording, or a complete set of minutes. Such 
minutes shall fully and clearly describe all matters discussed and shall 
provide a full and accurate summary of actions taken and the reasons 
therefor, including a description of each of the views expressed on any 
item and the record of all roll-call vote reflecting the vote of each 
member of the question. All documents considered in connection with any 
action will be identified in such minutes.
    (b) The retention period for the records required by paragraph (a) 
of this section will be for a period of at least two years after the 
particular Board meeting or until one year after the conclusion of any 
Board proceeding with respect to which the meeting or portion thereof 
was held, whichever occurs later.
    (c) The Secretary of the Board will make promptly available to the 
public the transcript, electronic recording, transcription of the 
recording, or minutes of the discussion of any item on the agenda of a 
Board meeting, except for such item or items of such discussion as the 
Board determines to contain information which may be withheld on the 
basis of one or more of the exemptions in Sec. 1600.6.
    (d) Requests for public inspection of electronic recording, 
transcripts or minutes of Board meetings shall be made to the Assistant 
Secretary of the Board of Directors of the Rural Telephone Bank, room 
4051-South Building, U.S. Department of Agriculture, 14th Street and 
Independence Avenue SW., Washington, DC 20250. Requests for inspection 
or copies of transcripts shall specify the date of the meeting, the name 
of the agenda and the agenda item number; this information will appear 
in the notice of the meeting.
    (e) The transcripts, minutes, or transcriptions of electronic 
recordings of a Board meeting will disclose the identity of each 
speaker, and will be furnished to any person at the actual cost of 
transcription or duplication.



PART 1610_LOAN POLICIES--Table of Contents



Sec.
1610.1  General.
1610.2  Definitions.
1610.3  Loan authorizations.
1610.4  Loan applications.
1610.5  Minimum Bank loan.
1610.6  Concurrent Bank and RUS cost-of-money loans.
1610.7  Acquisition of certain exchange facilities.
1610.8  Adoption of applicable RUS policy.
1610.9  Class B stock.
1610.10  Determination of interest rate on Bank loans.
1610.11  Prepayments.

    Authority: 7 U.S.C. 941 et seq.; Pub. L. 103-354, 108 Stat. 3178 (7 
U.S.C. 6941 et seq.).

[[Page 11]]


    Source: 38 FR 17184, June 29, 1973, unless otherwise noted.



Sec. 1610.1  General.

    Loans made by the Governor of the Rural Telephone Bank (the 
``Bank'') will be made in conformance with title IV of the Rural 
Electrification Act of 1936 (the ``Act''), as amended (7 U.S.C. 941 et 
seq.), and this part 1610. Loans are made under section 408(a)(1) of the 
Act for purposes of section 201 of the Act. Loans are also made for 
purposes of section 408(a)(2) of the Act. The Bank will give preference 
to the use of loan funds for purposes set forth in section 408(a)(2) of 
the Act to the extent that it has completed applications for such loans.

[38 FR 17184, June 29, 1973, as amended at 58 FR 66252, Dec. 20, 1993]



Sec. 1610.2  Definitions.

    As used in this part:
    Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    Appropriated means funds appropriated based on subsidy.
    Bank means the Rural Telephone Bank, an agency and instrumentality 
of the United States within the United States Department of Agriculture.
    Borrower means any organization which has an outstanding telephone 
loan made by the Bank or RUS, or guaranteed by RUS, or which is seeking 
such financing.
    Governor means the Governor of the Bank.
    REA means the Rural Electrification Administration, formerly an 
agency of the United States Department of Agriculture and predecessor 
agency to RUS with respect to administering certain electric and 
telephone loan programs.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub.L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    RUS cost-of-money-loan means a loan made under section 305(d)(2) of 
the Act bearing an interest rate as determined under 7 CFR 1735.31(c). 
RUS cost-of-money loans are made concurrently with Bank loans.
    TIER (Times Interest Earned Ratio) means the ratio of the borrower's 
net income (after taxes) plus interest expense, all divided by interest 
expense. For the purpose of this calculation, all amounts will be annual 
figures and interest expense will include only interest on debt with a 
maturity greater than one year.

[58 FR 66252, Dec. 20, 1993, as amended at 59 FR 66439, Dec. 27, 1994]



Sec. 1610.3  Loan authorizations.

    The aggregate amount of loans made will not exceed the amount 
authorized by the Board of Directors (the ``Board'') of the Bank.

[38 FR 17184, June 29, 1973. Redesignated at 58 FR 66252, Dec. 20, 1993]



Sec. 1610.4  Loan applications.

    No application for a loan will be considered for approval by the 
Bank until it has been reviewed by RUS and the Governor has determined, 
based on such review, the eligibility of the applicant for a Bank loan 
and the amount thereof. Loan application forms are available from RUS on 
request. No fees or charges are assessed for Bank loans.

[58 FR 66252, Dec. 20, 1993]



Sec. 1610.5  Minimum Bank loan.

    A Bank loan will not be made unless the applicant qualifies for a 
Bank loan of at least $50,000.

[38 FR 17184, June 29, 1973. Redesignated at 58 FR 66252, Dec. 20, 1993]



Sec. 1610.6  Concurrent Bank and RUS cost-of-money loans.

    (a) The Bank makes loans, under section 408 of the Act, concurrently 
with RUS cost-of-money loans made under section 305(d)(2) of the Act. To 
qualify for concurrent Bank and RUS cost-of-money loans on or after 
November 1, 1993, a borrower must meet each of the following 
requirements:
    (1) The average number of proposed subscribers per mile of line in 
the service area of the borrower is not more than 15, or the borrower 
has a projected TIER (including the proposed loans) of

[[Page 12]]

at least 1.0, but not greater than 5.0, as determined by the feasibility 
study prepared in connection with the loans, see 7 CFR part 1737, 
subpart H; and
    (2) The Administrator of RUS has approved and the borrower is 
participating in a telecommunications modernization plan for the state, 
see 7 CFR part 1751, subpart B.
    (b) The loan amounts from each program (Bank, including amounts for 
class B stock, and RUS cost-of-money) will be proportionate to the total 
amount of funds appropriated for the fiscal year for Bank loans and RUS 
cost-of-money loans. To determine the Bank portion, the total loan 
amount will be multiplied by the ratio of Bank funds appropriated for 
the fiscal year to the sum of RUS cost-of-money and Bank funds 
appropriated for the fiscal year in which the loan is approved. The same 
method would be used to calculate the RUS cost-of-money portion (see 7 
CFR 1735.31(b)). If during the fiscal year the amount of funds 
appropriated changes, the ratio will be adjusted accordingly and applied 
only to those loans approved afterwards.
    (c) The actual rate of interest on the Bank loan shall be determined 
as provided in Sec. 1610.10; the RUS cost-of-money loan shall bear 
interest at a rate equal to the current cost of money to the Federal 
Government, on the date of advance of funds to the borrower, for loans 
of similar maturity, but not more than 7 percent per year (see 7 CFR 
1735.31(c)).
    (d) Generally, no more than 10 percent of lending authority from 
appropriations in any fiscal year for Bank and RUS cost-of-money loans 
may be loaned to a single borrower. The Bank will publish by notice in 
the Federal Register the dollar limit that may be loaned to a single 
borrower in that particular fiscal year based on approved Bank and RUS 
lending authority.

[58 FR 66252, Dec. 20, 1993, as amended at 62 FR 46869, Sept. 5, 1997]



Sec. 1610.7  Acquisition of certain exchange facilities.

    In the interest of making optimum use of the Bank's loan funds, a 
Bank loan for the acquisition of exchange facilities under section 
408(a)(2) of the Act (7 U.S.C. 948(a)(2)) will not be recommended by the 
Governor for approval by the Secretary of Agriculture unless the 
Governor determines that the acquisition is reasonably necessary to 
improve the efficiency, effectiveness, or financial stability of the 
borrower's telephone system, that the location and character of the 
proposed acquisition are such that the acquisition is reasonably 
necessary to accomplish such improvement, and that the amount of the 
requested loan for such acquisition is reasonably justified by the 
nature and scope of the improvement which the acquisition would effect.



Sec. 1610.8  Adoption of applicable RUS policy.

    The policies embodied in 7 CFR part 1610, in all parts of 7 CFR 
chapter XVII except those identified below, will be utilized by the 
Governor in carrying out the Bank's loan program to the extent that such 
policies are consistent with title IV of the Act (7 U.S.C. 941 et seq.) 
and to the extent that policies in 7 CFR chapter XVII are consistent 
with 7 CFR part 1610. The parts of 7 CFR chapter XVII applicable solely 
to the Electric Program and thus exceptions to this section are parts 
1710 through 1734 inclusive.

[55 FR 39397, Sept. 27, 1990]



Sec. 1610.9  Class B stock.

    Borrowers receiving loans from the Bank shall be required to invest 
in class B stock at 5 percent of the total amount of loan funds 
advanced. Borrowers may purchase class B stock by:
    (1) Paying an amount (using their own general funds) equal to 5 
percent of the amount, exclusive of the amount for class B stock, of 
each loan advance, at the time of such advance; or
    (2) Requesting that funds for the purchase of class B stock be 
included in the loan. If funds for class B stock are included in a loan, 
the funds for class B stock shall be advanced in an amount equal to 5 
percent of the amount, exclusive of the amount for class B stock, of 
each loan fund advance, at the time of such advance.

[56 FR 26596, June 10, 1991]

[[Page 13]]



Sec. 1610.10  Determination of interest rate on Bank loans.

    (a) All loan fund advances made on or after December 22, 1987 under 
Bank loans approved on or after October 1, 1987, shall bear interest at 
the rate determined as established below, but not less than 5 percent 
per annum.
    (b) The interest rate for the period beginning on the date the 
advance is made and ending at the close of the fiscal year in which the 
advance is made shall be the average yield on the date of advance on 
outstanding marketable obligations of the United States having a final 
maturity comparable to the final maturity of the advance. The interest 
rate shall be determined to the nearest 0.01 percent.
    (1) For this determination, the Bank will use yields on actively 
traded Treasury issues adjusted to constant maturities obtained from the 
Federal Reserve statistical release (``Treasury rate''). In accordance 
with standard Treasury procedures, the rate in effect for any given day 
is the rate set at the close of business on the preceding day. The 30-
year Treasury rate will be applied to all advances with a final maturity 
of at least 30 years from date of advance. A straight-line interpolation 
between other Treasury rates will be used to determine the rate 
applicable for advances with final maturities of less than 30 years.
    (2) The Bank will notify the borrower in writing of the interest 
rate that applies to each advance.
    (c) After the fiscal year in which the advance is made, the interest 
rate applied to the advance will be the sum of the calculations made in 
paragraphs (c) (1) through (5) of this section. This interest rate 
determination shall be made by the Governor within 30 days of the end of 
each fiscal year and shall be determined to the nearest 0.01 percent.
    (1) The aggregate of all amounts received by the Bank during the 
fiscal year from the issuance of Class A stock, multiplied by the rate 
of return payable by the Bank during the fiscal year as specified in 
section 406(c) of the Act, which product is divided by the aggregate of 
the amounts advanced by the Bank during the fiscal year.
    (2) The aggregate of all amounts received by the Bank during the 
fiscal year from the issuance of Class B stock, multiplied by the rate 
at which dividends are payable by the Bank during the fiscal year as 
specified in section 406(d) of the Act, which product is divided by the 
aggregate of the amounts advanced by the Bank during the fiscal year. 
Section 406(d) provides that ``No dividends shall be payable on Class B 
stock.'' The ``amounts received by the Bank during the fiscal year from 
the issuance of Class B stock'' means the amount of cash received during 
the fiscal year for the purchase of Class B stock, plus the amount 
advanced to borrowers by the Bank during the fiscal year for such 
purchases, less any Class B stock that is rescinded during the fiscal 
year.
    (3) The aggregate of all amounts received by the Bank during the 
fiscal year from the issuance of Class C stock, multiplied by the rate 
at which dividends are payable by the Bank during the fiscal year as 
specified in section 406(e) of the Act, which product is divided by the 
aggregate of the amounts advanced by the Bank during the fiscal year.
    (4) The amounts received by the Bank during the fiscal year from 
each issue of telephone debentures and other obligations of the Bank, 
multiplied, respectively, by the rates at which interest is payable by 
the Bank during the fiscal year to holders of each issue, each of which 
product is divided, respectively, by the aggregate of the amounts 
advanced by the Bank during the fiscal year.
    (5) The amount by which the aggregate of the amounts advanced by the 
Bank during the fiscal year exceeds the aggregate of the amount received 
by the Bank from the issuance of Class A stock, Class B stock, Class C 
stock, and telephone debentures and other obligations of the Bank during 
the fiscal year, multiplied by the historic cost of money rate as of the 
close of the immediately preceding fiscal year, which product is divided 
by the aggregate of the amounts advanced by the Bank during the fiscal 
year.
    (6) As used in paragraph (c)(5) of this section, the term ``historic 
cost of money rate as of the close of the immediately preceding fiscal 
year,'' means the sums of the results of the following

[[Page 14]]

calculations: The amounts advanced by the Bank in each fiscal year 
during the period beginning with fiscal year 1974 and ending with the 
immediately preceding fiscal year, multiplied, respectively, by the cost 
of money rate for the fiscal year (as set forth in Table I for fiscal 
years 1974 through 1987, and as determined by the Governor in paragraphs 
(c) (1) through (5) of this section for fiscal years after fiscal year 
1987), with each product then divided by the aggregate of the amounts 
advanced by the Bank from the beginning of fiscal year 1974 through the 
end of the fiscal year just ended.

                                 Table I
------------------------------------------------------------------------
                                            The cost of money rate shall
     For advances made in fiscal year:                   be:
------------------------------------------------------------------------
1974......................................  5.01 percent.
1975......................................  5.85 percent.
1976......................................  5.33 percent.
1977......................................  5.00 percent.
1978......................................  5.87 percent.
1979......................................  5.93 percent.
1980......................................  8.10 percent.
1981......................................  9.46 percent.
1982......................................  8.39 percent.
1983......................................  6.99 percent.
1984......................................  6.55 percent.
1985......................................  5.00 percent.
1986......................................  5.00 percent.
1987......................................  5.00 percent.
------------------------------------------------------------------------
In this table, ``fiscal year'' means the 12-month period ending on
  September 30 of the designated year.

    (d) A borrower with a Bank loan approved on or after October 1, 
1987, and before December 22, 1987, and with funds not fully advanced as 
of December 22, 1987, may until the next advance under the loan or March 
21, 1988, whichever is later, elect to have the interest rate specified 
in the loan commitment apply to the unadvanced portion in lieu of the 
rate which would otherwise apply as set forth in Sec. 1610.10(a). A 
borrower making such an election shall contact, in writing, the 
applicable Area Office of RUS. The Governor shall then adjust the 
interest rate that applies to the unadvanced portion of the loan 
accordingly.
    (e) If the Bank, pursuant to section 407(b) of the Act, issues 
telephone debentures to refinance outstanding telephone debentures or 
other obligations, the Bank shall reduce the interest rate charged on 
each advance of Bank loan funds made during the fiscal year(s) in which 
the refinanced debentures or other obligations were originally issued. 
The reduction shall be for the period beginning on the issue date of the 
refinancing debentures and ending on the date the advance matures or is 
completely prepaid, whichever is earlier. This reduction shall be in 
addition to any other interest rate reduction required by section 
408(b)(3) of the Act. The interest rate shall be reduced by the amount 
which fully reflects that percentage of the funds saved by the Bank as a 
result of the refinancing which is equal to the percentage 
representation of the advance of all advances made during the fiscal 
year(s) involved. In no case, however, shall the interest rate be 
reduced to less than 5 percent per annum. The interest rate reduction 
for each advance shall be determined as follows:
    (1) The funds saved by the Bank as a result of the refinancing shall 
be computed.
    (2) The advance shall be divided by the total of all advances made 
during the fiscal year(s) involved, and stated to the nearest .01 
percent.
    (3) The percentage in paragraph (e)(2) of this section is multiplied 
by the amount in paragraph (e)(1) of this section to determine the 
savings for a particular advance. The interest rate on that advance is 
then reduced to fully reflect the savings over the remaining 
amortization period of the loan from which the advance was made.
    (f) Within 60 days after the issue date described in paragraph (e) 
of this section, the Governor shall amend the loan documentation for 
each advance described in paragraph (e) of this section, as necessary, 
to reflect any interest rate reduction applicable to the advance by 
reason of paragraph (e) of this section, and shall notify each affected 
borrower of the reduction.
    (g) Within 5 days of determining the cost of money rate for a fiscal 
year, the Governor shall:
    (1) Cause the determination to be published in the Federal Register 
in accordance with section 552 of title 5, United States Code, and
    (2) Furnish a copy of the determination to the Comptroller General 
of the United States.
    (h) A borrower should not wait until the end of the fiscal year to 
submit a

[[Page 15]]

requisition for an advance of loan funds if it wants the advance made in 
that fiscal year. Borrower requisitions submitted late in the fiscal 
year may not be processed in that fiscal year because of workload and 
other factors.

[53 FR 36783, Sept. 22, 1988; 53 FR 39014, Oct. 4, 1988]



Sec. 1610.11  Prepayments.

    (a) Bank loans approved before November 1, 1993, may be prepaid in 
accordance with the terms thereof, including payment of the premium as 
provided therein.
    (b) A borrower may prepay part or all of a Bank loan made on or 
after November 1, 1993, by paying the outstanding principal and any 
accrued interest without being required to pay a prepayment premium.
    (c) Borrowers that qualify to issue a refunding note or notes in 
accordance with 7 CFR 1735.43, Payments on loans, shall not be required 
to pay a prepayment premium on all payments made in accordance with the 
new payment schedule.

[58 FR 66252, Dec. 20, 1993, as amended at 62 FR 46869, Sept. 5, 1997]

[[Page 17]]



    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE




  --------------------------------------------------------------------
Part                                                                Page
1700            General information.........................          19
1703            Rural development...........................          30
1709            Assistance to high energy cost communities..          63
1710            General and pre-loan policies and procedures 
                    common to electric loans and guarantees.          81
1714            Pre-loan policies and procedures for insured 
                    electric loans..........................         129
1717            Post-loan policies and procedures common to 
                    insured and guaranteed electric loans...         136
1718            Loan security documents for electric 
                    borrowers...............................         185
1720            Guarantees for bonds and notes issued for 
                    electrification or telephone purposes...         227
1721            Post-loan policies and procedures for 
                    insured electric loans..................         234
1724            Electric engineering, architectural services 
                    and design policies and procedures......         239
1726            Electric system construction policies and 
                    procedures..............................         252
1728            Electric standards and specifications for 
                    materials and construction..............         277
1730            Electric system operations and maintenance..         305
1735            General policies, types of loans, loan 
                    requirements--telecommunications program         313
1737            Pre-loan policies and procedures common to 
                    insured and guaranteed 
                    telecommunications loans................         338
1738            Rural broadband access loans and loan 
                    guarantees..............................         353
1739            Broadband grant program.....................         373
1740            Public television station digital transition 
                    grant program...........................         380
1741

Pre-loan policies and procedures for insured telephone loans [Reserved]

1744            Post-loan policies and procedures common to 
                    guaranteed and insured telephone loans..         384
1748

Post-loan policies and procedures for insured telephone loans [Reserved]

[[Page 18]]

1751            Telecommunications system planning and 
                    design criteria, and procedures.........         410
1753            Telecommunications system construction 
                    policies and procedures.................         415
1755            Telecommunications policies on 
                    specifications, acceptable materials, 
                    and standard contract forms.............         452
1757

Telephone systems operations and maintenance [Reserved]

[[Page 19]]



PART 1700_GENERAL INFORMATION--Table of Contents



                            Subpart A_General

Sec.
1700.1  General.
1700.2  Availability of information.
1700.3  Requests under the Freedom of Information Act.
1700.4  Public comments on proposed rules.
1700.5-1700.24  [Reserved]

               Subpart B_Agency Organization and Functions

1700.25  Office of the Administrator.
1700.26  Deputy Administrator.
1700.27  Chief of Staff.
1700.28  Electric Program.
1700.29  Telecommunications Program.
1700.30  Water and Environmental Programs.
1700.31  Distance Learning and Telemedicine Loan and Grant Program.
1700.32  Program Accounting and Regulatory Analysis.
1700.33  Financial Services Staff.
1700.34  Assistance to High Energy Cost Rural Communities.
1700.35-1700.49  [Reserved]

              Subpart C_Loan and Grant Approval Authorities

1700.50-1700.52  [Reserved]
1700.53  Persons serving as Acting Administrator.
1700.54  Electric Program.
1700.55  Telecommunications Program.
1700.56  Water and Environmental Programs.
1700.57  Distance Learning and Telemedicine Loan and Grant Program.
1700.58  Assistance to high energy cost rural communities.
1700.59-1700.99  [Reserved]

             Subpart D_Substantially Underserved Trust Areas

1700.100  Purpose.
1700.101  Definitions.
1700.102  Eligible programs.
1700.103  Eligible communities.
1700.104  Financial feasibility.
1700.105  Determining whether land meets the statutory definition of 
          ``trust land.''
1700.106  Discretionary provisions.
1700.107  Considerations relevant to the exercise of SUTA discretionary 
          provisions.
1700.108  Application requirements.
1700.109  RUS review.
1700.110--1700.149  [Reserved]
1700.150  OMB Control Number.

    Authority: 5 U.S.C. 301, 552; 7 U.S.C. 901 et seq., 1921 et seq., 
6941 et seq.; 7 CFR 2.7.

    Source: 63 FR 16085, Apr. 2, 1998, unless otherwise noted.



                            Subpart A_General



Sec. 1700.1  General.

    (a) The Rural Electrification Administration (REA) was established 
by Executive Order No. 7037 on May 11, 1935. Statutory authority was 
provided by the Rural Electrification Act of 1936 (RE Act) (7 U.S.C. 
901). The RE Act established REA as a lending agency with responsibility 
for developing a program for rural electrification.
    (b) On October 28, 1949, the RE Act was amended to authorize REA to 
make loans to improve and extend telephone service in rural areas. The 
Rural Telephone Bank (RTB), an agency of the United States, was 
established by amendment to the RE Act, approved May 7, 1971. The 
Administrator of RUS serves as the Bank's chief executive with the title 
of Governor.
    (c) The Secretary of Agriculture (Secretary) established the Rural 
Utilities Service (RUS) on October 20, 1994, pursuant to the Department 
of Agriculture Reorganization Act of 1994, (7 U.S.C. 6941 et seq.). RUS 
was assigned responsibility for administering electric and 
telecommunications loan and loan guarantee programs previously 
administered by REA, including programs of the Rural Telephone Bank 
(RTB), and water and waste loans and grants previously administered by 
the Rural Development Administration, along with other functions as the 
Secretary determined appropriate. The rights, interests, obligations, 
duties, and contracts previously vested in REA were transferred to, and 
vested in RUS.



Sec. 1700.2  Availability of information.

    (a) The offices of RUS are located in the South Building of the 
United States Department of Agriculture at 1400 Independence Avenue, SW, 
Washington, DC 20250-1500. Hours of operation are from 8:15 AM to 4:45 
PM, Eastern time on Federal Government business days.
    (b) Information about RUS is available for public inspection and 
copying as required by the Freedom of Information Act, 5 U.S.C. 552 et 
seq. Information about availability and costs of

[[Page 20]]

agency publications and other agency materials is available from the 
Director, Program Development and Regulatory Analysis, Rural Utilities 
Service, United States Department of Agriculture, Room 5159-S, 1400 
Independence Avenue, SW., STOP 1530, Washington, DC 20250-1530. Phone 
202-720-9450. FAX 202-720-8435.
    (c) RUS issues indexes of publications in conformance with the 
Freedom of Information Act and Department of Agriculture regulations at 
7 CFR part 1. Many RUS documents, including regulations and delegations 
of authority for headquarters and field staff are available on the world 
wide web at http://www.usda.gov/rus.

[63 FR 16085, Apr. 2, 1998, as amended at 71 FR 8435, Feb. 17, 2006]



Sec. 1700.3  Requests under the Freedom of Information Act.

    Department of Agriculture procedures for requests for records under 
the Freedom of Information Act are found at 7 CFR part 1. Requests must 
be in writing and may be submitted in person or by mail to United States 
Department of Agriculture, Rural Utilities Service, Room 5159-S, 1400 
Independence Avenue, SW., STOP 1530, Washington, DC 20250-1530; or by 
FAX to 202-401-1977. As set forth in 7 CFR 1.16, fees may be charged for 
processing of requests for records. An appeal of the agency 
determination concerning the request for official records shall be made 
in writing to the Administrator, Rural Utilities Service, United States 
Department of Agriculture, Room 5135-S, 1400 Independence Avenue, SW., 
STOP 1510, Washington, DC 20250-1510.

[71 FR 8435, Feb. 17, 2006]



Sec. 1700.4  Public comments on proposed rules.

    RUS requires that all persons submitting comments to a proposed rule 
or other document published by the agency in the Federal Register, 
submit comments as specified in the published notice. Copies of comments 
submitted are available to the public in conformance with 7 CFR part 1.

[71 FR 8435, Feb. 17, 2006]



Secs. 1700.5-1700.24  [Reserved]



               Subpart B_Agency Organization and Functions



Sec. 1700.25  Office of the Administrator.

    The Administrator, who also serves as Governor of the RTB, is 
appointed by the President, with the advice and consent of the Senate. 
The Under Secretary, Rural Development delegated to the Administrator, 
in 7 CFR part 2, responsibility for administering the programs and 
activities of RUS and RTB. The Administrator is aided directly by Deputy 
Administrators and by Assistant Administrators for the electric program, 
telecommunications program, the water and environmental programs, and 
program accounting and regulatory analysis, and by other staff offices. 
The work of the agency is carried out as described in this part.



Sec. 1700.26  Deputy Administrator.

    The Deputy Administrator aids and assists the Administrator. The 
Deputy Administrator provides overall policy direction to all RUS 
programs. The Deputy Administrator reviews agency policies and, as 
necessary, implements changes and participates with the Administrator 
and other officials in planning and formulating the programs and 
activities of the agency, including the making and servicing of loans 
and grants. The Deputy Administrator is ``first assistant'' for purposes 
of the Federal Vacancies Reform Act of 1998 (5 U.S.C. 3345-3349d).

[71 FR 8435, Feb. 17, 2006]



Sec. 1700.27  Chief of Staff.

    The Chief of Staff aids and assists the Administrator and the Deputy 
Administrator. The Chief of Staff advises the Administrator regarding 
policy initiatives and operational issues and assists the Administrator 
and the Deputy Administrator in developing and planning agency program 
initiatives. The Chief of Staff is responsible for implementation of 
overall policy initiatives and provides direction to all RUS programs.

[71 FR 8436, Feb. 17, 2006]

[[Page 21]]



Sec. 1700.28  Electric Program.

    RUS, through the Electric Program, makes loans and loan guarantees 
for rural electrification and the furnishing of electric service to 
persons in rural areas.
    (a) The Assistant Administrator, Electric Program, directs and 
coordinates the rural electrification programs, participating with the 
Administrator, and others, in planning and formulating the programs and 
activities of the agency, and performs other activities as the 
Administrator may prescribe from time to time.
    (b) Primary point of contact with borrowers.Two regional divisions, 
one for the Northern Region and one for the Southern Region, are the 
primary points of contact between RUS and its electric distribution 
borrowers. Each office administers the rural electric program for its 
assigned geographical area through headquarters staff and general field 
representatives. The Power Supply Division is the primary point of 
contact between RUS and its electric power supply borrowers.
    (c) Staff office.The Electric Staff Division is responsible for 
engineering aspects of RUS' standards, specifications and other 
requirements for design, construction, and technical operation and 
maintenance of RUS borrowers' electric systems. The Electric Staff 
Division oversees the activities of Technical Standards Committees ``A'' 
and ``B'', Electric, which determine whether engineering specifications, 
drawings, material and equipment are acceptable for use in RUS 
borrowers' electric systems. The Office of the Assistant Administrator 
prepares analyses of loan making activities and the business and 
regulatory environment of RUS borrowers and recommends policies and 
procedures.

[63 FR 16085, Apr. 2, 1998. Redesignated at 71 FR 8436, Feb. 17, 2006]



Sec. 1700.29  Telecommunications Program.

    RUS and RTB, through the Telecommunications Program, make loans and 
loan guarantees to furnish and improve telecommunications service in 
rural areas.
    (a) The Assistant Administrator, Telecommunications Program, directs 
and coordinates the rural telecommunications programs, including the 
distance learning and telemedicine program, and in conjunction with the 
Administrator and Deputy Administrator, and others, the planning and 
formulating of programs and activities of the agency, and performs other 
activities as the Administrator may prescribe from time to time.
    (b) Primary point of contact with borrowers.Area offices are the 
primary points of contact between RUS and all telecommunications program 
borrowers. Each office administers the rural telecommunications program 
for its assigned geographical area with assistance of field 
representatives located in areas assigned to them.
    (c) Staff offices.The Telecommunications Staff Division is 
responsible for engineering aspects of design, construction, and 
technical operation and maintenance of rural telecommunications systems 
and facilities, including the activities of Technical Standards 
Committees ``A'' and ``B'', Telecommunications, which determine whether 
engineering specifications, drawings, material, and equipment are 
acceptable for use in RUS financed telecommunications systems. The 
Advanced Telecommunications Services office prepares analyses of loan 
making activities and the business and regulatory environment of RUS 
borrowers and recommends policies and procedures.

[63 FR 16085, Apr. 2, 1998; 63 FR 18307, Apr. 15, 1998. Redesignated at 
71 FR 8436, Feb. 17, 2006]



Sec. 1700.30  Water and Environmental Programs.

    RUS, through the Water and Environmental Programs, provides loan and 
grant funds for water and waste disposal projects serving the most 
financially needy rural communities.
    (a) The Assistant Administrator, Water and Environmental Programs, 
develops and institutes plans, procedures, and policies for the 
effective, efficient, and orderly management of Water and Environmental 
Programs responsibilities; provides leadership to ensure execution of 
policies and procedures by the Water

[[Page 22]]

and Waste Disposal programs and support functions; and performs other 
activities as the Administrator or Deputy Administrator may prescribe 
from time to time.
    (b) Primary point of contact. The State Rural Development Offices 
are the primary points of contact between RUS and loan and grant 
recipients.
    (c) The Engineering and Environmental Staff is responsible for 
engineering staff activities at all stages of Water and Waste Disposal 
programs implementation, including review of preliminary engineering 
plans and specifications, procurement practices, contract awards, 
construction monitoring, and system operation and maintenance. This 
staff develops agency engineering practices, policies, guidelines, and 
technical data relating to the construction and operation of water and 
waste disposal systems, and for implementing the National Environmental 
Policy Act, and other environmental requirements as they apply to all 
agency programs and activities.

[63 FR 16085, Apr. 2, 1998. Redesignated at 71 FR 8436, Feb. 17, 2006]



Sec. 1700.31  Distance Learning and Telemedicine Loan and Grant Program.

    RUS, through the Telecommunications Program, makes grants and loans 
to furnish and improve telemedicine services and distance learning 
services in rural areas.
    (a) The Assistant Administrator, Telecommunications Program, directs 
and coordinates the distance learning and telemedicine program.
    (b) Primary point of contact with borrowers. The area offices, 
described in Sec. 1700.28(b) support the distance learning and 
telemedicine program. Each office administers the distance learning and 
telemedicine program for its assigned geographical area with assistance 
of field representatives located in areas assigned to them.

[63 FR 16085, Apr. 2, 1998; 63 FR 18307, Apr. 15, 1998. Redesignated at 
71 FR 8436, Feb. 17, 2006]



Sec. 1700.32  Program Accounting and Regulatory Analysis.

    RUS, through Program Accounting and Regulatory Analysis, monitors 
and administers applicable regulations, RUS policy, and accounting 
requirements. The staffs assist the Assistant Administrator with respect 
to management, information systems, budgets, and other such matters.
    (a) The Assistant Administrator, Program Accounting and Regulatory 
Analysis, directs and coordinates program accounting and financial 
services with respect to electric and telecommunications borrowers and 
directs and coordinates the regulatory actions of the agency.
    (b) This division monitors borrowers' accounting operations in order 
to ensure compliance with applicable statutory and regulatory 
requirements and with the requirements of the Office of Management and 
Budget.
    (c) The two regional branches (the Northern Region and the Southern 
Region) work directly with borrowers. Each regional office has a staff 
of headquarters and field accountants. The Technical Accounting and 
Auditing Staff monitors industry developments, including the standards 
of the Financial Accounting Standards Board, and recommends Agency 
policies and procedures.
    (d) Program Development and Regulatory Analysis directs and 
administers the preparation, clearance, processing, and distribution of 
RUS submissions to the Office of the Federal Register in the form of 
proposed and final rules and notices and RUS bulletins and staff 
instructions.

[63 FR 16085, Apr. 2, 1998. Redesignated at 71 FR 8436, Feb. 17, 2006]



Sec. 1700.33  Financial Services Staff.

    The Financial Services Staff evaluates the financial condition of 
financially troubled borrowers in order to protect the Government's 
interests.

[63 FR 16085, Apr. 2, 1998. Redesignated at 71 FR 8436, Feb. 17, 2006]



Sec. 1700.34  Assistance to High Energy Cost Rural Communities.

    RUS, through the Electric Program, makes grants and loans to assist 
high energy cost rural communities. The Assistant Administrator, 
Electric Program, directs and coordinates the assistance to high energy 
cost rural communities program and serves as the

[[Page 23]]

primary point of contact for applicants, grantees, and borrowers.

[70 FR 5351, Feb. 2, 2005. Redesignated at 71 FR 8436, Feb. 17, 2006]



Secs. 1700.35-1700.49  [Reserved]



              Subpart C_Loan and Grant Approval Authorities



Secs. 1700.50-1700.52  [Reserved]



Sec. 1700.53  Persons serving as Acting Administrator.

    In accordance with procedures established in the RUS Continuity of 
Operations (COOP) plan, the following officials, in the order indicated 
below, shall act in the office of Rural Utilities Service Administrator 
in case of the Administrator's absence, or inability to act, until the 
absence or inability ceases.
    (a) The Deputy Administrator is ``first assistant'' for purposes of 
the Federal Vacancies Reform Act of 1998 (5 U.S.C. Sec. 3345-3349d) and 
shall, in the absence or disability of the Administrator, or in the 
event of a vacancy in the office of Administrator, serve as Acting 
Administrator, subject to the limitations established by law.
    (b) In the event of the absence or disability of both the 
Administrator and the Deputy Administrator, or in the event of a vacancy 
in both the office of the Administrator and the Deputy Administrator, 
the official incumbents of the following positions shall, in the 
sequence shown, temporarily perform all of the functions and duties of 
the Administrator, except to the extent that such functions and duties 
may not be delegated by law.
    (1) Chief of Staff.
    (2) Assistant Administrator, Electric Program.
    (3) Assistant Administrator, Water and Environmental Programs.
    (4) Assistant Administrator, Telecommunications Programs.
    (5) Assistant Administrator, Program Accounting and Regulatory 
Analysis.
    (6) Community Programs Director of the Rural Development Kentucky 
State Office.
    (c) Eligibility for succession to the position of RUS Administrator 
shall be limited to officially assigned incumbents of positions listed 
in paragraph (b) of this section. Only officials specifically designated 
in the approved order of succession are eligible. Persons appointed on 
acting basis, or on some other temporary basis, are ineligible by virtue 
of so serving to serve as a successor. Therefore the order of succession 
would fall to the next designated official in the approved order of 
succession. The eligibility of the incumbent of paragraph (b)(6) of this 
section to serve as a successor is also limited to periods of national 
emergency declared by the President or during the activation of the RUS 
COOP plan.
    (d) In the event of the absence or disability of the Administrator, 
or in the event that the Administrator's position is vacant, the Deputy 
Rural Utilities Service Administrator is the only RUS official 
authorized to serve as Acting Administrator. When serving as Acting 
Administrator, the Deputy Administrator is authorized to perform all of 
the functions and duties of the office of the Administrator, including 
those functions and duties that are required by statute or regulation to 
be performed exclusively by the Administrator. In the event of the 
absence or disability of both Administrator and the Deputy 
Administrator, or in the event that both the office of Administrator and 
Deputy Administrator are vacant, the officials in the order of 
succession indicated in paragraph (b) of this section shall perform all 
the functions and duties of the Administrator but may not serve as 
Acting Administrator.
    (e) The Administrator retains the discretion to depart from the 
order in paragraph (b) for occasions where deviation from automatic 
succession is desired by the Administrator. Such temporary designations 
shall be in writing. Notwithstanding the provisions of this Sec. 1710.53 
not contained in this paragraph (e), the Administrator may delegate full 
or limited authority to perform the functions and duties of the office 
of Administrator except to the extent that such functions and duties may 
not be delegated by law.
    (f) The Administrator may terminate the delegations under this 
section 1700.53, in whole or in part, at any

[[Page 24]]

time. Unless terminated by the Administrator, written delegations under 
paragraph (e) of this section expire in accordance with their terms. 
Individuals acting as successors under paragraph (b) of this section 
will be relieved of such authority as soon as an incumbent in a position 
listed higher on the order of succession is available, able, and assumes 
the functions and duties of the Administrator, or when an official with 
requisite authority designates a permanent or acting Administrator.
    (g) Individuals exercising authority under this Sec. 1700.53 shall 
keep a record of important actions taken and the period during which the 
authority is exercised.
    (h) The authority to perform functions and duties pursuant to this 
Sec. 1700.53 can not be redelegated by an incumbent of a position listed 
in paragraph (b) of this section.

[71 FR 8436, Feb. 17, 2006]



Sec. 1700.54  Electric Program.

    (a) Administrator: The authority to approve the following loans, 
loan guarantees, and lien accommodations and subordinations of liens is 
reserved to the Administrator:
    (1) All discretionary hardship loans.
    (2) All loans, loan guarantees, and lien accommodations and 
subordinations of liens to finance operating costs.
    (3) All loans, loan guarantees, and lien accommodations and 
subordinations of liens of more than $20,000,000 for distribution 
borrowers or more than $50,000,000 for power supply borrowers.
    (4) All loans, loan guarantees, and lien accommodations and 
subordinations of liens for distribution borrowers that are members of a 
power supply borrower that is in default of its obligations to the 
Government or that is currently assigned to the Financial Services 
Staff, unless otherwise determined by the Administrator.
    (5) All loans, loan guarantees, and lien accommodations and 
subordinations of liens that require an Environmental Impact Statement.
    (6) Certifications and findings required by the RE Act or other 
applicable laws and regulations, the placing and releasing of conditions 
precedent to the advance of funds, and all security instruments, loan 
contracts, and all other necessary documents relating to the authorities 
reserved in this section.
    (7) Execution of all loan contracts, security instruments, and all 
other documents in connection with loans, loan guarantees, and lien 
accommodations approved by the Administrator.
    (b) The Assistant Administrator, Electric Program, has the authority 
to approve the following loans, loan guarantees, and lien accommodations 
and subordinations of liens, except for those approvals reserved to the 
Administrator:
    (1) Loans, loan guarantees, and lien accommodations and 
subordinations of liens for distribution borrowers in amounts not 
exceeding $20,000,000.
    (2) Loans, loan guarantees, and lien accommodations and 
subordinations of liens for power supply borrowers in amounts not 
exceeding $50,000,000.
    (3) Execution of all loan contracts, security instruments, and all 
other documents in connection with loans, loan guarantees, and lien 
accommodations approved by the Assistant Administrator, Electric 
Program.
    (c) Directors, Regional Divisions, have the authority to approve, 
for distribution borrowers:
    (1) Loans, loan guarantees, and lien accommodations and 
subordinations of liens in amounts not exceeding $15,000,000 except for 
those approvals reserved to the Administrator.
    (2) All certifications and findings required by the RE Act or other 
applicable laws and regulations, the imposing and releasing of 
conditions precedent to the advance of loan funds, and all security 
instruments, loan contracts, and all other documents relating to the 
delegations set forth in paragraph (c)(1) of this section.
    (d) Director, Power Supply Division, has the authority to approve 
for power supply borrowers:
    (1) Loans, loan guarantees, and lien accommodations and 
subordinations of liens in amounts not exceeding $30,000,000, except for 
those approvals reserved to the Administrator.

[[Page 25]]

    (2) All certifications and findings required by the RE Act or other 
applicable laws and regulations, the placing and releasing of conditions 
precedent to the advance of funds, and all security instruments, loan 
contracts or all other documents relating to the delegations set forth 
in paragraph (d)(1) of this section.



Sec. 1700.55  Telecommunications Program.

    (a) Administrator: The authority to approve the following loans, 
loan guarantees, and lien accommodations is reserved to the 
Administrator:
    (1) All loans, loan guarantees, and lien accommodations and 
subordinations of liens to finance operating costs.
    (2) All loans, loan guarantees, or lien accommodations and 
subordinations of liens of $25,000,000 or more.
    (3) Loans and loan guarantees with acquisition costs of $5,000,000 
or more.
    (4) Loans and loan guarantees containing funds to refinance 
outstanding debt of more than $5,000,000.
    (5) All loan contracts, security instruments, and all other 
documents to be executed in connection with loans and loan guarantees 
approved by the Administrator.
    (b) Assistant Administrator, Telecommunications Program, has the 
authority to approve the following loans, loan guarantees, and lien 
accommodations, except for those approvals reserved to the 
Administrator:
    (1) Loans, loan guarantees, and lien accommodations and 
subordinations of liens not to exceed $25,000,000 except for those 
reserved to the Administrator.
    (2) Loans and loan guarantees with acquisition costs where the 
acquisition portion of the loan is less than $5,000,000.
    (3) Loans and loan guarantees including refinancing amounts that do 
not exceed $5,000,000.
    (4) Distance learning and telemedicine loans and loan guarantees 
that do not exceed $5,000,000.
    (5) Loan contracts, security instruments, and other documents to be 
executed in connection with loans and loan guarantees approved by the 
Assistant Administrator, Telecommunications Program.
    (c) Area Directors have the authority to approve the following 
loans, loan guarantees, and lien accommodations, except for those 
approvals reserved to the Administrator:
    (1) Loans, loan guarantees, and lien accommodations and 
subordinations of liens of less than $10,000,000.
    (2) Loans and loan guarantees with acquisition costs of less than 
$2,000,000.
    (3) Loans and loan guarantees including refinancing amounts of less 
than $2,000,000.
    (4) Any modifications in the method of carrying out loan purposes.



Sec. 1700.56  Water and Environmental Programs.

    The State Rural Development Offices have the responsibility for 
making and servicing water and waste loans and grants.



Sec. 1700.57  Distance Learning and Telemedicine Loan and Grant Program.

    (a) Administrator: The authority to approve the following loans and 
lien accommodations is reserved to the Administrator:
    (1) Grants or loan and grant combinations.
    (2) The number selected from each state for financial assistance for 
grant approval and loans or grants approved.
    (3) Extension of principal and interest repayments for rural 
development purposes.
    (4) Loan contracts, security instruments, and all other documents to 
be executed in connection with loans and loan guarantees approved by the 
Administrator.
    (b) Assistant Administrator, Telecommunications Program, has the 
authority to approve the following loans and lien accommodations and 
subordinations of liens:
    (1) Loans, that do not also include requests for grant funds, except 
for those reserved to the Administrator.
    (2) Loan contracts, security instruments, and all other documents to 
be executed in connection with loans and loan guarantees approved by the 
Assistant Administrator, Telecommunications Program.

[[Page 26]]



Sec. 1700.58  Assistance to high energy cost rural communities.

    (a) Administrator: The authority to approve the following is 
reserved to the Administrator:
    (1) Allocation of appropriated funds among high energy cost 
community assistance programs;
    (2) Awards of grants and loans to extremely high energy cost 
communities;
    (3) Awards of grants and loans to the Denali Commission;
    (4) Awards of grants to State entities for State bulk fuel revolving 
funds; and
    (5) Grant agreements, loan contracts, security instruments and all 
other documents executed in connection with grants and loans agreements 
approved by the Administrator.
    (b) The Assistant Administrator, Electric Program has the authority 
to make any required certifications and to approve all grant and loan 
servicing actions not specifically reserved to the Administrator.

[70 FR 5351, Feb. 3, 2005]



Secs. 1700.59-1700.99  [Reserved]



             Subpart D_Substantially Underserved Trust Areas

    Source: 77 FR 35250, June 13, 2012, unless otherwise noted.



Sec. 1700.100  Purpose.

    This subpart establishes policies and procedures for the Rural 
Utilities Service (RUS) implementation of the Substantially Underserved 
Trust Areas (SUTA) initiative under section 306F of the Rural 
Electrification Act of 1936, as amended (7 U.S.C. 906f). The purpose of 
this rule is to identify and improve the availability of eligible 
programs in communities in substantially underserved trust areas.



Sec. 1700.101  Definitions.

    Administrator means the Administrator of the Rural Utilities 
Service, or designee or successor.
    Applicant means an entity that is eligible for an eligible program 
under that program's eligibility criteria.
    Borrower means any organization that has an outstanding loan or loan 
guarantee made by RUS for a program purpose.
    Completed application means an application that includes the 
elements specified by the rules for the applicable eligible program in 
form and substance satisfactory to RUS.
    ConAct means the Consolidated Farm and Rural Development Act, as 
amended (7 U.S.C. 1921 et seq.).
    Credit support means equity, cash requirements, letters of credit, 
and other financial commitments provided in support of a loan or loan 
guarantee.
    Eligible community means a community as defined by 7 CFR 1700.103.
    Eligible program means a program as defined by 7 CFR 1700.102.
    Financial assistance means a grant, combination loan and grant, loan 
guarantee or loan.
    Financial feasibility means the ability of a project or enterprise 
to meet operating expenses, financial performance metrics, such as debt 
service coverage requirements and return on investment, and the general 
ability to repay debt and sustain continued operations at least through 
the life of the RUS loan or loan guarantee.
    Matching fund requirements means the applicant's financial or other 
required contribution to the project for approved purposes.
    Nonduplication generally means a restriction on financing projects 
for services in a geographic area where reasonably adequate service 
already exists as defined by the applicable program.
    Project means the activity for which financial assistance has been 
provided.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture, successor to the Rural Electrification 
Administration.
    Substantially underserved trust area means a community in trust land 
with respect to which the Administrator determines has a high need for 
the benefits of an eligible program.
    Trust land means ``trust land'' as defined in section 3765 of title 
38, United States Code as determined by the Administrator under 7 CFR 
1700.104.

[[Page 27]]

    Underserved means an area or community lacking an adequate level or 
quality of service in an eligible program, including areas of 
duplication of service provided by an existing provider where such 
provider has not provided or will not provide adequate level or quality 
of service.



Sec. 1700.102  Eligible programs.

    SUTA does not apply to all RUS programs. SUTA only applies to 
eligible programs. An eligible program means a program administered by 
RUS and authorized in paragraph (a) of the RE Act, or paragraphs (b)(1), 
(2), (14), (22), or (24) of section 306(a) (7 U.S.C. 1926(a)(1), (2), 
(14), (22), (24)), or sections 306A, 306C, 306D, or 306E of the Con Act 
(7 U.S.C. 1926a, 1926c, 1926d, 1926e).



Sec. 1700.103  Eligible communities.

    An eligible community is a community that:
    (a) Is located on Trust land;
    (b) May be served by an RUS administered program; and
    (c) Is determined by the Administrator as having a high need for 
benefits of an eligible program.



Sec. 1700.104  Financial feasibility.

    Pursuant to normal underwriting practices, and such reasonable 
alternatives within the discretion of RUS that contribute to a financial 
feasibility determination for a particular eligible program or project, 
the Administrator will only make grants, loans and loan guarantees that 
RUS finds to be financially feasible and that provide eligible program 
benefits to substantially underserved trust areas. All income and assets 
available to and under the control of the Applicant will be considered 
as part of the Applicant's financial profile.



Sec. 1700.105  Determining whether land meets the statutory definition
of ``trust land.''

    The Administrator will use one or more of the following resources in 
determining whether a particular community is located in Trust land:
    (a) Official maps of Federal Indian Reservations based on 
information compiled by the U. S. Department of the Interior, Bureau of 
Indian Affairs and made available to the public;
    (b) Title Status Reports issued by the U. S. Department of the 
Interior, Bureau of Indian Affairs showing that title to such land is 
held in trust or is subject to restrictions imposed by the United 
States;
    (c) Trust Asset and Accounting Management System data, maintained by 
the Department of the Interior, Bureau of Indian Affairs;
    (d) Official maps of the Department of Hawaiian Homelands of the 
State of Hawaii identifying land that has been given the status of 
Hawaiian home lands under the provisions of section 204 of the Hawaiian 
Homes Commission Act, 1920;
    (e) Official records of the U.S. Department of the Interior, the 
State of Alaska, or such other documentation of ownership as the 
Administrator may determine to be satisfactory, showing that title is 
owned by a Regional Corporation or a Village Corporation as such terms 
are defined in the Alaska Native Claims Settlement Act (43 U.S.C. 1601 
et seq);
    (f) Evidence that the land is located on Guam, American Samoa or the 
Commonwealth of the Northern Mariana Islands, and is eligible for use in 
the Veteran's Administration direct loan program for veterans purchasing 
or constructing homes on communally-owned land; and
    (g) Any other evidence satisfactory to the Administrator to 
establish that the land is ``trust land'' within the meaning of 38 
U.S.C. 3765(1).



Sec. 1700.106  Discretionary provisions.

    (a) To improve the availability of eligible programs in eligible 
communities determined to have a high need for the benefits of an 
eligible program, the Administrator retains the discretion, on a case-
by-case basis, to use any of the following SUTA authorities individually 
or in combination to:
    (1) Make available to qualified applicants financing with an 
interest rate as low as 2 percent;
    (2) Extend repayment terms;
    (3) Waive (individually or in combination) non-duplication 
restrictions, matching fund requirements, and credit support 
requirements from any loan

[[Page 28]]

or grant program administered by RUS; and
    (4) Give the highest funding priority to designated projects in 
substantially underserved trust areas.
    (b) Requests for waivers of nonduplication restrictions, matching 
fund requirements, and credit support requirements, and requests for 
highest funding priority will be reviewed on a case-by-case basis upon 
written request of the applicant filed pursuant to 7 CFR 1700.108.
    (c) Notwithstanding the requirements in paragraph (b) of this 
section, the Administrator reserves the right to evaluate any 
application for an eligible program for use of the discretionary 
provisions of this subpart without a formal, written request from the 
applicant.



Sec. 1700.107  Considerations relevant to the exercise of SUTA
discretionary provisions.

    (a) In considering requests to make available financing with an 
interest rate as low as 2 percent, and extended repayment terms, the 
Administrator will evaluate the effect of and need for such terms on the 
finding of financial feasibility.
    (b) In considering a request for a non-duplication waiver, the 
Administrator will consider the offerings of all existing service 
providers to determine whether or not granting the non-duplication 
waiver is warranted. A waiver of non-duplication restrictions will not 
be given if the Administrator determines as a matter of financial 
feasibility that, taking into account all existing service providers, an 
applicant or RUS borrower would not be able to repay a loan or 
successfully implement a grant agreement. Requests for waivers of non-
duplication restrictions will be reviewed by taking the following 
factors into consideration:
    (1) The size, extent and demographics of the duplicative area;
    (2) The cost of service from existing service providers;
    (3) The quality of available service; and
    (4) The ability of the existing service provider to serve the 
eligible service area.
    (c) Requests for waivers of matching fund requirements will be 
evaluated by taking the following factors into consideration:
    (1) Whether waivers or reductions in matching or equity requirements 
would make an otherwise financially infeasible project financially 
feasible;
    (2) Whether permitting a matching requirement to be met with sources 
not otherwise permitted in an affected program due to regulatory 
prohibition may be allowed under a separate statutory authority; and
    (3) Whether the application could be ranked and scored as if the 
matching requirements were fully met.
    (d) Requests for waivers of credit support requirements will be 
evaluated taking the following factors into consideration:
    (1) The cost and availability of credit support relative to the loan 
security derived from such support;
    (2) The extent to which the requirement is shown to be a barrier to 
the applicant's participation in the program; and
    (3) The alternatives to waiving the requirements.
    (e) The Administrator may adapt the manner of assigning highest 
funding priority to align with the selection methods used for particular 
programs or funding opportunities.
    (1) Eligible programs which use priority point scoring may, in a 
notice of funds availability or similar notice, assign extra points for 
SUTA eligible applicants as a means to exercise a discretionary 
authority under this subpart.
    (2) The Administrator may announce a competitive grant opportunity 
focused exclusively or primarily on trust lands which incorporates one 
or more discretionary authorities under this subpart into the rules or 
scoring for the competition.



Sec. 1700.108  Application requirements.

    (a) To receive consideration under this subpart, the applicant must 
submit to RUS a completed application that includes all of the 
information required for an application in accordance with the 
regulations relating to the program for which financial assistance

[[Page 29]]

is being sought. In addition, the applicant must notify the RUS contact 
for the applicable program in writing that it seeks consideration under 
this subpart and identify the discretionary authorities of this subpart 
it seeks to have applied to its application. The required written 
request memorandum or letter must include the following items:
    (1) A description of the applicant, documenting eligibility.
    (2) A description of the community to be served, documenting 
eligibility in accordance with 7 CFR 1700.103.
    (3) An explanation and documentation of the high need for the 
benefits of the eligible program, which may include:
    (i) Data documenting a lack of service (i.e. no service or unserved 
areas) or inadequate service in the affected community;
    (ii) Data documenting significant health risks due to the fact that 
a significant proportion of the community's residents do not have access 
to, or are not served by, adequate, affordable service.
    (iii) Data documenting economic need in the community, which may 
include:
    (A) Per capita income of the residents in the community, as 
documented by the U.S. Department of Commerce, Bureau of Economic 
Analysis;
    (B) Local area unemployment and not-employed statistics in the 
community, as documented by the U.S. Department of Labor, Bureau of 
Labor Statistics and/or the U.S. Department of the Interior, Bureau of 
Indian Affairs;
    (C) Supplemental Nutrition Assistance Program participation and 
benefit levels in the community, as documented by the U.S. Department of 
Agriculture, Economic Research Service;
    (D) National School Lunch Program participation and benefit levels 
in the community, as documented by the U.S. Department of Agriculture, 
Food and Nutrition Service;
    (E) Temporary Assistance for Needy Families Program participation 
and benefit levels in the community, as documented by the U.S. 
Department of Health and Human Services, Administration for Children and 
Families;
    (F) Lifeline Assistance and Link-Up America Program participation 
and benefit levels in the community, as documented by the Federal 
Communications Commission and the Universal Service Administrative 
Company;
    (G) Examples of economic opportunities which have been or may be 
lost without improved service.
    (H) Data maintained and supplied by Indian tribes or other tribal or 
jurisdictional entities on ``trust land'' to the Department of Interior, 
the Department of Health and Human Services and the Department of 
Housing and Urban Development that illustrates a high need for the 
benefits of an eligible program.
    (4) The impact of the specific authorities sought under this 
subpart.
    (b) The applicant must provide any additional information RUS may 
consider relevant to the application which is necessary to adequately 
evaluate the application under this subpart.
    (c) RUS may also request modifications or changes, including changes 
in the amount of funds requested, in any proposal described in an 
application submitted under this subpart.
    (d) The applicant must submit a completed application within the 
application window and guidelines for an eligible program.



Sec. 1700.109  RUS review.

    (a) RUS will review the application to determine whether the 
applicant is eligible to receive consideration under this subpart and 
whether the application is timely, complete, and responsive to the 
requirements set forth in 7 CFR 1700.107.
    (b) If the Administrator determines that the application is eligible 
to receive consideration under this subpart and one or more SUTA 
requests are granted, the applicant will be so notified.
    (c) If RUS determines that the application is not eligible to 
receive further consideration under this subpart, RUS will so notify the 
applicant. The applicant may withdraw its application or request that 
RUS treat its application as an ordinary application for review,

[[Page 30]]

feasibility analysis and service area verification by RUS consistent 
with the regulations and guidelines normally applicable to the relevant 
program.



Secs. 1700.110-1700.149  [Reserved]



Sec. 1700.150  OMB Control Number.

    The reporting and recordkeeping requirements contained in this part 
have been approved by the Office of Management and Budget and have been 
assigned OMB control number 0572-0147.



PART 1703_RURAL DEVELOPMENT--Table of Contents



Subpart A-B [Reserved]

Subpart C--Rural Business Incubator Program [Reserved]

1703.80-1703.99  [Reserved]

  Subpart D_Distance Learning and Telemedicine Loan and Grant Program_
                                 General

Sec.
1703.100  Purpose.
1703.101  Policy.
1703.102  Definitions.
1703.103  Applicant eligibility and allocation of funds.
1703.104  [Reserved]
1703.105  Processing of selected applications.
1703.106  Disbursement of loans and grants.
1703.107  Reporting and oversight requirements.
1073.108  Audit requirements.
1703.109  Grant and loan administration.
1703.110  Changes in project objectives or scope.
1703.111  Grant and loan termination.
1703.112  Expedited telecommunications loans.
1703.113-1703.119  [Reserved]

       Subpart E_Distance Learning and Telemedicine Grant Program

1703.120  [Reserved]
1703.121  Approved purposes for grants.
1703.122  Matching contributions.
1703.123  Nonapproved purposes for grants.
1703.124  Maximum and minimum grant amounts.
1703.125  Completed application.
1703.126  Criteria for scoring grant applications.
1703.127  Application selection provisions.
1703.128  Submission of applications.
1703.129  Appeals.

Subpart F_Distance Learning and Telemedicine Combination Loan and Grant 
                                 Program

1703.130  Use of combination loan and grant.
1703.131  Approved purposes for a combination loan and grant.
1703.132  Nonapproved purposes for a combination loan and grant.
1703.133  Maximum and minimum amounts.
1703.134  Completed application.
1703.135  Application selection provisions.
1703.136  Submission of applications.
1703.137  Appeals.
1703.138-1703.139  [Reserved]

        Subpart G_Distance Learning and Telemedicine Loan Program

1703.140  Use of loan funds.
1703.141  Approved purposes for loans.
1703.142  Nonapproved purposes for loans.
1703.143  Maximum and minimum amounts.
1703.144  Completed application.
1703.145  Application selection provisions.
1703.146  Submission of applications.
1703.147  Appeals.

Subpart H_Deferments of RUS Loan Payments for Rural Development Projects

1703.300  Purpose.
1703.301  Policy.
1703.302  Definitions and rules of construction.
1703.303  Eligibility criteria for deferment of loan payments.
1703.304  Restrictions on the deferment of loan payments.
1703.305  Requirements for deferment of loan payments.
1703.306  Limitation on funds derived from the deferment of loan 
          payments.
1703.307  Uses of the deferments of loan payments.
1703.308  Amount of deferment funds available.
1703.309  Terms of repayment of deferred loan payments.
1703.310  Environmental considerations.
1703.311  Application procedures for deferment of loan payments.
1703.312  RUS review requirements.
1703.313  Compliance with other regulations.

    Authority: 7 U.S.C. 901 et seq. and 950aaa et seq.

    Source: 54 FR 6870, Feb. 15, 1989, unless otherwise noted. 
Redesignated at 55 FR 39394, Sept. 27, 1990.

Subpart A--B [Reserved]

[[Page 31]]

Subpart C--Rural Business Incubator Program [Reserved]



Secs. 1703.80-1703.99  [Reserved]



  Subpart D_Distance Learning and Telemedicine Loan and Grant Program_
                                 General

    Source: 64 FR 14357, Mar. 25, 1999, unless otherwise noted.



Sec. 1703.100  Purpose.

    The purpose of the Distance Learning and Telemedicine (DLT) Loan and 
Grant Program is to encourage and improve telemedicine services and 
distance learning services in rural areas through the use of 
telecommunications, computer networks, and related advanced technologies 
by students, teachers, medical professionals, and rural residents. This 
subpart describes the general policies for administering the DLT 
program. Subpart E contains the policies and procedures related to 
grants; subpart F contains the policies and procedures related to a 
combination loan and grant; and subpart G contains the policies and 
procedures related to loans.



Sec. 1703.101  Policy.

    (a) The transmission of information is vital to the economic 
development, education, and health of rural Americans. To further this 
objective, RUS will provide financial assistance to distance learning 
and telemedicine projects that will improve the access of people 
residing in rural areas to educational, learning, training, and health 
care services.
    (b) In providing financial assistance, RUS will give priority to 
rural areas that it believes have the greatest need for distance 
learning and telemedicine services. RUS believes that generally the need 
is greatest in areas that are economically challenged, costly to serve, 
and experiencing outward migration. This program is consistent with the 
provisions of the Telecommunications Act of 1996 that designate 
telecommunications service discounts for schools, libraries, and rural 
health care centers. RUS will take into consideration the community's 
involvement in the proposed project and the applicant's ability to 
leverage grant funds.
    (c) In administering this subpart, RUS will not favor or mandate the 
use of one particular technology over another.
    (d) Rural institutions are encouraged to cooperate with each other, 
with applicants, and with end-users to promote the program being 
implemented under this subpart.
    (e) RUS staff will make diligent efforts to inform potential 
applicants in rural areas of the programs being implemented under this 
subpart.
    (f) The Administrator will provide only loans under this subpart to 
any entity that has received a telecommunications or electric loan under 
the Rural Electrification Act of 1936. Telecommunications and Electric 
borrowers are encouraged to seek a loan under this subpart to bolster 
educational and health care opportunities in the rural communities they 
serve. A borrower receiving a loan shall:
    (1) Make the loan available to entities that qualify as distance 
learning or telemedicine projects satisfying the requirements of this 
subpart, under any terms it so chooses as long as the terms are no more 
stringent than the terms under which it received the financial 
assistance.
    (2) Use the loan to acquire, install, improve, or extend a distance 
learning or telemedicine system referred to in this subpart.
    (g) The Administrator will allocate funds that are appropriated each 
fiscal year for the subparts E, F, and G, of this part respectively. Not 
more than 30 days before the end of the fiscal year, the Administrator 
may transfer any funds not committed to grants in the combination loan 
and grant program to the grant program.
    (h) Financial assistance may be provided for end user sites. 
Financial assistance may also be provided for hubs located in rural or 
non-rural areas if they are necessary to provide distance learning or 
telemedicine services to rural residents at end user sites.
    (i) The Administrator will publish, at the end of each fiscal year, 
a notice in the Federal Register of all applications receiving financial 
assistance

[[Page 32]]

under this subpart. Subject to the provisions of the Freedom of 
Information Act, (5 U.S.C. 552), applications will be available for 
public inspection at the U.S. Department of Agriculture, 1400 
Independence Avenue, SW., Washington, DC, 20250.



Sec. 1703.102  Definitions.

    1996 Act means the Federal Agriculture Improvement Act of 1996.
    Act means the Rural Electrification Act of 1936 (7 U.S.C. 901 et 
seq.).
    Administrator means the Administrator of the Rural Utilities 
Service, or designee or successor.
    Applicant means an eligible organization that applies for financial 
assistance under this subpart.
    Approved purposes means project purposes for which grant, loan, or 
combination loan and grant financial assistance may be expended.
    Champion community means any community that submitted a valid 
application to become a USDA Empowerment Zone/Enterprise Community (EZ/
EC) area, that met the requirements to be designated an EZ/EC area, but 
not chosen because their score was not high enough to be selected.
    Combination loan and grant means a grant in combination with a loan 
made under the DLT program.
    Completed application means an application that includes all those 
items specified in Secs. 1703.125, 1703.134, and 1703.144 in form and 
substance satisfactory to the Administrator.
    Computer networks mean computer hardware and software, terminals, 
signal conversion equipment including both modulators and demodulators, 
or related devices, used to communicate with other computers to process 
and exchange data through a telecommunication network in which signals 
are generated, modified, or prepared for transmission, or received, via 
telecommunications terminal equipment and telecommunications 
transmission facilities.
    Consortium means a combination or group of entities formed to 
undertake the purposes for which the distance learning and telemedicine 
financial assistance is provided. At least one of the entities in a 
consortium must meet the requirements of Sec. 1703.103.
    Construct means to acquire, construct, extend, improve, or install a 
facility or system.
    Data terminal equipment means equipment that converts user 
information into data signals for transmission, or reconverts the 
received data signals into user information, and is normally found on 
the terminal of a circuit and on the premises of the end user.
    Distance learning means a telecommunications link to an end user 
through the use of eligible equipment to:
    (1) Provide educational programs, instruction, or information 
originating in one area, whether rural or not, to students and teachers 
who are located in rural areas; or
    (2) Connect teachers and students, located in one rural area with 
teachers and students that are located in a different rural area.
    DLT borrower means an entity that has an outstanding loan under the 
provisions of the DLT program.
    DLT program means the Distance Learning and Telemedicine Loan and 
Grant Program administered by RUS.
    Economic useful life as applied to equipment and facilities financed 
under the DLT program means the number of years resulting from dividing 
100 percent by the depreciation rate (expressed as a percent) based on 
Internal Revenue Service depreciation rules or recognized 
telecommunications industry guidelines.
    Eligible equipment means computer hardware and software, audio or 
video equipment, computer network components, telecommunications 
terminal equipment, data terminal equipment, inside wiring, interactive 
video equipment, or other facilities that would further telemedicine 
services or distance learning services.
    Eligible facilities means land, buildings, or building construction 
needed to carry out an eligible distance learning or telemedicine 
project for loan financial assistance only.
    Empowerment Zone and Enterprise Community (EZ/EC) means any 
community whose designation as such by USDA pursuant to 26 U.S.C. 1391 
et seq., is in effect at the time RUS agrees to provide financial 
assistance.

[[Page 33]]

    End user is one or more of the following:
    (1) Rural elementary, secondary schools, and other educational 
institutions, such as institutions of higher education, vocational and 
adult training and education centers, libraries, and teacher training 
centers, and students, teachers and instructors using such rural 
educational facilities, that participate in a rural distance learning 
telecommunications program through a project funded under this subpart;
    (2) Rural hospitals, primary care centers or facilities, such as 
medical centers, nursing homes, and clinics, and physicians and staff 
using such rural medical facilities, that participate in a rural 
telemedicine program through a project funded under this subpart; and
    (3) Other rural community facilities, institutions, or entities that 
receive distance learning or telemedicine services.
    End user site means a facility that is part of a network or 
telecommunications system that is utilized by end users.
    Financial assistance means a grant, combination loan and grant, or 
loan.
    GFR means RUS telecommunications program General Field 
Representative.
    Grant documents means the grant agreement, including any amendments 
and supplements thereto, between RUS and the grantee.
    Grantee means a recipient of a grant from RUS to carry out the 
purposes of the DLT program.
    Guarantee means a guarantee for a loan provided by a RUS borrower or 
other qualified third party.
    Hub means a facility that is part of a network or telecommunications 
system that provides educational or medical services to end user sites.
    Instructional programming means educational material, including 
computer software, which would be used for educational purposes in 
connection with eligible equipment but does not include salaries, 
benefits, and overhead of medical or educational personnel.
    Interactive equipment means equipment used to produce and prepare 
for transmission audio and visual signals from at least two distant 
locations so that individuals at such locations can orally and visually 
communicate with each other. Such equipment includes monitors, other 
display devices, cameras or other recording devices, audio pickup 
devices, and other related equipment.
    Loan means a loan made under the DLT program bearing interest at a 
rate equal to the then current cost-of-money to the government.
    Loan documents mean the loan agreement, note, and security 
instrument, including any amendments and supplements thereto, between 
RUS and the DLT borrower.
    Local exchange carrier means a commercial, cooperative or mutual-
type association, or public body that is engaged in the provision of 
telephone exchange service or exchange access.
    Matching contribution means the applicant's contribution for 
approved purposes.
    National school lunch program (NSLP) means the federally assisted 
meal program established under the National School Lunch Act of 1946 (42 
U.S.C. 1751).
    Project means approved purposes for which financial assistance has 
been provided.
    Project service area means the area in which at least 90 percent of 
the persons to be served by the project are likely to reside.
    Recipient means a grantee, borrower, or both of a DLT program grant, 
loan or combination loan and grant.
    Rural community facility means a facility such as a school, library, 
learning center, training facility, hospital, or medical facility that 
provides educational or health care benefits primarily to residents of 
rural areas.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture, successor to the Rural Electrification 
Administration.
    Secretary means the Secretary of Agriculture.
    Technical assistance means:
    (1) Assistance in learning to manage, operate, or use equipment or 
systems; and
    (2) Studies, analyses, designs, reports, manuals, guides, 
literature, or other forms of creating, acquiring, or disseminating 
information.

[[Page 34]]

    Telecommunications carrier means any provider of telecommunications 
services.
    Telecommunications or electric borrower means an entity that has 
outstanding RUS or Rural Telephone Bank electric or telecommunications 
loans or loan guarantees under the provisions of the Act.
    Telecommunications systems plan means the plan submitted by an 
applicant in accordance with Sec. 1703.125 for grants, Sec. 1703.134 for 
a combination loan and grant, or Sec. 1703.144 for loans.
    Telecommunications terminal equipment means the assembly of 
telecommunications equipment at the end of a circuit or path of a 
signal, including but not limited to facilities that receive or transmit 
over the air broadcast, satellite, and microwave, normally located on 
the premises of the end user, that interfaces with telecommunications 
transmission facilities, and that is used to modify, convert, encode, or 
otherwise prepare signals to be transmitted via such telecommunications 
facilities, or that is used to modify, reconvert, or carry signals 
received from such facilities, the purpose of which is to accomplish the 
goal for which the circuit or signal was established.
    Telecommunications transmission facilities means facilities that 
transmit, receive, or carry voice, video, or data between the 
telecommunications terminal equipment at each end of the 
telecommunications circuit or path. Such facilities include microwave 
antennae, relay stations and towers, other telecommunications antennae, 
fiber-optic cables and repeaters, coaxial cables, communication 
satellite ground station complexes, copper cable electronic equipment 
associated with telecommunications transmissions, and similar items.
    Telemedicine means a telecommunications link to an end user through 
the use of eligible equipment which electronically links medical 
professionals at separate sites in order to exchange health care 
information in audio, video, graphic, or other format for the purpose of 
providing improved health care services primarily to residents of rural 
areas.

[64 FR 14357, Mar. 25, 1999, as amended at 67 FR 3040, Mar. 11, 2002]



Sec. 1703.103  Applicant eligibility and allocation of funds.

    (a) To be eligible to receive a grant, loan and grant combination, 
or loan under this subpart:
    (1) The applicant must be legally organized as an incorporated 
organization or partnership, an Indian tribe or tribal organization, as 
defined in 25 U.S.C. 450b (b) and (c), a state or local unit of 
government, a consortium, as defined in Sec. 1703.102, or other legal 
entity, including a private corporation organized on a for profit or 
not-for profit basis. Each applicant must provide written evidence of 
its legal capacity to contract with RUS to obtain the grant, loan and 
grant combination, or the loan, and comply with all applicable 
requirements. If a consortium lacks the legal capacity to contract, each 
individual entity must contract with RUS in its own behalf.
    (2) The applicant proposes to utilize the financing to:
    (i) Operate a rural community facility; or
    (ii) Deliver distance learning or telemedicine services to entities 
that operate a rural community facility or to residents of rural areas 
at rates calculated to ensure that the benefit of the financial 
assistance is passed through to such entities or to residents of rural 
areas.
    (b) Electric or telecommunications borrowers are not eligible for 
grants.

[64 FR 14357, Mar. 25, 1999, as amended at 67 FR 3040, Mar. 11, 2002]



Sec. 1703.104  [Reserved]



Sec. 1703.105  Processing of selected applications.

    (a) During the period between the submission of an application and 
the execution of documents, the applicant must inform RUS if the project 
is no longer viable or the applicant no longer is requesting financial 
assistance for the project. When the applicant so informs RUS, the 
selection will be rescinded or the application withdrawn

[[Page 35]]

and written notice to that effect sent to the applicant.
    (b) If an application has been selected and the scope of the project 
changes substantially, the applicant may be required to submit a new 
application to RUS for review and consideration depending on the degree 
of change. A new application will be subject to review in accordance 
with this subpart. The financial assistance may not be transferred by 
the applicant for use for another project.
    (c) If State or local governments raise objections to a proposed 
project under the intergovernmental review process that are not resolved 
within 90 days of the Administrator's selection of the application, the 
Administrator will rescind the selection and written notice to that 
effect will be sent to the applicant. The Administrator, in his sole 
discretion may extend the 90 day period if it appears resolution is 
imminent.
    (d) RUS may request additional information to complete the 
appropriate documents covering financial assistance.
    (e) Financial assistance documents. (1) The documents will include a 
grant agreement for grants; loan documents, including third party 
guarantees, notes and security instruments for loans; or any other legal 
documents the Administrator deems appropriate, including suggested forms 
of certifications and legal opinions.
    (2) The grant agreement and the loan documents will include, among 
other things, conditions on the release or advance of funds and include 
at a minimum, a project description, approved purposes, the maximum 
amount of the financial assistance, supplemental funds required for the 
project, and certain agreements or commitments the applicant may have 
proposed in its application. In addition, the loan documents may contain 
covenants and conditions the Administrator deems necessary or desirable 
to provide additional assurance that loans will be repaid and the 
purposes of the loan will be accomplished.
    (3) The recipient of a loan will be required to execute a security 
instrument in form and substance satisfactory to RUS and must, before 
receiving any advance of loan funds, provide security that is adequate, 
in the opinion of RUS, to assure repayment, within the time agreed, of 
all loans to the borrower under the DLT program. This assurance will 
generally be provided by a first lien upon all facilities and equipment 
financed by the loan. RUS may require additional security as it deems 
necessary.
    (4) Adequate security may also be provided by third-party 
guarantees, letters of credit, pledges of revenue, or other forms of 
security satisfactory to RUS.
    (5) The security instrument and other loan documents required by RUS 
in connection with a loan under the DLT program shall contain such 
pledges, covenants, and other provisions as may, in the opinion of RUS, 
be required to secure repayment of the loan.
    (6) If the project does not constitute a complete operating system, 
the DLT recipient shall provide evidence, in form and substance 
satisfactory to RUS, demonstrating that the recipient has sufficient 
contractual, financing, or other arrangements to assure that the project 
will provide adequate and efficient service.
    (f) Prior to the execution of a grant and loan document, RUS 
reserves the right to require any changes in the project or legal 
documents covering the project to protect the integrity of the DLT 
program and the interests of the government.
    (g) If the applicant fails to submit, within 120 calendar days from 
the date of RUS' selection of an application, all of the information 
that RUS determines to be necessary to prepare legal documents and 
satisfy other requirements of this subpart, RUS may rescind the 
selection of the application.

[64 FR 14357, Mar. 25, 1999; 64 FR 25422, May 12, 1999]



Sec. 1703.106  Disbursement of loans and grants.

    (a) For financial assistance of $100,000 or greater, prior to the 
disbursement of a grant and a loan, the recipient, if it is not a unit 
of government, will provide evidence of fidelity bond coverage as 
required by 7 CFR part 3019.

[[Page 36]]

    (b) Grants and loans will be disbursed to recipients on a 
reimbursement basis, or with unpaid invoices for the eligible purposes 
contained in this subpart, by the following process:
    (1) An SF 270, ``Request for Advance or Reimbursement,'' will be 
completed by the recipient and submitted to RUS not more frequently than 
once a month;
    (2) RUS will review the SF 270 for accuracy when received and will 
schedule payment if the form is satisfactory. Payment will ordinarily be 
made within 30 days; and
    (3) For financial assistance approved during and subsequent to FY 
1999, funds will be advanced in accordance with 7 CFR 1744.69.
    (c) The recipient's share in the cost of the project must be 
disbursed in advance of the loan and grant, or if the recipient agrees, 
on a pro rata distribution basis with financial assistance during the 
disbursement period. Recipients will not be permitted to provide their 
contributions at the end of the project.
    (d) A combination loan and grant will be disbursed on a pro rata 
basis based on the respective amounts of financial assistance provided.



Sec. 1703.107  Reporting and oversight requirements.

    (a) A project performance activity report will be required of all 
recipients on an annual basis until the project is complete and the 
funds are expended by the applicant.
    (b) A final project performance report must be provided by the 
recipient. It must provide an evaluation of the success of the project 
in meeting the objectives of the program. The final report may serve as 
the last annual report.
    (c) RUS will monitor recipients, as it determines necessary, to 
assure that projects are completed in accordance with the approved scope 
of work and that the financial assistance is expended for approved 
purposes.
    (d) Recipients shall diligently monitor performance to ensure that 
time schedules are being met, projected work by time periods is being 
accomplished, and other performance objectives are being achieved. 
Recipients are to submit an original and one copy of all project 
performance reports, including, but not limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) A description of any problems, delays, or adverse conditions 
which have occurred, or are anticipated, and which may affect the 
attainment of overall project objectives, prevent the meeting of time 
schedules or objectives, or preclude the attainment of particular 
project work elements during established time periods. This disclosure 
shall be accompanied by a statement of the action taken or planned to 
resolve the situation; and
    (3) Objectives and timetable established for the next reporting 
period.



Sec. 1703.108  Audit requirements.

    A recipient of financial assistance shall provide RUS with an audit 
for each year, beginning with the year in which a portion of the 
financial assistance is expended, in accordance with the following:
    (a) If the recipient is a for-profit entity, a Telecommunications or 
Electric borrower, or any other entity not covered by the following 
paragraph, the recipient shall provide an independent audit report in 
accordance with 7 CFR part 1773, ``Policy on Audits of RUS Borrowers.''
    (b) If the recipient is a State or local government, or non-profit 
organization, the recipient shall provide an audit in accordance with 7 
CFR part 3052, ``Audits of States, Local Governments, and Non-Profit 
Organizations.''

[64 FR 14357, Mar. 25, 1999; 64 FR 25422, May 12, 1999]



Sec. 1703.109  Grant and loan administration.

    RUS will conduct reviews as necessary to determine whether the 
financial assistance was expended for approved purposes. The recipient 
is responsible for ensuring that the project complies with all 
applicable regulations, and that the grants and loans are expended only 
for approved purposes. The recipient is responsible for ensuring that 
disbursements and expenditures of funds are properly supported by 
invoices, contracts, bills of sale,

[[Page 37]]

canceled checks, or other appropriate forms of evidence, and that such 
supporting material is provided to RUS, upon request, and is otherwise 
made available, at the recipient's premises, for review by the RUS 
representatives, the recipient's certified public accountant, the Office 
of Inspector General, U. S. Department of Agriculture, the General 
Accounting Office, and any other official conducting an audit of the 
recipient's financial statements or records, and program performance for 
the grants and loans made under this subpart. The recipient shall permit 
RUS to inspect and copy any records and documents that pertain to the 
project.



Sec. 1703.110  Changes in project objectives or scope.

    The recipient shall obtain prior written approval by RUS for any 
material change to the scope or objectives of the project, including any 
changes to the scope of work or the budget submitted to RUS. Any 
material change shall be contained in a revised scope of work plan to be 
prepared by the recipient, submitted to, and approved by RUS in writing.



Sec. 1703.111  Grant and loan termination.

    (a) The financial assistance may be terminated when RUS and the 
recipient agree upon the conditions of the termination, the effective 
date of the termination, and, in the case of a partial termination of 
the financial assistance, any unadvanced portion of the financial 
assistance to be terminated and any advanced portion of the financial 
assistance to be returned.
    (b) The recipient may terminate the financial assistance by written 
notification to RUS, providing the reasons for such termination, the 
effective date, and, in the case of a partial termination, the portion 
of the financial assistance to be terminated. In the case of a partial 
termination, if RUS believes that the remaining portion of the financial 
assistance will not accomplish the approved purposes, then, RUS may 
terminate the financial assistance in its entirety, pursuant to the 
provisions of paragraph (a) of this section.



Sec. 1703.112  Expedited telecommunications loans

    RUS will expedite consideration and determination of an application 
submitted by an RUS telecommunications borrower for a loan under the Act 
or an advance of such loan funds to be used in conjunction with 
financial assistance under subparts E, F, or G of this part. See 7 CFR 
part 1737 for loans and 7 CFR part 1744 for advances under this section.



Secs. 1703.113-1703.119  [Reserved]



       Subpart E_Distance Learning and Telemedicine Grant Program

    Source: 64 FR 14360, Mar. 25, 1999, unless otherwise noted.



Sec. 1703.120  [Reserved]



Sec. 1703.121  Approved purposes for grants.

    For distance learning and telemedicine projects, grants shall 
finance only the costs for approved purposes. Grants shall be expended 
only for the costs associated with the initial capital assets associated 
with the project. The following are approved grant purposes:
    (a) Acquiring, by lease or purchase, eligible equipment as defined 
in Sec. 1703.102;
    (b) Acquiring instructional programming; and
    (c) Providing technical assistance and instruction for using 
eligible equipment, including any related software; developing 
instructional programming; providing engineering or environmental 
studies relating to the establishment or expansion of the phase of the 
project that is being financed with the grant (this purpose shall not 
exceed 10 percent of the grant).

[64 FR 14357, Mar. 25, 1999, as amended at 67 FR 3040, Mar. 11, 2002]



Sec. 1703.122  Matching contributions.

    (a) The grant applicant's minimum matching contribution must equal 
15 percent of the grant amount requested and shall be used for approved 
purposes for grants listed in Sec. 1703.121. Matching contributions 
generally must be in the

[[Page 38]]

form of cash. However, in-kind contributions solely for the purposes 
listed in Sec. 1703.121 may be substituted for cash.
    (b) In-kind items listed in Sec. 1703.121 must be non-depreciated or 
new assets with established monetary values. Manufacturers' or service 
providers' discounts are not considered in-kind matching.
    (c) Costs incurred by the applicant, or others on behalf of the 
applicant, for facilities or equipment installed, or other services 
rendered prior to submission of a completed application, shall not be 
considered as an eligible in-kind matching contribution.
    (d) Costs incurred for non-approved purposes for grant outlined in 
Sec. 1703.123 shall not be used as an in-kind matching contribution.
    (e) Any financial assistance from Federal sources will not be 
considered as matching contributions under this subpart unless there is 
a Federal statutory exception specifically authorizing the Federal 
financial assistance to be considered as a matching contribution.

[64 FR 14357, Mar. 25, 1999, as amended at 67 FR 3040, Mar. 11, 2002]



Sec. 1703.123  Nonapproved purposes for grants.

    (a) A grant made under this subpart will not be provided or used:
    (1) To cover the costs of acquiring, installing or constructing 
telecommunications transmission facilities;
    (2) To pay for medical equipment not having telemedicine as its 
essential function;
    (3) To pay salaries, wages, or employee benefits to medical or 
educational personnel;
    (4) To pay for the salaries or administrative expenses of the 
applicant or the project;
    (5) To purchase equipment that will be owned by the local exchange 
carrier or another telecommunications service provider unless that 
service provider is the applicant.
    (6) To duplicate facilities providing distance learning or 
telemedicine services in place or to reimburse the applicant or others 
for costs incurred prior to RUS' receipt of the completed application;
    (7) To pay costs of preparing the application package for financial 
assistance under this program;
    (8) For projects whose sole objective is to provide links between 
teachers and students or between medical professionals who are located 
at the same facility;
    (9) For site development and the destruction or alteration of 
buildings;
    (10) For the purchase of land, buildings, or building construction;
    (11) For projects located in areas covered by the Coastal Barrier 
Resources Act (16 U.S.C. 3501 et seq.);
    (12) For any purpose that the Administrator has not specifically 
approved;
    (13) Except for leases provided for in Sec. 1703.121, to pay the 
cost of recurring or operating expenses for the project; or
    (14) For any other purposes not specifically contained in 
Sec. 1703.121.
    (b) Except as otherwise provided in Sec. 1703.112, grants shall not 
be used to finance a project, in part, when the success of the project 
is dependent upon the receipt of additional financial assistance under 
this subpart or is dependent upon the receipt of other financial 
assistance that is not assured.

[64 FR 14360, Mar. 25, 1999; 64 FR 25422, May 12, 1999, as amended at 64 
FR 25423, May 12, 1999; 67 FR 3040, Mar. 11, 2002]



Sec. 1703.124  Maximum and minimum grant amounts.

    Applications for grants under this subpart will be subject to 
limitations on the proposed amount of grant funds. The Administrator 
will establish the maximum amount of a grant to be made available to an 
individual recipient for each fiscal year under this subpart by 
publishing notice of the maximum amount in the Federal Register not 
sooner than 45 days before the period for accepting applications begins. 
The minimum amount of a grant is $50,000.



Sec. 1703.125  Completed application.

    The following items are required to be submitted to RUS in support 
of an application for grant funds:
    (a) An application for Federal Assistance. A completed Standard Form 
424.
    (b) An executive summary of the project. The applicant must provide

[[Page 39]]

RUS with a general project overview that addresses the following 8 
categories:
    (1) A description of why the project is needed;
    (2) An explanation of how the applicant will address the need cited 
in paragraph (b)(1) of this section, why the applicant requires 
financial assistance, the types of educational or medical services to be 
offered by the project, and the benefits to rural residents;
    (3) A description of the applicant, documenting eligibility in 
accordance with Sec. 1703.103;
    (4) An explanation of the total project cost including a breakdown 
of the grant required and the source of matching contribution and other 
financial assistance for the remainder of the project;
    (5) A statement specifying whether the project is either a distance 
learning or telemedicine facility as defined in Sec. 1703.102. If the 
project provides both distance learning and telemedicine services, the 
applicant must identify the predominant use of the system;
    (6) A general overview of the telecommunications system to be 
developed, including the types of equipment, technologies, and 
facilities used;
    (7) A description of the participating hubs and end user sites and 
the number of rural residents that will be served by the project at each 
end user site; and
    (8) A certification by the applicant that facilities constructed 
with grants do not duplicate adequate established telemedicine or 
distance learning services.
    (9) A listing of the location of each end user site (city, town, 
village, borough, or rural areas) plus the State.
    (c) Scoring criteria documentation. Each grant applicant must 
address and provide documentation on how it meets each of the scoring 
criteria contained in Sec. 1703.126.
    (d) A scope of work. The scope of work must include, at a minimum:
    (1) The specific activities to be performed under the project;
    (2) Who will carry out the activities;
    (3) The time-frames for accomplishing the project objectives and 
activities; and
    (4) A budget for all capital expenditures reflecting the line item 
costs for approved purposes for both the grant funds and other sources 
of funds for the project. Separately, the budget must specify any line 
item costs that are nonapproved purposes for grants as contained in 
Sec. 1703.123.
    (e) Financial information and sustainability. The applicant must 
provide a narrative description demonstrating: feasibility of the 
project, including having sufficient resources and expertise necessary 
to undertake and complete the project; and, how the project will be 
sustained following completion of the project.
    (f) A statement of experience. The applicant must provide a written 
narrative (not exceeding three single spaced pages) describing its 
demonstrated capability and experience, if any, in operating an 
educational or health care endeavor and any project similar to the 
project. Experience in a similar project is desirable but not required.
    (g) Funding commitment from other sources. The applicant must 
provide evidence, in form and substance satisfactory to RUS, that 
funding agreements have been obtained to ensure completion of the 
project. These agreements shall be sufficient to ensure:
    (1) Payment of all proposed expenditures for the project;
    (2) All required matching contribution in 1703.120;
    (3) any additional matching funding provided in accordance with 
Sec. 1703.126(b)(4); and
    (4) Any other funds necessary to complete the project.
    (h) A telecommunications system plan. A telecommunications system 
plan consisting of the following:
    (1) The capabilities of the telecommunications terminal equipment, 
including a description of the specific equipment which will be used to 
deliver the proposed service. The applicant must document discussions 
with various technical sources which could include consultants, 
engineers, product vendors, or internal technical experts, provide 
detailed cost estimates for operating and maintaining the end user 
equipment and provide evidence that

[[Page 40]]

alternative equipment and technologies were evaluated.
    (2) A listing of the proposed telecommunications terminal equipment, 
telecommunications transmission facilities, data terminal equipment, 
interactive video equipment, computer hardware and software systems, and 
components that process data for transmission via telecommunications, 
computer network components, communication satellite ground station 
equipment, or any other elements of the telecommunications system 
designed to further the purposes of this subpart, that the applicant 
intends to build or fund using RUS financial assistance.
    (3) A description of the consultations with the appropriate 
telecommunications carriers (including other interexchange carriers, 
cable television operators, enhanced service providers, providers of 
satellite services and telecommunications equipment manufacturers and 
distributors) and the anticipated role of such providers in the proposed 
telecommunications system.
    (i) Compliance with other Federal statutes. The applicant must 
provide evidence of compliance with other Federal statutes and 
regulations including, but not limited to the following:
    (1) E.O. 11246, Equal Employment Opportunity, as amended by E.O. 
11375 and as supplemented by regulations contained in 41 CFR part 60;
    (2) Architectural barriers;
    (3) Flood hazard area precautions;
    (4) Assistance and Real Property Acquisition Policies Act of 1970;
    (5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
    (6) E.O.s 12549 and 12689, Debarment and Suspension;
    (7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
    (j) Environmental impact and historic preservation. (1) The 
applicant must provide details of the project's impact on the 
environment and historic preservation. Grants made under this part are 
subject to part 1794 of this chapter which contains RUS' policies and 
procedures for implementing a variety of Federal statutes, regulations, 
and executive orders generally pertaining to the protection of the 
quality of the human environment that are listed in 7 CFR 1794.1. The 
application shall contain a separate section entitled ``Environmental 
Impact of the Project.''
    (2) The applicant may use the ``Environmental Questionnaire,'' 
available from RUS, to assist in complying with the requirements of this 
section.
    (k) Evidence of legal authority and existence. The applicant must 
provide evidence of its legal existence and authority to enter into a 
grant agreement with RUS and perform the activities proposed under the 
grant application.
    (l) Federal debt certification. The applicant must provide a 
certification that it is not delinquent on any obligation owed to the 
government (7 CFR parts 3016 and 3019).
    (m) Consultation with USDA State Director, Rural Development. The 
applicant must provide evidence that it has consulted with the USDA 
State Director, Rural Development, concerning the availability of other 
sources of funding available at the State or local level.
    (n) State strategic plan conformity. The applicant must provide 
evidence from the USDA State Director, Rural Development, that the 
application conforms with the State strategic plan as prepared under 
section 381D of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1921 et seq.). The applicant should indicate if such a plan does 
not exist.
    (o) Supplemental information. The applicant should provide any 
additional information it considers relevant to the project and likely 
to be helpful in determining the extent to which the project would 
further the purposes of the 1996 Act.
    (p) Additional information required by RUS. The applicant must 
provide any additional information RUS may consider relevant to the 
application and necessary to adequately evaluate the application. RUS 
may request modifications or changes, including changes in the amount of 
financial assistance requested, in any proposal described in an 
application submitted under this subpart.

[64 FR 14360, Mar. 25, 1999, as amended at 64 FR 25423, May 12, 1999; 67 
FR 3040, Mar. 11, 2002]

[[Page 41]]



Sec. 1703.126  Criteria for scoring grant applications.

    (a) Criteria. The criteria in this section will be used by RUS to 
score applications that have been determined to be in compliance with 
the requirements of this subpart. Applications for grants must meet the 
rurality requirements in paragraph (b)(2)(iv) of this section and 
address each of the following scoring criteria:
    (1) The need for services and benefits derived from services (up to 
55 points);
    (2) The comparative rurality of the project service area (up to 45 
points);
    (3) The economic need of the applicant's service area as estimated 
by the NSLP or other supplemental objective criteria (up to 35 points);
    (4) The ability of the applicant to leverage resources (up to 35 
points);
    (5) Innovativeness of the project (up to 15 points);
    (6) The cost effectiveness of the system (up to 35 points);
    (7) Project participation in EZ/ECs (Empowerment Zone and Enterprise 
Communities) and Champion Communities (up to 15 points).
    (b) Scoring criteria:
    (1) The need for services and benefits derived from services--Up to 
55 Points. (i) This criterion will be used by RUS to score applications 
based on the documentation in support of the need for services, benefits 
derived from the services proposed by the project, and local community 
involvement in planning, implementing, and financial assistance of the 
project. Applicants may receive up to 45 points for documenting the need 
for services and benefits derived from service as explained in this 
section. Applicants with an average NSLP percentage less than 50 percent 
as determined in paragraph (b)(3) of this section may receive up to an 
additional 10 points based on information submitted that evidences the 
economic need of the project's service area. This determination will be 
made by RUS based on information submitted by the applicant under 
paragraph (b)(1) of this section.
    (ii) RUS will consider the extent of the applicant's documentation 
explaining the economic, education, or health care challenges facing the 
community; the applicant's proposed plan to address these challenges; 
how the grant can help; and why the applicant cannot complete the 
project without a grant. RUS will also consider the extent to which the 
applicant provides evidence that economic, education, or health care 
challenges could not be addressed without employing advanced technology. 
The Administrator will also consider any support by recognized experts 
in the related educational or health care field, any documentation 
substantiating the educational or health care underserved nature of the 
applicant's proposed service area, and any justification for specific 
educational or medical services which are needed and will provide direct 
benefits to rural residents.
    (A) Some examples of benefits to be provided by the project include, 
but are not limited to:
    (1) Improved educational opportunities for a specified number of 
students;
    (2) Travel time and money saved by telemedicine diagnoses;
    (3) Number of doctors retained in rural areas;
    (4) Number of additional students electing to attend higher 
education institutions;
    (5) Lives saved due to prompt medical diagnoses and treatment;
    (6) New education courses offered, including college level courses;
    (7) Expanded use of educational facilities such as night training;
    (8) Number of patients receiving telemedicine diagnoses;
    (9) Provision of training, information resources, library assets, 
adult education, lifetime learning, community use of technology, jobs, 
connection to region, nation, and world.
    (B) Other matters that will be considered by RUS under this 
criterion include:
    (1) That rural residents, and other beneficiaries, desire the 
educational or medical services to be provided by the project. A strong 
indication of need is the willingness of local end users or 
institutions, to the extent possible, to contribute to the capital costs 
of establishing the project. This could include letters of financial 
commitment toward the project from local institutions.

[[Page 42]]

    (2) The extent of the project's planning, development, and support 
by local residents and institutions. This may include evidence of 
community involvement, as exemplified in community meetings, public 
forums, and surveys. In addition, applicants should provide evidence of 
local residents' participation in the project planning and development.
    (3) The extent to which the application addresses the problems of 
population out-migration and how the project seeks to slow, halt, or 
prevent population loss.
    (4) The extent to which the application is consistent with the State 
strategic plan prepared by the Rural Development State Director of the 
United States Department of Agriculture.
    (2) The comparative rurality of the project service area--Up to 45 
Points. This criterion will be used to evaluate the relative rurality of 
service areas for various projects. Under this system, the end user 
sites and hubs (as defined in Sec. 1703.102) contained within the 
project service area are identified and given a score according to the 
population of the area where the end user sites are located.
    (i) The following definitions are used in the evaluation of 
rurality:
    (A) Exceptionally Rural Area means any area of the United States not 
included within the boundaries of any incorporated or unincorporated 
city, village, or borough having a population in excess of 5,000 
inhabitants.
    (B) Rural Area means any area of the United States included within 
the boundaries of any incorporated or unincorporated city, village, or 
borough having a population over 5,000 and not in excess of 10,000 
inhabitants.
    (C) Mid-Rural Area means any area of the United States included 
within the boundaries of any incorporated or unincorporated city, 
village, or borough having a population over 10,000 and not in excess of 
20,000 inhabitants.
    (D) Urban Area means any area of the United States included within 
the boundaries of any incorporated or unincorporated city, village, or 
borough having a population in excess of 20,000 inhabitants.
    (ii) There are a total of 45 possible points for this criterion. 
Each end user site will receive points based on its location in 
accordance with paragraph (b)(2)(i) of this section. If a hub is 
utilized as an end user site, the hub will be considered as an end user 
site. The applicant will receive points as follows:
    (A) If the end user site is located in an Exceptionally Rural Area, 
it will receive 45 points.
    (B) If the end user site is located in a Rural Area, it will receive 
30 points.
    (C) If the end user site is located in a Mid-Rural Area, it will 
receive 15 points.
    (D) If the end user site is located in an Urban Area, it will 
receive 0 points.
    (iii) The total score for this criterion will be based on the 
average score for all the end user sites included in the project.
    (iv) An application must receive a minimum of 20 points as an 
average score for all the end user sites under this criterion to be 
eligible for a grant.
    (3) The economic need of the applicant's service area as estimated 
by NSLP--Up to 35 points. This criterion will be used to evaluate the 
relative financial need of the applicant, community, and project. All 
applicants are required to provide the applicable percentage of students 
eligible to participate in the NSLP for each area to be served by the 
end user site. The appropriate State or local organization administering 
the program must certify the percentages as being correct. The applicant 
must provide RUS with a listing of the location of each end user site 
(city, town, village, borough or rural area plus the State) discussing 
how the appropriate NSLP percentage was determined in accordance with 
this section. These percentages may be obtained from the State or local 
organization that administers the program and must be certified by that 
organization as being correct. For purposes of this subpart, the NSLP 
percentage will reflect the percentage of eligibility rather than the 
percentage of actual participation.
    (i) The following guidelines will be used to determine the 
applicable NSLP percent for a particular application:
    (A) Public schools or non-profit private schools of high school 
grade or under will use the actual eligibility percentage for that 
particular school.

[[Page 43]]

    (B) Schools and institutions of higher learning ineligible to 
participate in the NSLP and non-school end user sites (medical 
facilities, libraries, etc.) will use the eligibility percentage of all 
students in the school district where the end user will be located.
    (C) Percentage ratios will be rounded up to the next highest or 
rounded down to the next lowest whole number for fraction of percentages 
at or greater than .5 or less than .5, respectively.
    (D) The project NSLP percentage will be determined by the average of 
the NSLP percentages of the end user sites. If end user sites fall 
within different percentile categories, the eligibility percentages 
associated with each end user site will be averaged to determine the 
percentile category. For purposes of averaging, if a hub is also 
utilized as an end user site, the hub will be considered as an end user 
site.
    (ii) The applicant will receive points as follows:
    (A) NSLP percentage greater than or equal to 75 percent--35 points
    (B) NSLP percentage greater than or equal to 50 percent but less 
than 75 percent--25 points
    (C) NSLP percentage greater than or equal to 25 percent but less 
than 50 percent--15 points
    (D) NSLP percentage less than 25% percent--0 points
    (4) The ability of the applicant to leverage financial resources--Up 
to 35 points. This criterion will be used to evaluate the ability of the 
applicant to provide a matching contribution for the project using other 
non-Federal financial assistance. Documentation submitted in support of 
the application should reflect any additional financial support for the 
project from non-Federal sources above the applicant's minimum matching 
contribution of 15 percent as required by Sec. 1703.122. The applicant 
must include evidence, from authorized representatives of the sources, 
of a commitment that the funds are available and will be used for the 
project. The applicant will receive points as follows:
    (i) Matching contribution for approved purposes greater than 15 
percent, but less than or equal to 30 percent of the grant requested--0 
points.
    (ii) Matching contribution for approved purposes greater than 30 
percent, but less than or equal to 50 percent of the grant requested--15 
points.
    (iii) Matching contribution for approved purposes greater than 50 
percent, but less than or equal to 75 percent of the grant requested--25 
points.
    (iv) Matching contribution for approved purposes greater than 75 
percent, but less than or equal to 100 percent of the grant requested--
30 points.
    (v) Matching contribution for a grant for approved purposes greater 
than 100 percent of the grant requested--35 points.
    (5) Innovativeness of the project--Up to 15 points. This criterion 
will be used to evaluate the innovativeness of application based on 
documentation that shows how the project utilizes advanced 
telecommunications in a unique way to address the needs of the 
community. Innovativeness should be addressed in the context of how the 
project will deliver distance learning or telemedicine services more 
effectively or at a lower cost. The following issues may be addressed to 
show how the project differs from a typical distance learning and 
telemedicine network as follows:
    (i) The extent to which the project differs from a technical 
standpoint;
    (ii) The extent to which the project differs from an educational or 
medical programmatic standpoint;
    (iii) The extent to which the project reflects a unique adaptation 
of technology based on the special needs or circumstances of the 
proposed area to be served by the project; and
    (iv) The potential of the project to influence or lead changes in 
how telecommunications services can be delivered in other areas.
    (6) The cost-effectiveness of the project--Up to 35 points. This 
criterion will be used to evaluate the cost effectiveness of the 
application based on the extent that cost-efficiency is considered in 
delivering the services in the project. The following issues should be 
addressed under this criterion:
    (i) The extent to which the applicant has considered various 
technological options for delivering the services. The

[[Page 44]]

applicant must provide sufficient documentation reflecting accepted 
analytical and financial methodologies to substantiate its choice of 
technology as the most cost-effective option. RUS will consider the 
applicant's documentation and analysis comparing various systems and 
technologies.
    (ii) Whether buying or leasing specific equipment is more cost 
effective.
    (iii) The extent to which the project will utilize other existing 
networks at the regional, statewide, national or international levels. 
To the extent possible, educational and health care networks should be 
designed to utilize the widest practicable number of other networks that 
expand the capabilities of the project, thereby affording rural 
residents opportunities that may not be available at the local level. 
The ability to connect to the Internet alone cannot be used as the sole 
basis to fulfill this criteria.
    (iv) The extent to which the facilities being constructed with 
financial assistance, particularly financial assistance under this 
chapter provided to entities other than the applicant, will be utilized 
to extend or enhance the benefits of the project.
    (v) The extent to which the project utilizes existing 
telecommunications transmission facilities that could provide the 
transmission path for the needed services. For projects that do not 
utilize existing transmission facilities, RUS will consider 
documentation explaining the necessity of this option. RUS will also 
consider any agreements between the applicant and other entities for 
sharing transmission facilities to lower the fixed costs of such 
facilities.
    (7) Project participation in EZ/ECs and champion communities--(Up to 
15 Points). This criterion will be used by RUS to score applications 
based on the number of end user sites within an EZ/EC and Champion 
Community. Ten (10) points will be assigned if at least one end user 
site is located in an EZ/EC. Five (5) points will be assigned if at 
least one end user site is located in a Champion Community.

[64 FR 14360, Mar. 25, 1999; 64 FR 25422, May 12, 1999, as amended at 67 
FR 3040, Mar. 11, 2002; 67 FR 16011, Apr. 4, 2002]



Sec. 1703.127  Application selection provisions.

    (a) Applications will be selected for approval based on scores 
assigned, availability of funds, and the provisions of this section. RUS 
will make determinations regarding the reasonableness of all numbers; 
dollar levels; rates; the nature and design of the project; costs; 
location; and other characteristics of the application and the project 
to determine the number of points assigned to a grant application for 
all selection criteria.
    (b) Regardless of the number of points an application receives in 
accordance with Sec. 1703.126, the Administrator may, based on a review 
of the applications in accordance with the requirements of this subpart:
    (1) Limit the number of applications selected for projects located 
in any one State during a fiscal year;
    (2) Limit the number of selected applications for a particular 
project;
    (3) Select an application receiving fewer points than another higher 
scoring application if there are insufficient funds during a particular 
funding period to select the higher scoring application. In this case, 
however, the Administrator will provide the applicant of the higher 
scoring application the opportunity to reduce the amount of its grant 
request to the amount of funds available. If the applicant agrees to 
lower its grant request, it must certify that the purposes of the 
project can be met, and the Administrator must determine the project is 
financially feasible at the lower amount in accordance with 
Sec. 1703.125(e)(1). An applicant or multiple applicants affected under 
this paragraph will have the opportunity to be considered for loan 
financing in accordance with subparts F and G of this part.
    (c) RUS will not approve a grant if RUS determines that:
    (1) The applicant's proposal does not indicate financial feasibility 
or is not sustainable in accordance with the requirements of 
Sec. 1703.125(e)(1);
    (2) The applicant's proposal indicates technical flaws, which, in 
the opinion of RUS, would prevent successful implementation, operation, 
or sustainability of the project;

[[Page 45]]

    (3) Other applications would provide more benefit to rural America 
based on a review of the financial and technical information submitted 
in accordance with Sec. 1703.125(e).
    (4) Any other aspect of the applicant's proposal fails to adequately 
address any requirement of this subpart or contains inadequacies which 
would, in the opinion of RUS, undermine the ability of the project to 
meet the general purpose of this subpart or comply with policies of the 
DLT Program contained in Sec. 1703.101.
    (d) Grant applications will be ranked by the type of application 
(health care or educational) and total points scored. Grants available 
for medical and educational applicants may be allocated based on the 
total number of medical and educational applications scoring in the top 
50 percent of all applications received for that fiscal year. Based on 
the number and type of applications received, applications may be ranked 
only in one category based on the predominant use of the project.
    (e) RUS may reduce the amount of the applicant's grant based on 
insufficient program funding for the fiscal year in which the project is 
reviewed. RUS will discuss its findings informally with the applicant 
and make every effort to reach a mutually acceptable agreement with the 
applicant. Any discussions with the applicant and agreements made with 
regard to a reduced grant amount will be confirmed in writing, and these 
actions shall be deemed to have met the notification requirements set 
forth in paragraph (f) of this section.
    (f) RUS will provide the applicant with an explanation of any 
determinations made with regard to paragraphs (c)(1) through (c)(4) of 
this section prior to making final project selections for the year. The 
applicant will be provided 15 days from the date of RUS' letter to 
respond, provide clarification, or make any adjustments or corrections 
to the project. If, in the opinion of the Administrator, the applicant 
fails to adequately respond to any determinations or other findings made 
by the Administrator, the project will not be funded, and the applicant 
will be notified of this determination. If the applicant does not agree 
with this finding an appeal may be filed in accordance with 
Sec. 1703.129.
    (g) Grantees shall comply with all applicable provisions of 7 CFR 
parts 3015, 3016, and 3019.

[64 FR 14360, Mar. 25, 1999; 64 FR 25422, May 12, 1999]



Sec. 1703.128  Submission of applications.

    (a) Applications for grants shall be submitted to the RUS, U.S. 
Department of Agriculture, 1400 Independence Avenue, SW., STOP 1590, 
Washington, DC 20250-1590. Applications should be marked ``Attention: 
Assistant Administrator, Telecommunications Program''.
    (b) Applications must be submitted to RUS postmarked not later than 
the application filing deadline established by the Administrator if the 
applications are to be considered during the period for which the 
application was submitted. The deadline for submission of applications 
each fiscal year will be published, and provided through other notices, 
by RUS in the Federal Register, at least 30 days before the deadline 
occurs. It is suggested that applications be submitted prior to the 
respective deadline to ensure they can be reviewed and considered 
complete by the deadline. RUS will review each application for 
completeness in accordance with Sec. 1703.125, and notify the applicant, 
within 15 working days of the receipt of the application, of the results 
of this review, citing any information that is incomplete. To be 
considered for a grant, the applicant must submit the information to 
complete the application within 15 working days of the date of RUS' 
written response. If the applicant has submitted an application prior to 
the application filing deadline, the applicant will have 15 working days 
from RUS' response or until the application filing deadline to submit 
information, whichever provides the applicant more time. If the 
applicant fails to submit such information by the appropriate deadline, 
the application will be considered during the next established 
application period.
    (c) All applicants must submit an original and two copies of a 
completed application. Applicants must also submit a copy of the 
application to the State government point of contact, if

[[Page 46]]

one has been designated for the State, at the same time it submits an 
application to RUS. All applications must include the information 
required by Sec. 1703.125.



Sec. 1703.129  Appeals.

    All qualifying applications under this subpart will be scored based 
on the criteria contained in Sec. 1703.126. Awards will be made by RUS 
based on the highest ranking applications and the amount of financial 
assistance available for grants. All applicants will be notified in 
writing of the score each application receives, and included in this 
notification will be a tentative minimum required score to receive 
financial assistance. If the score received by the applicant could 
result in the denial of its application, or if its score, while 
apparently sufficient to qualify for financial assistance, may be 
surpassed by the score awarded to a competing application after appeal, 
that applicant may appeal its numerical scoring. Any appeal must be 
based on inaccurate scoring of the application by RUS and no new 
information or data that was not included in the original application 
will be considered. The appeal must be made, in writing, within 10 days 
after the applicant is notified of the scoring results. Appeals shall be 
submitted to the Administrator, RUS, U.S. Department of Agriculture, 
1400 Independence Ave., SW., STOP 1590, Washington, DC 20250-1590. 
Thereafter, the Administrator will review the original scoring to 
determine whether to sustain, reverse, or modify the original scoring 
determination. Final determinations will be made after consideration of 
all appeals. The Administrator's determination will be final. A copy of 
the Administrator's decision will be furnished promptly to the 
applicant.



Subpart F_Distance Learning and Telemedicine Combination Loan and Grant 
                                 Program

    Source: 64 FR 14366, Mar. 25, 1999, unless otherwise noted.



Sec. 1703.130  Use of combination loan and grant.

    (a) A combination loan and grant may be used by eligible 
organizations as defined in Sec. 1703.103 for distance learning and 
telemedicine projects to finance 100 percent of the cost of approved 
purposes contained in Sec. 1703.131 provided that no financial 
assistance may exceed the maximum amount for the year in which the 
combination loan and grant is made.
    (b) Applicants must meet the minimum eligibility requirement for 
determining the extent to which the project serves rural areas as 
determined in Sec. 1703.126(b)(2) (the applicant must receive at least 
20 points to be eligible to receive financial assistance under this 
subpart).



Sec. 1703.131  Approved purposes for a combination loan and grant.

    The approved purposes for a combination loan and grant are:
    (a) Acquiring, by lease or purchase, eligible equipment or 
facilities as defined in Sec. 1703.102;
    (b) Acquiring instructional programming;
    (c) Providing technical assistance and instruction for using 
eligible equipment, including any related software; developing 
instructional programming; providing engineering or environmental 
studies relating to the establishment or expansion of the phase of the 
project that is being financed with a combination loan and grant (this 
purpose shall not exceed 10 percent of the total requested financial 
assistance);
    (d) Paying for medical or educational equipment and facilities that 
are shown to be necessary to implement the project, including vehicles 
utilizing distance learning and telemedicine technology to deliver 
educational and health care services. The applicant must demonstrate 
that such items are necessary to meet the purposes under this subpart 
and financial assistance for such equipment and facilities is not 
available from other sources at a cost which would not adversely affect 
the economic viability of the project;
    (e) Providing links between teachers and students or medical 
professionals who are located at the same facility, provided that such 
facility receives or provides distance learning or telemedicine services 
as part of a distance learning or telemedicine network

[[Page 47]]

which meets the purposes of this subpart;
    (f) Providing for site development and alteration of buildings in 
order to meet the purposes of this subpart. Financial assistance for 
this purpose must be necessary and incidental to the total amount of 
financial assistance requested;
    (g) Purchasing of land, buildings, or building construction 
determined by RUS to be necessary and incidental to the project. The 
applicant must demonstrate that financial assistance funding from other 
sources is not available at a cost that does not adversely impact the 
economic viability of the project as determined by the Administrator. 
Financial assistance for this purpose must be necessary and incidental 
to the total amount of financial assistance requested; and
    (h) Acquiring telecommunications transmission facilities provided 
that no telecommunications carrier will install such facilities under 
the Act or through other financial procedures within a reasonable time 
period and at a cost to the applicant that does not impact the economic 
viability of the project, as determined by the Administrator.



Sec. 1703.132  Nonapproved purposes for a combination loan and grant.

    (a) Without limitation, a combination loan and grant made under this 
subpart shall not be expended:
    (1) To pay salaries, wages, or employee benefits to medical or 
educational personnel;
    (2) To pay for the salaries or administrative expenses of the 
applicant or the project;
    (3) To purchase equipment that will be owned by the local exchange 
carrier or another telecommunications service provider, unless the 
applicant is the local exchange carrier or other telecommunications 
service provider;
    (4) To duplicate facilities providing distance learning or 
telemedicine services in place or to reimburse the applicant or others 
for costs incurred prior to RUS' receipt of the completed application;
    (5) For projects located in areas covered by the Coastal Barrier 
Resources Act (16 U.S.C. 3501 et seq.);
    (6) For any purpose that the Administrator has not specifically 
approved;
    (7) Except for leases (see Sec. 1703.131), to pay the cost of 
recurring or operating expenses for the project; or,
    (8) For any other purposes not specifically outlined in 
Sec. 1703.131.
    (b) Except as otherwise provided in Sec. 1703.112, funds shall not 
be used to finance a project, in part, when the success of the project 
is dependent upon the receipt of additional financial assistance under 
this subpart or is dependent upon the receipt of other funding that is 
not assured.



Sec. 1703.133  Maximum and minimum amounts.

    Applications for a combination loan and grant under this subpart 
will be subject to limitations on the proposed amount of loans and 
grants. The Administrator will establish the maximum amount of loans and 
grants and the portion of grant funds as a percentage of total 
assistance for each project to be made available to an individual 
recipient for each fiscal year under this subpart, by publishing notice 
of the maximum amount in the Federal Register before the beginning of 
the fiscal year to carry out this subpart. The minimum amount of a 
combination loan and grant is $50,000.



Sec. 1703.134  Completed application.

    The following items are required to be submitted to RUS in support 
of an application for a combination loan and grant:
    (a) An application for federal assistance: A completed Standard Form 
424.
    (b) An executive summary of the project: The applicant must provide 
RUS with a general project overview that addresses each of the following 
9 categories:
    (1) A description of why the project is needed;
    (2) An explanation of how the applicant will address the need cited 
in paragraph (b)(1) of this section, why the applicant requires 
financial assistance, the types of educational or medical services to be 
offered by the project, and the benefits to the rural residents;

[[Page 48]]

    (3) A description of the applicant, documenting eligibility in 
accordance with Sec. 1703.103;
    (4) An explanation of the total project cost including a breakdown 
of the combination loan and grant required and the source of funding, if 
applicable, for the remainder of the project;
    (5) A statement specifying whether the project provides 
predominantly distance learning or telemedicine services as defined in 
Sec. 1703.102. If the project provides both distance learning and 
telemedicine services, the applicant must identify the predominant use 
of the system;
    (6) A general overview of the telecommunications system to be 
developed, including the types of equipment, technologies, and 
facilities used;
    (7) A description of the participating hubs and end user sites and 
the number of rural residents that will be served by the project at each 
end user site;
    (8) A certification by the applicant that facilities constructed 
with a combination loan and grant do not duplicate adequately 
established telemedicine or distance learning services.
    (9) A listing of the location of each end user site (city, town, 
village, borough, or rural area plus the State).
    (c) A scope of work. The scope of work must include, at a minimum:
    (1) The specific activities to be performed under the project;
    (2) Who will carry out the activities;
    (3) The time-frames for accomplishing the project objectives and 
activities; and
    (4) A budget for capital expenditures reflecting the line item costs 
for both the combination loan and grant and any other sources of funds 
for the project.
    (d) Financial information. The applicant must show its financial 
ability to complete the project; show project feasibility; and provide 
evidence that it can execute a note for a loan with a maturity period 
greater than one year. For educational institutions participating in a 
project application (including all members of a consortium), the 
financial data must reflect revenue and expense reports and balance 
sheet reports, reflecting net worth, for the most recent annual 
reporting period preceding the date of the application. For medical 
institutions participating in a project application (including all 
members of a consortium), the financial data must include income 
statement and balance sheet reports, reflecting net worth, for the most 
recent completed fiscal year preceding the date of the application. When 
the applicant is a partnership, company, corporation, or other entity, 
current balance sheets, reflecting net worth, are needed from each of 
the entities that has at least a 20 percent interest in such 
partnership, company, corporation or other entity. When the applicant is 
a consortium, a current balance sheet, reflecting net worth, is needed 
from each member of the consortium and from each of the entities that 
has at least a 20 percent interest in such member of the consortium.
    (1) Applicants must include sufficient pro-forma financial data that 
adequately reflects the financial capability of project participants and 
the project as a whole to continue a sustainable project for a minimum 
of 10 years and repay the loan portion of the combination loan and 
grant. This documentation should include sources of sufficient income or 
revenues to pay operating expenses including telecommunications access 
and toll charges, system maintenance, salaries, training, and any other 
general operating expenses, provide for replacement of depreciable 
items, and show repayment of interest and principal for the loan portion 
of the combination loan and grant.
    (2) A list of property which will be used as collateral to secure 
repayment of the loan. The applicant shall purchase and own collateral 
that secures the loan free from liens or security interests and take all 
actions necessary to perfect a security interest in the collateral that 
secures the loan. RUS considers as adequate security for a loan, a 
guarantee by a RUS telecommunications or electric borrower or by another 
qualified party. Additional forms of security, including letters of 
credit, real estate, or any other items will be considered. RUS will 
determine the adequacy of the security offered.

[[Page 49]]

    (3) As applicable, a depreciation schedule covering all assets of 
the project. Those assets for which a combination loan and grant are 
being requested should be clearly indicated.
    (4) For each hub and end user site, the applicant must identify and 
provide reasonable evidence of each source of revenue. If the projection 
relies on cost sharing arrangements among hub and end user sites, the 
applicant must provide evidence of agreements made among project 
participants.
    (5) For applicants eligible under Sec. 1703.103(a)(3), an 
explanation of the economic analysis justifying the rate structure to 
ensure that the benefit, including cost saving, of the financial 
assistance is passed through to the other persons receiving telemedicine 
or distance learning services.
    (e) A statement of experience. The applicant must provide a written 
narrative (not exceeding three single spaced pages) describing its 
demonstrated capability and experience, if any, in operating an 
educational or health care endeavor similar to the project. Experience 
in a similar project is desirable but not required.
    (f) A telecommunications system plan. A telecommunications system 
plan, consisting of the following (the items in paragraphs (f)(4) and 
(f)(5) of this section are required only when the applicant is 
requesting a combination loan and grant for telecommunications 
transmission facilities):
    (1) The capabilities of the telecommunications terminal equipment, 
including a description of the specific equipment which will be used to 
deliver the proposed service. The applicant must document discussions 
with various technical sources which could include consultants, 
engineers, product vendors, or internal technical experts, provide 
detailed cost estimates for operating and maintaining the end user 
equipment and provide evidence that alternative equipment and 
technologies were evaluated.
    (2) A listing of the proposed purchases or leases of 
telecommunications terminal equipment, telecommunications transmission 
facilities, data terminal equipment, interactive video equipment, 
computer hardware and software systems, and components that process data 
for transmission via telecommunications, computer network components, 
communication satellite ground station equipment, or any other elements 
of the telecommunications system designed to further the purposes of 
this subpart, that the applicant intends to build or fund using a 
combination loan and grant.
    (3) A description of the consultations with the appropriate 
telecommunications carriers (including other interexchange carriers, 
cable television operators, enhanced service providers, providers of 
satellite services, and telecommunications equipment manufacturers and 
distributors) and the anticipated role of such providers in the proposed 
telecommunications system.
    (4) Results of discussions with local exchange carriers serving the 
project area addressing the concerns contained in Sec. 1703.131(h).
    (5) The capabilities of the telecommunications transmission 
facilities, including bandwidth, networking topology, switching, 
multiplexing, standards, and protocols for intra-networking and open 
systems architecture (the ability to effectively communicate with other 
networks). In addition, the applicant must explain the manner in which 
the transmission facilities will deliver the proposed services. For 
example, for medical diagnostics, the applicant might indicate whether 
or not a guest or other diagnosticians can join the network from 
locations off the network. For educational services, indicate whether or 
not all hub and end-user sites are able to simultaneously hear in real-
time and see each other or the instructional material in real-time. The 
applicant must include detailed cost estimates for operating and 
maintaining the network, and include evidence that alternative delivery 
methods and systems were evaluated.
    (g) Compliance with other Federal statutes. The applicant must 
provide evidence of compliance with other federal statutes and 
regulations including, but not limited to the following:
    (1) E.O. 11246, Equal Employment Opportunity, as amended by E.O. 
11375 and as supplemented by regulations contained in 41 CFR part 60;
    (2) Architectural barriers;
    (3) Flood hazard area precautions;

[[Page 50]]

    (4) Assistance and Real Property Acquisition Policies Act of 1970;
    (5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
    (6) E.O.s 12549 and 12689, Debarment and Suspension;
    (7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
    (h) Environmental impact and historic preservation. (1) The 
applicant must provide details of the project's impact on the 
environment and historic preservation. Loans and grants made under this 
part are subject to 7 CFR part 1794 which contains RUS' policies and 
procedures for implementing a variety of Federal statutes, regulations, 
and Executive orders generally pertaining to the protection of the 
quality of the human environment that are listed in 7 CFR 1794.1. The 
application shall contain a separate section entitled ``Environmental 
Impact of the Project.''
    (2) The applicant may use the ``Environmental Questionnaire,'' 
available from RUS, to assist in complying with the requirements of this 
section.
    (i) Evidence of legal authority and existence. The applicant must 
provide evidence of its legal existence and authority to enter into a 
grant and incur debt with RUS.
    (j) Federal debt certification. The applicant must provide evidence 
that it is not delinquent on any obligation owed to the government.
    (k) Supplemental information. The applicant should provide any 
additional information it considers relevant to the project and likely 
to be helpful in determining the extent to which the project would 
further the purposes of this subpart.
    (l) Additional information required by RUS. The applicant must 
provide any additional information RUS may consider relevant to the 
application and necessary to adequately evaluate the application. RUS 
may also request modifications or changes, including changes in the 
amount of funds requested, in any proposal described in an application 
submitted under this subpart.

[64 FR 14366, Mar. 25, 1999; 64 FR 25422, May 12, 1999, as amended at 64 
FR 25423, May 12, 1999]



Sec. 1703.135  Application selection provisions.

    (a) A combination loan and grant will be approved based on 
availability of funds, the financial feasibility of the project in 
accordance with Sec. 1703.134(d), the services to be provided which 
demonstrate that the project meets the general requirements of this 
subpart, the design of the project; costs; location; and other 
characteristics of the application.
    (b) RUS will determine, from the information submitted with each 
application for a combination loan and grant, whether the application 
achieves sufficient priority, based on the criteria set forth in the 
1996 Act, to receive a combination loan and grant from funds available 
for the fiscal year. If such priority is achieved, RUS will process the 
combination loan and grant application on a first-in, first-out basis, 
provided that the total amount of applications on-hand for combination 
loans and grants does not exceed 90 percent of the total loan and grant 
funding available for the fiscal year. At such time as the total amount 
of applications eligible for combination loans and grants, if such 
applications were approved, exceeds 90 percent of amount of combination 
loan and grant funding available, RUS will process the remaining 
applications using the evaluation criteria set forth in Sec. 1703.126.
    (c) RUS will not approve a combination loan and grant if RUS 
determines that:
    (1) The applicant's proposal does not indicate financial 
feasibility, or will not be adequately secured in accordance with the 
requirements contained in Sec. 1703.134(d);
    (2) The applicant's proposal indicates technical flaws, which, in 
the opinion of RUS, would prevent successful implementation, or 
operation of the project; or
    (3) Any other aspect of the applicant's proposal fails to adequately 
address any requirements of this subpart or contains inadequacies which 
would, in the opinion of RUS, undermine the ability of the project to 
meet the general purpose of this subpart or comply with policies of the 
DLT program contained in Sec. 1703.101.

[[Page 51]]

    (d) RUS will provide the applicant with a statement of any 
determinations made with regard to paragraphs (c)(1) through (c)(3) of 
this section. The applicant will be provided 15 days from the date of 
RUS' letter to respond, provide clarification, or make any adjustments 
or corrections to the project. If, in the opinion of the Administrator, 
the applicant fails to adequately respond to any determinations or other 
findings made by the Administrator, the project will not be funded, and 
the applicant will be notified of this determination. If the applicant 
does not agree with this finding, an appeal may be filed in accordance 
with Sec. 1703.137.



Sec. 1703.136  Submission of applications.

    (a) RUS will accept applications for a combination loan and grant 
submitted by RUS telecommunications General Field representatives 
(GFRs), by Rural Development State Directors, or by applicants 
themselves. Applications for a combination loan and grant under this 
subpart may be filed at any time and will be evaluated as received.
    (b) Applications submitted to the State Director, Rural Development, 
in the State serving the headquarters of the project will be evaluated 
as they are submitted. All applicants must submit an original and two 
copies of a completed application. The applicant must also submit a copy 
of the application to the State government point of contact, if one has 
been designated for the State, at the same time it submits an 
application to the State Director. The State Director will:
    (1) Review each application for completeness in accordance with 
Sec. 1703.134, and notify the applicant, within 15 working days of 
receiving the application, of the results of this review, acknowledging 
a complete application, or citing any information that is incomplete. To 
be considered for a combination loan and grant, the applicant must 
submit any additional information requested to complete the application 
within 15 working days of the date of the State Director's written 
response. If the applicant fails to submit such information, the 
application will be returned to the applicant.
    (2) Within 30 days of the determination of a completed application 
in accordance with paragraph (b)(1) of this section, review the 
application to determine suitability for financial assistance in 
accordance with Sec. 1703.135, and other requirements of this subpart. 
Based on its review, the State Director will work with the applicant to 
resolve any questions or obtain any additional information. The 
applicant will be notified, in writing, of any additional information 
required to allow a financial assistance recommendation and will be 
provided a reasonable period of time to furnish the additional 
information.
    (3) Based on the review in accordance with Sec. 1703.135 and other 
requirements of this subpart, make a preliminary determination of 
suitability for financial assistance. A combination loan and grant 
recommendation will be prepared by the State Director with concurrence 
of the RUS telecommunications GFR that addresses the provisions of 
sections Secs. 1703.134 and 1703.135 and other applicable requirements 
of this subpart.
    (4) If the application is determined suitable for further 
consideration by RUS, forward an original and one copy of the 
application with a financial assistance recommendation, signed jointly, 
to the Assistant Administrator, Telecommunications Program, Rural 
Utilities Service, Washington, DC. The applicant will be notified by 
letter of this action. Upon receipt of the application from the State 
Director, RUS will conduct a review of the application and the financial 
assistance recommendation. A final determination will be made within 15 
days. If the Administrator determines that a combination loan and grant 
can be approved, the State Director will be notified and the State 
Director will notify the applicant. A combination loan and grant will be 
processed, approved, and serviced in accordance with Secs. 1703.105 
through 1703.112 of subpart D.
    (5) If the State Director determines that the application is not 
suitable for further consideration by RUS, notify the applicant with the 
reasons for this determination. The applicant may appeal this 
determination pursuant to section Sec. 1703.137 of this subpart.
    (c) Applications submitted by RUS telecommunications GFRs or 
directly by applicants will be evaluated as they

[[Page 52]]

are submitted. All applicants must submit an original and two copies of 
a completed application. The applicant must also submit a copy of the 
application to the State government point of contact, if one has been 
designated for the State, at the same time it submits an application to 
RUS. RUS will:
    (1) Review each application for completeness in accordance with 
Sec. 1703.134, and notify the applicant, within 15 working days of 
receiving the application, of the results of this review, acknowledging 
a complete application, or citing any information that is incomplete. To 
be considered for a combination loan and grant assistance, the applicant 
must submit any additional information requested to complete the 
application within 15 working days of the date of the RUS written 
response. If the applicant fails to submit such information, the 
application will be returned to the applicant.
    (2) Within 30 days of the determination of a completed application 
in accordance with paragraph (c)(1) of this section, review the 
application to determine suitability for financial assistance in 
accordance with Sec. 1703.135, and other requirements of this subpart. 
Based on its review, RUS will work with the applicant to resolve any 
questions or obtain any additional information. The applicant will be 
notified, in writing, of any additional information required to allow a 
financial assistance recommendation and will be provided a reasonable 
period of time to furnish the additional information.
    (3) If the application is determined suitable for further 
consideration by RUS, conduct a review of the application and financial 
assistance recommendation. A final determination will be made within 15 
days. If the Administrator determines that a combination loan and grant 
can be approved, the applicant will be notified. A combination loan and 
grant will be processed, approved, and serviced in accordance with 
Secs. 1703.105 through 1703.112 of subpart D.
    (4) If RUS determines that the application is not suitable for 
further consideration, notify the applicant with the reasons for this 
determination. The applicant will be able to appeal in accordance with 
Sec. 1703.137 of this subpart.



Sec. 1703.137  Appeals.

    Any appeal must be made, in writing, within 10 days after the 
applicant is notified of the determination to deny the application. 
Appeals shall be submitted to the Administrator, RUS, U.S. Department of 
Agriculture, 1400 Independence Ave., SW., STOP 1590, Washington, DC 
20250-1590. Thereafter, the Administrator will review the appeal to 
determine whether to sustain, reverse, or modify the original 
determination. Final determinations will be made after consideration of 
all appeals. The Administrator's determination will be final. A copy of 
the Administrator's decision will be furnished promptly to the 
applicant.



Secs. 1703.138-1703.139  [Reserved]



        Subpart G_Distance Learning and Telemedicine Loan Program

    Source: 64 FR 14369, Mar. 25, 1999, unless otherwise noted.



Sec. 1703.140  Use of loan funds.

    A loan may be used by eligible organizations as defined in 
Sec. 1703.103 for distance learning and telemedicine projects to finance 
100 percent of the cost of approved purposes contained in Sec. 1703.141 
provided that no financial assistance may exceed the maximum amount for 
the year in which the loan is made. Entities seeking a loan must be able 
to provide security and execute a note with a maturity period greater 
than one year. The following entities are eligible for loans under this 
subpart:
    (a) Organizations as defined in Sec. 1703.103. If a RUS 
telecommunications borrower is seeking a loan, the borrower does not 
need to submit all of the financial security information required by 
Sec. 1703.144(d). The borrower's latest financial report (Form 479) 
filed with RUS and any additional information relevant to the project, 
as determined by RUS, will suffice;
    (b) Any non-profit or for-profit entity, public or private entity, 
urban or rural institution, or rural educational broadcaster, which 
proposes to provide

[[Page 53]]

and receive distance learning and telemedicine services to carry out the 
purposes of this subpart; or
    (c) Any entity that contracts with an eligible organization in 
paragraphs (a) or (b) of this section for constructing distance learning 
or telemedicine facilities for the purposes contained in Sec. 1703.141, 
except for those purposes in Sec. 1703.141(h).
    (d) Applicants must meet the minimum eligibility requirement for 
determining the extent to which the project serves rural areas as 
contained in Sec. 1703.126(b)(2) (the applicant must receive at least 20 
points to be eligible to receive financial assistance under this 
subpart).

[64 FR 14369, Mar. 25, 1999, as amended at 64 FR 25423, May 12, 1999]



Sec. 1703.141  Approved purposes for loans.

    The following are approved purposes for loans:
    (a) Acquiring, by lease or purchase, eligible equipment or 
facilities as defined in Sec. 1703.102;
    (b) Acquiring instructional programming;
    (c) Providing technical assistance and instruction for using 
eligible equipment, including any related software; developing 
instructional programming; providing engineering or environmental 
studies relating to the establishment or expansion of the phase of the 
project that is being financed with the loan (financial assistance for 
this purpose shall not exceed 10 percent of the requested financial 
assistance);
    (d) Paying for medical or educational equipment and facilities which 
are shown to be necessary to implement the project, including vehicles 
utilizing distance learning and telemedicine technology to deliver 
educational and health care services. The applicant must demonstrate 
that such items are necessary to meet the purposes under this subpart 
and financial assistance for such equipment and facilities is not 
available from other sources at a cost which would not adversely affect 
the economic viability of the project;
    (e) Providing links between teachers and students or medical 
professionals who are located at the same facility, provided that such 
facility receives or provides distance learning or telemedicine services 
as part of a distance learning or telemedicine network which meets the 
purposes of this subpart;
    (f) Providing for site development and alteration of buildings in 
order to meet the purposes of this subpart. Loans for this purpose must 
be necessary and incidental to the total amount of financial assistance 
requested;
    (g) Purchasing of land, buildings, or building construction, where 
such costs are demonstrated necessary to construct distance learning and 
telemedicine facilities. The applicant must demonstrate that funding 
from other sources is not available at a cost which does not adversely 
impact the economic viability of the project as determined by the 
Administrator. Financial assistance for this purpose must be necessary 
and incidental to the total amount of financial assistance requested;
    (h) Acquiring of telecommunications transmission facilities provided 
that no telecommunications carrier will install such facilities under 
the Act or through other financial procedures within a reasonable time 
period and at a cost to the applicant that does not impact the economic 
viability of the project, as determined by the Administrator;
    (i) Any project costs, except for salaries and administrative 
expenses, not included in paragraphs (a) through (h) of this section, 
incurred during the first two years of operation after the financial 
assistance has been approved. The applicant must show that financing 
such costs are necessary for the establishment or continued operation of 
the project and that financing is not available for such costs 
elsewhere, including from the applicant's financial resources. The 
Administrator will determine whether such costs will be financed based 
on information submitted by the applicant. Loans shall not be made 
exclusively to finance such costs, and financing for such costs will not 
exceed 20 percent of the loan provided to a project under this section; 
and
    (j) All of the costs needed to provide distance learning 
broadcasting to rural

[[Page 54]]

areas. Loans may be used to cover the costs of facilities and end-user 
equipment dedicated to providing educational broadcasting to rural areas 
for distance learning purposes. If the facilities are not 100 percent 
dedicated to broadcasting, a portion of the financing may be used to 
fund such facilities based on a percentage of use factor that 
approximates the distance learning broadcasting portion of use.

[64 FR 14369, Mar. 25, 1999, as amended at 64 FR 25423, May 12, 1999]



Sec. 1703.142  Nonapproved purposes for loans.

    (a) Loans made under this subpart will not be provided to pay the 
costs of recurring or operating expenses incurred after two years from 
approval of the project except for leases (see Sec. 1703.141).
    (b) Loans made under this subpart will not be provided for any of 
the following costs:
    (1) To purchase equipment that will be owned by the local exchange 
carrier or another telecommunications service provider, unless the 
applicant is the local exchange carrier or other telecommunications 
service provider;
    (2) To duplicate facilities providing distance learning or 
telemedicine services in place or to reimburse the applicant or others 
for costs incurred prior to RUS' receipt of the completed application;
    (3) For projects located in areas covered by the Coastal Barrier 
Resources Act (16 U.S.C. 3501 et seq.); or
    (4) To pay for salaries, wages, or administrative expenses; or
    (5) For any purpose that the Administrator has not specifically 
approved.
    (c) Except as otherwise provided in Sec. 1703.112, funds shall not 
be used to finance a project, in part, when the success of the project 
is dependent upon the receipt of additional financial assistance under 
this subpart G or is dependent upon the receipt of other funding that is 
not assured.

[64 FR 14369, Mar. 25, 1999, as amended at 64 FR 25423, May 12, 1999]



Sec. 1703.143  Maximum and minimum amounts.

    Applications for loans under this subpart will be subject to 
limitations on the proposed amount of loans. The Administrator will 
establish the maximum amount of a loan available to an applicant under 
this subpart, by publishing notice of the maximum amount in the Federal 
Register before the opening of the application window. The minimum 
amount of a loan is $50,000.



Sec. 1703.144  Completed application.

    The following items are required to be submitted in support of an 
application for a loan:
    (a) An application for federal assistance: A completed standard form 
424.
    (b) An executive summary of the project. The applicant must provide 
RUS with a general project overview that addresses each of the following 
9 categories:
    (1) A description of why the project is needed;
    (2) An explanation of how the applicant will address the need (see 
paragraph (b)(1) of this section), why the applicant requires financial 
assistance, the types of educational or medical services to be offered 
by the project, and the benefits to the rural residents;
    (3) A description of the applicant, documenting eligibility in 
accordance with Sec. 1703.103;
    (4) An explanation of the total project cost including a breakdown 
of the loan required and the source of funding, if applicable, for the 
remainder of the project;
    (5) A statement specifying whether the project provides 
predominantly distance learning or telemedicine services as defined in 
Sec. 1703.102. If the project provides both distance learning and 
telemedicine services, the applicant must identify the predominant use 
of the system;
    (6) A general overview of the telecommunications system to be 
developed, including the types of equipment, technologies, and 
facilities used;
    (7) A description of the participating hubs and end user sites and 
the number of rural residents which will be served by the project at 
each end user site;
    (8) A certification by the applicant that facilities funded by a 
loan do not duplicate adequate established telemedicine or distance 
learning services.

[[Page 55]]

    (9) A listing of the location of each end user site (city, town, 
village, borough, or rural area plus the State).
    (c) A scope of work. The scope of work must include, at a minimum:
    (1) The specific activities to be performed under the project;
    (2) Who will carry out the activities;
    (3) The time-frames for accomplishing the project objectives and 
activities; and
    (4) A budget for capital expenditures reflecting the line item costs 
for the loan and any other sources of funds for the project.
    (d) Financial information. The applicant must show its financial 
ability to complete the project; show project feasibility; and provide 
evidence that it can execute a note for a loan for a maturity period 
greater than one year. For educational institutions participating in a 
project application (including all members of a consortium), the 
financial data must reflect revenue and expense reports and balance 
sheet reports, reflecting net worth, for the most recent annual 
reporting period preceding the date of the application. For medical 
institutions participating in a project application (including all 
members of a consortium), the financial data must include income 
statement and balance sheet reports, reflecting net worth, for the most 
recent completed fiscal year preceding the date of the application. When 
the applicant is a partnership, company, corporation, or other entity, 
current balance sheets, reflecting net worth, are needed from each of 
the entities that has at least a 20 percent interest in such 
partnership, company, corporation or other entity. When the applicant is 
a consortium, a current balance sheet, reflecting net worth, is needed 
from each member of the consortium and from each of the entities that 
has at least a 20 percent interest in such member of the consortium.
    (1) Applicants must include sufficient pro-forma financial data 
which adequately reflects the financial capability of project 
participants and the project as a whole to continue a sustainable 
project for a minimum of 10 years and repay the requested loan. This 
documentation should include sources of sufficient income or revenues to 
pay operating expenses including telecommunications access and toll 
charges, system maintenance, salaries, training, and any other general 
operating expenses, provide for replacement of depreciable items, and 
show repayment of interest and principal for the loan.
    (2) A list of property which will be used as collateral to secure 
repayment of the proposed loan. The applicant shall purchase and own 
collateral that secures the loan free from liens or security interests 
and take all actions necessary to perfect a first lien in the collateral 
that secures the loan. RUS will consider as adequate security a loan 
guarantee by a telecommunications or electric borrower or by another 
qualified party. Additional forms of security, including letters of 
credit, real estate, or any other items will be considered. RUS will 
determine the adequacy of the security offered.
    (3) As applicable, a depreciation schedule covering all assets of 
the project. Those assets for which a loan is being requested should be 
clearly indicated.
    (4) For each hub and end user site, the applicant must identify and 
provide reasonable evidence of each source of revenue. If the projection 
relies on cost sharing arrangements among hub and end user sites, the 
applicant must provide evidence of agreements made among project 
participants.
    (5) For applicants eligible under Sec. 1703.103(a)(3), an 
explanation of the economic analysis justifying the rate structure to 
ensure that the benefit, including cost saving, of the financial 
assistance is passed through to the other persons receiving telemedicine 
or distance learning services.
    (e) A statement of experience. The applicant must provide a written 
narrative (not exceeding three single spaced pages) describing its 
demonstrated capability and experience, if any, in operating an 
educational or health care endeavor and any project similar to the 
project. Experience in a similar project is desirable but not required.
    (f) A telecommunications system plan. A telecommunications system 
plan, consisting of the following (the items in

[[Page 56]]

paragraphs (f)(4) and (f)(5) of this section are required only when the 
applicant is requesting a loan for telecommunications transmission 
facilities):
    (1) The capabilities of the telecommunications terminal equipment, 
including a description of the specific equipment which will be used to 
deliver the proposed service. The applicant must document discussions 
with various technical sources which could include consultants, 
engineers, product vendors, or internal technical experts, provide 
detailed cost estimates for operating and maintaining the end user 
equipment and provide evidence that alternative equipment and 
technologies were evaluated.
    (2) A listing of the proposed purchases or leases of 
telecommunications terminal equipment, telecommunications transmission 
facilities, data terminal equipment, interactive video equipment, 
computer hardware and software systems, and components that process data 
for transmission via telecommunications, computer network components, 
communication satellite ground station equipment, or any other elements 
of the telecommunications system designed to further the purposes of 
this subpart, that the applicant intends to build or fund using a loan.
    (3) A description of the consultations with the appropriate 
telecommunications carriers (including other interexchange carriers, 
cable television operators, enhanced service providers, providers of 
satellite services, and telecommunications equipment manufacturers and 
distributors) and the anticipated role of such providers in the proposed 
telecommunications system.
    (4) Results of discussions with local exchange carriers serving the 
project area addressing the concerns contained in Sec. 1703.141(h).
    (5) The capabilities of the telecommunications transmission 
facilities, including bandwidth, networking topology, switching, 
multiplexing, standards, and protocols for intra-networking and open 
systems architecture (the ability to effectively communicate with other 
networks). In addition, the applicant must explain the manner in which 
the transmission facilities will deliver the proposed services. For 
example, for medical diagnostics, the applicant might indicate whether 
or not a guest or other diagnosticians can join the network from 
locations off the network. For educational services, indicate whether or 
not all hub and end-user sites are able to simultaneously hear in real-
time and see each other or the instructional material in real-time. The 
applicant must include detailed cost estimates for operating and 
maintaining the network, and include evidence that alternative delivery 
methods and systems were evaluated.
    (g) Compliance with other Federal statutes. The applicant must 
provide evidence of compliance with other Federal statutes and 
regulations including, but not limited to the following:
    (1) E.O. 11246, Equal Employment Opportunity, as amended by E.O. 
11375 and as supplemented by regulations contained in 41 CFR part 60;
    (2) Architectural barriers;
    (3) Flood hazard area precautions;
    (4) Assistance and Real Property Acquisition Policies Act of 1970;
    (5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
    (6) E.O.s 12549 and 12689, Debarment and Suspension;
    (7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
    (h) Environmental impact and historic preservation. (1) The 
applicant must provide details of the project's impact on the 
environment and historic preservation. Loans made under this part are 
subject to 7 CFR part 1794 which contains RUS' policies and procedures 
for implementing a variety of Federal statutes, regulations, and 
executive orders generally pertaining to the protection of the quality 
of the human environment that are listed in 7 CFR 1794.1. The 
application shall contain a separate section entitled ``Environmental 
Impact of the Project.''
    (2) The applicant may use the ``Environmental Questionnaire,'' 
available from RUS, to assist in complying with the requirements of this 
section.
    (i) Evidence of legal authority and existence. The applicant must 
provide evidence of its legal existence and authority to enter into debt 
with RUS and perform the activities proposed under the loan application.

[[Page 57]]

    (j) Federal debt certification. The applicants must provide a 
certification that it is not delinquent on any obligation owed to the 
government (7 CFR parts 3016 and 3019).
    (k) Supplemental information. The applicant should provide any 
additional information it considers relevant to the project and likely 
to be helpful in determining the extent to which the project would 
further the purposes of this subpart.
    (l) Additional information required by RUS. The applicant must 
provide any additional information RUS determines is necessary to 
adequately evaluate the application. Modifications or changes, including 
changes in the loan amount requested, may be requested in any project 
described in an application submitted under this subpart.

[64 FR 14369, Mar. 25, 1999; 64 FR 25422, May 12, 1999, as amended at 64 
FR 25423, May 12, 1999]



Sec. 1703.145  Application selection provisions.

    (a) Loans will be approved based on availability of funds, the 
financial feasibility of the project in accordance with 
Sec. 1703.144(d), the services to be provided which demonstrate that the 
project meets the general requirements of this subpart, the design of 
the project; costs; location; and other characteristics of the 
application.
    (b) RUS will determine, from the information submitted with each 
application for a loan, whether the application achieves sufficient 
priority, based on the criteria set forth in the 1996 Act, to receive a 
loan from funds available for the fiscal year. If such priority is 
achieved, RUS will process the loan application on a first-in, first-out 
basis, provided that the total amount of applications on-hand for loans 
does not exceed 90 percent of the total loan funding available for the 
fiscal year. At such time as the total amount of applications eligible 
for loans, if such applications were approved, exceeds 90 percent of 
amount of loan funding available, RUS will process the remaining 
applications using the evaluation criteria set forth in Sec. 1703.126.
    (c) A loan will not be approved if it is determined that:
    (1) The applicant's proposal does not indicate financial 
feasibility, or is not adequately secured in accordance with the 
requirements of Sec. 1703.144(d);
    (2) The applicant's proposal indicates technical flaws, which, in 
the opinion of RUS, would prevent successful implementation, or 
operation of the project; or
    (3) Any other aspect of the applicant's proposal fails to adequately 
address any requirements of this subpart or contains inadequacies which 
would, in the opinion of RUS, undermine the ability of the project to 
meet the general purpose of this subpart or comply with policies of the 
DLT program contained in Sec. 1703.101.
    (d) RUS will provide the applicant with a statement of any 
determinations made with regard to paragraphs (c)(1) through (c)(3) of 
this section. The applicant will be provided 15 days from the date of 
the RUS letter to respond, provide clarification, or make any 
adjustments or corrections to the project. If, in the opinion of the 
Administrator, the applicant fails to adequately respond to any 
determinations or other findings made by the Administrator, the loan 
will not be approved, and the applicant will be notified of this 
determination. If the applicant does not agree with this finding an 
appeal may be filed in accordance with Sec. 1703.147.

[64 FR 14369, Mar. 25, 1999; 64 FR 25422, May 12, 1999]



Sec. 1703.146  Submission of applications.

    (a) RUS will accept applications for loans submitted by RUS 
telecommunications General Field Representatives (GFRs), by Rural 
Development State Directors, or by applicants themselves. Applications 
for loans under this subpart may be filed at any time and will be 
evaluated as received on a non-competitive basis.
    (b) Applications submitted to the State Director, Rural Development, 
in the State serving the headquarters of the project will be evaluated 
as they are submitted. All applicants must submit an original and two 
copies of a completed application. The applicant must also submit a copy 
of the application to the State government point of contact, if one has 
been designated for the State, at the same time it submits

[[Page 58]]

an application to the State Director. The State Director will:
    (1) Review each application for completeness in accordance with 
Sec. 1703.144, and notify the applicant, within 15 working days of 
receiving the application, of the results of this review, acknowledging 
a complete application, or citing any information that is incomplete. To 
be considered for a loan, the applicant must submit any additional 
information requested to complete the application within 15 working days 
of the date of the State Director's written response. If the applicant 
fails to submit such information, the application will be returned to 
the applicant.
    (2) Within 30 days of the determination of a completed application 
in accordance with paragraph (b)(1) of this section, review the 
application to determine suitability for financial assistance in 
accordance with Sec. 1703.145, and other requirements of this subpart. 
Based on its review, the State Director will work with the applicant to 
resolve any questions or obtain any additional information. The 
applicant will be notified, in writing, of any additional information 
required to allow a financial assistance recommendation and will be 
provided a reasonable period of time to furnish the additional 
information.
    (3) Based on the review in accordance with Sec. 1703.145 and other 
requirements of this subpart, make a preliminary determination of 
suitability for financial assistance. A loan recommendation will be 
prepared by the State Director with concurrence of the RUS 
telecommunications GFR that addresses the provisions of Secs. 1703.144 
and 1703.145 and other applicable requirements of this subpart.
    (4) If the application is determined suitable for further 
consideration by RUS, forward an original and one copy of the 
application with a loan recommendation, signed jointly, to the Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
Washington DC. The applicant will be notified by letter of this action. 
Upon receipt of the application from the State Director, RUS will 
conduct a cursory review of the application and the recommendation. A 
final determination will be made within 15 days. If the Administrator 
determines that a loan can be approved, the State Director will be 
notified and the State Director will notify the applicant. Applications 
for loans will be processed, and approved loans serviced, in accordance 
with Secs. 1703.105 through 1703.112.
    (5) If the State Director determines that the application is not 
suitable for further consideration by RUS, notify the applicant with the 
reasons for this determination. The applicant will be offered appeal 
rights in accordance with Sec. 1703.147.
    (c) Applications submitted by RUS telecommunications GFRs or 
directly by applicants will be evaluated as they are submitted. All 
applicants must submit an original and two copies of a completed 
application. The applicant must also submit a copy of the application to 
the State government point of contact, if one has been designated for 
the State, at the same time it submits an application to the RUS. RUS 
will:
    (1) Review each application for completeness in accordance with 
Sec. 1703.144, and notify the applicant, within 15 working days of 
receiving the application, of the results of this review, acknowledging 
a complete application, or citing any information that is incomplete. To 
be considered for a loan, the applicant must submit any additional 
information requested to complete the application within 15 working days 
of the date of the RUS written response. If the applicant fails to 
submit such information, the application will be returned to the 
applicant.
    (2) Within 30 days of the determination of a completed application 
in accordance with paragraph (c)(1) of this section, review the 
application to determine suitability for financial assistance in 
accordance with this subpart. Based on its review, RUS will work with 
the applicant to resolve any questions or obtain any additional 
information. The applicant will be notified, in writing, of any 
additional information required to allow a financial assistance 
recommendation and will be provided a reasonable period of time to 
furnish the additional information.
    (3) If the application is determined suitable for further 
consideration by RUS, conduct a review of the application and financial 
assistance recommendation. A final determination

[[Page 59]]

will be made within 15 days. If the Administrator determines that a loan 
can be approved, the applicant will be notified. Applications will be 
processed, and approved loans serviced, in accordance with 
Secs. 1703.105 through 1703.112 of subpart D.
    (4) If RUS determines that the application is not suitable for 
further consideration, notify the applicant with the reasons for this 
determination. The applicant will be offered appeal rights in accordance 
with Sec. 1703.147 of this subpart.



Sec. 1703.147  Appeals.

    Any appeal must be made, in writing, within 10 days after the 
applicant is notified of the determination to deny the application. 
Appeals shall be submitted to the Administrator, RUS, U.S. Department of 
Agriculture, 1400 Independence Ave., SW., STOP 1590, Washington, DC 
20250-1590. Thereafter, the Administrator will review the appeal to 
determine whether to sustain, reverse, or modify the original 
determination. Final determinations will be made after consideration of 
all appeals. The Administrator's determination will be final. A copy of 
the Administrator's decision will be furnished promptly to the 
applicant.



Subpart H_Deferments of RUS Loan Payments for Rural Development Projects

    Source: 58 FR 21639, Apr. 23, 1993, unless otherwise noted. 
Redesignated at 64 FR 14356, Mar. 25, 1999.



Sec. 1703.300  Purpose.

    This subpart E sets forth RUS's policies and procedures for making 
loan deferments of principal and interest payments on direct loans or 
insured loans made for electric or telephone purposes, but not for loans 
made for rural economic development purposes, in accordance with 
subsection (b) of section 12 of the RE Act. Loan deferments are provided 
for the purpose of promoting rural development opportunities.



Sec. 1703.301  Policy.

    It is RUS's policy to encourage borrowers to invest in and promote 
rural development and rural job creation projects that are based on 
sound economic and financial analyses. Borrowers are encouraged to use 
this program to promote economic, business and community development 
projects that will benefit rural areas.



Sec. 1703.302  Definitions and rules of construction.

    (a) Definitions. For the purpose of this subpart, the following 
terms will have the following meanings:1
    Administrator means the Administrator of RUS.
    Borrower means any organization which has an outstanding direct loan 
or insured loan made by RUS for the provision of electric or telephone 
service.
    Cushion of credit payment means a voluntary unscheduled payment on 
an RUS note made after October 1, 1987, credited to the cushion of 
credit account of a borrower.
    Deferment means a re-amortization of a payment of principal and/or 
interest on an RUS direct loan or insured loan for over either a 5- or 
10 year period, with the first payment beginning on the date of the 
deferment.
    Direct loan means a loan that is made by the Administrator pursuant 
to section 4 or section 201 of the RE Act (7 U.S.C. 901 et seq.) for the 
provision of electric or telephone service in rural areas and does not 
include a loan made to promote economic development in rural areas.
    Financially distressed borrower means an RUS-financed borrower 
determined by the Administrator to be either:
    (i) In default or near default on interest or principal payments due 
on loans made or guaranteed under the RE Act;
    (ii) A borrower that was in default or near default, but is 
currently participating in a workout or debt restructuring plan with 
RUS; or
    (iii) Experiencing a financial hardship.
    Insured loan means a loan that is made, held, and serviced by the 
Administrator, and sold and insured by the Administrator, pursuant to 
Section 305 of the RE Act (7 U.S.C. 901 et seq.) for

[[Page 60]]

the provision of electric or telephone service in rural areas and does 
not include a loan made to promote economic development in rural areas.
    Job creation means the creation of jobs in rural areas, or in close 
enough proximity to rural areas so that it is likely that the majority 
of the jobs created will be held by residents of rural areas.
    Project means a rural development project that a borrower proposes 
and the Administrator approves as qualifying under this subpart.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    REA means the Rural Electrification Administration formerly an 
agency of the United States Department of Agriculture and predecessor 
agency to RUS with respect to administering certain electric and 
telephone loan programs.
    RTB means the Rural Telephone Bank (telephone bank), a body 
corporate and an instrumentality of the United States, that obtains 
supplemental funds from non-Federal sources and utilizes them in making 
loans, operating on a self-sustaining basis to the extent practicable 
(section 401, RE Act).
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    Technical assistance means market research, product or service 
improvement, feasibility studies, environmental studies, and similar 
activities that benefit rural development or rural job creation 
projects.
    (b) Rules of construction. Unless the context otherwise indicates; 
``includes'' and ``including'' are not limiting, and ``or'' is not 
exclusive. The terms defined in Sec. 1703.302(a) include both the plural 
and the singular.

[58 FR 21639, Apr. 23, 1993, as amended at 59 FR 66440, Dec. 27, 1994]



Sec. 1703.303  Eligibility criteria for deferment of loan payments.

    The deferment of loan payments may be granted to any borrower that 
is not financially distressed, delinquent on any Federal debt, or in 
bankruptcy proceedings. However, the deferment of loan payments will not 
be granted to a borrower during any period in which the Administrator 
has determined that no additional financial assistance of any nature 
should be provided to the borrower pursuant to any provision of the RE 
Act. The determination to suspend eligibility for the deferment of loan 
payments under this subpart will be based on:
    (a) The borrower's demonstrated unwillingness to exercise diligence 
in repaying loans made by RUS or RTB or guaranteed by RUS that results 
in the Administrator being unable to find that such loans, would be 
repaid within the time agreed; or
    (b) The borrower's demonstrated unwillingness to meet the 
requirements in RUS's or RTB's legal documents or regulations.



Sec. 1703.304  Restrictions on the deferment of loan payments.

    (a) The deferment must not impair the security of any loans made RUS 
or RTB, or guaranteed by RUS, pursuant to the RE Act.
    (b) At no point in time may the amount of the debt service payments 
deferred exceed 50 percent of the total cost of a community, business, 
or economic development project for which a deferment is provided.
    (c) A borrower may defer debt service payments only in an amount 
equal to the investment made by such borrower in a rural development 
project. The investment must not be made from:
    (1) Proceeds of loans made or guaranteed pursuant to the RE Act, or 
grants made pursuant to the RE Act or section 2331 through section 2335A 
of the Rural Economic Development Act of 1990 (7 U.S.C. 950aaa et seq.);
    (2) Funds necessary to make timely payments of principal and 
interest on loans made, guaranteed or lien accommodated pursuant to the 
RE Act;
    (3) Insurance proceeds from mortgaged property;

[[Page 61]]

    (4) Damage awards and sale proceeds resulting from eminent domain 
and similar proceedings involving mortgaged property;
    (5) Sale proceeds from mortgaged property sales requiring specific 
Administrator approval; and
    (6) Funds which are restricted by RUS or RTB loan instruments to be 
held in trust for the Government or to be held for any other specific 
purpose.
    (d) Any investment made in a rural development project prior to the 
date of the application for a deferment based on such project cannot be 
used to satisfy the requirements of this section.



Sec. 1703.305  Requirements for deferment of loan payments.

    (a) Except as otherwise provided in paragraph (b) of this section, 
the borrower must make a cushion of credit payment equal to the amount 
of the payment deferred and subject to the following rules:
    (1) Cushion of credit payments made prior to the date that an 
application for deferral has been approved by RUS cannot be used to 
satisfy the requirements of this section;
    (2) Once a cushion of credit payment has been made to satisfy the 
requirements of paragraph (a) of this section, it must remain on deposit 
in the cushion of credit account on the date of the deferral or the 
deferral will not take place; and
    (3) The cushion of credit payment must be received by RUS on the 
date the payment being deferred is due, or within 30 days prior to this 
date.
    (b) A borrower may elect to consolidate in one application filed 
pursuant to Sec. 1703.311, all of the related deferrals it wishes to 
receive in a twelve month period following application approval. In such 
a case, the requirement contained in paragraph (a)(1) of this section 
may alternatively be satisfied by depositing an amount equal to the 
aggregate deferrals covered by such application into the cushion of 
credit account at the time the first cushion of credit payment is due 
under paragraph (a)(1) of this section.



Sec. 1703.306  Limitation on funds derived from the deferment of
loan payments.

    Funds derived from the deferment of loan payments will not be used:
    (a) To fund or assist projects which would, in the judgement of the 
Administrator, create a conflict of interest or the appearance of a 
conflict of interest. The borrower must disclose to the Administrator 
information regarding any potential conflict of interest or appearance 
of a conflict of interest;
    (b) For any purpose not reasonably related to the project as 
determined by the Administrator;
    (c) To transfer existing employment or business activities from one 
area to another; or
    (d) For the borrower's electric or telephone operations, nor for any 
operations affiliated with the borrower unless the Administrator has 
specifically informed the borrower in writing that the affiliated 
operations are part of the approved purposes.



Sec. 1703.307  Uses of the deferments of loan payments.

    The deferment of loan payments will be made to enable the borrower 
to provide funding and assistance for rural development and job creation 
projects. This includes, but is not limited to, the borrower providing 
financing to local businesses, community development assistance, 
technical assistance to businesses, and other community, business, or 
economic development projects that will benefit rural areas.



Sec. 1703.308  Amount of deferment funds available.

    (a) The total amount of deferments made available for each fiscal 
year under this program will not exceed 3 percent of the total payments 
due during fiscal year 1993 from all borrowers on direct loans and 
insured loans made under the RE Act. For each subsequent fiscal year 
after 1993, the total amount of deferments will not exceed 5 percent of 
the total payments due for the year from all borrowers on direct loans 
and insured loans.
    (b) The total amount of annual deferments are subject to limitations 
established by appropriations Acts.

[[Page 62]]



Sec. 1703.309  Terms of repayment of deferred loan payments.

    (a) Deferments made to enable the borrower to provide financing to 
local businesses will be repaid over a period of 60 months, in equal 
installments, with payments beginning on the date of the deferment, and 
continuing in such a manner until the total amount of the deferment is 
repaid. The deferment payments will be made on either a monthly or 
quarterly basis depending on the existing repayment terms of the direct 
loan or insured loan being deferred. The deferment will not accrue 
interest.
    (b) In the case of deferments made to enable the borrower to provide 
community development assistance, technical assistance to businesses, 
and for other community, business, or economic development projects not 
included in paragraph (a) of this section, the deferment will be repaid 
over a period of 120 months, in equal installments, with payments 
beginning on the date of the deferment and continuing in such a manner 
until the total amount of the deferment is repaid. The deferment 
payments will be made on either a monthly or quarterly basis depending 
on the existing repayment terms of the direct loan or insured loan being 
deferred. The deferment will not accrue interest.
    (c) The maturity date of a loan may not be extended as a result of a 
deferment.
    (d) If the required payment is not made by the borrower or received 
by the Administrator when due, the Administrator will reduce the 
borrower's cushion of credit account established under this subpart in 
an amount equal to the deferment payment required.
    (e) The balance in a borrower's cushion of credit account shall not 
be reduced by the borrower below the level of the unpaid balance of the 
payment deferred.



Sec. 1703.310  Environmental considerations.

    Prospective recipients of funds received from the deferment of loan 
payments are encouraged to consider the potential environmental impact 
of their proposed projects at the earliest planning stage and plan 
development in a manner that reduces, to the extent practicable, the 
potential to affect the quality of the human environment adversely.



Sec. 1703.311  Application procedures for deferment of loan payments.

    (a) A borrower applying for a deferment must:
    (1) Submit a certified board resolution to the Administrator 
requesting a deferment of principal and interest. The resolution must:
    (i) Be signed by the president or vice president of the borrower;
    (ii) Contain information on the total amount of deferment requested 
for each specific project;
    (iii) Contain information on the type of project and the length of 
deferment requested as defined in Sec. 1703.309; and
    (iv) Specify which officer of the borrower has been given the 
authority to certify to those matters required in this section;
    (2) Submit certification by the appropriate officer to the 
Administrator that the proposed project will not violate the limitations 
set forth in Sec. 1703.306 and disclose all information regarding any 
potential conflict of interest or appearance of a conflict of interest 
that would allow the Administrator to make an informed decision;
    (3) Submit certification by the appropriate officer to the 
Administrator that an investment in the rural development project will 
be made by the borrower in an amount equal to the deferred debt service 
payment;
    (4) Submit certification by the appropriate officer to the 
Administrator that the amount of the deferment will not exceed 50 
percent of the total cost of the project for which the deferment is 
provided;
    (5) Submit certification by the appropriate officer to the 
Administrator that it will make a cushion of credit payment necessary to 
satisfy the requirement of Sec. 1703.305(a);
    (6) Submit certification by the appropriate officer to the 
Administrator that it will comply with Sec. 1703.313 and provide 
documentation showing that its total investments, including the proposed 
investment, will not exceed the investment limitations specified in

[[Page 63]]

7 CFR part 1717, Subpart N, Investments, Loans and Guarantees by 
Electric Borrowers, or 7 CFR Part 1744, Post Loan Policies and 
Procedures Common to Guaranteed and Insured Loans. The documentation 
must provide a list of each rural development project the borrower has 
invested in to date, including the investment amounts;
    (7) Submit to the Administrator written identification of the direct 
loan(s) and/or insured loan(s) for which payments are to be deferred;
    (8) Submit to the Administrator a written narrative which contains 
information regarding the proposed rural development or job creation 
project such as the manner in which the project will promote community, 
business, or economic development in rural areas, the nature of the 
project, its location, the primary beneficiaries, and, if applicable, 
the number and type of jobs to be created; and
    (9) Submit to the Administrator a letter of approval from the state 
regulatory authority, if applicable, granting its approval for the 
borrower to defer direct loan payment(s) and/or insured loan payment(s) 
and invest the amount in a rural development project.
    (b) The Administrator reserves the right to determine that special 
circumstances require additional data from borrowers before acting on a 
deferment. The Administrator also reserves the right to require, as a 
condition of approving a loan payment deferment pursuant to this 
subpart, that the borrower execute and deliver any amendments or 
supplements to its loan documents that may be necessary or appropriate 
to achieve the purposes outlined in Sec. 1703.300.
    (c) The Administrator will decide whether the borrower is eligible 
for the deferment and will notify the borrower of the decision.



Sec. 1703.312  RUS review requirements.

    Borrowers shall ensure that funds are invested in the rural 
development project as approved by RUS. The Administrator reserves the 
right to review the books and copy records of borrowers receiving loan 
payment deferments as necessary to ensure that the investments in the 
rural development project are in accordance with this subpart and the 
representations and purposes stated in the borrower's completed 
application. If an audit discloses that the amount deferred was not used 
for the purposes stated in the completed application, the borrower shall 
be required to promptly repay the amount deferred and the benefits of 
the deferment to the borrower will be recaptured by RUS. The borrower is 
responsible for ensuring that disbursements and expenditures of funds 
covering the investment in the rural development project are properly 
supported with certifications, invoices, contracts, bills of sale, 
cancelled checks, or any other forms of evidence determined appropriate 
by the Administrator and that such supporting material is available at 
the borrower's premises for review by the RUS field accountant, 
borrower's certified public accountant, the Office of Inspector General, 
the General Accounting Office and any other accountant conducting an 
audit of the borrower's financial statements for this rural development 
program.



Sec. 1703.313  Compliance with other regulations.

    (a) Investments in a rural economic development project made by an 
electric borrower under this subpart are subject to the provisions of 7 
CFR part 1717, Subpart N, Investments, Loans and Guarantees by Electric 
Borrowers.
    (b) Investments in a rural economic development project made by a 
telephone borrower under this subpart are subject to the provisions of 7 
CFR Part 1744, Post Loan Policies and Procedures Common to Guaranteed 
and Insured Loans.



PART 1709_ASSISTANCE TO HIGH ENERGY COST COMMUNITIES--Table of Contents



                     Subpart A_General Requirements

Sec.
1709.1  Purpose.
1709.2  Policy. [Reserved]
1709.3  Definitions.
1709.4  Allocation of available funds among programs.
1709.5  Determination of energy cost benchmarks.
1709.6  Appeals.

[[Page 64]]

1709.7  Applicant eligibility.
1709.8  Electronic submission.
1709.9  Grant awards and advance of funds.
1709.10  Ineligible grant purposes.
1709.11  Award conditions.
1709.12  Reporting requirements.
1709.13  Grant administration.
1709.14  Inspections.
1709.15  Grant close out.
1709.16  Performance reviews.
1709.17  Environmental review.
1709.18  Civil rights.
1709.19  Other USDA regulations.
1709.20  Member delegate clause.
1709.21  Audit requirements.
1709.22  Project changes.
1709.23-1709.99  [Reserved]
1709.100  OMB control number.

              Subpart B_RUS High Cost Energy Grant Program

1709.101  Purpose.
1709.102  Policy.
1709.103-1709.105  [Reserved]
1709.106  Eligible applicants.
1709.107  Eligible communities.
1709.108  Supporting data for determining community eligibility.
1709.109  Eligible projects.
1709.110  Use of grant funds.
1709.111  Limitations on use of grant funds.
1709.112  Ineligible grant purposes.
1709.113  Limitations on grant awards.
1709.114  Application process.
1709.115  Availability of application materials.
1709.116  Application package.
1709.117  Application requirements.
1709.118  Submission of applications.
1709.119  Review of applications.
1709.120  Evaluation of applications.
1709.121  Administrator's review and selection of grant awards.
1709.122  Consideration of eligible grant applications under later grant 
          announcements.
1709.123  Evaluation criteria and weights.
1709.124  Grant award procedures.
1709.125-1709.200  [Reserved]

            Subpart C_Bulk Fuel Revolving Fund Grant Program

1709.201  Purpose.
1709.202  Policy. [Reserved]
1709.203  Definitions.
1709.204-1709.206  [Reserved]
1709.207  Eligible applicants.
1709.208  Use of grant funds.
1709.209  Limitations on use of grant funds.
1709.210  Application process.
1709.211  Submission of applications.
1709.212  Application review.
1709.213  Evaluation of applications.
1709.214  Administrator's review and selection of grant awards.
1709.215  Consideration of unfunded applications under later grant 
          announcements.
1709.216  Evaluation criteria and weights.
1709.217  Grant award.
1709.218-1709.300  [Reserved]

Subparts D-F [Reserved]

    Subpart G_Recovery of Financial Assistance Used for Unauthorized 
                                Purposes

1709.601  Policy.
1709.602-1709.999  [Reserved]

    Authority: 5 U.S.C. 301, 7 U.S.C. 901 et seq.

    Source: 70 FR 5351, Feb. 2, 2005, unless otherwise noted.



                     Subpart A_General Requirements



Sec. 1709.1  Purpose.

    The purpose of the Rural Utilities Service (RUS) Assistance to High 
Energy Cost Rural Communities Program is to help local communities meet 
their energy needs through direct loans and grants for energy facilities 
in qualifying extremely high energy cost communities, grants and loans 
to the Denali Commission for extremely high energy cost communities in 
Alaska, and grants to States to support revolving funds to finance more 
cost effective means of acquiring fuel in qualifying communities. This 
subpart sets forth definitions and requirements which are common to all 
grant and loan programs in this part administered by the RUS Electric 
Program under section 19 of the Rural Electrification Act of 1936, as 
amended (RE Act) (7 U.S.C. 918a).



Sec. 1709.2  [Reserved]



Sec. 1709.3  Definitions.

    Administrator means the Administrator of the Rural Utilities Service 
(RUS), United States Department of Agriculture (USDA).
    Agency means the Rural Utilities Service (RUS), an agency of the 
United States Department of Agriculture (USDA), or a successor agency.
    Census block means the smallest geographic entity for which the U.S. 
Census Bureau collects and tabulates decennial census information and 
which are defined by boundaries shown on census maps.
    Census designated place (CDP) means a statistical entity recognized 
by the

[[Page 65]]

U.S. Census Bureau comprising a dense concentration of population that 
is not within an incorporated place but is locally identified by a name 
and which has boundaries defined on census maps.
    Electric program means the office within RUS, and its successor 
organization, that administers rural electrification programs authorized 
by the Rural Electrification Act of 1936 (RE Act) (7 U.S.C. 901 et seq.) 
and such other programs so identified in USDA regulations.
    Extremely high energy costs means community average residential 
energy costs that are at least 275 percent of one or more home energy 
cost benchmarks identified by RUS and based on the latest available 
information on national average residential energy expenditures as 
reported by the Energy Information Administration (EIA) of the United 
States Department of Energy.
    Financial assistance means a grant, loan, or grant-loan combination 
issued under this part.
    Home energy means any energy source or fuel used by a household for 
purposes other than transportation, including electricity, natural gas, 
fuel oil, kerosene, liquified petroleum gas (propane), other petroleum 
products, wood and other biomass fuels, coal, wind and solar energy. 
Fuels used for subsistence activities in remote rural areas are also 
included.
    High energy cost benchmarks means the criteria established by RUS 
for eligibility as an extremely high energy cost community. Extremely 
high energy cost benchmarks are calculated as 275 percent of the 
relevant national average household energy benchmarks.
    Indian Tribe means a Federally recognized tribe as defined under 
section 4 of the Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 450b) to include ``* * * any Indian tribe, band, nation, or 
other organized group or community, including any Alaska Native village 
or regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), 
that is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians.''
    Person means any natural person, firm, corporation, association, or 
other legal entity, and includes Indian tribes and tribal entities.
    State means any of the several States of the United States, and, 
where provided by law, any Territory of the United States or other area 
authorized to receive the services and programs of the Rural Utilities 
Service or the Rural Electrification Act of 1936, as amended.
    Target area means the geographic area to be served by the grant.
    Target community means the unit or units of local government in 
which the target area is located.



Sec. 1709.4  Allocation of available funds among programs.

    The Administrator, in his sole discretion, shall allocate available 
funds among the programs administered under this part and determine the 
grant application periods under each program. In making fund allocations 
for each fiscal year, the Administrator may consider the amount of 
available funds, the nature and amount of unfunded grant applications 
and prior awards, Agency resources, Agency priorities, and any other 
pertinent information.



Sec. 1709.5  Determination of energy cost benchmarks.

    (a) The Administrator shall establish, using the most recent data 
available, and periodically revise, the home energy cost benchmarks and 
the high energy cost benchmarks used to determine community eligibility 
for high energy cost grant and loan programs and the Denali Commission 
high energy cost grants and loans. In setting these energy cost 
benchmarks, the Administrator shall review the latest available 
information on home energy costs published by the EIA. High energy cost 
benchmarks will be set at 275 percent of the applicable national average 
home energy cost benchmark as determined by the Administrator from the 
published EIA data. Eligibility benchmarks shall be published in each 
grant announcement.
    (b) For use in determining eligibility for High Energy Cost Grants, 
the Administrator may establish benchmarks for national average annual 
household

[[Page 66]]

expenditures and for national average household per unit energy 
expenditures for major home energy sources or fuels, including, but not 
limited to, electricity, natural gas, fuel oil, kerosene, liquified 
petroleum gas (propane), other petroleum products, wood and other 
biomass fuels, coal, wind and solar energy.



Sec. 1709.6  Appeals.

    An applicant may appeal a decision by the Assistant Administrator, 
Electric Program rejecting an application for failure to meet 
eligibility requirements. Applicants may not appeal rating panel scores 
or rankings. An appeal must be made, in writing to the Administrator, 
within 10 days after the applicant is notified of the determination to 
reject the application. Appeals must state the basis for the appeal and 
shall be submitted to the Administrator, Rural Utilities Service, U.S. 
Department of Agriculture, 1400 Independence Ave., SW., STOP 1500, 
Washington, DC 20250-1500. Thereafter, the Administrator will review the 
appeal to determine whether to sustain, reverse, or modify the original 
determination. The Administrator's determination shall be final. A 
written copy of the Administrator's decision will be furnished promptly 
to the applicant.



Sec. 1709.7  Applicant eligibility.

    An outstanding judgment obtained against an applicant by the United 
States in a Federal Court (other than in the United States Tax Court), 
which has been recorded, shall cause the applicant to be ineligible to 
receive a grant or loan under this part until the judgment is paid in 
full or otherwise satisfied. RUS financial assistance under this part 
may not be used to satisfy the judgment.



Sec. 1709.8  Electronic submission.

    Applicants may submit applications and reports electronically if so 
provided in the applicable grant announcement and grant agreements or if 
other regulations provide for electronic submission. Any electronic 
submissions must be in the form prescribed in the applicable grant 
announcement, grant agreement, or regulation.



Sec. 1709.9  Grant awards and advance of funds.

    The grantee must execute a grant agreement that is acceptable to the 
Agency. The grantee must sign and return the grant agreement to the 
Agency, within the time specified, before any grant funds will be 
advanced.



Sec. 1709.10  Ineligible grant purposes.

    Grant funds under this part may not be used to:
    (a) Pay costs of preparing the application package for funding under 
programs in this part, or for any finders fees or incentives for persons 
or entities assisting in the preparation or submission of an 
application.
    (b) Fund political activities;
    (c) Pay any judgment or debt owed to the United States; or
    (d) Pay construction costs of the project incurred prior to the date 
of grant award except as provided herein. Construction work should not 
be started and obligations for such work or materials should not be 
incurred before the grant is approved.
    (1) Applicants may request Agency approval for reimbursement of pre-
award construction obligations if there are compelling reasons for 
proceeding with construction before grant approval. Such requests may be 
approved if the Agency determines that:
    (i) Compelling reasons, as determined by the Agency, exist for 
incurring obligations before grant approval;
    (ii) The obligations will be incurred for authorized grant purposes;
    (iii) All environmental requirements applicable to the Agency and 
the applicant have been met;
    (iv) The applicant has the legal authority to incur the obligations 
at the time proposed, and payment of the debts will remove any basis for 
any mechanic's, material, or other liens that may attach to the grant 
financed property: and
    (v) The expenditure is incurred no more than 18 months before the 
date of the Administrator's approval of the grant award.
    (2) The Agency may authorize payment of approved pre-award project 
construction obligations at the time of award approval. The applicant's 
request and the Agency's authorization

[[Page 67]]

for paying such obligations shall be in writing.



Sec. 1709.11  Award conditions.

    In addition to all other grant requirements, all approved applicants 
will be required to do the following:
    (a) Enter into a grant agreement with the Agency in form and 
substance acceptable to the Agency;
    (b) Request advances or reimbursements, as applicable, as provided 
in the grant agreement; and
    (c) Maintain a financial management system that is acceptable to the 
Agency.



Sec. 1709.12  Reporting requirements.

    To support Agency monitoring of project performance and use of grant 
funds, Grantees shall file periodic reports, required under 7 CFR part 
3015, as provided in this part, and the grant agreement as follows:
    (a) A financial status report listing project expenditures by budget 
category in such form and at such times as provided in the grant 
agreement.
    (b) Project performance reports in such form and at such intervals 
as provided in the grant agreement. The project performance report shall 
compare accomplishments to the objectives stated in the proposal and 
grant agreement. The project performance report should identify all 
completed tasks with supporting documentation. If the project schedule 
as approved in the grant agreement is not being met, the report should 
discuss the problems or delays that may affect completion of the 
project. Objectives for the next reporting period should be listed. 
Compliance with any special condition on the use of award funds should 
be discussed. Reports are due as provided in the grant agreement.
    (c) A final project performance report with supporting documentation 
in such form and at the time specified in the grant agreement.
    (d) Such other reports as the Agency determines are necessary to 
assure effective grant monitoring as part of the grant agreement or the 
grant announcement as a condition of the grant award or advances of 
funds.



Sec. 1709.13  Grant administration.

    The authority to approve administrative actions is vested in the 
Administrator except as otherwise provided in the RUS delegations of 
authority. Administration of RUS grants is governed by the provisions of 
this subpart and subpart B of this part, the terms of the grant 
agreement and, as applicable, the provisions of 7 CFR parts 3015, 3016 
and 3017, or their successors.



Sec. 1709.14  Inspections.

    The grantee will permit periodic inspection of the grant project 
operations by a representative of the Agency.



Sec. 1709.15  Grant closeout.

    Grant closeout is when all required work is completed, 
administrative actions relating to the completion of work and 
expenditure of funds have been accomplished, the final project report 
has been submitted and found acceptable by RUS and RUS accepts final 
expenditure information. No monitoring action by RUS of the grantee is 
required after grant closeout. However, grantees remain responsible in 
accordance with the terms of the grant agreement for compliance with 
conditions on property acquired or derived through grant funds.



Sec. 1709.16  Performance reviews.

    Each grant agreement shall include performance criteria and RUS will 
regularly evaluate the progress and performance of grantee according to 
such criteria. If the grantee does not comply with or does not meet the 
performance criteria set out in the grant agreement, the Administrator 
may require amendment of the grant agreement, or may suspend or 
terminate the grant pursuant to 7 CFR 2015, subpart N.



Sec. 1709.17  Environmental review.

    (a) All grants made under this subpart are subject to the 
requirements of 7 CFR part 1794 or its successor.
    (b) Applicants must address environmental aspects of their projects 
in the grant application in sufficient detail to allow the Agency to 
categorize the project for purposes of compliance with environmental 
review requirements.

[[Page 68]]

The grant announcement will establish the form and content of the 
environmental information required for the application.
    (c) Projects that are selected for grant awards by the Administrator 
will be reviewed by the Agency under 7 CFR part 1794 prior to final 
award approval. The Agency may require the selected applicant to submit 
additional information, including an environmental report, environmental 
assessment, or environmental impact statement, as may be required, 
concerning the proposed project in order to complete the required 
reviews and to develop any project-specific conditions for the final 
grant agreement.



Sec. 1709.18  Civil rights.

    This program will be administered in accordance with applicable 
Federal Civil Rights Law. All grants made under this subpart are subject 
to the requirements of title VI of the Civil Rights Act of 1964, which 
prohibits discrimination on the basis of race, color or national origin. 
In addition, all grants made under this subpart are subject to the 
requirements of section 504 of the Rehabilitation Act of 1973, as 
amended, which prohibits discrimination on the basis of disability; the 
requirements of the Age Discrimination Act of 1975, which prohibits 
discrimination on the basis of age; and title III of the Americans with 
Disabilities Act, which prohibits discrimination on the basis of 
disability by private entities in places of public accommodations. 
Grantees are required to comply with certain regulations on 
nondiscrimination in program services and benefits and on equal 
employment opportunity including 7 CFR parts 15 and 15b; and 45 CFR part 
90, as applicable.



Sec. 1709.19  Other USDA regulations.

    The grant programs under this part are subject to the provisions of 
other departmental regulations, including but not limited to the 
following departmental regulations, or their successors, as applicable:
    (a) 7 CFR part 3015, Uniform Federal Assistance Regulations;
    (b) 7 CFR part 3016, Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments;
    (c) 7 CFR part 3017, Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free Workplace 
(Grants);
    (d) 7 CFR part 3018, New Restrictions on Lobbying;
    (e) 7 CFR part 3019, Uniform Administrative Requirements for Grants 
and Agreements with Institutions of Higher Education, Hospitals and 
Other Non-profit Organizations; and
    (f) 7 CFR part 3052, Audits of States, Local Governments and Non-
profit Organizations.



Sec. 1709.20  Member delegate clause.

    Each grant agreement under this part shall provide that no member of 
Congress shall be admitted to any share or part of a grant program or 
any benefit that may arise there from, but this provision shall not be 
construed to bar as a contractor under a grant a publicly held 
corporation whose ownership might include a member of Congress.



Sec. 1709.21  Audit requirements.

    The grantee shall provide the Agency with an audit for each year, 
beginning with the year in which a portion of the financial assistance 
is expended, in accordance with the following:
    (a) If the grantee is a for-profit entity, an RUS Electric or 
Telecommunication borrower or any other entity not covered by paragraph 
(b) of this section, the recipient shall provide an independent audit 
report in accordance with 7 CFR part 1773, ``Policy on Audits of RUS 
Borrowers'' and the grant agreement.
    (b) If the grantee is a State or local government, or a non-profit 
corporation (other than an RUS Electric or Telecommunication Borrower), 
the recipient shall provide an audit in accordance with 7 CFR part 3052.



Sec. 1709.22  Project changes.

    The Grantee shall obtain prior written approval from the Agency for 
any change to the scope or objectives of the approved grant project.

[[Page 69]]



Secs. 1709.23-1709.99  [Reserved]



Sec. 1709.100  OMB control number.

    The information collection requirements in this part are approved by 
the Office of Management and Budget and assigned OMB control number 
0572-0136.



              Subpart B_RUS High Energy Cost Grant Program



Sec. 1709.101  Purpose.

    This subpart establishes policies and procedures for the Rural 
Utilities Service (RUS) High Energy Cost Grant Program under section 
19(a)(1) of the Rural Electrification Act of 1936, as amended (7 U.S.C. 
918a(a)(1)). The purpose of this grant program is to assure access to 
adequate and reliable energy services for persons in extremely high 
energy cost communities by providing financial assistance to acquire, 
construct, extend, upgrade, and otherwise improve energy generation, 
transmission, or distribution facilities serving the community.



Sec. 1709.102  Policy.

    (a) All high energy cost grants will be awarded competitively 
subject to the limited exceptions in 7 CFR 3015.158(d).
    (b) RUS may give priority consideration to projects that benefit 
smaller rural communities, communities experiencing economic hardship, 
projects that extend service to households that lack reliable 
centralized or commercial energy services, and projects that correct 
imminent hazards to public safety, welfare, the environment or critical 
community energy facilities. RUS may also give priority to projects that 
are coordinated with State rural development initiatives or that serve a 
Federally-identified Empowerment Zone or Enterprise Community (EZ/EC) or 
a USDA-identified ``Champion Community.'' Priority consideration will be 
provided through the award of additional points under the project 
selection criteria as specified in the grant announcement.



Secs. 1709.103-1709.105  [Reserved]



Sec. 1709.106  Eligible applicants.

    (a) Eligible applicants for grants to fund projects serving eligible 
extremely high energy cost communities include Persons, States, 
political subdivisions of States, and other entities organized under the 
laws of States.
    (b) Eligible applicants may be for-profit or non-profit business 
entities including but not limited to corporations, associations, 
partnerships, limited liability partnerships (LLPs), cooperatives, 
trusts, and sole proprietorships.
    (c) Eligible government applicants include State and local 
governments, and agencies and instrumentalities of States and local 
governments.
    (d) Indian tribes, other tribal entities, and Alaska Native 
Corporations are eligible applicants.
    (e) Individuals are also eligible applicants under this program, 
however the proposed grant project must provide community benefits and 
not be for the sole benefit of the individual applicant or an individual 
household.
    (f) As a condition of eligibility, the applicant must demonstrate 
the capacity:
    (1) to enter into a binding grant agreement with the Federal 
Government at the time of the award approval; and
    (2) to carry out the proposed grant project according to its terms.



Sec. 1709.107  Eligible communities.

    (a) An eligible community under this program is one in which the 
average home energy costs exceed 275 percent of the national average 
under one or more high energy cost benchmarks established by RUS based 
on the latest available residential energy information from the Energy 
Information Administration (EIA) of the United States Department of 
Energy. RUS will update the national and high energy cost community 
benchmarks periodically to incorporate any changes in national home 
energy costs reported by EIA. RUS will publish the high energy cost 
community benchmark criteria in the grant announcement. Community 
eligibility will be determined by RUS at the

[[Page 70]]

time of application based on the criteria published in the applicable 
grant announcement.
    (b) The Application must include information demonstrating that each 
community in the grant's proposed target area exceeds one or more of the 
RUS high energy cost community benchmarks to be eligible for assistance 
under this program. The smallest area that may be designated as a target 
area is a 2000 Census block
    (c) The target community may include an extremely high cost to serve 
portion of a larger service area that does not otherwise meet the 
criteria, provided that the applicant can establish that the costs to 
serve the smaller target area exceed the benchmark.
    (d) In determining the community energy costs, applicants may 
include additional revenue sources that lower the rates or out of pocket 
consumer energy costs such as rate averaging, and other Federal, State, 
or private cost contributions or subsidies.
    (e) The applicant may propose a project that will serve high energy 
cost communities across a State or region, but where individual project 
beneficiaries will be selected at a later time. In such cases, to 
establish eligibility, the applicant must provide sufficient information 
in the application to determine that the proposed target area includes 
eligible high energy cost communities and proposed selection criteria to 
assure that grant funds are used to serve eligible communities.



Sec. 1709.108  Supporting data for determining community eligibility.

    The application shall include the following:
    (a) Documentation of energy costs. Documents or references to 
published or other sources for information or data on home energy 
expenditures or equivalent measures used to support eligibility, or 
where such information is unavailable or does not adequately reflect the 
actual cost of average home energy use in a local community, reasonable 
estimates of commercial energy costs.
    (b) Served areas. A comparison of the historical residential energy 
cost or expenditure information for the local commercial energy 
provider(s) serving the target community or target area with the 
benchmark criteria published by the Agency.
    (c) Engineering estimates. Estimates based on engineering standards 
may be used in lieu of historical residential energy costs or 
expenditure information under the following circumstances:
    (1) Where historical community energy cost data are unavailable 
(unserved areas), incomplete or otherwise inadequate;
    (2) Where the target area is not connected to central station 
electric service to a degree comparable with other residential customers 
in the State or region.
    (3) Where historic energy costs do not reflect the costs of 
providing a necessary upgrade or replacement of energy infrastructure 
that would have the effect of raising costs above one or more of the 
Agency benchmarks.
    (d) Independent Agency review. Information to support high energy 
cost eligibility is subject to independent review by the Agency. The 
Agency may reject applications that are not based on credible data 
sources or sound engineering estimates.



Sec. 1709.109  Eligible projects.

    Eligible projects are those that acquire, construct, extend, repair, 
upgrade or otherwise improve energy generation, transmission or 
distribution facilities serving communities with extremely high energy 
costs. All energy generation, transmission and distribution facilities 
and equipment used to provide or improve electricity, natural gas, home 
heating fuels, and other energy services to eligible communities are 
eligible. Projects providing or improving service to communities with 
extremely high energy costs through on-grid and off-grid renewable 
energy technologies, energy efficiency, and energy conservation projects 
and services are eligible. A grant project is eligible if it improves, 
or maintains energy services, or reduces the costs of providing energy 
services to eligible communities. Examples of eligible activities 
include, but are not limited to, the acquisition, construction, 
replacement, repair, or improvement of:
    (a) Electric generation, transmission, and distribution facilities, 
equipment,

[[Page 71]]

and services serving the eligible community;
    (b) Natural gas distribution or storage facilities and associated 
equipment and activities serving the eligible community;
    (c) Petroleum product storage and handling facilities serving 
residential or community use.
    (d) Renewable energy facilities used for on-grid or off-grid 
electric power generation, water or space heating, or process heating 
and power for the eligible community;
    (e) Backup up or emergency power generation or energy storage 
equipment, including distributed generation, to serve the eligible 
community; and
    (f) Implementation of cost-effective energy efficiency, energy 
conservation measures that are part of the implementation of a 
coordinated demand management or energy conservation program for the 
eligible community, such as, for example, weatherization of residences 
and community facilities, or acquisition and installation of energy-
efficient or energy saving appliances and devices .



Sec. 1709.110  Use of grant funds.

    (a) Project development costs. Grants may be used to fund the costs 
and activities associated with the development of an eligible energy 
project. RUS will in no case approve the use of grant funds to be used 
solely or primarily for project development costs. Eligible project 
development costs must be reasonable and directly related to the project 
and may include the following:
    (1) Costs of conducting, or hiring a qualified consultant to 
conduct, a feasibility analysis of the proposed project to help 
establish the financial and technical sustainability of the project, 
provided that such costs do not exceed more than 10 percent of total 
project costs;
    (2) Design and engineering costs, including costs of environmental 
and cultural surveys and consulting services necessary to the project 
and associated environmental review, siting and permit approvals; and
    (3) Fees for legal and other professional services directly related 
to the project.
    (b) Construction costs. Grant funds may be used for the reasonable 
costs of construction activities, including initial construction, 
installation, expansion, extension, repair, upgrades, and related 
activities, including the rental or lease of necessary equipment, to 
provide or improve energy generation, transmission, or distribution 
facilities or services;
    (c) Acquisitions and purchase. Grant funds may be used for the 
acquisition of property, equipment, and materials, including the 
purchase of equipment, and materials, the acquisition or leasing of real 
or personal property, equipment, and vehicles associated with and 
necessary for project development, construction, and operation. Grant 
funds may be used for the acquisition of new or existing facilities or 
systems where such action is a cost-effective means to extend or 
maintain service to an eligible community or reduces the costs of such 
service for the primary benefit of community residents.
    (d) Grantee cost contributions. Grant funds may be applied as 
matching funds or cost contributions under Federal or other programs 
where the terms of those programs so allow use of other Federal funds.



Sec. 1709.111  Limitations on use of grant funds.

    (a) Planning and administrative costs. Not more than 4 percent of 
each grant award may be used for the planning and administrative 
expenses of the applicant that are unrelated to the grant project.
    (b) Unproven technology. Only projects that utilize technology with 
a proven operating history, and for which there is an established 
industry for the design, installation, and service (including spare 
parts) of the equipment, are eligible for funding. Energy projects 
utilizing experimental, developmental, or prototype technologies or 
technology demonstrations are not eligible for grant funds. The 
determination by RUS that a project relies on unproven technology shall 
be final.



Sec. 1709.112  Ineligible grant purposes.

    (a) Grant funds may not be used for the costs of preparing the grant 
application, finders fees, fuel purchases,

[[Page 72]]

routine maintenance or other operating costs, or purchase of equipment, 
structures or real property not directly associated with providing 
energy services in the target community, or, except as provided in 
Sec. 1709.11(d), project construction costs incurred prior to the date 
of the grant award.
    (b) In general, grant funds may not be used to support projects that 
primarily benefit areas outside of eligible target communities. However, 
grant funds may be used to finance an eligible target community's 
proportionate share of a larger energy project.
    (c) Grant funds may not be used to refinance or repay the 
applicant's outstanding loans or loan guarantees under the Rural 
Electrification Act of 1936, as amended.



Sec. 1709.113  Limitations on grant awards.

    (a) The Administrator may establish minimum or maximum amount of 
funds that may be awarded in a single grant application within in any 
grant cycle in order to distribute available grant funds as broadly as 
possible. If the Administrator elects to impose a minimum or maximum 
grant amount, the limitations will be published in the grant 
announcement.
    (b) The Administrator may restrict eligible applicants to a single 
award of grant funds or to a monetary cap on grant awards within a grant 
cycle in order to assure that the available grant funds are distributed 
as broadly as possible. If the Administrator elects to impose a limit or 
cap on grant awards, the terms will be established in the grant 
announcement.



Sec. 1709.114  Application process.

    The RUS will request applications for high energy cost grants on a 
competitive basis by publication of a grant announcement as a Notice of 
Funds Availability (NOFA) or Notice of Funding Opportunity. The grant 
announcement will establish the amount of funds available, the 
application package contents and additional requirements, the 
availability of application materials, high energy cost community 
eligibility benchmarks, selection criteria and weights, priority 
considerations, and deadlines and procedures for submitting 
applications.



Sec. 1709.115  Availability of application materials.

    Application materials, including copies of the grant announcement 
and all required forms and certifications will be available by request 
from the Agency and by such other means as the Agency may determine. In 
addition, the Agency may make available an application guide and other 
materials that may be of assistance to prospective applicants.



Sec. 1709.116  Application package.

    The requirements for the application package will be established in 
the grant announcement. A complete application package will consist of 
the standard application for federal assistance (SF-424 series), as 
applicable, a narrative project proposal prepared in accordance with the 
grant announcement, an RUS environmental profile, and such other 
supporting documentation, forms, and certifications as required in the 
grant announcement and this part.



Sec. 1709.117  Application requirements.

    (a) Required forms. The forms required for application and where to 
obtain them will be specified in the announcement. All required forms 
must be completed, signed and submitted by a person authorized to submit 
the proposal on behalf of the applicant. For applications and forms that 
are submitted electronically, the application must be authenticated as 
provided in the grant announcement. In the case of grant applications 
submitted electronically, the applicant may be required to provide 
signed originals of required forms prior to and as a condition of the 
grant award.
    (b) Narrative proposal. Each application must include a narrative 
proposal describing the proposed project and addressing eligibility and 
selection criteria. The grant announcement will specify the contents, 
order, and format for the narrative proposal. The proposal must include 
all the required elements identified in this subsection. The grant 
announcement may establish additional required elements that

[[Page 73]]

must be addressed in the narrative project proposal.
    (1) Executive summary. A summary of the proposal should briefly 
describe the project including target community, goals, tasks to be 
completed and other relevant information that provides a general 
overview of the project. The applicant must clearly state the amount of 
grant funds requested and identify any priority ratings for which the 
applicant believes it is qualified.
    (2) Applicant eligibility. The narrative and supporting 
documentation must describe the applicant and establish its eligibility.
    (3) Community eligibility. This section must describe the target 
area and communities to be served by the project and demonstrate 
eligibility. The applicant must clearly identify the:
    (i) Location and population of the areas to be served by the 
project;
    (ii) Population of the local government division to which they 
belong;
    (iii) Identity of local energy providers; and
    (iv) Sources of the high energy cost data and estimates used.
    (4) Project eligibility. The narrative must describe the proposed 
project in sufficient detail to establish that it is an eligible 
project.
    (5) Project description. The project description must:
    (i) Describe the project design, materials, and equipment in 
sufficient detail to support a finding of technical feasibility;
    (ii) Identify the major tasks to be performed and a proposed 
timeline for completion of each task; and
    (iii) Identify the location of the project target area and the 
eligible extremely high energy cost communities to be served.
    (6) Project management. The applicant must describe how and by whom 
the project will be managed during construction and operation. The 
description should address the applicant's organizational structure, key 
project personnel and the degree to which full time employees, 
affiliated entities or contractors will be utilized. The applicant must 
describe the identities, legal relationship, qualifications and 
experience of those persons that will perform project management 
functions. If the applicant proposes to use the equipment or design, 
construction and other services from non-affiliated entities, the 
applicant must describe how it plans to contract for such equipment or 
services.
    (7) Budget. The budget narrative must present a detailed breakdown 
of all estimated costs and allocate these costs among the listed tasks 
in the work plan. All project costs, not just grant funds, must be 
accounted for in the budget. A pro forma operating budget for the first 
year of operations must also be included. The detailed budget 
description must be accompanied by SF-424A, ``Budget Information--Non-
Construction Programs,'' or SF-424C ``Budget Information--Construction 
Programs,'' as applicable.
    (8) Project goals and objectives. The applicant must identify 
unambiguous measures for expected cost reduction, efficiencies or other 
improvements and the degree to which the incremental benefit will be 
enjoyed by residents of the eligible community. The description should 
specifically address how the project will provide or improve energy 
generation, transmission or distribution services in the target area. 
The project objectives and proposed evaluation measures will be the 
basis for project performance measures in the grant agreement.
    (9) Performance measures. The application must include specific 
criteria for measuring project performance. These proposed criteria will 
be used in establishing performance measures incorporated in the grant 
agreement in the event the proposal receives funding under this subpart. 
These suggested criteria are not binding on the Agency. Appropriate 
measures of project performance include expected reductions in home 
energy costs, avoided cost increases, enhanced reliability, new 
households served, or economic and social benefits from improvements in 
energy services.
    (10) Proposal evaluation and selection criteria. The application 
must address individually and in narrative form each of the proposal 
evaluation and selection criteria referenced in the grant announcement.
    (11) Rural development initiatives. The proposal should describe 
whether and

[[Page 74]]

how the proposed project will support any State rural development 
initiatives. If the project is in support of a rural development 
initiative, the application should include confirming documentation from 
the appropriate rural development agency. The application must identify 
the extent to which the project is dependent upon or tied to other rural 
development initiatives, funding and approvals.
    (12) Environmental profile. The application must include information 
about project characteristics and site specific conditions that may 
involve environmental, historic preservation and other resource issues. 
This information must be presented in sufficient detail so as to 
facilitate the Agency's identification of projects that may require 
additional environmental review under 7 CFR part 1794 before a grant 
award can be approved. The format and requirements for the environmental 
profile will be established in the grant announcement.
    (13) Regulatory and other required project approvals. The applicant 
must identify all regulatory or other approvals required by other 
Federal, State, local, tribal or private entities (including conditions 
precedent to financing) that are necessary to carry out the proposed 
project and an estimated schedule for obtaining the necessary permits 
and approvals.



Sec. 1709.118  Submission of applications.

    Unless otherwise provided in the grant announcement, a complete 
original application package and two copies must be submitted by the 
application deadline to RUS at the address specified in the applicable 
announcement. Instructions for submittal of applications electronically 
will be established in the grant announcement.



Sec. 1709.119  Review of applications.

    (a) RUS will review each application package received to determine 
whether the applicant is eligible and whether the application is timely, 
complete, and responsive to the requirements set forth in the grant 
announcement.
    (b) RUS may, at its discretion, contact the applicant to clarify or 
supplement information in the application needed to determine 
eligibility, identifying information, and grant requests to allow for 
informed review. Failure of the applicant to provide such information in 
response to a written request by the Agency within the time frame 
established by the Agency may result in rejection of the application.
    (c) After consideration of the information submitted, the Assistant 
Administrator, Electric Program will determine whether an applicant or 
project is eligible and whether an application is timely, complete, and 
responsive to the grant announcement and shall notify the applicant in 
writing. The Assistant Administrator's decision on eligibility may be 
appealed to the Administrator.



Sec. 1709.120  Evaluation of applications.

    (a) The Agency will establish one or more rating panels to review 
and rate the grant applications. The panels may include persons not 
employed by the Agency.
    (b) All timely and complete applications that meet the eligibility 
requirements will be referred to the rating panel. The rating panel will 
evaluate and rate all referred applications according to the evaluation 
criteria and weights established in the grant announcement. Panel 
members may make recommendations for conditions on grant awards to 
promote successful performance of the grant or to assure compliance with 
other Federal requirements.
    (c) After the rating panel has evaluated and scored all proposals, 
in accordance with the point allocation specified in the grant 
announcement, the panel will prepare a list of all applications in rank 
order, together with funding level recommendations and recommendations 
for conditions, if any.
    (d) The list of ranked projects and rating panel recommendations 
will be forwarded to the Administrator for review and selection.



Sec. 1709.121  Administrator's review and selection of grant awards.

    (a) The final decision to make an award is at the discretion of the 
Administrator. The Administrator shall make any selections of finalists 
for grant awards after consideration of the

[[Page 75]]

applications, the rankings, comments, and recommendations of the rating 
panel, and other pertinent information.
    (b) Based on consideration of the application materials, ranking 
panel ratings, comments, and recommendations, and other pertinent 
information, the Administrator may elect to award less than the full 
amount of grant requested by an applicant. Applicants will be notified 
of an offer of a reduced or partial award. If an applicant does not 
accept the Administrator's offer of a reduced or partial award, the 
Administrator may reject the application and offer an award to the next 
highest ranking project.
    (c) The projects selected by the Administrator will be funded in 
rank order to the extent of available funds.
    (d) In the event an insufficient number of eligible applications are 
received in response to a published grant announcement and selected for 
funding to exhaust the funds available, the Administrator reserves the 
discretion to reopen the application period and to accept additional 
applications for consideration under the terms of the grant 
announcement. A notice regarding the reopening of an application period 
will be published in the Federal Register.



Sec. 1709.122  Consideration of eligible grant applications under 
later grant announcements.

    At the discretion of the Administrator, the grant announcement may 
provide that all eligible but unfunded proposals submitted under 
preceding competitive grant announcements may also be considered for 
funding. This option is provided to reduce the burden on applicants and 
the Agency. The grant announcement shall indicate how applicants may 
request reconsideration of previously submitted, but unfunded, 
applications and how they may supplement their applications.



Sec. 1709.123  Evaluation criteria and weights.

    (a) Establishing evaluation criteria and weights. The grant 
announcement will establish the evaluation criteria and weights to be 
used in ranking the grant proposals submitted. Unless supplemented in 
the grant announcement, the criteria listed in this section will be used 
to evaluate proposals submitted under this program. Additional criteria 
may be included in the grant announcement. In establishing evaluation 
criteria and weights, the total points that may be awarded for project 
design and technical merit criteria shall not be less than 65 percent of 
the total available points, and the total points awarded for priority 
criteria shall not be more than 35 percent of the total available 
points. The distribution of points to be awarded per criterion will be 
identified in the grant announcement.
    (b) Project design and technical merit. In reviewing the grant 
proposal's project design and technical merit, reviewers will consider 
the soundness of the applicant's approach, the project's technical and 
financial feasibility, the adequacy of financial and other resources, 
the capabilities and experience of the applicant and its project 
management team, the project goals, and identified community needs and 
benefits. Points will be awarded under the following project elements:
    (1) Comprehensiveness and feasibility. Reviewers will assess the 
technical and economic feasibility of the project and how well its goals 
and objectives address the challenges of the eligible communities. The 
panel will review the proposed design, construction, equipment and 
materials for the proposed energy facilities to determine technical 
feasibility. Reviewers may propose additional conditions on the grant 
award to assure that the project is technically sound. Budgets will be 
reviewed for completeness and the strength of non-Federal funding 
commitments. Points may not be awarded unless sufficient detail is 
provided to determine whether or not funds are being used for qualified 
purposes. Reviewers will consider the adequacy of the applicant's budget 
and resources to carry out the project as proposed. Reviewers will also 
evaluate how the applicant proposes to manage available resources such 
as grant funds, income generated from the facilities and any other 
financing sources to maintain and operate a financially viable project 
once the grant period has ended. Reviewers must make a finding of 
operational sustainability for any points to

[[Page 76]]

be awarded. Projects for which future grant funding is likely to be 
required in order to assure ongoing operations will not receive any 
points.
    (2) Demonstrated experience. Reviewers will consider whether the 
applicant or its project team have demonstrated experience in 
successfully administering and carrying out projects that are comparable 
to that proposed in the application. The reviewers may assign a higher 
point score to proposals that develop the internal capacity to provide 
or improve energy services in the eligible communities over other 
proposals that rely extensively on temporary outside contractors.
    (3) Community needs. Reviewers will consider the applicant's 
assessment of community energy needs to be addressed by the proposed 
project as well as the severity of physical and economic challenges 
affecting the target communities. In determining whether one proposal 
should receive more points than another under this criterion, reviewers 
will consider the relative burdens placed on the communities and 
individual households by extremely high energy costs, the hardships 
created by limited access to reliable and affordable energy services and 
the availability of other resources to support or supplement the 
proposed grant funding.
    (4) Project evaluation and performance measures. Reviewers will 
consider the applicant's suggested project evaluation and performance 
criteria. Reviewers may award higher points to criteria that are 
quantifiable, directly relevant to project goals, and reflect serious 
consideration than to more subjective performance criteria that do not 
incorporate variables that reflect a reduction in energy cost or 
improvement in service.
    (5) Coordination with rural development initiatives. Proposals that 
include documentation confirming coordination with State rural 
development initiatives may be credited points for this criterion.
    (c) Priority considerations. Subject to the limitation in paragraph 
(a) of this section, evaluation points may also be awarded for projects 
that advance identified priority interests identified in the grant 
announcement to assist the Agency in selecting among competing projects 
when the amount of funding requests exceed available funds. The grant 
announcement may incorporate all or some of the priority criteria listed 
below, and as discussed in paragraph (a) of this section, the grant 
announcement may supplement these criteria. The announcement will also 
specify the points that will be awarded to qualifying applications under 
these priority criteria.
    (1) Community economic hardship. Economic hardship points may be 
awarded where the median household income for the target community is 
significantly below the State average or where the target community 
suffers from economic conditions that severely constrain its ability to 
provide or improve energy facilities serving the community. Applicants 
must describe in detail and document conditions creating severe 
community economic hardship in the proposal.
    (2) Rurality. Priority consideration may be given to proposals that 
serve smaller rural communities. Applications will be scored based on 
the population of the largest incorporated cities, towns or villages or 
census designated places included within the grant's proposed target 
area as determined using the latest available population figures from 
the U.S. Census Bureau.
    (3) Unserved energy needs. Points may be awarded to projects that 
extend or improve electric or other energy services to eligible 
communities or areas of eligible communities that do not have reliable 
centralized or commercial service.
    (4) Imminent hazard. Additional points may be awarded for projects 
that correct a condition posing an imminent hazard to public safety, 
public welfare, the environment, or to a critical community or 
residential energy facility in immediate danger of failure because of a 
deteriorated condition, capacity limitation, or damage from a natural 
disaster or accident.
    (5) Cost sharing. Projects that evidence significant commitments of 
funds, contributed property, equipment, or other in kind support for the 
project may be awarded additional

[[Page 77]]

points for this criterion where the aggregate value of these 
contributions exceed ten percent of total eligible project costs.



Sec. 1709.124  Grant award procedures.

    (a) Notification of applicants. The Agency will notify all 
applicants in writing whether they have been selected for a grant award. 
Applicants that have been selected as finalists for a competitive grant 
award will be notified in writing of their selection and advised that 
the Agency may request additional information in order to complete the 
required environmental review under 7 CFR 1794 and to meet other pre-
award conditions.
    (b) Letter of conditions. The Agency will notify each applicant 
selected as a finalist in writing setting out the amount of grant funds 
and the terms and conditions under which the grant will be made and 
requesting that the applicant indicate in writing its intent to accept 
these conditions.
    (c) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the selected 
applicant must notify the agency in writing within the time period 
indicated, of its acceptance of the conditions, or if the proposed 
certain conditions cannot be met, the applicant must so advise the 
Agency and may propose alternate conditions. The Agency must concur with 
any changes proposed to the letter of conditions by the applicant before 
the application will be further processed.
    (d) Grant agreement. The Agency and the grantee must sign a grant 
agreement acceptable to the Agency prior to the advance of funds.



Secs. 1709.125-1709.200  [Reserved]



            Subpart C_Bulk Fuel Revolving Fund Grant Program



Sec. 1709.201  Purpose.

    This subpart establishes policies and procedures for the Rural 
Utilities Service (RUS) State Bulk Fuel Revolving Fund Grants. The 
purpose of this grant program is to assist State entities in 
establishing and supporting a revolving fund to provide a more cost-
effective means of purchasing fuel for communities where the fuel cannot 
be shipped by means of surface transportation.



Sec. 1709.202  [Reserved]



Sec. 1709.203  Definitions.

    As used in this subpart, the following definitions apply:
    Eligible area means any area that is primarily dependent on delivery 
of fuel by water or air for a significant part of the year and where 
fuel cannot be shipped routinely by means of surface transportation 
either because of absolute physical constraints or because surface 
transportation is not practical or is prohibitively expensive.
    Fuel means oil, diesel fuel, gasoline and other petroleum products, 
coal, and any other material that can be burned to make energy.
    State entity means a department, agency, or instrumentality of any 
State.
    Surface transportation means transportation by road, rail or 
pipeline.



Secs. 1709.204-1709.206  [Reserved]



Sec. 1709.207  Eligible applicants.

    Eligible applicants are restricted to State entities in existence as 
of November 9, 2000. Eligible State entities may partner with other 
entities, including other government agencies, in carrying out the 
programs funded by this program. Each applicant must demonstrate that it 
has the authority to enter into a binding agreement with the Federal 
Government to carry out the grant activities.



Sec. 1709.208  Use of grant funds.

    Grant funds must be used to establish and support a revolving loan 
fund that facilitates cost effective fuel purchases for persons, 
communities, and businesses in eligible areas. Where a recipient State 
entity's existing program is authorized to fund multiple purposes, grant 
funds may only be used to the extent the recipient fund finances 
eligible activities.



Sec. 1709.209  Limitations on use of grant funds.

    Not more than 4 percent of the grant award may be used for the 
planning

[[Page 78]]

and administrative expenses of the grantee.



Sec. 1709.210  Application process.

    (a) Applications. The Agency will solicit applications on a 
competitive basis by publication of a grant announcement establishing 
the amount of funds available, the maximum grant award, the required 
application materials and where to obtain them, the evaluation and 
selection criteria and weights, and application deadlines. Unless 
otherwise specified in the announcement, applicants must file an 
original application package and two copies. Where provided in the grant 
announcement, applicants may submit electronic applications.
    (b) Required forms. The grant application will use the Standard 
Application for Federal Assistance (SF-424 series or its successor) and 
other forms as provided in the grant announcement. The required forms 
must be completed, signed and submitted by a person authorized to submit 
the proposal on behalf of the applicants. Where provided in the grant 
announcement, applicants may file electronic versions of the forms in 
compliance with the instructions in the grant announcement.
    (c) Narrative proposal and required elements. Each grant application 
must include a narrative proposal describing the project and addressing 
the following elements. The form, contents, and order of the narrative 
proposal will be specified in the grant announcement. Additional 
elements may be published in the applicable grant announcement.
    (1) Executive summary. This summary of the proposal must identify 
the State entity applying for the grant and the key agency contact 
information (telephone and fax numbers, mailing address and e-mail 
address). The applicant must clearly state the amount requested in this 
section. It should briefly describe the program, including the estimated 
number of potential beneficiaries in eligible areas, their estimated 
fuel needs, the projects and activities to be financed through the 
revolving fund and how the projects and activities will improve the cost 
effectiveness of fuel procured.
    (2) Applicant eligibility. The application must establish that the 
applicant is a State entity that was in existence as of November 9, 
2000, and has the legal authority to enter into a financial assistance 
relationship with the Federal Government to carry out the grant 
activities.
    (3) Assessment of needs and potential beneficiaries. The application 
must provide estimates of the number, location and population of 
potentially eligible areas in the State and their estimated fuel needs 
and costs. The section must also describe the criteria used to identify 
eligible areas, including the characteristics that make fuel deliveries 
by surface transport impossible or impracticable. The description of 
beneficiary communities should provide a detailed breakdown of the 
density profile of the area to be served by eligible projects. Indicate 
to what extent persons in eligible areas live outside of communities of 
2,500 persons or more, communities of 5,000 or more or outside of 
communities of 20,000 or more. All population estimates should be based 
on Census Bureau data where available. All representations should be 
supported with exhibits such as maps, summary tables and references to 
official information sources.
    (4) Project description. The application must:
    (i) Describe the legal structure and staffing of the revolving fund 
proposal for fuel purchase support.
    (ii) Identify the objectives of the project, the proposed criteria 
for establishing project funding eligibility and how the project is to 
be staffed, managed and financed.
    (iii) Describe how the potential beneficiaries will be informed of 
the availability of revolving fund benefits to them.
    (iv) Explain how the proposed revolving fund program will help 
provide a more cost-effective means of meeting fuel supply needs in 
eligible areas, encourage the adoption of financially sustainable energy 
practices, the adequate planning and investment in bulk fuel facility 
operations and maintenance and cost-effective investments in energy 
efficiency.

[[Page 79]]

    (v) If the revolving fund program is not yet operational, a proposed 
implementation schedule and milestones should be provided.
    (5) Demonstrated experience. The application shall describe past 
accomplishments and experiences that are relevant to determine whether 
the applicant is capable of administering the grant project.
    (6) Budget. The application must include a pro forma operating 
budget for the proposed fund and a description of all funding sources. 
The level of detail must be sufficient for reviewers to determine that 
grant funds will be used only for eligible purposes and to determine the 
extent to which the program is entirely dependent on grant funding or 
whether it has financial support from the State or other sources.
    (7) Performance measures and project evaluation. The application 
must provide unambiguous and quantifiable measures that will be used to 
evaluate the success and cost-effectiveness of the revolving fund in 
assuring adequate fuel supplies for eligible communities and for 
assessing the fuel supply projects financed. The grant announcement may 
establish additional required elements that must be addressed in the 
narrative proposal of the application package.



Sec. 1709.211  Submission of applications.

    Completed applications must be submitted to RUS at the address 
specified in the grant announcement on or before the deadline specified 
in the grant announcement. Instructions for submittal of applications 
electronically will be established in the grant announcement. Late 
applications will be rejected.



Sec. 1709.212  Application review.

    The Agency will review all applications to determine whether the 
applicant is eligible and whether the application is timely, complete 
and sufficiently responsive to the requirements set forth in the grant 
announcement to allow for an informed review. Failure to address any of 
the required evaluation criteria or to submit all required forms will 
disqualify the proposal. The Agency reserves the right to contact the 
applicant to clarify information contained in the proposal to resolve 
issues related to eligibility and the grant request. Applications that 
are timely, complete, and responsive will be forwarded for further 
evaluation. Applications that are late, incomplete, or non-responsive 
will be rejected.



Sec. 1709.213  Evaluation of applications.

    (a) The Agency will establish one or more rating panels to review 
and rate the grant applications. The panels may include persons not 
employed by the Agency.
    (b) The rating panel will evaluate and rate all complete 
applications that meet the eligibility requirements according to the 
evaluation and selection criteria and weights established in the grant 
announcement. Panel members may make recommendations for conditions on 
grant awards to promote successful performance of the grant or to assure 
compliance with other Federal requirements.
    (c) After all proposals have been evaluated and scored, the 
proposals, the rankings, recommendations, and comments of the rating 
panel will be forwarded to the Administrator.



Sec. 1709.214  Administrator's review and selection of grant awards.

    (a) The final decision to make a grant award is at the discretion of 
the Administrator. The Administrator shall consider the applications, 
the ranking, comments, and recommendations of the rating panel, and any 
other pertinent information before making a decision about which, if 
any, applications to approve, the amount of funds awarded, and the order 
of approval. The Administrator reserves the right not to make any awards 
from the applications submitted. When the Administrator decides not to 
make any awards, the Administrator shall document in writing the reason 
for the decision.
    (b) Decisions on grant awards will be made by the Administrator 
after consideration of the applications, the rankings and 
recommendations of the rating panel. The Administrator may elect to 
award less than the full amount of grant requested by an applicant.

[[Page 80]]

    (c) The applications selected by the Administrator will be funded in 
rank order to the extent of available funds.



Sec. 1709.215  Consideration of unfunded applications under later
grant announcements.

    The grant announcement may provide that all eligible but unfunded 
proposals submitted under preceding announcements may also be considered 
for funding. The announcement shall describe whether and how prior 
applicants may request reconsideration and supplement their application 
material.



Sec. 1709.216  Evaluation criteria and weights.

    Unless supplemented in the grant announcement, the criteria listed 
in this section will be used to evaluate proposals submitted under this 
program. The total points available and the distribution of points to be 
awarded per criterion will be identified in the grant announcement.
    (a) Program Design. Reviewers will consider the financial viability 
of the applicant's revolving fund program design, the proposed criteria 
for establishing eligible projects and borrowers, and how the program 
will improve the cost effectiveness of bulk fuel purchases in eligible 
areas. Programs demonstrating a strong design and the ability to improve 
cost effectiveness will receive more points than applications that are 
less detailed.
    (b) Assessment of needs. Reviewers will award more points to 
programs that serve or give priority to assisting more costly areas than 
those that serve populations that suffer from less severe physical and 
economic challenges.
    (c) Program evaluation and performance measures. Reviewers may award 
more points to performance measures that are relevant to the project 
objective and quantifiable than to performance measures that are more 
subjective and do not incorporate variables that reflect a reduction in 
fuel cost or improvement in service.
    (d) Demonstrated experience. Applicants may be awarded points for 
relevant experience in administering revolving fund or other comparable 
programs.
    (e) Rurality. Reviewers may award more points to proposals that give 
priority in access to funds to communities with low population density 
or that are located in remote eligible areas than to proposals that 
serve eligible, but less remote and higher population density 
communities.
    (f) Cost sharing. Although cost-sharing is not required under this 
program, projects that evidence significant funding or contributed 
property, equipment or other in kind support for the project may be 
awarded points for this criterion where the aggregate value of these 
contributions exceed 25 percent of the annual funding operations.
    (g) Additional priority considerations. The grant announcement may 
provide for additional points to be awarded to projects that advance 
identified Agency priority interests under this program.



Sec. 1709.217  Grant award.

    (a) Notification of applicants. The Agency will notify all 
applicants in writing whether or not they have been selected for a grant 
award.
    (b) Letter of conditions. The Agency will notify a selected 
applicant in writing, setting out the amount of grant approved and the 
conditions under which the grant will be made.
    (c) Applicant's intent to meet conditions. Upon reviewing the 
conditions and requirements in the letter of conditions, the selected 
applicant must complete, sign and return the Agency's ``Letter of Intent 
to Meet Conditions,'' or, if certain conditions cannot be met, the 
applicant may propose alternate conditions to the Agency. The Agency 
must concur with any changes proposed to the letter of conditions by the 
applicant before the application will be further processed.
    (d) Grant agreement. The Agency and the grantee must execute a grant 
agreement acceptable to the Agency prior to the advance of funds.



Secs. 1709.218-1709.300  [Reserved]

Subparts D-F [Reserved]

[[Page 81]]



    Subpart G_Recovery of Financial Assistance Used for Unauthorized 
                                Purposes



Sec. 1709.601  Policy.

    This subpart prescribes the policies of the Rural Utilities Service 
(RUS) when it is subsequently determined that the recipient of an 
Assistance to High Energy Cost Rural Communities program loan or grant 
was not eligible for all or part of the financial assistance received or 
that the assistance received was used for unauthorized purposes. It is 
the policy of the Agency that when assistance under this part has been 
received by an ineligible recipient or used for unauthorized purposes 
the Agency shall initiate appropriate actions to recover from the 
recipient the sum that is determined to be ineligible or used for 
unauthorized purposes, regardless of amount, unless any applicable 
statute of limitation has expired. The Agency shall make full use of 
available authority and procedures, including but not limited to those 
available under 7 CFR part 3015, subpart N.



Secs. 1709.602-1709.999  [Reserved]



PART 1710_GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO ELECTRIC
LOANS AND GUARANTEES--Table of Contents



                            Subpart A_General

Sec.
1710.1  General statement.
1710.2  Definitions and rules of construction.
1710.3  Form and bulletin revisions.
1710.4  Exception authority.
1710.5  Availability of forms.
1710.6  Applicability of certain provisions to completed loan 
          applications.
1710.7-1710.49  [Reserved]

              Subpart B_Types of Loans and Loan Guarantees

1710.50  Insured loans.
1710.51  Direct loans.
1710.52  Loan guarantees.
1710.53-1710.99  [Reserved]

               Subpart C_Loan Purposes and Basic Policies

1710.100  General.
1710.101  Types of eligible borrowers.
1710.102  Borrower eligibility for different types of loans.
1710.103  Area coverage.
1710.104  Service to non-RE Act beneficiaries.
1710.105  State regulatory approvals.
1710.106  Uses of loan funds.
1710.107  Amount lent for acquisitions.
1710.108  Mergers and consolidations.
1710.109  Reimbursement of general funds and interim financing.
1710.110  Supplemental financing.
1710.111  Refinancing.
1710.112  Loan feasibility.
1710.113  Loan security.
1710.114  TIER, DSC, OTIER and ODSC requirements.
1710.115  Final maturity.
1710.116  [Reserved]
1710.117  Environmental considerations.
1710.118  [Reserved]
1710.119  Loan processing priorities.
1710.120  Construction standards and contracting.
1710.121  Insurance requirements.
1710.122  Equal opportunity and nondiscrimination.
1710.123  Debarment and suspension.
1710.124  Uniform Relocation Act.
1710.125  Restrictions on lobbying.
1710.126  Federal debt delinquency.
1710.127  Drug free workplace.
1710.128-1710.149  [Reserved]

             Subpart D_Basic Requirements for Loan Approval

1710.150  General.
1710.151  Required findings for all loans.
1710.152  Primary support documents.
1710.153  Additional requirements and procedures.
1710.154-1710.199  [Reserved]

                        Subpart E_Load Forecasts

1710.200  Purpose.
1710.201  General.
1710.202  Requirement to prepare a load forecast-power supply borrowers.
1710.203  Requirement to prepare a load forecast-distribution borrowers.
1710.204  Filing requirements for borrowers that must maintain a current 
          RUS approved load forecast on an ongoing basis.
1710.205  Minimum requirements for all borrower load forecasts.
1710.206  Requirements for load forecasts prepared pursuant to RUS 
          approved load forecast work plans.
1710.207  RUS approval criteria for approval of load forecasts by 
          distribution borrowers not required to maintain a current load 
          forecast on an ongoing basis.

[[Page 82]]

1710.208  RUS approval criteria for load forecasts submitted by all 
          power supply borrowers and by distribution borrowers required 
          to maintain a current load forecast on an ongoing basis.
1710.209  Requirements for load forecast work plans.
1710.210  Waiver of requirements or approval criteria.
1710.211-1710.249  [Reserved]

          Subpart F_Construction Work Plans and Related Studies

1710.250  General.
1710.251  Construction work plans--distribution borrowers.
1710.252  Construction work plans--power supply borrowers.
1710.253  Engineering and cost studies--addition of generation capacity.
1710.254  Alternative sources of power.
1710.255  Energy efficiency work plans--energy efficiency borrowers.
1710.256-1710.299  [Reserved]

                Subpart G_Long-Range Financial Forecasts

1710.300  General.
1710.301  Financial forecasts--distribution borrowers.
1710.302  Financial forecasts--power supply borrowers.
1710.303  Power cost studies--power supply borrowers.
1710.304-1710.349  [Reserved]

        Subpart H_Energy Efficiency and Conservation Loan Program

1710.400  Purpose.
1710.401  RUS policy.
1710.402  Scope.
1710.403  General.
1710.404  Definitions.
1710.405  Eligible energy efficiency and conservation programs.
1710.406  Eligible activities and investments.
1710.407  Business plan.
1710.408  Quality assurance plan.
1710.409  Loan provisions.
1710.410  Application documents.
1710.411  Analytical support documentation.
1710.412  Borrower accounting methods, management reporting, and audits.
1710.413  Compliance with other laws and regulations.
1710.414-1710.499  [Reserved]

   Subpart I_Application Requirements and Procedures for Insured and 
                            Guaranteed Loans

1710.400  Initial contact.
1710.401  Loan application documents.
1710.402-1710.403  [Reserved]
1710.404  Additional requirements.
1710.405  Supplemental financing documents.
1710.406  Loan approval.
1710.407  Loan documents.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

    Source: 57 FR 1053, Jan. 9, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 1710.1  General statement.

    (a) 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.
    (b) Additional pre-loan policies, procedures, and requirements that 
apply specifically to guaranteed and/or insured loans are set forth 
elsewhere:
    (1) For guaranteed loans in 7 CFR part 1712 and RUS Bulletins 20-22, 
60-10, 86-3, 105-5, and 111-3, or the successors to these bulletins; and
    (2) For insured loans in 7 CFR part 1714 and in RUS Bulletins 60-10, 
86-3, 105-5, and 111-3, or the successors to these bulletins.
    (c) This part supersedes those portions of the following RUS 
Bulletins and supplements that are in conflict.

20-5  Extensions of Payments of Principal and Interest
20-20  Deferment of Principal Repayments for Investment in Supplemental 
Lending Institutions
20-22  Guarantee of Loans for Bulk Power Supply Facilities
20-23  Section 12 Extensions for Energy Resources Conservation Loans
60-10  Construction Work Plans, Electric Distribution Systems
86-3  Headquarters Facilities for Electric Borrowers
105-5  Financial Forecast-Electric Distribution Systems
111-3  Power Supply Surveys
120-1  Development, Approval, and Use of Power Requirements Studies

    (d) When parts 1710, 1712, and 1714 are published in final form, the 
bulletins cited in paragraph (b) of this section will be rescinded, in 
whole or in part, or revised.

[57 FR 1053, Jan. 9, 1992, as amended at 58 FR 66262, Dec. 20, 1993]

[[Page 83]]



Sec. 1710.2  Definitions and rules of construction.

    (a) Definitions. For the purpose of this part, the following terms 
shall have the following meanings:
    Administrator means the Administrator of RUS or his or her designee.
    Approved load forecast means a load forecast that RUS has determined 
is current for RUS purposes and has been approved by RUS pursuant to 7 
CFR part 1710, subpart E.
    Approved load forecast work plan means a load forecast work plan 
that RUS has determined is current for RUS' purposes and has been 
approved pursuant to 7 CFR part 1710, subpart E.
    APRR means Average Adjusted Plant Revenue Ratio calculated as a 
simple average of the adjusted plant revenue ratios for 1978, 1979 and 
1980 as follows:
[GRAPHIC] [TIFF OMITTED] TC16SE91.000

where:

A=Distribution (plant), which equals Part E, Line 14(e) of RUS Form 7;
B=General Plant, which equals Part E, Line 24(e) of RUS Form 7;
C=Operating Revenue and Patronage Capital, which equals Part A, Line 1 
          of RUS Form 7; and
D=Cost of Power, which equals the sum of Part A, Lines 2, 3, and 4 of 
          RUS Form 7.

    Area Coverage means the provision of adequate electric service to 
the widest practical number of rural users in the borrower's service 
area during the life of the loan.
    Borrower means any organization that has an outstanding loan made or 
guaranteed by RUS for rural electrification, or that is seeking such 
financing.
    Bulk Transmission Facilities means the transmission facilities 
connecting power supply facilities to the subtransmission facilities, 
including both the high and low voltage sides of the transformer used to 
connect to the subtransmission facilities, as well as related 
supervisory control and data acquisition systems.
    Call provision has the same meaning as ``prepayment option''.
    Consolidation means the combination of 2 or more borrower or 
nonborrower organizations, pursuant to state law, into a new successor 
organization that takes over the assets and assumes the liabilities of 
those organizations.
    Consumer means a retail customer of electricity, as reported on RUS 
Form 7, Part R, Lines 1-7.
    Demand side management (DSM) means the deliberate planning and/or 
implementation of activities to influence consumer use of electricity 
provided by a distribution borrower to produce beneficial modifications 
to the system load profile. Beneficial modifications to the system load 
profile ordinarily improve load factor or otherwise help in utilizing 
electric system resources to best advantage consistent with acceptable 
standards of service and lowest system cost. Load profile modifications 
are characterized as peak clipping, valley filling, load shifting, 
strategic conservation, strategic load growth, and flexible load 
profile. (See, for example, publications of the Electric Power Research 
Institute (EPRI), 3412 Hillview Avenue, Palo Alto, CA 94304, especially 
``Demand-Side Management Glossary'' EPRI TR-101158, Project 1940-25, 
Final Report, October 1992.) DSM includes energy conservation programs. 
It does not include sources of electrical energy such as renewable 
energy systems, fuel cells, or traditionally fueled generation, such as 
fossil or nuclear fueled generators.
    Distribution Borrower means a borrower that sells or intends to sell 
electric power and energy at retail in rural areas.
    Distribution Facilities means all electrical lines and related 
facilities beginning at the consumer's meter base, and continuing back 
to and including the distribution substation.
    Distributed generation is the generation of electricity by a 
sufficiently small electric generating system as to

[[Page 84]]

allow interconnection of the electric generating system near the point 
of service at distribution voltages including points on the customer 
side of the meter. A distributed generating system may be operated in 
parallel or independent of the electric power system. A distributed 
generating system may be fueled by any source, including but not limited 
to renewable energy sources. A distributed generation project may 
include one or more distributed generation systems.
    DSC means Debt Service Coverage of the borrower calculated as:
    [GRAPHIC] [TIFF OMITTED] TR29DE95.000
    
Where:

All amounts are for the same calendar year and are based on the RUS 
system of accounts and RUS Forms 7 and 12. References to line numbers in 
the RUS Forms 7 and 12 refer to the June 1994 version of RUS Form 7 and 
the December 1993 version of RUS Form 12, and will apply to 
corresponding information in future versions of the forms;
A=Depreciation and Amortization Expense of the borrower, which equals 
Part A, Line 12 of RUS Form 7 (distribution borrowers) or Section A, 
Line 20 of RUS Form 12a (power supply borrowers);
B=Interest expense on total long-term debt of the borrower, which equals 
Part A, Line 15 of RUS Form 7 or Section A, Line 22 of RUS Form 12a, 
except that interest expense shall be increased by \1/3\ of the amount, 
if any, by which restricted rentals of the borrower (Part M, Line 3 of 
RUS Form 7 or Section K, Line 4 of RUS Form 12h) exceed 2 percent of the 
borrower's equity (RUS Form 7, Part C, Line 36 [Total Margins & 
Equities] less Line 26 [Regulatory Assets] or RUS Form 12a, Section B, 
Line 38 [Total Margins & Equities] less Line 28 [Regulatory Assets]);
C=Patronage Capital or Margins of the borrower, which equals Part A, 
Line 28 of RUS Form 7 or Section A, Line 35 of RUS Form 12a; and
D=Debt Service Billed (RUS + other), which equals the sum of all 
payments of principal and interest required to be made on account of 
total long-term debt of the borrower during the calendar year, plus \1/
3\ of the amount, if any, by which restricted rentals of the borrower 
(Part M, Line 3 of RUS Form 7 or Section K, Line 4 of RUS Form 12h) 
exceed 2 percent of the borrower's equity (RUS Form 7, Part C, Line 36 
[Total Margins & Equities] less Line 26 [Regulatory Assets] or RUS Form 
12a, Section B, Line 38 [Total Margins & Equities] less Line 28 
[Regulatory Assets]);

    DSM activities means activities of the type referred to in 
Sec. 1710.354(f).
    DSM plan means a plan that describes the implementation at the 
distribution level of the DSM activities identified in the integrated 
resource plan as having positive net benefits. See Sec. 1710.357.
    Electric system means all of the borrower's interests in all 
electric production, transmission, distribution, conservation, load 
management, general plant and other related facilities, equipment or 
property and in any mine, well, pipeline, plant, structure or other 
facility for the development, production, manufacture, storage, 
fabrication or processing of fossil, nuclear, or other fuel or in any 
facility or rights with respect to the supply of water, in each case for 
use, in whole or in major part, in any of the borrower's generating 
plants, including any interest or participation of the borrower in any 
such facilities or any rights to the output or capacity thereof, 
together with all lands, easements, rights-of-way, other works, 
property, structures, contract rights and other tangible and intangible 
assets of the borrower in each case used or useful in such electric 
system.
    Equity means total margins and equities, which equals Part C, Line 
33 of RUS Form 7 (distribution borrowers) or Section B, Line 34 of RUS 
Form 12a (power supply borrowers).
    Final maturity means the final date on which all outstanding 
principal and accrued interest on an electric loan is due and payable.
    Five percent hardship rate means an interest rate of 5 percent 
applicable to a hardship rate loan.
    Fund advance period means the period of time during which the 
Government may advance loan funds to the borrower. See 7 CFR 1714.56.
    Generation Facilities means the generating plant and related 
facilities, including the building containing the plant, all fuel 
handling facilities, and the stepup substation used to convert the 
generator voltage to transmission voltage, as well as related energy 
management (dispatching) systems.

[[Page 85]]

    Hardship rate loan means a loan made at the 5 percent hardship rate 
pursuant to 7 CFR 1714.8.
    Insured Loan means a loan made pursuant to Section 305 of the RE 
Act, and may include a direct loan made under Section 4 of the RE Act.
    Integrated Resources Plan (IRP) means a plan resulting from the 
planning and selection process for new energy resources that evaluates 
the benefits and costs of the full range of alternatives, including new 
generating capacity, power purchases, DSM programs, system operating 
efficiency, and renewable energy systems.
    Interest rate cap means a maximum interest rate of 7 percent 
applicable to certain municipal rate loans as set forth in Sec. 1710.7.
    Interest rate term means a period of time selected by the borrower 
for the purpose of determining the interest rate on an advance of funds. 
See 7 CFR 1714.6.
    Load forecast means the thorough study of a borrower's electric 
loads and the factors that affect those loads in order to determine, as 
accurately as practicable, the borrower's future requirements for energy 
and capacity.
    Load forecast work plan means the plan that contains the resources, 
methods, schedules, and milestones to be used in the preparation and 
maintenance of a load forecast.
    Loan means any loan made or guaranteed by RUS.
    Loan Contract means the agreement, as amended, supplemented, or 
restated from time to time, between a borrower and RUS providing for 
loans made or guaranteed pursuant to the RE Act.
    Loan Feasibility means that the borrower has the capability of 
repaying the loan in full as scheduled, in accordance with the terms of 
the mortgage, note, and loan contract.
    Loan Guarantee means a loan guarantee made by RUS pursuant to the RE 
Act.
    Loan period means the period of time during which the facilities 
included in a loan application will be constructed. It commences with 
the date shown on page 1, in the block headed ``Cost Estimates as of,'' 
of RUS Form 740c, Cost Estimates and Loan Budget for Electric Borrowers, 
which is the same as the date on the Financial and Statistical Report 
submitted with the loan application. The loan period may be up to 4 
years for distribution borrowers and, except in the case of a loan for 
new generating and associated transmission facilities, up to 4 years for 
the transmission facilities and improvements or replacements of 
generation facilities for power supply borrowers. The loan period for 
new generating facilities is determined on a case by case basis.
    Merger means the combining, pursuant to state law, of borrower or 
nonborrower organizations into an existing survivor organization that 
takes over the assets and assumes the liabilities of the merged 
organizations.
    Mortgage means any and all instruments creating a lien on or 
security interest in the borrower's assets in connection with loans or 
guarantees under the RE Act.
    Municipal rate loan means a loan made at a municipal interest rate 
pursuant to 7 CFR 1714.5.
    ODSC means Operating Debt Service Coverage of the electric system 
calculated as:
[GRAPHIC] [TIFF OMITTED] TR29DE95.001

Where:

All amounts are for the same calendar year and are based on the RUS 
system of accounts and RUS Form 7. References to line numbers in the RUS 
Form 7 refer to the June 1994 version of the form, and will apply to 
corresponding information in future versions of the form;
A=Depreciation and Amortization Expense of the electric system, which 
usually equals Part A, Line 12 of RUS Form 7;
B=Interest expense on total long-term debt of the electric system, which 
usually equals Part A, Line 15 of RUS Form 7, except that such interest 
expense shall be increased by \1/3\ of the amount, if any, by which 
restricted rentals of the electric system (usually Part M, Line 3 of RUS 
Form 7) exceed 2 percent of the borrower's equity (RUS Form 7, Part C, 
Line 36 [Total Margins & Equities] less Line 26 [Regulatory Assets]);
C=Patronage Capital & Operating Margins of the electric system, which 
usually equals Part A, Line 20 of RUS Form 7, plus cash received from 
the retirement of patronage capital by suppliers of electric power and

[[Page 86]]

by lenders for credit extended for the Electric System; and
D=Debt Service Billed (RUS + other), which equals the sum of all 
payments of principal and interest required to be made on account of 
total long-term debt of the electric system during the calendar year, 
plus \1/3\ of the amount, if any, by which restricted rentals of the 
Electric System (usually Part M, Line 3 of RUS Form 7) exceed 2 percent 
of the borrower's equity (RUS Form 7, Part C, Line 36 [Total Margins & 
Equities] less Line 26 [Regulatory Assets]).

    Off-grid renewable energy system is a renewable energy system not 
interconnected to an area electric power system (EPS). An off-grid 
renewable energy system in areas without access to an area EPS may 
include energy consuming devices and electric wiring to provide for more 
effective or more efficient use of the electricity produced by the 
system.
    On-grid renewable energy system is a renewable energy system 
interconnected to an area electric power system (EPS) through a normally 
open or normally closed device. It can be interconnected to the EPS on 
either side of a customer's meter.
    Ordinary Replacement means replacing one or more units of plant, 
called ``retirement units'', with similar units when made necessary by 
normal wear and tear, damage beyond repair, or obsolescence of the 
facilities.
    OTIER means Operating Times Interest Earned Ratio of the electric 
system calculated as:
[GRAPHIC] [TIFF OMITTED] TR29DE95.002

Where:

All amounts are for the same calendar year and are based on the RUS 
system of accounts and RUS Form 7. References to line numbers in the RUS 
Form 7 refer to the June 1994 version of the form, and will apply to 
corresponding information in future versions of the form;
A=Interest expense on total long-term debt of the electric system, which 
usually equals Part A, Line 15 of RUS Form 7, except that such interest 
expense shall be increased by \1/3\ of the amount, if any, by which 
restricted rentals of the electric system (usually Part M, Line 3 of RUS 
Form 7) exceed 2 percent of the borrower's equity (RUS Form 7, Part C, 
Line 36 [Total Margins & Equities] less Line 26 [Regulatory Assets]); 
and
B=Patronage Capital & Operating Margins of the electric system, which 
usually equals Part A, Line 20 of RUS Form 7, plus cash received from 
the retirement of patronage capital by suppliers of electric power and 
by lenders for credit extended for the Electric System.

    Power requirements study (PRS) has the same meaning as load 
forecast.
    Power Supply Borrower means a borrower that sells or intends to sell 
electric power at wholesale to distribution or power supply borrowers 
pursuant to RUS wholesale power contracts.
    Prepayment option means a provision included in the loan documents 
to allow the borrower to prepay all or a portion of an advance on a 
municipal rate loan on a date other than a rollover maturity date. See 7 
CFR 1714.9.
    PRR means Plant Revenue Ratio calculated as:
    [GRAPHIC] [TIFF OMITTED] TC16SE91.001
    
where:

A = Total Utility Plant, which equals Part C, Line 3 of RUS Form 7;
B = Operating Revenue and Patronage Capital, which equals Part A, Line 1 
          of RUS Form 7; and
C = Cost of Power, which equals the sum of Part A, Lines 2, 3, and 4 of 
          RUS Form 7.

    PRS work plan has the same meaning as load forecast work plan.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    RE Act beneficiary means a person, business, or other entity that is 
located in a rural area.
    REA means the Rural Electrification Administration formerly an 
agency of the United States Department of Agriculture and predecessor 
agency to RUS with respect to administering certain electric and 
telephone loan programs.
    Renewable energy system is an energy conversion system fueled from 
any of the following energy sources: Solar, wind, hydropower, biomass, 
or geothermal. Any of these energy sources may be converted to heat or 
electricity, provided heat is a by-product of electricity generation. 
Non-renewable energy sources may be used by a renewable energy system 
for incidental

[[Page 87]]

and necessary means such as, but not limited to, system start up, flame 
stabilization, continuity of system processes, or reduction of the 
moisture content of renewable fuels. Energy from bio-mass may be 
converted from any organic matter available on a renewable basis, 
including dedicated energy crops and trees, agricultural food and feed 
crops, agricultural crop wastes and residues, wood wastes and residues, 
aquatic plants, animal wastes, municipal wastes, and other waste 
materials.
    Retirement Unit means a substantial unit of property, which when 
retired, with or without being replaced, is accounted for by removing 
its book cost from the plant account.
    Rollover maturity date means the last day of an interest rate term.
    Rural area means--
    (i) Any area of the United States, its territories and insular 
possessions (including any area within the Federated States of 
Micronesia, the Marshall Islands, and the Republic of Palau) other than 
a city, town, or unincorporated area that has a population of greater 
than 20,000 inhabitants; and
    (ii) Any area within a service area of a borrower for which a 
borrower has an outstanding loan as of June 18, 2008, made under titles 
I through V of the Rural Electrification Act of 1936 (7 U.S.C. 901-
950bb). For initial loans to a borrower made after June 18, 2008, the 
``rural'' character of an area is determined at the time of the initial 
loan to furnish or improve service in the area.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    Subtransmission Facilities means the transmission facilities that 
connect the high voltage side of the distribution substation to the low 
voltage side of the bulk transmission or generating facilities, as well 
as related supervisory control and data acquisition facilities.
    System Improvement means the change or addition to electric plant 
facilities to improve the quality of electric service or to increase the 
quantity of electric power available to RE Act beneficiaries.
    TIER means Times Interest Earned Ratio of the borrower calculated 
as:
[GRAPHIC] [TIFF OMITTED] TR29DE95.003

Where:

All amounts are for the same calendar year and are based on the RUS 
          system of accounts and RUS Forms 7 and 12. References to line 
          numbers in the RUS Forms 7 and 12 refer to the June 1994 
          version of RUS Form 7 and the December 1993 version of RUS 
          Form 12, and will apply to corresponding information in future 
          versions of the forms;
A=Interest expense on total long-term debt of the borrower, which equals 
          Part A, Line 15 of RUS Form 7 or Section A, Line 22 of RUS 
          Form 12a, except that interest expense shall be increased by 
          \1/3\ of the amount, if any, by which restricted rentals of 
          the borrower (Part M, Line 3 of RUS Form 7 or Section K, Line 
          4 of RUS Form 12h) exceed 2 percent of the borrower's equity 
          (RUS Form 7, Part C, Line 36 [Total Margins & Equities] less 
          Line 26 [Regulatory Assets] or RUS Form 12a, Section B, Line 
          38 [Total Margins & Equities] less Line 28 [Regulatory 
          Assets]); and
B=Patronage Capital or Margins of the borrower, which equals Part A, 
          Line 28 of RUS Form 7 or Section A, Line 35 of RUS Form 12a.

    Total Assets means Part C, Line 26 of RUS Form 7 (distribution 
borrowers) or Section B, Line 27 of RUS Form 12a (power supply 
borrowers).
    Total Utility Plant means Part C, Line 3 of RUS Form 7 (distribution 
borrowers) or Section B, Line 27 of RUS Form 12a (power supply 
borrowers).
    Transmission Facilities means all electrical lines and related 
facilities, including certain substations, used to connect the 
distribution facilities to generation facilities. They include bulk 
transmission and subtransmission facilities.
    Urban area is defined as any area not considered a rural area per 
the definition contained in this subpart.
    Urbanized area means an urbanized area as defined by the Bureau of 
the Census in notices published periodically in the Federal 
Register.Generally an urbanized area is

[[Page 88]]

characterized as an area that comprises a place and the adjacent densely 
settled territory that together have a minimum population of 50,000 
people.
    (b) Rules of Construction. Unless the context otherwise indicates, 
``includes'' and ``including'' are not limiting, and ``or'' is not 
exclusive. The terms defined in paragraph (a) of this part include the 
plural as well as the singular, and the singular as well as the plural.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 58 FR 
66263, Dec. 20, 1993; 59 FR 495, Jan. 4, 1994; 59 FR 66440, Dec. 27, 
1994; 60 FR 3730, Jan. 19, 1995; 60 FR 67400, Dec. 29, 1995; 65 FR 
14786, Mar. 20, 2000; 68 FR 37953, June 26, 2003; 74 FR 56543, Nov. 2, 
2009]

    Effective Date Note: At 78 FR 73365, Dec. 5, 2013, Sec. 1710.2 was 
amended in paragraph (a) by revising the definition of ``Demand side 
management'' and adding a definition of ``Eligible Energy Efficiency 
Programs'', effective Feb. 3, 2014. For the convenience of the user, the 
added and revised text is set forth as follows:



Sec. 1710.2  Definitions and rules of construction.

    (a) * * *
    Demand side management (DSM) means the deliberate planning and/or 
implementation of activities to influence Consumer use of electricity 
provided by a distribution borrower to produce beneficial modifications 
to the system load profile. Beneficial modifications to the system load 
profile ordinarily improve load factor or otherwise help in utilizing 
electric system resources to best advantage consistent with acceptable 
standards of service and lowest system cost. Load profile modifications 
are characterized as peak clipping, valley filling, load shifting, 
strategic conservation, strategic load growth, and flexible load 
profile. (See, for example, publications of the Electric Power Research 
Institute (EPRI), 3412 Hillview Avenue, Palo Alto, CA 94304, especially 
``Demand-Side Management Glossary'' EPRI TR-101158, Project 1940-25, 
Final Report, October 1992.) DSM includes energy conservation programs.

                                * * * * *

    Eligible Energy Efficiency and Conservation Programs (Eligible EE 
Program) means an energy efficiency and conservation program that meets 
the requirements of subpart H of this part.

                                * * * * *



Sec. 1710.3  Form and bulletin revisions.

    References in this part to RUS or REA forms or line numbers in RUS 
or REA forms are based on RUS or REA Form 7 and Form 12 dated December 
1992, unless otherwise indicated. These references will apply to 
corresponding information in future versions of the forms. The terms 
``RUS form'', ``RUS standard form'', ``RUS specification'', and ``RUS 
bulletin'' have the same meanings as the terms ``REA form'', ``REA 
standard form'', ``REA specification'', and ``REA bulletin'', 
respectively, unless otherwise indicated.

[59 FR 66440, Dec. 27, 1994]



Sec. 1710.4  Exception authority.

    Consistent with the RE Act and other applicable laws, the 
Administrator may waive or reduce any requirement imposed by this part 
or other RUS regulations on an electric borrower, or a lender whose loan 
is guaranteed by RUS, if the Administrator determines that imposition of 
the requirement would adversely affect the Government's financial 
interest.



Sec. 1710.5  Availability of forms.

    Information about the availability of RUS forms and publications 
cited in this part is available from Administrative Services Division, 
Rural Utilities Service, United States Department of Agriculture, 
Washington, DC 20250-1500. These RUS forms and publications may be 
reproduced.



Sec. 1710.6  Applicability of certain provisions to completed loan applications.

    (a) Certain new or revised policies and requirements set forth in 
this part, which are listed in this paragraph, shall not apply to a 
pending loan application that has been determined by RUS to be complete 
as of January 9, 1992, the date of publication of such policies and 
requirements in the Federal Register.This exception does not apply to 
loan applications received after said date, nor to incomplete 
applications pending as of said date. This exception applies only to the 
following provisions:
    (1) Paragraph 1710.115(b)--with respect to limiting loan maturities 
to the

[[Page 89]]

expected useful life of the facilities financed;
    (2) Section 1710.116--with respect to the requirement to develop and 
follow an equity development plan;
    (3) Paragraph 1710.151(f)--with respect to the borrower providing 
satisfactory evidence that a state regulatory authority will allow the 
facilities to be included in the rate base or otherwise allow sufficient 
revenues to repay the loan;
    (4) Paragraphs 1710.250(b), 1710.251(a), and 1710.252(a)--with 
respect to the requirement that improvements, replacements, and 
retirements of generation plant be included in a Construction Work Plan; 
and
    (5) Paragraph 1710.300(d)(5)--with respect to the requirement that a 
borrower's financial forecast include a sensitivity analysis of a 
reasonable range of assumptions for each of the major variables in the 
forecast.
    (b) Certain provisions of this part apply only to loans made on or 
after February 10, 1992. These provisions are identified in the 
individual sections of this part.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 58 FR 
66263, Dec. 20, 1993]



Secs. 1710.7-1710.49  [Reserved]



              Subpart B_Types of Loans and Loan Guarantees



Sec. 1710.50  Insured loans.

    RUS makes insured loans under section 305 of the RE Act.
    (a) Municipal rate loans. The standard interest rate on an insured 
loan made on or after November 1, 1993, is the municipal rate, which is 
the rate determined by the Administrator to be equal to the current 
market yield on outstanding municipal obligations with remaining periods 
to maturity, up to 35 years, similar to the interest rate term selected 
by the borrower. In certain cases, an interest rate cap of 7 percent may 
apply. The interest rate term and rollover maturity date for a municipal 
rate loan will be determined pursuant to 7 CFR part 1714, and the 
borrower may elect to include in the loan documents a prepayment option 
(call provision).
    (b) Hardship rate loans. RUS makes hardship rate loans at the 5 
percent hardship rate to qualified borrowers meeting the criteria set 
forth in 7 CFR 1714.8

[58 FR 66263, Dec. 20, 1993]



Sec. 1710.51  Direct loans.

    RUS makes direct loans under section 4 of the RE Act.
    (a) General. Except as otherwise modified by this section, RUS will 
make loans under the direct Treasury rate loan program in the same 
manner that it makes loans under the municipal rate program. The general 
and pre-loan policies and procedures for municipal rate electric loans 
made by RUS may be found in this part and 7 CFR part 1714. Treasury rate 
electric loans are also governed by such municipal rate policies and 
procedures, except as follows:
    (1) Interest rates. The standard interest rate on direct Treasury 
rate loans will be established daily by the United States Treasury. The 
borrower will select interest rate terms for each advance of funds. The 
minimum interest rate term shall be one year. Interest rate terms will 
be limited to terms published by the Treasury (i.e. 1, 2, 3, 5, 7, 10, 
20, and 30). Interest rate terms to final maturity date, if other than 
published by Treasury, will be determined by RUS. Interest rates for 
terms greater than 30 years will be at the 30-year rate. There will be 
no interest rate cap on Treasury rate loans.
    (2) Prepayment. A Treasury rate direct electric loan may be repaid 
at par on its rollover maturity date if there is one. Such a loan, or 
portion thereof, may also be prepaid after it has been advanced for not 
less than two years, at any time prior to its rollover or final maturity 
date at its ``net present value'' (NPV) as determined by RUS.
    (3) Supplemental financing. Supplemental financing will not be 
required in connection with Treasury rate direct electric loans.
    (4) Transitional assistance. A Treasury rate direct loan is not 
available to provide transitional assistance to borrowers.
    (b) Loan documents. Successful applicants will be required to 
execute and

[[Page 90]]

deliver to RUS a promissory note evidencing the borrower's obligation to 
repay the loan. The note must be in form and substance satisfactory to 
RUS. RUS will require a form of note substantially in the form that it 
currently accepts for direct municipal rate electric loans, with such 
revisions as may be necessary or appropriate to reflect the different 
interest setting provisions and the terms of paragraphs (a) (1) and (2) 
of this section. All notes will be secured in accordance with the terms 
of 7 CFR part 1718.

[66 FR 66294, Dec. 26, 2001]



Sec. 1710.52  Loan guarantees.

    RUS provides financing through 100 percent loan guarantees made 
under sections 306 and 306A of the RE Act. RUS also provides 90 percent 
loan guarantees under section 311 of the RE Act to enable borrowers to 
secure financing from certain private lenders. The loan guarantees are 
made for a term of up to 35 years, and the interest rate is established 
at a rate agreed to by the borrower and the lender, with RUS 
concurrence. The guarantee applies to the repayment of both principal 
and interest.

[58 FR 66264, Dec. 20, 1993]



Secs. 1710.53-1710.99  [Reserved]



               Subpart C_Loan Purposes and Basic Policies



Sec. 1710.100  General.

    RUS makes loans and loan guarantees to finance the construction of 
electric distribution, transmission and generation facilities, including 
system improvements and replacements required to furnish and improve 
electric service in rural areas, and for demand side management, energy 
conservation programs, and on grid and off grid renewable energy 
systems. In some circumstances, RUS may finance selected operating 
expenses of its borrowers. Loans made or guaranteed by the Administrator 
of RUS will be made in conformance with the Rural Electrification Act of 
1936, as amended (7 U.S.C. 901 et seq.), and 7 CFR chapter XVII. RUS 
provides certain technical assistance to borrowers when necessary to aid 
the development of rural electric service and to protect loan security.

[58 FR 66264, Dec. 20, 1993]

    Effective Date Note: At 78 FR 73365, Dec. 5, 2013, Sec. 1710.100 was 
amended in the first sentence by adding the words ``efficiency and'' 
before ``energy conservation,'' effective Feb. 3, 2014.



Sec. 1710.101  Types of eligible borrowers.

    (a) RUS makes loans to corporations, states, 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:
    (1) The retail electric service needs of rural areas, or
    (2) The power supply needs of distribution borrowers under the terms 
of power supply arrangements satisfactory to RUS.
    (b) In making loans, RUS gives preference to states, territories, 
and subdivisions and agencies thereof; municipalities; people's utility 
districts; and cooperative, nonprofit, or limited-dividend associations. 
RUS does not make loans to individual consumers.
    (c) For the purpose of determining eligibility of a distribution 
borrower not in default on the repayment of a loan made or guaranteed 
under the RE Act for a loan, loan guarantee, or lien accommodation, a 
default by a borrower from which a distribution borrower purchases 
wholesale power shall not:
    (1) Be considered a default by the distribution borrower;
    (2) Reduce the eligibility of the distribution borrower for 
assistance under the RE Act; or
    (3) Be the cause, directly or indirectly, of imposing any 
requirement or restriction on the borrower as a condition of the 
assistance, except such requirements or restrictions as are necessary to 
implement a debt restructuring agreed on by the power supply borrower 
and RUS.
    (d) For the purpose of determining the eligibility of a distribution 
borrower, RUS will consider whether the distribution borrower is current 
on its obligations to its wholesale power supplier under the RUS 
wholesale power contract.

[[Page 91]]

    (e) Nothing in paragraph (c) of this section relieves any 
distribution borrower that is a member of a power supply borrower in 
default on its obligations to RUS or operating under a debt 
restructuring agreement, of requirements set forth in RUS regulations, 
including, without limitation, Sec. 1710.112(b)(6), or of any terms and 
conditions that the Administrator may otherwise impose on any borrower 
as a condition of obtaining a loan or loan guarantee (including, in 
appropriate cases, member guarantees).
    (f) Except as provided in paragraph (g) of this section, former 
borrowers that have paid off all outstanding loans may reapply for a 
loan to serve RE Act beneficiary loads accruing from the time the former 
borrower's complete loan application is received by RUS. The 
determination of whether an area is rural will be based on the Census 
designation of the area at the time of the reapplication for a loan, if 
the area is not served by electric facilities financed by RUS. If the 
area is served by electric facilities financed by RUS, it will continue 
to be considered rural.
    (g) Former borrowers that have prepaid all, or portions of 
outstanding insured and direct loans in accordance with RUS regulations 
must comply with the provisions of 7 CFR part 1786 before being 
considered eligible to borrow additional funds from RUS.

[58 FR 66264, Dec. 20, 1993]

    Effective Date Note: At 78 FR 73365, Dec. 5, 2013, Sec. 1710.101 was 
amended in the second sentence of paragraph (b) by adding the word 
``direct'' before ``loans to individual consumers,'' effective Feb. 3, 
2014.



Sec. 1710.102  Borrower eligibility for different types of loans.

    (a) Insured loans under section 305. Insured loans are normally 
reserved for the financing of distribution and subtransmission 
facilities of both distribution and power supply borrowers, including, 
under certain circumstances, the implementation of demand side 
management, energy conservation programs, and on grid and off grid 
renewable energy systems. In accordance with Sec. 1710.110, the 
Administrator may require the borrower to obtain no more than 30 percent 
of the total debt financing required for a proposed project by means of 
a supplemental loan from another lender without an RUS guarantee.
    (b) Direct loans under section 4. Direct loans are normally reserved 
for the financing of distribution and subtransmission facilities of both 
distribution and power supply borrowers, including, under certain 
circumstances, the implementation of demand side management, energy 
conservation programs, and on grid and off grid renewable energy 
systems.
    (c) One hundred percent loan guarantees under section 306. Both 
distribution and power supply borrowers are eligible for 100 percent 
loan guarantees under section 306 of the RE Act for any or all of the 
purposes set forth in Sec. 1710.106, including, under certain 
circumstances, the implementation of demand side management, energy 
conservation programs, and on grid and off grid renewable energy 
systems. (See 7 CFR part 1712). These guarantees are normally used to 
finance bulk transmission and generation facilities, but they may also 
be used to finance distribution and subtransmission facilities. If a 
borrower applies for a section 306 loan guarantee to finance all or a 
portion of distribution and subtransmission facilities, such request 
will not affect the borrower's eligibility for an insured loan to 
finance any remaining portion of said facilities or for any future 
insured loan to finance other distribution or subtransmission 
facilities. A section 306 loan guarantee, however, may not be used to 
guarantee a supplemental loan required by Sec. 1710.110.
    (d) One hundred percent loan guarantees under section 306A. Under 
section 306A of the RE Act, both distribution and power supply borrowers 
are eligible under certain conditions to use an existing section 306 
guarantee to refinance advances made on or before July 2, 1986 from a 
loan made by the Federal Financing Bank. (See 7 CFR part 1786.)
    (e) Ninety percent guarantees of private-sector loans under section 
311. Under section 311 of the RE Act, both distribution and power supply 
borrowers in the state of Alaska are eligible under certain conditions 
to obtain from RUS a 90 percent guarantee of a private-sector loan to 
refinance their

[[Page 92]]

Federal Financing Bank loans. (See 7 CFR part 1786.)

[57 FR 2832, Jan. 24, 1992, as amended at 58 FR 66264, Dec. 20, 1993; 66 
FR 66294, Dec. 26, 2001]

    Effective Date Note: At 78 FR 73365, Dec. 5, 2013, Sec. 1710.102 was 
amended in the first sentence of paragraphs (a) and (b) by adding 
``energy efficiency and'' before ``energy conservation'', effective Feb. 
3, 2014.



Sec. 1710.103  Area coverage.

    (a) Borrowers shall make a diligent effort to extend electric 
service to all unserved persons within their service area who:
    (1) Desire electric service; and
    (2) Meet all reasonable requirements established by the borrower as 
a condition of service.
    (b) If economically feasible and reasonable considering the cost of 
providing such service and/or the effects on all consumers' rates, such 
service shall be provided, to the maximum extent practicable, at the 
rates and minimum charges established in the borrower's rate schedules, 
without the payment by such persons, other than seasonal or temporary 
consumers, of a contribution in aid of construction. A seasonal consumer 
is one that demands electric service only during certain seasons of the 
year. A temporary consumer is a seasonal or year-round consumer that 
demands electric service over a period of less than five years.
    (c) Borrowers may assess contributions in aid of construction 
provided such assessments are consistent with the policy set forth in 
this section.

[57 FR 1053, Jan. 9, 1992, as amended at 60 FR 67404, Dec. 29, 1995]



Sec. 1710.104  Service to non-RE Act beneficiaries.

    (a) To the greatest extent practical, loans are limited to providing 
and improving electric facilities to serve consumers that are RE Act 
beneficiaries. When it is determined by the Administrator to be 
necessary in order to furnish or improve electric service in rural 
areas, loans may, under certain circumstances, be made to finance 
electric facilities to serve consumers that are not RE Act 
beneficiaries.
    (b) Loan funds may be approved for facilities to serve non-RE Act 
beneficiaries only if:
    (1) The primary purpose of the loan is to furnish or improve service 
for RE Act beneficiaries; and
    (2) The use of loan funds to serve non-RE Act beneficiaries is 
necessary and incidental to the primary purpose of the loan.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 58 FR 
66264, Dec. 20, 1993]



Sec. 1710.105  State regulatory approvals.

    (a) In States where a borrower is required to obtain approval of a 
project or its financing from a state regulatory authority, RUS may 
require that such approvals be obtained, if feasible for the borrower to 
do so, 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) At minimum, in the case of all loans in states where state 
regulatory approval is required of the project or its financing, such 
state approvals will be required before loan funds are advanced.
    (c) In cases where state regulatory authority 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 authority before any additional loan funds are advanced.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 58 FR 
66265, Dec. 20, 1993]



Sec. 1710.106  Uses of loan funds.

    (a) Funds from loans made or guaranteed by RUS may be used to 
finance:

[[Page 93]]

    (1) Distribution facilities. (i) The construction of new 
distribution facilities or systems, the cost of system improvements and 
removals less salvage value, the cost of ordinary replacements and 
removals less salvage value, needed to meet load growth requirements, 
improve the quality of service, or replace existing facilities.
    (ii) The purchase, rehabilitation and integration of existing 
distribution facilities and associated service territory when the 
acquisition is an incidental and necessary means of providing or 
improving service to persons in rural areas who are not receiving 
adequate central station service, and the borrower is unable to finance 
the acquisition from other sources. See Sec. 1710.107.
    (2) Transmission and generation facilities. (i) The construction of 
new transmission and generation facilities or systems, the cost of 
system improvements and removals, less salvage value, the cost of 
ordinary replacements and removals less salvage value, needed to meet 
load growth, improve the quality of service, or replace existing 
facilities.
    (ii) The purchase of an ownership interest in new or existing 
transmission or generation facilities to serve RE Act beneficiaries.
    (3) Warehouse and garage facilities. The purchase, remodeling, or 
construction of warehouse and garage facilities required for the 
operation of a borrower's system. See paragraph (b) of this section.
    (4) Interest. The payment of interest on indebtedness incurred by a 
borrower to finance the construction of generation and transmission 
facilities during the period preceding the date such facilities are 
placed into service, if requested by the borrower and found necessary by 
RUS.
    (5) Certain costs incurred in demand side management, energy 
conservation programs and on and off grid renewable energy systems.
    (b) In cases of financial hardship, as determined by the 
Administrator, loans may also be made to finance the following items:
    (1) The headquarters office and other headquarters facilities in 
addition to those cited in paragraph (a)(4) of this section;
    (2) General plant equipment, including furniture, office, 
transportation, data processing and other work equipment; and
    (3) Working capital required for the initial operation of a new 
system.
    (c) RUS will not make loans to finance the following:
    (1) Electric facilities, equipment, appliances, or wiring located 
inside the premises of the consumer, except qualifying items included in 
a loan for demand side management or energy resource conservation 
programs, or on or off grid renewable energy systems;
    (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; and
    (4) Any facilities or other specific purposes that were included in 
a loan made or guaranteed by RUS that the borrower has prepaid or that 
has been rescinded.
    (d) A distribution borrower may request a loan period of up to 4 
years. Except in the case of loans for new generating and associated 
transmission facilities, a power supply borrower may request a loan 
period of not more than 4 years for transmission and substation 
facilities and improvements or replacements of generation facilities. 
The loan period for new generating facilities is determined on a case by 
case basis. The loan period for DSM activities will be determined in 
accordance with Sec. 1710.355. The Administrator may approve a loan 
period shorter than the period requested by the borrower, if in the 
Administrator's sole discretion, a loan made for the longer period would 
fail to meet RUS requirements for loan feasibility and loan security set 
forth in Secs. 1710.112 and 1710.113, respectively.
    (e)(1) If, in the sole discretion of the Administrator, the amount 
authorized for lending for municipal rate loans,

[[Page 94]]

hardship rate loans, and loan guarantees in a fiscal year is 
substantially less than the total amount eligible for RUS financing, RUS 
may limit the size of all loans of that type approved during the fiscal 
year. Depending on the amount of the shortfall between the amount 
authorized for lending and the loan application inventory on hand for 
each type of loan, RUS may either reduce the amount on an equal 
proportion basis for all applicants for that type of loan based on the 
amount of funds for which the applicant is eligible, or may shorten the 
loan period for which funding will be approved to less than the maximum 
of 4 years. All applications for the same type of loan approved during a 
fiscal year will be treated in the same manner, except that RUS will not 
limit funding to any borrower requesting an RUS loan or loan guarantee 
of $1 million or less.
    (2) If RUS limits the amount of loan funds approved for borrowers, 
the Administrator shall notify all electric borrowers early in the 
fiscal year of the manner in which funding will be limited. The portion 
of the loan application that is not funded during that fiscal year may, 
at the borrower's option, be treated as a second loan application 
received by RUS at a later date. This date will be determined by RUS in 
the same manner for all affected loans and will be based on the 
availability of loan funds. The second loan application shall be 
considered complete except that the borrower must submit a certification 
from a duly authorized corporate official stating that funds are still 
needed for loan purposes specified in the original application and must 
notify RUS of any changes in its circumstances that materially affects 
the information contained in the original loan application or the 
primary support documents. See 7 CFR 1710.401(f).
    (f)(1) For borrowers having one or more loans approved on or after 
October 1, 1991, advances of funds will be made only for the primary 
budget purposes included in the loan as shown on RUS Form 740c as 
amended and approved by RUS, or on a construction work plan or a 
construction work plan amendment approved by RUS. Each advance will be 
charged to the oldest outstanding note(s) having unadvanced funds for 
the primary budget purpose for which the request for advances was made, 
regardless of whether such notes are associated with loans approved 
before or after October 1, 1991, unless any conditions on advances under 
any of these notes have not been met by the borrower.
    (2) For borrowers whose most recent loan was approved before October 
1, 1991, advances will be made on the oldest outstanding note having 
unadvanced funds, unless any conditions on advances under such note have 
not been met by the borrower.

[57 FR 1053, Jan. 9, 1992, as amended at 58 FR 66265, Dec. 20, 1993; 60 
FR 3730, Jan. 19, 1995; 62 FR 7922, Feb. 21, 1997; 64 FR 33178, June 22, 
1999]

    Effective Date Note: At 78 FR 73365, Dec. 5, 2013, Sec. 1710.106 was 
amended by adding paragraph (a)(6), and revsing paragraphs (c)(1) and 
(d), effective Feb. 3, 2014. For the convenience of the user, the added 
and revised text is set forth as follows:



Sec. 1710.106  Uses of loan funds.

    (a) * * *
    (6) Eligible Energy Efficiency and Conservation Programs pursuant to 
Subpart H of this part.

                                * * * * *

    (c) * * *
    (1) Electric facilities, equipment, appliances, or wiring located 
inside the premises of the Consumer, except for assets financed pursuant 
to an Eligible EE Program, and qualifying items included in a loan for 
Demand side management or energy resource conservation programs, or 
renewable energy systems.

                                * * * * *

    (d) A distribution borrower may request a loan period of up to 4 
years. Except in the case of loans for new generating and associated 
transmission facilities, a power supply borrower may request a loan 
period of not more than 4 years for transmission and substation 
facilities and improvements or replacements of generation facilities. 
The loan period for new generating facilities and DSM activities will be 
determined on a case-by-case basis. The Administrator may approve a loan 
period shorter than the period requested by the borrower, if in the 
Administrator's sole discretion, a loan made for the longer period would 
fail to meet RUS requirements

[[Page 95]]

for loan feasibility and loan security set forth in Secs. 1710.112 and 
1710.113, respectively.

                                * * * * *



Sec. 1710.107  Amount lent for acquisitions.

    The maximum amount that will be lent for an acquisition is limited 
to the value of the property, as determined by RUS. If the acquisition 
price exceeds this amount, the borrower shall provide the remainder 
without RUS financial assistance.



Sec. 1710.108  Mergers and consolidations.

    (a) RUS encourages its borrowers to consider merging or 
consolidating with another electric borrower when such action will 
contribute to greater operating efficiency and financial soundness.
    (b) After a merger or consolidation, RUS will give priority 
consideration per Sec. 1710.119 to the processing of loans for the 
surviving system to finance the integration and rehabilitation of 
electric facilities, if necessary, and the improvement or extension of 
electric service in rural areas. Such priority consideration will also 
be given in the case of a borrower that has merged or consolidated with 
an electric system that has not previously received RUS financial 
assistance, if such system was serving primarily rural residents at the 
time of the merger or consolidation and such rural residents will 
continue to be served by the merged or consolidated system. RUS does not 
make loans for costs incurred in effectuating mergers or consolidations, 
such as legal expenses or feasibility study costs.



Sec. 1710.109  Reimbursement of general funds and interim financing.

    (a) Borrowers may request that a loan include funds to reimburse 
general funds and/or replace interim financing used to finance equipment 
and facilities that were included in an RUS-approved construction work 
plan, work plan amendment or other RUS-approved plan, and for which loan 
funds have not been provided by RUS. Such reimbursement and/or 
replacement of interim financing may include the direct costs of 
procurement and construction, as well as the related cost of 
engineering, architectural, environmental and other studies and plans 
needed to support the project, when such cost is capitalized as part of 
the cost of the facilities.
    (b) If procurement and/or construction of the equipment and 
facilities was completed prior to the current loan period, 
reimbursement, including replacement of interim financing, will be 
limited, except in cases of extreme financial hardship as determined by 
the Administrator, to the cost of procurement and construction completed 
during the period immediately preceding the current loan period, as 
specified in paragraph (c) of this section. As defined in Sec. 1710.2, 
the loan period begins on the date shown on page 1 of RUS Form 740c, 
Cost Estimates and Loan Budget for Electric Borrowers.
    (c)(1) The period immediately preceding the current loan period for 
which reimbursement and replacement of interim financing is authorized 
under paragraph (b) of this section is as follows:
    (i) The number of months agreed to by RUS and the borrower for 
complete loan applications received by RUS before February 10, 1992;
    (ii) 36 months for complete loan applications received from February 
10, 1992 through February 10, 1993; or
    (iii) 24 months for complete loan applications received after 
February 10, 1993.
    (2) Policies for reimbursement of general funds and interim 
financing following certain mergers, consolidations, and transfers of 
systems substantially in their entirety are set forth in 7 CFR 1717.154.
    (d) If the reimbursement of general funds and/or replacement of 
interim financing is for approved expenditures for equipment and 
facilities whose procurement and/or construction is completed during the 
current loan period, the time limits of paragraph (c) of this section do 
not apply.

[57 FR 1053, Jan. 9, 1992, as amended at 58 FR 66265, Dec. 20, 1993; 61 
FR 66870, Dec. 19, 1996]

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.109 was 
amended in the first sentence of paragraph (a) by adding the words 
``energy efficiency and conservation

[[Page 96]]

program work plan,'' after ``construction work plan,'' effective Feb. 3, 
2014.



Sec. 1710.110  Supplemental financing.

    (a) Except in the case of financial hardship as determined by the 
Administrator, and following certain mergers, consolidations, and 
transfers of systems substantially in their entirety as set forth in 7 
CFR 1717.154, applicants for a municipal rate loan will be required to 
obtain a portion of their loan funds from a supplemental source without 
an RUS guarantee, in the amounts set forth in paragraph (c) of this 
section. RUS will normally grant a lien accommodation to the 
supplemental lender. RUS does not require supplemental financing in 
conjunction with an RUS guaranteed loan. However, if a borrower elects 
to obtain supplemental financing in conjunction with a guaranteed loan, 
the granting of RUS's loan guarantee may be conditioned on the 
borrower's obtaining supplemental financing.
    (b) The terms and conditions of supplemental financing and any 
security offered to the supplemental lender are subject to RUS approval. 
Generally, supplemental loans must have the same final maturity and be 
amortized in the same manner as RUS loans made concurrently. Borrowers 
may elect to repay the loans either in substantially equal periodic 
installments covering interest and principal, or in periodic 
installments that include interest and level amortization of principal.
    (c) Supplemental financing required for municipal rate loans--(1) 
Distribution borrowers. (i) Distribution borrowers that had, as of 
December 31, 1980, an average consumer density of 2 or fewer consumers 
per mile or an average adjusted plant revenue ratio (APRR), as defined 
in Sec. 1710.2, of over 9.0 shall obtain supplemental financing equal to 
10 percent of their loan request.
    (ii) All other distribution borrowers must obtain supplemental 
financing according to their plant revenue ratio (PRR), as defined in 
Sec. 1710.2, based on the most recent year-end data available on the 
date of loan approval, as follows:

------------------------------------------------------------------------
                                                       Supplemental loan
                         PRR                               percentage
------------------------------------------------------------------------
9.00 and above.......................................                 10
8.01-8.99............................................                 20
8.00 and below.......................................                 30
------------------------------------------------------------------------

    (iii) If a distribution borrower enters into a merger, 
consolidation, or transfer of system substantially in its entirety, and 
the provisions of 7 CFR 1717.154(b) do not apply, required supplemental 
financing will be determined as follows for loans approved by RUS after 
December 19, 1996. If one of the merging parties met the criteria in 
paragraph (c)(1)(i) of this section prior to the effective date of the 
merger consolidation or transfer, the borrower will be required to 
obtain supplemental financing equal to 10 percent of any loan funds 
requested for facilities to serve consumers located in the territory 
formerly served by the ``paragraph (c)(1)(i)'' borrower. The required 
amount of supplemental financing for the rest of the loan will be 
determined according to the provisions of paragraph (c)(1)(ii) of this 
section.
    (2) Power supply borrowers. The supplemental loan proportion 
required of a power supply borrower is based on the simple arithmetic 
mean of the supplemental loan proportions required of the borrower's 
distribution members.
    (3) Subsequent loans. (i) If more than 5 percent of an insured loan 
made prior to November 1, 1993, or of a municipal rate loan is 
terminated or rescinded, the amount of supplemental financing required 
in the borrower's next loan after the rescission for which supplemental 
financing is required, pursuant to paragraph (a) of this section, will 
be adjusted to average the actual supplemental financing portion on the 
terminated or rescinded loan with the supplemental financing portion 
that would have been required on the new loan according to paragraphs 
(c)(1) and (2) of this section, in accordance with the formulas set 
forth in paragraphs (c)(3)(ii) and (iii) of this section.
    (ii) If a borrower's supplemental financing requirement as set forth 
in paragraphs (a), (c)(1), and (c)(2) of this section has not changed 
between the most recent loan and the loan being considered, then the 
amount of supplemental financing required for the new loan will be 
computed as follows:


[[Page 97]]


Supplemental financing amount, new loan = [(A + B) x C] - D

where:

A = The total funds ($) actually advanced from the first loan, including 
          both RUS loan funds and funds from the supplemental loan, plus 
          any unadvanced funds still available to the borrower after the 
          rescission.
B = The total amount ($) for facilities of the new loan request, 
          including both RUS loan funds and funds from supplemental 
          loans.
C = The proportion (%) of supplemental financing required on the loans 
          according to paragraphs (a), (c)(1) and (c)(2) of this 
          section.
D = The amount ($) of supplemental funds actually advanced on the first 
          loan, plus any unadvanced supplemental funds still available 
          to the borrower after the rescission.

    (iii) If a borrower's supplemental financing requirement as set 
forth in paragraphs (a), (c)(1), and (c)(2) of this section has changed 
between the most recent loan and the loan being considered, then the 
amount of supplemental financing required for the new loan will be the 
weighted average of the portions otherwise applicable on the two loans 
and will be computed as follows:

Supplemental financing amount, new loan = 
(AxC1)+(BxC2)-D

where:

A = The total funds ($) actually advanced from the first loan, including 
          both RUS loan funds and funds from the supplemental loan, plus 
          any unadvanced funds still available to the borrower after the 
          rescission.
B = The total amount ($) for facilities of the new loan request, 
          including both RUS funds and funds from supplemental loans.
C1 = The proportion (%) of supplemental financing required on 
          the old loan according to paragraphs (a), (c)(1) and (c)(2) of 
          this section.
C2 = The proportion (%) of supplemental financing required on 
          the new loan according to paragraphs (a), (c)(1) and (c)(2) of 
          this section.
D = The amount ($) of supplemental funds actually advanced on the first 
          loan, plus any unadvanced supplemental funds still available 
          to the borrower after the rescission.

    (d) Supplemental financing will not be required in connection with 
hardship rate loans. Borrowers that qualify for hardship rate loans but 
elect to take municipal rate loans instead, will be required to obtain 
supplemental financing pursuant to this section, unless at the time of 
loan approval, there are no funds remaining available for hardship 
loans, in which case supplemental financing will not be required.

[57 FR 1053, Jan. 9, 1992, as amended at 58 FR 66265, Dec. 20, 1993; 60 
FR 3730, Jan. 19, 1995; 61 FR 66870, Dec. 19, 1996]



Sec. 1710.111  Refinancing.

    (a) RUS makes loans or loan guarantees to refinance the outstanding 
indebtedness of borrowers in the following cases:
    (1) Loans or loan guarantees to refinance long-term debt owed by 
borrowers to the Tennessee Valley Authority fpr credit extended under 
the terms of the Tennessee Valley Authority Act of 1933, as amended.
    (2) Loan guarantees made in accordance with the provisions of 
section 306A of the RE Act to prepay a loan (or any loan advance 
thereunder) made by the Federal Financing Bank.
    (b) In certain circumstances, RUS may make a loan to replace interim 
financing obtained for the construction of facilities (See 
Sec. 1710.109).



Sec. 1710.112  Loan feasibility.

    (a) RUS will make a loan only if there is reasonable assurance that 
the loan, together with all outstanding loans and other obligations of 
the borrower, will be repaid in full as scheduled, in accordance with 
the mortgage, notes, and loan contracts. The borrower must provide 
evidence satisfactory to the Administrator that the loan will be repaid 
in full as scheduled, and that all other obligations of the borrower 
will be met.
    (b) Based on evidence submitted by the borrower and other 
information, RUS will use the following criteria to evaluate loan 
feasibility:
    (1) Projections of power requirements, rates, revenues, expenses, 
margins, and other factors for the present system and proposed additions 
are based on reasonable assumptions and adequate supporting data and 
analysis, including analysis of a range of assumptions for the 
significant variables, when required by Sec. 1710.300(d)(5).

[[Page 98]]

    (2) Projected revenues from the rates proposed by the borrower are 
adequate to meet the required TIER and DSC ratios based on the 
borrower's total costs, including the projected maximum debt service 
cost of the new loan.
    (3) The economics of the borrower's operations and service area are 
such that consumers can reasonably be expected to pay the proposed rates 
required to cover all expenses and meet RUS TIER and DSC requirements, 
and the borrower can reasonably compete with other utilities and other 
energy sources to prevent substantial load loss while providing 
satisfactory service to its consumers.
    (4) Risks of possible loss of substantial loads from large consumers 
or from load concentrations in particular industries will not 
substantially impair loan feasibility.
    (5) Risks of loss of portions of the borrower's service territory 
from annexation or other causes will not substantially impair loan 
feasibility. If there appears to be a substantial risk, RUS may require 
additional information from the borrower, such as a summary and analysis 
of the risk by the borrower; state, county or local planning reports 
having information on projected growth or expansion plans of local 
communities; annexation plans of the municipalities in question; and any 
other relevant information.
    (6) In states where rates or investment decisions are subject to 
approval by state regulatory authorities, there is reasonable 
expectation that such approvals will be forthcoming to enable repayment 
of the loan in full according to its terms.
    (7) The experience and performance of the system's management is 
acceptable.
    (8) In the case of joint ventures, the borrower has sufficient 
management control or other contractual safeguards with respect to the 
construction and operation of the jointly owned facility to ensure that 
the borrower's interests are protected and the credit risk is minimized.
    (9) The borrower has implemented adequate financial and management 
controls and there are and have been no significant financial or other 
irregularities.
    (10) The borrower's projected capitalization, measured by its equity 
as a percentage of total assets, is adequate to enable the borrower to 
meet its financial needs and to provide service consistent with the RE 
Act. Among the factors to be considered in reviewing the borrower's 
projected capitalization are the economic strength of the borrower's 
service territory, the inherent cost of providing service to the 
territory, the disparity in rates between the borrower and neighboring 
utilities, the intensity of competition faced by the borrower from 
neighboring utilities and other power sources, and the relative amount 
of new capital investment required to serve existing or new loads.
    (c) RUS considers a loan to be feasible only if the borrower's 
electric system is year 2000 compliant, or if the borrower provides RUS 
with evidence, satisfactory to RUS, that it is taking measures necessary 
to ensure that its electric system will be year 2000 compliant on or 
before December 31, 1999. Year 2000 compliant means that product 
performance and function are not affected by dates before, during, and a 
reasonable time after the year 2000.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 60 FR 
3731, Jan. 19, 1995; 63 FR 51793, Sept. 29, 1998]



Sec. 1710.113  Loan security.

    (a) RUS makes loans only if, in the judgment of the Administrator, 
the security therefor is reasonably adequate and the loan will be repaid 
according to its terms within the time agreed.
    (b) RUS generally requires that borrowers provide it with a first 
lien on all of the borrower's real and personal property, including 
intangible personal property and any property acquired after the date of 
the loan. This lien shall be in the form of a mortgage by the borrower 
to the Government or a deed of trust between the borrower and a trustee 
satisfactory to the Administrator, together with such security documents 
as RUS may deem necessary in a particular case.
    (c)(1) When a borrower is unable by reason of preexisting 
encumbrances, or otherwise, to furnish a first mortgage

[[Page 99]]

lien on its entire system the Administrator may accept other forms of 
security, such as a pledge of revenues, if he or she determines such 
security is reasonably adequate and the form and nature thereof is 
otherwise acceptable.
    (2) The Administrator, at his or her discretion, may approve the use 
of an indenture patterned after those indentures commonly used by 
utilities engaged in private market financing, in lieu of a mortgage as 
the security instrument for loans to power supply borrowers. The use of 
an indenture will be by mutual agreement of the borrower and the 
Administrator. The terms of each indenture and related loan agreement 
will be negotiated on a case by case basis to best meet the needs of the 
individual borrower and the Government. The provisions of the indenture 
and loan contract shall control, notwithstanding any provisions of 7 CFR 
Chapter XVII which may be in conflict therewith.
    (d) In the case of loans that include the financing of electric 
facilities that are operated as an integral component of a non-RUS 
financed system (such as generation and transmission facilities co-owned 
with other electric utilities), the borrower shall, in addition to the 
mortgage lien on all of the borrower's electric facilities, furnish 
adequate assurance, in the form of contractual or other security 
arrangements, that the system will be operated on an efficient and 
continuous basis. Satisfactory evidence must also be provided that the 
non-RUS financed system is financially sound and under capable 
management. Examples of such evidence include financial reports, annual 
reports, Security and Exchange Commission 10K reports if the system is 
required to file them, credit reports from Standard and Poor's, Moodys 
or other recognized sources, reports to state regulatory authorities and 
the Federal Energy Regulatory Commission, and evidence of a successful 
track record in related construction projects.
    (e) Additional controls on the borrower's financial, investment and 
managerial activities appear in the loan contract and mortgage required 
by RUS.

[57 FR 1053, Jan. 9, 1992, as amended at 62 FR 7665, Feb. 20, 1997]



Sec. 1710.114  TIER, DSC, OTIER and ODSC requirements.

    (a) General. Requirements for coverage ratios are set forth in the 
borrower's mortgage, loan contract, or other contractual agreements with 
RUS. The requirements set forth in this section apply to borrowers that 
receive a loan approved by RUS on or after February 10, 1992. Nothing in 
this section, however, shall reduce the coverage ratio requirements of a 
borrower that has contractually agreed with RUS to a higher requirement.
    (b) Coverage ratios. (1) Distribution borrowers. The minimum 
coverage ratios required of distribution borrowers whether applied on an 
annual or average basis, are a TIER of 1.25, DSC of 1.25, OTIER of 1.1, 
and ODSC of 1.1. OTIER and ODSC shall apply to distribution borrowers 
that receive a loan approved on or after January 29, 1996.
    (2) The minimum coverage ratios required of power supply borrowers, 
whether applied on an annual or average basis, are a TIER of 1.05 and 
DSC of 1.00.
    (3) When new loan contracts are executed, the Administrator may, 
case by case, increase the coverage ratios of distribution and power 
supply borrowers above the levels cited in paragraphs (b)(1) and (b)(2), 
respectively, of this section if the Administrator determines that the 
higher ratios are required to ensure reasonable security for and/or the 
repayment of loans made or guaranteed by RUS. Also, the Administrator 
may, case by case, reduce said coverage ratios if the Administrator 
determines that the lower ratios are required to ensure reasonable 
security for and/or the repayment of loans made or guaranteed by RUS. 
Policies for coverage ratios following certain mergers, consolidations, 
and transfers of systems substantially in their entirety are in 7 CFR 
1717.155.
    (4) If a distribution borrower has in service or under construction 
a substantial amount of generation and associated transmission plant 
financed at a cost of capital substantially higher than the cost of 
funds under section 305 of the RE Act, then the Administrator may 
establish, in his or her sole discretion, blended levels for TIER, DSC,

[[Page 100]]

OTIER, and ODSC based on the respective shares of total utility plant 
represented by said generation and associated transmission plant and by 
distribution and other transmission plant.
    (c) Requirements for loan feasibility. To be eligible for a loan, 
borrowers must demonstrate to RUS that they will, on a pro forma basis, 
earn the coverage ratios required by paragraph (b) of this section in 
each of the years included in the borrower's long-range financial 
forecast prepared in support of its loan application, as set forth in 
subpart G of this part.
    (d) Requirements for maintenance of coverage ratios--(1) Prospective 
requirement. Borrowers must design and implement rates for utility 
service to provide sufficient revenue (along with other revenue 
available to the borrower in the case of TIER and DSC) to pay all fixed 
and variable expenses, to provide and maintain reasonable working 
capital and to maintain on an annual basis the coverage ratios required 
by paragraph (b) of this section. Rates must be designed and implemented 
to produce at least enough revenue to meet the requirements of this 
paragraph under the assumption that average weather conditions in the 
borrower's service territory will prevail in the future, including 
average system damage and outages due to weather and the related costs. 
Failure to design and implement rates pursuant to the requirements of 
this paragraph shall be an event of default upon notice provided in 
accordance with the terms of the borrower's mortgage or loan contract.
    (2) Retrospective requirement. The average coverage ratios achieved 
by a borrower in the 2 best years out of the 3 most recent calendar 
years must meet the levels required by paragraph (b) of this section. If 
a borrower fails to achieve these average levels, it must promptly 
notify RUS in writing. Within 30 days of such notification or of the 
borrower being notified in writing by RUS, whichever is earlier, the 
borrower, in consultation with RUS, must provide a written plan 
satisfactory to RUS setting forth the actions that will be taken to 
achieve the required coverage ratios on a timely basis. Failure to 
develop and implement a plan satisfactory to RUS shall be an event of 
default upon notice provided in accordance with the terms of the 
borrower's mortgage or loan contract.
    (3) Fixed and variable expenses, as used in this section, include 
but are not limited to: all taxes, depreciation, maintenance expenses, 
and the cost of electric power and energy and other operating expenses 
of the electric system, including all obligations under the wholesale 
power contract, all lease payments when due, and all principal and 
interest payments on outstanding indebtedness when due.
    (e) Requirements for advance of funds. (1) If a borrower applying 
for a loan has failed to achieve the coverage ratios required by 
paragraph (b) of this section during the latest 12 month period 
immediately preceding approval of the loan, or if any of the borrower's 
average coverage ratios for the 2 best years out of the most recent 3 
calendar years were below the levels required in paragraph (b) of this 
section, RUS may withhold the advance of loan funds until the borrower 
has adopted an annual financial plan and operating budget satisfactory 
to RUS and taken such other action as RUS may require to demonstrate 
that the required coverage ratios will be maintained in the future and 
that the loan will be repaid with interest within the time agreed. Such 
other action may include, for example, increasing system operating 
efficiency and reducing costs or adopting a rate design that will 
achieve the required coverage ratios, and either placing such rates into 
effect or taking action to obtain regulatory authority approval of such 
rates. If failure to achieve the coverage ratios is due to unusual 
events beyond the control of the borrower, such as unusual weather, 
system outage due to a storm or regulatory delay in approving rate 
increases, then the Administrator may waive the requirement that the 
borrower take the remedial actions set forth in this paragraph, provided 
that such waiver will not threaten loan feasibility.
    (2) With respect to any outstanding loan approved by RUS on or after 
February 10, 1992, if, based on actual or projected financial 
performance of the borrower, RUS determines that the

[[Page 101]]

borrower may not achieve its required coverage ratios in the current or 
future years, RUS may withhold the advance of loan funds until the 
borrower has taken remedial action satisfactory to RUS.

[60 FR 67404, Dec. 29, 1995, as amended at 61 FR 66871, Dec. 19, 1996; 
65 FR 51748, Aug. 25, 2000]



Sec. 1710.115  Final maturity.

    (a) RUS is authorized to make loans and loan guarantees with a final 
maturity of up to 35 years. The borrower may elect a repayment period 
for a loan not longer than the expected useful life of the facilities, 
not to exceed 35 years. Most of the electric facilities financed by RUS 
have a long useful life, often approximating 35 years. Some facilities, 
such as load management equipment and Supervisory Control and Data 
Acquisition equipment, have a much shorter useful life due, in part, to 
obsolescence. Operating loans to finance working capital required for 
the initial operation of a new system are a separate class of loans and 
usually have a final maturity of less than 10 years.
    (b) Loans made or guaranteed by RUS for facilities owned by the 
borrower generally must be repaid with interest within a period, up to 
35 years, that approximates the expected useful life of the facilities 
financed. The expected useful life shall be based on the weighted 
average of the useful lives that the borrower proposes for the 
facilities financed by the loan, provided that the proposed useful lives 
are deemed appropriate by RUS. RUS Form 740c, Cost Estimates and Loan 
Budget for Electric Borrowers, submitted as part of the loan application 
must include, as a note, either a statement certifying that at least 90 
percent of the loan funds are for facilities that have a useful life of 
33 years or longer, or a schedule showing the costs and useful life of 
those facilities with a useful life of less than 33 years. If the useful 
life determination proposed by the borrower is not deemed appropriate by 
RUS, RUS will base expected useful life on an independent evaluation, 
the manufacturer's estimated useful-life or RUS experience with like-
property, as applicable. Final maturities for loans for the 
implementation of programs for demand side management and energy 
resource conservation and on and off grid renewable energy sources not 
owned by the borrower will be determined by RUS. Due to the uncertainty 
of predictions over an extended period of time, RUS may add up to 2 
years to the composite average useful life of the facilities in order to 
determine final maturity.
    (c) [Reserved]
    (d) The Administrator may approve a repayment period longer than the 
expected useful life of the facilities financed, up to 35 years, if a 
longer final maturity is required to ensure repayment of the loan and 
loan security is adequate.
    (e) The final maturity of a loan established pursuant to the 
provisions of this section shall not be extended as a result of 
extending loan payments under section 12(a) of the RE Act.

[58 FR 66265, Dec. 20, 1993, as amended at 60 FR 3731, Jan. 19, 1995; 68 
FR 54236, May 7, 2003]

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.115 was 
amended by adding paragraph (c), effective Feb. 3, 2014. For the 
convenience of the user, the added text is set forth as follows:



Sec. 1710.115  Final maturity.

                                * * * * *

    (c) The term for loans made to finance Eligible EE Programs will be 
determined in accordance with Sec. 1710.408 of this part.



Sec. 1710.116  [Reserved]



Sec. 1710.117  Environmental considerations.

    Borrowers are required to comply with 7 CFR part 1794, which sets 
forth applicable requirements of the National Environmental Policy Act 
(NEPA), as amended (42 U.S.C. 4321 et seq.); the Council on 
Environmental Quality Regulations for Implementing the Procedural 
Provisions of NEPA (40 CFR parts 1500-1508); and certain other statutes, 
regulations and orders. Borrowers must also comply with any other 
applicable Federal or state environmental laws and regulations.

[[Page 102]]



Sec. 1710.118  [Reserved]



Sec. 1710.119  Loan processing priorities.

    (a) Generally loans are processed in chronological order based on 
the date the complete application is received in the Regional office.
    (b) The Administrator may give priority to processing loans that are 
required to meet the following needs:
    (1) To restore electric service following a major storm or other 
catastrophe;
    (2) To bring existing electric facilities into compliance with any 
environmental requirements imposed by Federal or state law that were not 
in effect at the time the facilities were originally constructed;
    (3) To finance the capital needs of borrowers that are the result of 
a merger, consolidation, or a transfer of a system substantially in its 
entirety, provided that the merger, consolidation, or transfer has 
either been approved by RUS or does not need RUS approval pursuant to 
the borrower's loan documents (See 7 CFR 1717.154); or
    (4) To correct serious safety problems, other than those resulting 
from borrower mismanagement or negligence.
    (c) The Administrator may also change the normal order of processing 
loan applications when it is necessary to ensure that all loan authority 
for the fiscal year is utilized.

[57 FR 1053, Jan. 9, 1992, as amended at 61 FR 66871, Dec. 19, 1996]



Sec. 1710.120  Construction standards and contracting.

    Borrowers shall follow all RUS requirements regarding construction 
work plans, construction standards, approved materials, construction and 
related contracts, inspection procedures, and bidding procedures.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.120 was 
amended by adding the words ``energy efficiency and conservation program 
work plans,'' after ``construction work plans,'' effective Feb. 3, 2014.



Sec. 1710.121  Insurance requirements.

    Borrowers are required to comply with certain requirements with 
respect to insurance and fidelity coverage as set forth in 7 CFR part 
1788.



Sec. 1710.122  Equal opportunity and nondiscrimination.

    Borrowers are required to comply with certain regulations on 
nondiscrimination in program services and benefits and on equal 
employment opportunity as set forth in RUS Bulletins 20-15 and 20-19 or 
their successors; 7 CFR parts 15 and 15b; and 45 CFR part 90.



Sec. 1710.123  Debarment and suspension.

    Borrowers are required to comply with certain requirements on 
debarment and suspension as set forth in 7 CFR part 3017.



Sec. 1710.124  Uniform Relocation Act.

    Borrowers are required to comply with applicable provisions of 49 
CFR part 24, which sets forth the requirements of the Uniform Relocation 
Assistance and Real Property Acquisition Policy Act of 1970 (Pub. L. 91-
646; 84 Stat. 1894), as amended by the Uniform Relocation Act Amendments 
of 1987 (Pub. L. 100-17; 101 Stat. 246-256) and the Intermodal Surface 
Transportation Efficiency Act of 1991.



Sec. 1710.125  Restrictions on lobbying.

    Borrowers are required to comply with certain requirements with 
respect to restrictions on lobbying activities. See 7 CFR part 3018.



Sec. 1710.126  Federal debt delinquency.

    (a) Prior to approval of a loan or advance of funds, a borrower must 
report to RUS whether or not it is delinquent on any Federal debt, such 
as Federal income tax obligations or a loan or loan guarantee from 
another Federal agency. If delinquent, the reasons for the delinquency 
must be explained, and RUS will take such explanation into consideration 
in deciding whether to approve the loan or advance of funds.
    (b) Applicants for a loan or loan guarantee must also certify that 
they have been informed of the collection options the Federal government 
may use to collect delinquent debt.



Sec. 1710.127  Drug free workplace.

    Borrowers are required to comply with the Drug Free Workplace Act of 
1988 (Pub. L. 100-690, title V, subtitle D)

[[Page 103]]

and the Act's implementing regulations (7 CFR part 3017) when a borrower 
receives a Federal grant or enters into a procurement contract awarded 
pursuant to the provisions of the Federal Acquisition Regulation (title 
48 CFR) to sell to a Federal agency property or services having a value 
of $25,000 or more.



Secs. 1710.128-1710.149  [Reserved]



             Subpart D_Basic Requirements for Loan Approval



Sec. 1710.150  General.

    The RE Act and prudent lending practice require that the 
Administrator make certain findings before approving an electric loan or 
loan guarantee. The borrower shall provide the evidence determined by 
the Administrator to be necessary to make these findings.



Sec. 1710.151  Required findings for all loans.

    (a) Area coverage. Adequate electric service will be made available 
to the widest practical number of rural users in the borrower's service 
area during the life of the loan. See Sec. 1710.103.
    (b) Feasibility. The loan is feasible and it will be repaid on time 
according to the terms of the mortgage, note, and loan contract. At any 
time after the original determination of feasibility, the Administrator 
may require the borrower to demonstrate that the loan remains feasible 
if there have been, or are anticipated to be, material changes in the 
borrower's costs, loads, rates, rate disparity, revenues, or other 
relevant factors from the time that feasibility was originally 
determined. See Sec. 1710.112 and subpart G of this part.
    (c) Security. RUS will have a first lien on the borrower's total 
system or other adequate security, and adequate financial and managerial 
controls will be included in loan documents. See Sec. 1710.113.
    (d) Interim financing. For loans that include funds to replace 
interim financing, there is satisfactory evidence that the interim 
financing was used for purposes approved by RUS and that the loan meets 
all applicable requirements of this part.
    (e) Facilities for nonrural areas. Whenever a borrower proposes to 
use loan funds for the improvement, expansion, construction, or 
acquisition of electric facilities for non-RE Act beneficiaries, there 
is satisfactory evidence that such funds are necessary and incidental to 
furnishing or improving electric service for RE Act beneficiaries. See 
Sec. 1710.104.
    (f) Facilities to be included in rate base. In states having 
jurisdiction, the borrower has provided satisfactory evidence based on 
the information available, such as an opinion of counsel, that the state 
regulatory authority will not exclude from the borrower's rate base any 
of the facilities included in the loan request, or otherwise prevent the 
borrower from charging rates sufficient to repay with interest the debt 
incurred for the facilities. Such evidence may be based on, but not 
necessarily limited to, the provisions of applicable state laws; the 
rules and policies of the state authority; precedents in other similar 
cases; statements made by the state authority; any assurances given to 
the borrower by the state authority; and other relevant information and 
experience.



Sec. 1710.152  Primary support documents.

    The following primary support documents and studies must be prepared 
by the borrower for approval by RUS in order to support a loan 
application:
    (a) Load forecast. The load forecast provides the borrower and RUS 
with an understanding of the borrower's future system loads, the factors 
influencing those loads, and estimates of future loads. The load 
forecast provides a basis for projecting annual electricity (kWh) sales 
and revenues, and for engineering estimates of plant additions required 
to provide reliable service to meet the forecasted loads. Subpart E of 
this part contains the information to be included in a load forecast and 
when an approved load forecast is required.
    (b) Construction work plan (CWP). The CWP shall specify and document 
the capital investments required to serve a borrower's planned new 
loads, improve service reliability and quality, and service the changing 
needs of existing loads. The requirements for a CWP are set forth in 
subpart F of this part.

[[Page 104]]

    (c) Long-range financial forecasts. RUS encourages borrowers to 
maintain on a current basis a long-range financial forecast, which 
should be used by a borrower's board of directors and manager to guide 
the system toward its financial goals. The forecast submitted in support 
of a loan application shall show the projected results of future actions 
planned by the board of directors. The requirements for a long-range 
financial forecast are set forth in subpart G of this part.
    (d) Borrower's environmental report (BER). This document is used to 
determine what effect the construction of the facilities included in the 
construction work plan will have on the environment. In developing a BER 
a borrower shall follow the policy and procedural requirements set forth 
in 7 CFR part 1794. After reviewing the BER, RUS will determine whether 
additional environmental studies will be required.

[57 FR 1053, Jan. 9, 1992, as amended at 65 FR 14786, Mar. 20, 2000]

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.152 was 
amended by adding paragraph (e), effective Feb. 3, 2014. For the 
convenience of the user, the added text is set forth as follows:



Sec. 1710.152  Primary support documents.

                                * * * * *

    (e) EE Program work plan (EEWP). In the case of a loan application 
to finance an Eligible Energy Efficient Program, an EE Program work plan 
shall be prepared in lieu of a traditional CWP required pursuant to 
paragraph (b) of this section. The requirements for an EEWP are set 
forth in Sec. 1710.255 and in subpart H of this part.



Sec. 1710.153  Additional requirements and procedures.

    Additional requirements and procedures for obtaining RUS financial 
assistance are set forth in 7 CFR part 1712 for loan guarantees, and in 
7 CFR part 1714 for insured loans.



Secs. 1710.154-1710.199  [Reserved]



                        Subpart E_Load Forecasts

    Source: 65 FR 14786, Mar. 20, 2000, unless otherwise noted.



Sec. 1710.200  Purpose.

    This subpart contains RUS policies for the preparation, review, 
approval and use of load forecasts and load forecast work plans. A load 
forecast is a thorough study of a borrower's electric loads and the 
factors that affect those loads in order to estimate, as accurately as 
practicable, the borrower's future requirements for energy and capacity. 
The load forecast of a power supply borrower includes and integrates the 
load forecasts of its member systems. An approved load forecast, if 
required by this subpart, is one of the primary documents that a 
borrower is required to submit to support a loan application.



Sec. 1710.201  General.

    (a) The policies, procedures and requirements in this subpart are 
intended to implement provisions of the loan documents between RUS and 
the electric borrowers and are also necessary to support approval by RUS 
of requests for financial assistance.
    (b) Notwithstanding any other provisions of this subpart, RUS may 
require any power supply or distribution borrower to prepare a new or 
updated load forecast for RUS approval or to maintain an approved load 
forecast on an ongoing basis, if such documentation is necessary for RUS 
to determine loan feasibility, or to ensure compliance under the loan 
documents.



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 an approved load forecast that meets the 
requirements of this subpart on an ongoing basis and provide an approved 
load forecast in support of any request for RUS financial assistance. 
The borrower must also maintain an approved load forecast work plan. The 
borrower's approved load forecast must be prepared pursuant to the 
approved load forecast work plan.
    (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 
maintain an approved load forecast that meets the

[[Page 105]]

requirements of this subpart on an ongoing basis and 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 approved load forecast of its power supply borrower. The approved 
load forecasts must be prepared pursuant to the RUS approved load 
forecast work plan.
    (c) A power supply borrower that has total utility plant of less 
than $500 million and that is not a member of another power supply 
borrower with a total utility plant of $500 million or more must provide 
an approved load forecast that meets the requirements of this subpart in 
support of an application for any RUS loan or loan guarantee which 
exceeds $50 million. The borrower is not required to maintain on an 
ongoing basis either an approved load forecast or an approved load 
forecast work plan.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.202 was 
amended by adding paragraph (d), effective Feb. 3, 2014. For the 
convenience of the user, the added text is set forth as follows:



Sec. 1710.202  Requirement to prepare a load forecast--power supply 
          borrowers.

                                * * * * *

    (d) Notwithstanding paragraphs (a) through (c) of this section, a 
power supply borrower that has an outstanding loan for an Eligible EE 
Program is required to maintain an approved load forecast and an 
approved load forecast work plan on an ongoing basis.



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 
maintain an approved load forecast that meets the requirements of this 
subpart on an ongoing basis and provide an approved 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. The distribution borrower's load 
forecast must be prepared pursuant to the approved load forecast work 
plan 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 maintain an 
approved load forecast that meets the requirements of this subpart on an 
ongoing basis and provide an approved 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. The distribution borrower's approved load forecast must 
be prepared pursuant to the approved load forecast work plan of the 
power supply borrower with total utility plant in excess of $500 
million.
    (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 an approved 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 approved load forecast of its power supply borrower. The borrower is 
not required to maintain on an ongoing basis either an approved load 
forecast or an approved load forecast work plan.
    (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 an approved 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. The borrower is not required to maintain on an ongoing basis 
either an approved load forecast or an approved load forecast work plan.
    (e) A distribution borrower with a total utility plant of $500 
million or more must maintain an approved load

[[Page 106]]

forecast that meets the requirements of this subpart on an ongoing basis 
and provide an approved load forecast in support of any request for RUS 
financing assistance. The borrower must also maintain an approved load 
forecast work plan. 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.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.203 was 
amended by adding paragraph (f), effective Feb. 3, 2014. For the 
convenience of the user, the added text is set forth as follows:



Sec. 1710.203  Requirement to prepare a load forecast--distribution 
          borrowers.

                                * * * * *

    (f) Notwithstanding paragraphs (a) through (e) of this section, a 
distribution borrower that has an outstanding loan for an Eligible EE 
Program is required to maintain an approved load forecast and an 
approved load forecast work plan on an ongoing basis.



Sec. 1710.204  Filing requirements for borrowers that must maintain an
approved load forecast on an ongoing basis.

    (a) Filing of load forecasts and updates. A power supply or 
distribution borrower required to maintain an approved load forecast on 
an ongoing basis under Sec. 1710.202 or Sec. 1710.203 may elect either 
of the following two methods of compliance:
    (1) Submitting a new load forecast to RUS for review and approval at 
least every 36 months, and then submitting updates to the load forecast 
to RUS for review and approval in each intervening year; or
    (2) Submitting a new load forecast to RUS for review and approval 
not less frequently than every 24 months.
    (b) Extensions. RUS may extend any time period required under this 
section for up to 3 months at the written request of the borrower's 
general manager. A request to extend a time period beyond 3 months must 
be accompanied by a written request from the borrower's general manager, 
an amendment to the borrower's approved load forecast work plan 
incorporating the extension, a board resolution approving the extension 
request and any amendment to the approved load forecast work plan, and 
any other relevant supporting information. RUS may extend the time 
periods contained in this section for up to 24 months.



Sec. 1710.205  Minimum approval requirements for all load forecasts.

    (a) Documents required for RUS approval of a borrower's load 
forecast. The borrower must provide the following documents to obtain 
RUS approval for a load forecast:
    (1) The load forecast and supporting documentation;
    (2) A memorandum from the borrower's general manager to the board of 
directors recommending that the board approve the load forecast and its 
uses; and
    (3) A board resolution from the borrower's board of directors 
approving the load forecast and its uses.
    (b) Contents of Load Forecast. All load forecasts submitted by 
borrowers for approval must include:
    (1) A narrative describing the borrower's system, service territory, 
and consumers;
    (2) 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;
    (3) 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;
    (4) 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;
    (5) The load impacts of a borrower's demand side management 
activities, if applicable;
    (6) Graphic representations of the variables specifically identified 
by management as influencing a borrower's loads; and
    (7) A database that tracks all relevant variables that might 
influence a borrower's loads.
    (c) Formats. RUS does not require a specific format for the 
narrative, documentation, data, and other information

[[Page 107]]

in the load forecast, provided that all required information is included 
and available. All data must be in a tabular form that can be 
transferred electronically to RUS computer software applications. RUS 
will evaluate borrower load forecasts for readability, understanding, 
filing, and electronic access. If a borrower's load forecast is 
submitted in a format that is not readily usable by RUS or is 
incomplete, RUS will require the borrower to submit the load forecast in 
a format acceptable to RUS.
    (d) Document retention. The borrower must retain its latest approved 
load forecasts, and supporting documentation until RUS approval of its 
next load forecast. Any approved load forecast work plan must be 
retained as part of the approved load forecast.
    (e) Consultation with RUS. The borrower must designate and make 
appropriate staff and consultants available for consultation with RUS to 
facilitate RUS review of the load forecast work plan and the load 
forecast when requested by RUS.
    (f) Correlation and consistency with other RUS loan support 
documents. If a borrower relies on an approved load forecast or an 
update of an approved load forecast as loan support, the borrower must 
demonstrate that the approved load forecast and the other primary 
support documentation for the loan were reconciled. For example, both 
the load forecast and the financial forecast require input assumptions 
for wholesale power costs, distribution costs, other systems costs, 
average revenue per kWh, and inflation. Also, a borrower's engineering 
planning documents, such as the construction work plan, incorporate 
consumer and usage per consumer projections from the load forecast to 
develop system design criteria. The assumptions and data common to all 
the documents must be consistent.
    (g) Coordination. Power supply borrowers and their members that are 
subject to the requirement to maintain an approved load forecast on an 
ongoing basis are required to coordinate preparation of their respective 
load forecasts, updates of load forecasts, and approved load forecast 
work plan. A load forecast of a power supply borrower must consider the 
load forecasts of all its member systems.

    Effective Date Note: At 78 FR 73365, Dec. 5, 2013, Sec. 1710.205 was 
amended in paragraph (b)(5) by adding the words ``and energy efficiency 
and conservation program'' after ``demand side management'', effective 
Feb. 3, 2014.



Sec. 1710.206  Approval requirements for load forecasts prepared pursuant
to approved load forecast work plans.

    (a) Contents of load forecasts prepared under an approved load 
forecast work plan. In addition to the minimum requirements for load 
forecasts under Sec. 1710.205, load forecasts developed and submitted by 
borrowers required to have an approved load forecast work plan shall 
include the following:
    (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 member 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 work plans.
    (3) A comprehensive description of the database used in the study. 
The narrative shall describe the procedures

[[Page 108]]

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 discussing the methods and procedures used in the analysis and 
modeling of the borrower's electric system loads as provided for in the 
load forecast work plan.
    (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. Examples of 
economic scenarios, weather conditions, and other uncertainties that 
borrowers may decide to address in their analysis include:
    (i) Most-probable assumptions, with normal weather;
    (ii) Pessimistic assumptions, with normal weather;
    (iii) Optimistic assumptions, with normal weather;
    (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.
    (b) Compliance with an approved load forecast work plan. A borrower 
required to maintain an approved load forecast work plan must also be 
able to demonstrate that both it and its RUS borrower members are in 
compliance with its approved load forecast work plan for the next load 
forecast or update of a load forecast.



Sec. 1710.207  RUS criteria for approval of load forecasts by
distribution borrowers not required to maintain an approved load forecast 
on an ongoing basis.

    Load forecasts submitted by distribution borrowers that are 
unaffiliated with a power supply borrower, or by distribution borrowers 
that are members of a power supply borrower that has a total utility 
plant less than $500 million and that is not itself a member of another 
power supply borrower with a total utility plant of $500 million or more 
must satisfy the following minimum criteria:
    (a) The borrower considered all known relevant factors that 
influence the consumption of electricity and the known number of 
consumers served at the time the study was developed;
    (b) The borrower considered and identified all loads on its system 
of RE Act beneficiaries and non-RE Act beneficiaries;
    (c) The borrower developed an adequate supporting data base and 
considered a range of relevant assumptions; and
    (d) The borrower provided RUS with adequate documentation and 
assistance to allow for a thorough and independent review.



Sec. 1710.208  RUS criteria for approval of all load forecasts by power
supply borrowers and by distribution borrowers required to maintain an
approved load forecast on an ongoing basis.

    All load forecasts submitted by power supply borrowers and by 
distribution borrowers required to maintain an approved load forecast 
must satisfy the following criteria:

[[Page 109]]

    (a) The borrower objectively analyzed all known relevant factors 
that influence the consumption of electricity and the known number of 
customers served at the time the study was developed;
    (b) The borrower considered and identified all loads on its system 
of RE Act beneficiaries and non-RE Act beneficiaries;
    (c) The borrower developed an adequate supporting database and 
analyzed a reasonable range of relevant assumptions and alternative 
futures;
    (d) The borrower adopted methods and procedures in general use by 
the electric utility industry to develop its load forecast;
    (e) The borrower used valid and verifiable analytical techniques and 
models;
    (f) The borrower provided RUS with adequate documentation and 
assistance to allow for a thorough and independent review; and
    (g) In the case of a power supply borrower required to maintain an 
approved load forecast on an ongoing basis, the borrower adequately 
coordinated the preparation of the load forecast work plan and load 
forecast with its member systems.



Sec. 1710.209  Approval requirements for load forecast work plans.

    (a) In addition to the approved load forecast required under 
Secs. 1710.202 and 1710.203, any power supply borrower with a total 
utility plant of $500 million or more and any distribution borrower with 
a total utility plant of $500 million or more must maintain an approved 
load forecast work plan. RUS borrowers that are members of a power 
supply borrower with a total utility plant of $500 million or more must 
cooperate in the preparation of and submittal of the load forecast work 
plan of their power supply borrower.
    (b) An approved load forecast work plan establishes the process for 
the preparation and maintenance of a comprehensive database for the 
development of the borrower's load forecast, and load forecast updates. 
The approved load forecast work plan is intended to develop and maintain 
a process that will result in load forecasts that will meet the 
borrowers' own needs and the requirements of this subpart. An approved 
work plan represents a commitment by a power supply borrower and its 
members, or by a large unaffiliated distribution borrower, that all 
parties concerned will prepare their load forecasts in a timely manner 
pursuant to the approved load forecast work plan and they will modify 
the approved load forecast work plan as needed with RUS approval to 
address changing circumstances or enhance the usefulness of the approved 
load forecast work plan.
    (c) An approved load forecast work plan for a power supply borrower 
and its members must cover all member systems, including those that are 
not borrowers. However, only members that are borrowers, including the 
power supply borrower, are required to follow the approved load forecast 
work plan in preparing their respective load forecasts. Each borrower is 
individually responsible for forecasting all its RE Act beneficiary and 
non-RE Act beneficiary loads.
    (d) An approved load forecast work plan must outline the 
coordination and preparation requirements for both the power supply 
borrower and its members.
    (e) An approved load forecast work plan must cover a period of 2 or 
3 years depending on the applicable compliance filing schedule elected 
under Sec. 1710.204.
    (f) An approved load forecast work plan must describe the borrower's 
process and methods to be used in producing the load forecast and 
maintaining current load forecasts on an ongoing basis.
    (g) Approved load forecast work plans for borrowers with residential 
demand of 50 percent or more of total kWh must provide for a residential 
consumer survey 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. Residential consumer surveys 
may be based on

[[Page 110]]

the aggregation of member-based samples or on a system-wide sample, 
provided that the latter provides for relevant regional breakdowns as 
appropriate.
    (h) Approved load forecast work plans must provide for RUS review of 
the load forecasts as the load forecast is being developed.
    (i) A power supply borrower's work plan must have the concurrence of 
the majority of the members that are borrowers.
    (j) The borrower's board of directors must approve the load forecast 
work plan.
    (k) A borrower may amend its approved load forecast work plan 
subject to RUS approval. If RUS concludes that the existing approved 
load forecast work plan will not result in a satisfactory load forecast, 
RUS may require a new or revised load forecast work plan.



Sec. 1710.210  Waiver of requirements or approval criteria.

    For good cause shown by the borrower, the Administrator may waive 
any of the requirements applicable to borrowers in this subpart if the 
Administrator determines that waiving the requirement will not 
significantly affect accomplishment of RUS' objectives and if the 
requirement imposes a substantial burden on the borrower. The borrower's 
general manager must request the waiver in writing.



Secs. 1710.211-1710.249  [Reserved]



          Subpart F_Construction Work Plans and Related Studies



Sec. 1710.250  General.

    (a) An ongoing, integrated planning system is needed by borrowers to 
determine their short-term and long-term needs for plant additions, 
improvements, replacements, and retirements. The primary components of 
the system consist of long-range engineering plans, construction work 
plans (CWPs), CWP amendments, and special engineering and cost studies. 
Long range engineering plans identify plant investments required over a 
period of 10 years or more. CWPs specify and document plant requirements 
for the short-term, usually 2 to 3 years, and special engineering and 
cost studies are used to support CWPs and to identify and document 
requirements for specific items or purposes, such as load management 
equipment, System Control and Data Acquisition equipment, sectionalizing 
investments, and additions of generation capacity and associated 
transmission plant.
    (b) Generally, all borrowers are required to maintain up-to-date 
long range engineering plans approved by their boards of directors. 
Current CWPs approved by the borrower's board must also be developed and 
maintained for distribution and transmission facilities and for 
improvements and replacements of generation facilities. All such 
distribution, transmission or generation facilities must be included in 
the respective CWPs regardless of the source of financing.
    (c) A long range engineering plan specifies and supports the major 
system additions, improvements, replacements, and retirements needed for 
an orderly transition from the existing system to the system required 10 
or more years in the future. The planned future system should be based 
on the most technically and economically sound means of serving the 
borrower's long-range loads in a reliable and environmentally acceptable 
manner, and it should ensure that planned facilities will not become 
obsolete prematurely.
    (d) A CWP shall include investment cost estimates and supporting 
engineering and cost studies to demonstrate the need for each proposed 
facility or activity and the reasonableness of the investment 
projections and the engineering assumptions used in sizing the 
facilities. The CWP must be consistent with the borrower's long range 
engineering plan and both documents must be consistent with the 
borrower's RUS-approved power requirements study.
    (e) Applications for a loan or loan guarantee from RUS (new loans or 
budget reclassifications) must be supported by a current CWP approved by 
both the borrower's board of directors and RUS. RUS approval of these 
plans relates only to the facilities, equipment, and other purposes to 
be financed by RUS, and means that the

[[Page 111]]

plans provide an adequate basis from a planning and engineering 
standpoint to support RUS financing. RUS approval of the plans does not 
mean that RUS approves of the facilities, equipment, or other purposes 
for which the borrower is not seeking RUS financing. If RUS disagrees 
with a borrower's estimate of the cost of one or more facilities for 
which RUS financing is sought, RUS may adjust the estimate after 
consulting with the borrower and explaining the reasons for the 
adjustment.
    (f) Except as provided in paragraph (g) of this section, to be 
eligible for RUS financing, the facilities, including equipment and 
other items, included in a CWP must be approved by RUS before the start 
of construction. This requirement also applies to any amendments to a 
CWP required to add facilities to a CWP or to make significant physical 
changes in the facilities already included in a CWP. Provision for 
funding of ``minor projects'' under an RUS loan guarantee is permitted 
on the same basis as that discussed for insured loan funds in 7 CFR part 
1721, Post-Loan Policies and Procedures for Insured Electric Loans.
    (g) In the case of damage caused by storms and other natural 
catastrophes, a borrower may proceed with emergency repair work before a 
CWP or CWP amendment is prepared by the borrower and approved by RUS, 
without loosing eligibility for RUS financing of the repairs. The 
borrower must notify the RUS regional office in writing, not later than 
45 days after the natural catastrophe, of its preliminary estimates of 
damages and repair costs. Not later than 120 days after the natural 
catastrophe, the borrower must submit to RUS for approval, a CWP or CWP 
amendment detailing the repairs.
    (h) A CWP may be amended or augmented when the borrower can 
demonstrate the need for the changes.
    (i) A borrower's CWP or special engineering studies must be 
supported by a Borrower's Environmental Report, and when necessary by an 
Environmental Analysis or Environmental Impact Statement, as set forth 
in 7 CFR 1794 or required by other Federal or state regulations or laws.
    (j) All engineering activities required by this subpart must be 
performed by qualified engineers, who may be staff employees of the 
borrower or outside consultants.
    (k) Upon written request from a borrower, RUS may waive in writing 
certain requirements with respect to long-range engineering plans and 
CWPs if RUS determines that such requirements impose a substantial 
burden on the borrower and that waiving the requirements will not 
significantly affect the accomplishment of the objectives of this 
subpart. For example, if a borrower's load is forecast to remain 
constant or decline during the planning period, RUS may waive those 
portions of the plans that relate to load growth.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 60 FR 
67405, Dec. 29, 1995; 64 FR 33178, June 22, 1999]



Sec. 1710.251  Construction work plans--distribution borrowers.

    (a) All distribution borrowers must maintain a current CWP approved 
by their board of directors covering all new construction, improvements, 
replacements, and retirements of distribution and transmission plant, 
and improvements replacements, and retirements of any generation plant. 
Construction of new generation capacity need not be included in a CWP 
but must be specified and supported by specific engineering and cost 
studies. (See Sec. 1710.253.)
    (b) A distribution borrower's CWP shall cover a construction period 
of between 2 and 4 years, and include all facilities to be constructed 
which are eligible for RUS financing, whether or not RUS financial 
assistance will be sought or be available for certain facilities. Any 
RUS financing provided for the facilities will be limited to a 4 year 
loan period. The construction period covered by a CWP in support of a 
loan application shall not be shorter than the loan period requested for 
financing of the facilities.
    (c) The facilities, equipment and other items included in a 
distribution borrower's CWP may include:
    (1) Line extensions required to connect consumers, improve service 
reliability or improve voltage conditions;

[[Page 112]]

    (2) Distribution tie lines to improve reliability of service and 
voltage regulation;
    (3) Line conversions and changes required to improve existing 
services or provide additional capacity for new consumers;
    (4) New substation facilities or additions to existing substations;
    (5) Transmission and substation facilities required to support the 
distribution system;
    (6) Distribution equipment required to serve new consumers or to 
provide adequate and dependable service to existing consumers, including 
replacement of existing plant facilities;
    (7) Residential security lights;
    (8) Communications equipment and meters;
    (9) Headquarters facilities;
    (10) Improvements, replacements, and retirements of generation 
facilities;
    (11) Load management equipment, automatic sectionalizing facilities, 
and centralized System Control and Data Acquisition equipment. Load 
management equipment eligible for financing, including the related costs 
of installation, is limited to capital equipment designed to influence 
the time and manner of consumer use of electricity, which includes peak 
clipping and load shifting. To be eligible for financing, such equipment 
must be owned by the borrower, although it may be located inside or 
outside a consumer's premises; and
    (12) The cost of engineering, architectural, environmental and other 
studies and plans needed to support the construction of facilities, when 
such cost is capitalized as part of the cost of the facilities.

[57 FR 1053, Jan. 9, 1992; 57 FR 4513, Feb. 5, 1992, as amended at 60 FR 
3731, Jan. 19, 1995; 60 FR 67405, Dec. 29, 1995]



Sec. 1710.252  Construction work plans--power supply borrowers.

    (a) All power supply borrowers must maintain a current CWP approved 
by the borrower's board of directors covering all new construction, 
improvements, replacements, and retirements of distribution and 
transmission plant, and improvements, replacements, and retirements of 
generation plant. Applications for RUS financial assistance for such 
facilities must be supported by a current, RUS-approved CWP. 
Construction of new generation capacity need not be included in a CWP 
but must be specified and supported by specific engineering and cost 
studies.
    (b) Normally a power supply borrower's CWP shall cover a period of 3 
to 4 years. While comprehensive CWP's are desired, if there are 
extenuating circumstances RUS may accept a single-purpose transmission 
or generation CWP in support of a loan application or budget 
reclassification. The construction period covered by a CWP in support of 
a loan application shall not be shorter than the loan period requested 
for financing of the facilities.
    (c) Facilities, equipment, and other items included in a power 
supply borrower's CWP may include:
    (1) Distribution and related facilities as set forth in 
Sec. 1710.251(c);
    (2) Transmission facilities required to deliver the power needed to 
serve the existing and planned new loads of the borrower and its 
members, and to improve service reliability, including tie lines for 
improved reliability of service, line conversions, improvements and 
replacements, new substations and substation improvements and 
replacements, and Systems Control and Data Acquisition equipment, 
including communications, dispatching and sectionalizing equipment, and 
load management equipment;
    (3) The borrower's proportionate share of transmission facilities 
required to tie together the operating systems of supporting power pools 
and to connect with adjacent power suppliers;
    (4) Improvements and replacements of generation facilities; and
    (5) The cost of engineering, architectural, environmental and other 
studies and plans needed to support the construction of facilities, when 
such cost is capitalized as part of the cost of the facilities.
    (d) A CWP for transmission facilities shall normally include studies 
of load flows, voltage regulation, and stability characteristics to 
demonstrate system performance and needs.

[57 FR 1053, Jan. 9, 1992, as amended at 60 FR 3731, Jan. 19, 1995; 60 
FR 67405, Dec. 29, 1995]

[[Page 113]]



Sec. 1710.253  Engineering and cost studies--addition of generation capacity.

    (a) The construction or purchase of additional generation capacity 
and associated transmission facilities by a power supply or distribution 
borrower, including the replacement of existing capacity, shall be 
supported by comprehensive project-specific engineering and cost studies 
as specified by RUS. The studies shall cover a period from the beginning 
of the project to at least 10 years after the start of commercial 
operation of the facilities.
    (b) The studies must include comprehensive economic present-value 
analyses of the costs and revenues of the available self-generation, 
load management, energy conservation, and purchased-power options, 
including assessments of service reliability and financing requirements 
and risks. Requirements for analyzing purchased-power options are set 
forth in Sec. 1710.254.
    (c) Generally, studies of self-generation, load management, and 
energy conservation options shall include, as appropriate, analyses of:
    (1) Capital and operating costs;
    (2) Financing requirements and risks;
    (3) System reliability;
    (4) Alternative unit sizes;
    (5) Alternative types of generation;
    (6) Fuel alternatives;
    (7) System stability;
    (8) Load flows; and
    (9) System dispatching.
    (d) At the request of a borrower, RUS, in its sole discretion, may 
waive specific requirements of this section if such requirements imposed 
a substantial burden on the borrower and if such waiver will not 
significantly affect the accomplishment of the objectives of this 
subpart.



Sec. 1710.254  Alternative sources of power.

    (a) General. (1) RUS will make loans to finance the construction of 
generation facilities by distribution or power supply borrowers and 
transmission facilities by power supply borrowers only under the 
following conditions if said borrowers do not already own and operate 
such types of facilities:
    (i) Where no adequate and dependable source of power is available to 
meet the consumers' needs; or
    (ii) Where the rates offered by other power sources would result in 
a higher cost of power to the consumers than the cost from facilities 
financed by RUS, and the amount of the power cost savings that would 
result from the RUS-financed facilities bears a significant relationship 
to the amount of the proposed loan.
    (2) If a borrower already owns and operates the types of facilities 
included in a loan request, then a loan for the purposes contained in 
paragraph (a)(1) of this section, as well as for the construction of 
transmission facilities by a distribution borrower, will be considered 
and evaluated by RUS in terms of whether the proposed facilities 
constitute an effective and economical means of meeting the power 
requirements of the consumers. A borrower shall contact RUS as soon as 
practicable in order for RUS to review information submitted by the 
borrower and advise the borrower, in writing, whether there is a need 
for the borrower to investigate and seek alternative sources of power. 
RUS will determine, based on information provided by the borrower or 
otherwise available, whether there is a need to investigate alternative 
sources of power or whether RUS will require information or other 
methods of determining the need for the generation capacity. RUS will 
base its determination on whether RUS is able to conclude that the 
project is needed, the borrower would incur delays and costs in pursuing 
an RFP, or that an RFP is not likely to produce new alternatives to the 
project.
    (b) Loan requests for the addition of generation capacity, including 
replacement of existing capacity, will be accepted by RUS when the 
applicant has completed the requirements established by RUS, in a manner 
satisfactory to RUS. The investigations of alternative sources of power 
must be coordinated in advance with RUS. This section applies to RUS 
financed generation capacity whether owned solely by the borrower, owned 
on an undivided ownership basis with other utilities or substantially 
controlled by the borrower.

[[Page 114]]

    (c) The applicant may be required to seek and utilize capacity 
available from RUS borrowers and other organizations before developing 
plans for additional generation capacity. RUS may require, on a case by 
case basis, that the applicant, among other things:
    (1) Solicit power and energy purchase proposals from all reasonable 
potential sources of power, such as other electric cooperatives, 
investor-owned utilities, municipal utility organizations, and Federal 
and state power authorities.
    (2) Solicit proposals from independent power producers, including 
co-generators, to determine the terms and conditions under which these 
producers can supply the additional power and energy needs of the 
applicant, without RUS financial assistance. Such solicitations should 
be placed in at least three national newspapers or trade publications, 
and they meet all planning, coordination or other requirements imposed 
by state authorities, as well as the environmental requirements of RUS.
    (d) When solicitations are received in accordance with paragraph (c) 
of this section, the applicant will evaluate all alternative proposals 
on an economic, present-value basis, giving consideration to cost-
effectiveness, reliability of service, the short-term and long-term 
financial viability of the supplier, and the financial risk to the 
borrower and its creditors. The applicant will keep RUS fully informed 
on these evaluations and provide supporting information and analysis as 
requested by RUS.
    (e) After evaluation of all proposals received in accordance with 
paragraph (c) of this section, and having informed RUS of the results, 
the applicant may be required to negotiate final proposals with the 
entities submitting the best acceptable offers. Contracts requiring RUS 
approval will either be approved in advance by the Administrator or 
contain a provision that the contract is not valid until approved, in 
writing, by the Administrator. The Administrator will approve the 
contracts in a timely manner provided that the borrower has met all 
applicable requirements, including, among other matters, evidence that 
the alternative source of power selected is an economical and effective 
alternative.
    (f) RUS may make independent inquiries with potential power 
suppliers as to the availability of power to meet borrowers' needs. 
Information developed by RUS will be shared with borrowers at their 
request.
    (g) Further details of RUS requirements for financing of generation 
and bulk transmission facilities are set forth in 7 CFR part 1712.
    (h) At the request of a borrower, RUS, in its sole discretion, may 
waive specific requirements of paragraphs (b) through (e) of this 
section if such waiver is required to prevent unreasonable delays in 
obtaining generation capacity that could result in system reliability 
problems.

(Approved by the Office of Management and Budget under control number 
0572-0032)

[57 FR 1053, Jan. 9, 1992, as amended at 65 FR 31247, May 17, 2000]



Sec. 1710.255  Energy efficiency work plans--energy efficiency borrowers.

    (a) All energy efficiency borrowers must maintain a current EEWP 
approved by their board of directors covering in aggregate all new 
construction, improvements, replacements, and retirements of energy 
efficiency related equipment and activities;
    (b) An energy efficiency borrower's EEWP shall cover a period of 
between 2 and 4 years, and include all facilities to be constructed or 
improved which are eligible for RUS financing, whether or not RUS 
financial assistance will be sought or be available for certain 
facilities. The construction period covered by an EEWP in support of a 
loan application shall not be shorter than the loan period requested for 
financing of the facilities;
    (c) The borrower's EEWP may only include facilities, equipment and 
other activities that have been approved by RUS as a part of an Eligible 
Energy Efficiency and Conservation Program pursuant to subpart H of this 
part;
    (d) The borrower's EEWP must be consistent with the documentation 
provided as part of the current RUS approved EE Program as outlined in 
Sec. 1710.410(c); and

[[Page 115]]

    (e) The borrower's EEWP must include an estimated schedule for the 
implementation of included projects.

[78 FR 73366, Dec. 5, 2013]

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.255 was 
added, effective Feb. 3, 2014.



Secs. 1710.256-1710.299  [Reserved]



                Subpart G_Long-Range Financial Forecasts



Sec. 1710.300  General.

    (a) RUS encourages borrowers to maintain a current long-range 
financial forecast. The forecast should be used by the board of 
directors and the manager to guide the system towards its financial 
goals.
    (b) A borrower must prepare, for RUS review and approval, a long-
range financial forecast, approved by its board of directors, in support 
of its loan application. The forecast must demonstrate that the 
borrower's system is economically viable and that the proposed loan is 
financially feasible. Loan feasibility will be assessed based on the 
criteria set forth in Sec. 1710.112.
    (c) The financial forecast and related projections submitted in 
support of a loan application shall include:
    (1) The projected results of future actions planned by the 
borrower's board of directors;
    (2) The financial goals established for margins, TIER, DSC, equity, 
and levels of general funds to be invested in plant;
    (3) A pro forma balance sheet, statement of operations, and general 
funds summary projected for each year during the forecast period;
    (4) A full explanation of the assumptions, supporting data, and 
analysis used in the forecast, including the methodology used to project 
loads, rates, revenue, power costs, operating expenses, plant additions, 
and other factors having a material effect on the balance sheet and on 
financial ratios such as equity, TIER, and DSC;
    (5) Current and projected cash flows;
    (6) Projections of future borrowings and the associated interest and 
principal expenses required to meet the projected investment 
requirements of the system;
    (7) Current and projected kW and kWh energy sales;
    (8) Current and projected unit prices of significant variables such 
as retail and wholesale power prices, average labor costs, and interest;
    (9) Current and projected system operating costs, including, but not 
limited to, wholesale power costs, depreciation expenses, labor costs, 
and debt service costs;
    (10) Current and projected revenues from sales of electric power and 
energy;
    (11) Current and projected non-operating income and expense;
    (12) A discussion of the historical experience of the borrower, and 
in the case of a power supply borrower its member systems as 
appropriate, with respect to the borrower's market competitiveness as it 
relates to the rates charged for electricity, competition from other 
fuels, and other factors. Additional data and analysis may be required 
by RUS on a case by case basis to assess the probable future 
competitiveness of those borrowers that have a history of serious 
competitive problems; and
    (13) An analysis of the effects of major factors, such as projected 
increases in rates charged for electricity, on the ability of the 
borrower, and in the case of a power supply borrower its member systems, 
to compete with neighboring utilities and other energy sources.
    (d) The following plans, studies and assumptions shall be used in 
developing the financial forecast:
    (1) The RUS-approved CWP;
    (2) RUS-approved power requirements data;
    (3) The current rate schedules or new rates already approved by the 
board of directors;
    (4) Future plant additions and operating expenses projected at 
anticipated future cost levels rather than in constant dollars, with the 
annual rate of inflation for major items specified; and
    (5) A sensitivity analysis may be required by RUS on a case-by-case 
basis taking into account such factors as the number and type of large 
power loads, projections of future borrowings and the associated 
interest, projected

[[Page 116]]

loads, projected revenues, and the probable future competitiveness of 
the borrower. When RUS determines that a sensitivity analysis is 
necessary for distribution borrowers, the variables to be tested will be 
determined by the General Field Representative in consultation with the 
borrower and the regional office. The regional office will consult with 
the Power Supply Division in the case of generation projects for 
distribution borrowers. For power supply borrowers, the variables to be 
tested will be determined by the borrower and the Power Supply Division.
    (e) The financial forecast shall use the accrual method, as approved 
by RUS, for analyzing costs and revenues, and, as applicable, compare 
the economic results of the various alternatives on a present value 
basis.

[57 FR 1053, Jan. 9, 1992, as amended at 63 FR 53277, Oct. 5, 1998]

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.300 was 
amended by redesignating paragraphs (d)(3) through (5) as paragraphs 
(d)(4) through (6), and adding a new paragraph (d)(3), effective Feb. 3, 
2014. For the convenience of the user, the added text is set forth as 
follows:



Sec. 1710.300  General.

                                * * * * *

    (d) * * *
    (3) RUS-approved EE Program work plan;

                                * * * * *



Sec. 1710.301  Financial forecasts--distribution borrowers.

    (a) Financial forecasts prepared by distribution borrowers shall 
cover at least a ten-year period, unless a shorter period is authorized 
by other RUS regulations.
    (b) In addition to the requirements set forth in Sec. 1710.300 of 
this part, financial forecasts prepared by distribution borrowers in 
support of a loan application shall:
    (1) Include expenditures for any maintenance determined to be needed 
in the current system's operation and maintenance review and evaluation 
in order to comply with mortgage covenants and prudent utility practice;
    (2) Fully explain the basis for the power cost projections used. 
Generally, the power supplier's most recent forecasted rates shall be 
used; and
    (3) Use RUS Form 325 or computer-generated equivalent reports.



Sec. 1710.302  Financial forecasts--power supply borrowers.

    (a) The requirements of this section apply only to financial 
forecasts submitted by power supply borrowers in support of a loan from 
RUS. The financial forecast prepared by power supply borrowers shall 
demonstrate the effects that the addition of generation, transmission 
and any distribution facilities will have on the power supply borrower's 
sales, costs, and revenues, and on the cost of power to the member 
distribution systems.
    (b) The financial forecast shall cover a period of 10 years. RUS may 
request projections for a longer period of time if RUS deems necessary.
    (c) Financial forecasts prepared in support of loan applications to 
finance additional generation capacity shall include a power cost study 
as set forth in Sec. 1710.303.
    (d) In addition to the requirements set forth in Sec. 1710.300, 
financial forecasts prepared by power supply borrowers shall:
    (1) Identify all plans for generation and transmission capital 
additions and system operating expenses on a year-by-year basis, 
beginning with the present and running for 10 years, unless a longer 
period of time has been requested by RUS.
    (2) Integrate projections of operation and maintenance expenses 
associated with existing plant with those of new proposed facilities to 
determine total costs of system operation as well as the costs of new 
generation and generation-related facilities;
    (3) Provide an in-depth analysis of the regional markets for power 
if loan feasibility depends to any degree on a borrower's ability to 
sell surplus power while its system loads grow to meet the planned 
capacity of a proposed plant;
    (4) If not previously submitted, furnish RUS with all material 
information on operating agreements, ownership agreements, fuel 
contracts and any other special agreements that affect annual cost 
projections, as may be

[[Page 117]]

required by RUS on a case by case basis; and
    (5) Include sensitivity analysis if required by RUS pursuant to 
Sec. 1710.300(d)(5).
    (e) The projections shall be coordinated in advance with RUS so that 
agreement can be reached on major aspects of the economic studies. These 
include, but are not limited to, projections of future kW and kWh 
requirements, RE Act beneficiary loads, electricity prices, revenues 
from system and off-system power sales, the cost of prospective plant 
additions, interest and depreciation rates, fuel costs, cost escalation 
factors, the discount rate, and other factors.
    (f) The projections, analysis, and supporting information must be 
included in a report that will provide RUS with the information needed 
to:
    (1) Understand and compare various power supply plans;
    (2) Determine that the facilities to be financed will perform 
satisfactorily; and
    (3) Determine that the overall system is economically viable and the 
loan is financially feasible and secure.

[57 FR 1053, Jan. 9, 1992, as amended at 63 FR 53278, Oct. 5, 1998]

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.302 was 
amended in paragraph (d)(5) by removing the reference 
``Sec. 1710.300(d)(5)'' and adding in its place ``Sec. 1710.300(d)(6),'' 
effective Feb. 3, 2014.



Sec. 1710.303  Power cost studies--power supply borrowers.

    (a) All applications for financing of additional generation capacity 
and the associated bulk transmission facilities shall be supported by a 
power cost study to demonstrate that the proposed generation and 
associated transmission facilities are the most economical and effective 
means of meeting the borrower's power requirements. This study usually 
is a separate study but it may be integrated with the financial forecast 
required by Sec. 1710.302.
    (b) A power cost study shall include the following basic elements:
    (1) A study of all reasonably available self-generation, purchased-
power, load management, and energy conservation alternatives as set 
forth in Secs. 1710.253 and 1710.254;
    (2) A present-value analysis of the costs of the alternatives and 
their effects on total power costs, covering a period of at least 10 
years beyond the projected in-service date of the facilities;
    (3) A description of proposed new power-purchase contracts or 
revisions to existing contracts, and an analysis of the effects on power 
costs;
    (4) Use of sensitivity analyses to determine the vulnerability of 
the alternatives to a reasonable range of assumptions about fuel costs, 
failure to achieve projected load growth, changes in operating and 
financing costs, and other major factors, if the financial forecast is 
used in support of a loan or loan guarantee that exceeds the smaller of 
$25 million or 10 percent of the borrower's total utility plant. 
Individual sensitivity analyses need not be duplicated if they have been 
included in other materials submitted to RUS; and
    (5) Assessment of the financial risks of the various alternatives, 
especially as between capital-intensive and non-capital-intensive 
alternatives, under the range of assumptions set forth in paragraph 
(b)(4) of this section.
    (c) Power cost studies must use current, RUS-approved power 
requirements data, and all major assumptions are subject to RUS 
approval. Alternative assumptions about projected power requirements may 
be used, however, in conjunction with the sensitivity analyses required 
by paragraph (b)(4) of this section.

(Approved by the Office of Management and Budget under control number 
0572-0032)



Secs. 1710.304-1710.349  [Reserved]



        Subpart H_Energy Efficiency and Conservation Loan Program

    Source: 78 FR 73366, Dec. 5, 2013, unless otherwise noted.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, subpart H was 
added, effective Feb. 3, 2014.



Sec. 1710.400  Purpose.

    (a) This subpart establishes policies and requirements that apply to 
loans and loan guarantees to finance Energy

[[Page 118]]

Efficiency and Conservation programs (EE Programs) undertaken by an 
eligible utility system to finance Demand side management, energy 
efficiency and conservation, or on-grid and off-grid renewable energy 
system programs that will result in the better management of their 
system load growth, a more beneficial load profile, or greater 
optimization of the use of alternative energy resources in their service 
territory. These programs may be considered an essential utility 
service.
    (b)(1) The goals of an eligible Energy Efficiency project eligible 
for funding under this program and Subpart H include:
    (i) Increasing energy efficiency at the end user level;
    (ii) Modifying electric load such that there is a reduction in 
overall system demand;
    (iii) Effecting a more efficient use of existing electric 
distribution, transmission and generation facilities;
    (iv) Attracting new businesses and creating jobs in rural 
communities by investing in energy efficiency; and
    (v) Encouraging the use of renewable energy fuels for either Demand 
side management or the reduction of conventional fossil fuel use within 
the service territory.
    (2) Although not a goal, RUS recognizes that there will be a 
reduction of green house gases with energy efficiency improvements.



Sec. 1710.401  RUS policy.

    EE Programs under this subpart may be financed at the distribution 
level or by an electric generation and transmission provider. RUS 
encourages borrowers to coordinate with the relevant member systems 
regarding their intention to implement a program financed under this 
subpart. RUS also encourages borrowers to leverage funds available under 
this subpart with State, local, or other funding sources that may be 
available to implement such programs.



Sec. 1710.402  Scope.

    This subpart adapts and modifies, but does not supplant, the 
requirements for all borrowers set forth elsewhere where the purpose of 
the loan is to finance an approved EE program. In the event there is 
overlap or conflict between this subpart and the provisions of this part 
1710 or other parts of the Code of Federal Regulations, the provisions 
of this subpart will apply for loans made or guaranteed pursuant to this 
subpart.



Sec. 1710.403  General.

    EE Programs financed under this subpart may be directed at all forms 
of energy consumed within a utility's service territory, not just 
electricity, where the electric utility is in a position to facilitate 
the optimization of the energy consumption profile within its service 
territory and do so in a way that enhances the financial or physical 
performance of the rural electric system and enables the repayment of 
the energy efficiency loan.



Sec. 1710.404  Definitions.

    For the purpose of this subpart, the following terms shall have the 
following meanings. In the event there is overlap or conflict between 
the definitions contained in Sec. 1710.2, the definitions set forth 
below will apply for loans made or guaranteed pursuant to this subpart.
    British thermal unit (Btu) means the quantity of heat required to 
raise one pound of water one degree Fahrenheit.
    Certified energy auditor for commercial and industrial energy 
efficiency improvements. (1) An energy auditor shall meet 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.

[[Page 119]]

    (2) For residential energy efficiency improvements, an energy 
auditor shall meet one of the following criteria: 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 an individual possessing a current residential 
energy auditor or building analyst certification from a national, 
industry-recognized organization.
    Cost effective means the aggregate cost of an EE Program is less 
than the financial benefit of the program over time. The cost of a 
program for this purpose shall include the costs of incentives, 
measurement and verification activity and administrative costs, and the 
benefits shall include, without limitation, the value of energy saved, 
the value of corresponding avoided generation, transmission or 
distribution and reserve investments as may be displaced or deferred by 
program activities, and the value of corresponding avoided greenhouse 
gas emissions and other pollutants.
    Demand means the electrical load averaged over a specified interval 
of time. Demand is expressed in kilowatts, kilovolt amperes, kilovars, 
amperes, or other suitable units. The interval of time is generally 15 
minutes, 30 minutes, or 60 minutes.
    Demand savings means the quantifiable reduction in the load 
requirement for electric power, usually expressed in kilowatts (kW) or 
megawatts (MW) such that it reduces the cost to serve the load.
    Eligible borrower means a utility system that has direct or indirect 
responsibility for providing retail electric service to persons in a 
rural area. This definition includes existing borrowers and utilities 
who meet current RUS borrower requirements.
    Energy audit means an inspection and analysis of energy flows in a 
building, process, or system with the goal of identifying opportunities 
to enhance energy efficiency. The activity should result in an objective 
standard-based technical report containing recommendations for improving 
the energy efficiency. The report should also include an analysis of the 
estimated benefits and costs of pursuing each recommendation and the 
simple payback period.
    Energy efficiency and conservation measures means equipment, 
materials and practices that when installed and used at a Consumer's 
premises result in a verifiable reduction in energy consumption, 
measured in Btus, or demand as measured in Btu-hours, or both, at the 
point of purchase relative to a base level of output. The ultimate goal 
is the reduction of utility or consumer energy needs.
    Energy efficiency and conservation program (EE Program) means a 
program of activities undertaken or financed by a utility within its 
service territory to reduce the amount or rate of energy used by 
Consumers relative to a base level of output.
    HVAC means heating, ventilation, and air conditioning.
    Load means the Power delivered to power utilization equipment 
performing its normal function.
    Load factor means the ratio of the average load over a designated 
period of time to the peak load occurring in the same period.
    Peak demand (or maximum demand) means the highest demand measured 
over a selected period of time, e.g., one month.
    Peak demand reduction means a decrease in electrical demand on an 
electric utility system during the system's peak period, calculated as 
the reduction in maximum average demand achieved over a specified 
interval of time.
    Power means the rate of generating, transferring, or using energy. 
The basic unit is the watt, where one Watt is approximately 3.41213 Btu/
hr.
    Re-lamping means the initial conversion of bulbs or light fixtures 
to more efficient lighting technology but not the replacement of like 
kind bulbs or fixtures after the initial conversion.
    SI means the International System of Units: the modern metric 
system.
    Smart Grid Investments means capital expenditures for devices or 
systems that are capable of providing real time, two way (utility and 
Consumer) information and control protocols for individual Consumer 
owned or operated appliances and equipment, usually

[[Page 120]]

through a Consumer interface or smart meter.
    Ultimate recipient means a Consumer that receives a loan from a 
borrower under this subpart.
    Utility Energy Services Contract (UESC) means a contract whereby a 
utility provides a Consumer with comprehensive energy efficiency 
improvement services or demand reduction services.
    Utility system means an entity in the business of providing retail 
electric service to Consumers (distribution entity) or an entity in the 
business of providing wholesale electric supply to distribution entities 
(generation entity) or an entity in the business of providing 
transmission service to distribution or generation entities 
(transmission entity), where, in each case, the entities provide the 
applicable service using self-owned or controlled assets under a 
published tariff that the entity and any associated regulatory agency 
may adjust.
    Watt means the SI unit of power equal to a rate of energy transfer 
(or the rate at which work is done), of one joule per second.



Sec. 1710.405  Eligible energy efficiency and conservation programs.

    (a) General. Eligible EE Programs shall:
    (1) Be developed and implemented by an Eligible borrower and applied 
within its service territory;
    (2) Consist of eligible activities and investments as provided in 
Sec. 1710.406
    (3) Provide for the use of State and local funds where available to 
supplement RUS loan funds;
    (4) Incorporate the applicant's policy applicable to the 
interconnection of distributed resources;
    (5) Incorporate a business plan that meets the requirements of 
Sec. 1710.407;
    (6) Incorporate a quality assurance plan that meets the requirements 
of Sec. 1710.408;
    (7) Demonstrate that the program can be expected to be Cost 
effective;
    (8) Demonstrate that the program will have a net positive or neutral 
cumulative impact on the borrower's financial condition over the time 
period contemplated in the analytical support documents demonstrating 
that the net present value of program costs incurred by the borrower are 
positive, pursuant to Sec. 1710.411;
    (9) Demonstrate energy savings or peak demand reduction for the 
service territory overall; and
    (10) Be approved in writing by RUS prior to the investment of funds 
for which reimbursement will be requested.
    (b) Financial Structures. Eligible EE Programs may provide for 
direct recoupment of expenditures for eligible activities and investment 
from Ultimate Recipients as follows:
    (1) Loans made to Ultimate Recipients located in a rural area where 
--
    (i) The Ultimate Recipients may be wholesale or retail;
    (ii) The loans may be secured or unsecured;
    (iii) The loan receivables are owned by the Eligible Borrower;
    (iv) The loans are made or serviced directly by the Eligible 
Borrower or by a financial institution pursuant to a contractual 
relationship between the Eligible Borrower and the financial 
institution;
    (v) Due diligence is performed to confirm the repayment ability of 
the Ultimate Recipient;
    (vi) Loans are funded only upon completion of the project financed 
or to reimburse startup costs that have been incurred;
    (vii) The rate charged the Ultimate Recipient is less than or equal 
to the direct Treasury rate established daily by the United States 
Treasury pursuant to Sec. 1710.51(a)(1) or Sec. 1710.52, as applicable, 
plus the borrower's interest rate from RUS and 1.5 percent . Exceptions 
will be made on a case-by-case basis to ensure repayment of the 
government's loan and must be clearly articulated in the business plan 
RUS will not accept an exception request if the loan is feasible at 1.5 
percent; and
    (viii) Loans are not used to refinance a preexisting loan.
    (2) A tariff that is specific to an identified rural Consumer, 
premise or class of ratepayer; or
    (3) On bill repayment and other financial recoupment mechanisms as 
may be approved by RUS.
    (c) Period of performance--(1) Performance standards. (i) Eligible 
EE Programs activities that are listed under

[[Page 121]]

Sec. 1710.406(b) should be designed to achieve the applicable operating 
performance standards within one year of the date of installation of the 
facilities.
    (ii) All activities other than those included in paragraph (c)(1)(i) 
of this section should be designed to achieve the applicable operating 
performance targets within the time period contemplated by the analytic 
support documents for the overall EE Program as approved by RUS.
    (2) Cost effectiveness. Eligible EE Programs must demonstrate that 
Cost effectiveness as measured for the program overall will be achieved 
within ten years of initial funding, except in cases where the useful 
life of the technology on an aggregate basis can be demonstrated to be 
longer than the ten year period. RUS will evaluate the useful life 
assumption on a case-by-case basis.



Sec. 1710.406  Eligible activities and investments.

    (a) General. Eligible program activities and investments:
    (1) Shall be designed to improve energy efficiency and/or reduce 
peak demand on the customer side of the meter;
    (2) Shall be Cost effective in the aggregate after giving effect to 
all activities and investments contemplated in the approved EE Program; 
and
    (3) May apply to all Consumer classes.
    (b) Eligible activities and investments. Eligible program activities 
and investments may include, but are not limited to, the following:
    (1) Energy efficiency and conservation measures where assets 
financed at an Ultimate Recipient premises can be characterized as an 
integral part of the real property that would typically transfer with 
the title under applicable state law. Where applicable, it is 
anticipated that the loan obligation would also be expected to transfer 
with ownership of the metered account serving that property.
    (2) Renewable Energy Systems, including --
    (i) On or Off Grid Renewable energy systems;
    (ii) Fuel cells;
    (3) Demand side management (DSM) investments including Smart Grid 
Investments;
    (4) Energy audits;
    (5) Utility Energy Services Contracts;
    (6) Consumer education and outreach programs;
    (7) Power factor correction equipment on the Ultimate Recipient side 
of the meter;
    (8) Re-lamping to more energy efficient lighting; and
    (9) Fuel Switching as in:
    (i) The replacement of existing fuel consuming equipment using a 
particular fuel with more efficient fuel consuming equipment that uses 
another fuel but which does not increase direct greenhouse gas 
emissions; or
    (ii) The installation of non-electric fuel consuming equipment to 
facilitate management of electric system peak loads. Fuel switching to 
fossil or biomass fueled electric generating equipment is expressly 
excluded.
    (10) Other activities and investments as approved by RUS as part of 
the EE Program such as, but not limited to, pre-retrofit improvements.
    (c) Intermediary lending. EE Program loan funds may be used for 
direct re-lending to Ultimate Recipients where the requirements of 
Sec. 1710.405(b) are met.
    (d) Performance standards. Borrowers are required to use Energy Star 
qualified equipment where applicable or meet or exceed efficiency 
requirements designated by the Federal Energy Management Program.



Sec. 1710.407  Business plan.

    An Eligible EE Program must have a business plan for implementing 
the program. The business plan is expected to have a global perspective 
on the borrower's energy efficiency plan. Therefore, energy efficiency 
upgrades should be identified in aggregate. The business plan must have 
the following elements:
    (a) Executive summary. The executive summary shall capture the 
overall objectives to be met by the Eligible EE Program and the 
timeframe in which they are expected to be achieved.

[[Page 122]]

    (b) Organizational background. The background section shall include 
descriptions of the management team responsible for implementing the 
Eligible EE Program.
    (c) Marketing plan. The marketing section should identify the target 
Consumers, promotional activities to be pursued and target penetration 
rates by Consumer category and investment activity.
    (d) Operations plan. The operations plan shall include but is not 
limited to:
    (1) A list of the activities and investments to be implemented under 
the EE Program and the Btu savings goal targeted for each category;
    (2) An estimate of the dollar amount of investment by the utility 
for each category of activities and investments listed under paragraph 
(d)(1) of this section;
    (3) A staffing plan that identifies whether and how outsourced 
contractors or subcontractors will be used to deliver the program;
    (4) A description of the process for documenting and perfecting 
collateral arrangements for Ultimate Recipient loans, if applicable; and
    (5) The overall Btu savings to be accomplished over the life of the 
EE Program.
    (e) Financial plan. The financial plan shall include but is not 
limited to:
    (1) A schedule showing sources and uses of funds for the program;
    (2) An itemized budget for each activity and investment category 
listed in the operations plan;
    (3) An aggregate Cost effectiveness forecast;
    (4) Where applicable, provision for Ultimate Recipient loan loss 
reserves. These loan loss reserves will not be funded by RUS. Loan loss 
reserves are not required when a utility will not be relending RUS 
funds.
    (5) Identify expected Ultimate Recipient loan delinquency and 
default rates and report annually on deviations from the expected rates.
    (f) Risk analysis. The business plan shall include an evaluation of 
the financial and operational risk associated with the program, 
including an estimate of prospective Consumer loan losses consistent 
with the loan loss reserve to be established pursuant to paragraph 
(e)(4) of this section.
    (g) The borrowers are strongly encouraged to follow a bulletin or 
such other publication as RUS deems appropriate that contains and 
describes best practices for energy efficiency business plans. RUS will 
make this bulletin or publication publicly available and revise it from 
time-to-time as RUS deems it necessary.



Sec. 1710.408  Quality assurance plan.

    An eligible EE program must have a quality assurance plan as part of 
the program. The quality assurance plan is expected to have a global 
perspective on the borrower's energy efficiency plan. Therefore, energy 
efficiency upgrades should be identified in aggregate. Every effort is 
made to fund only EE programs that are administered in accordance with 
quality assurance plans meeting standards designed to achieve the 
purposes of this subpart. However, RUS and its employees assume no legal 
liability for the accuracy, completeness or usefulness of any 
information, product, service, or process funded directly or indirectly 
with financial assistance provided under this subpart. Nothing in the 
loan documents between RUS and the energy efficiency borrower shall 
confer upon any other person any right, benefit or remedy of any nature 
whatsoever. Neither RUS nor its employees makes any warranty, express or 
implied, including the warranties of merchantability and fitness for a 
particular purpose, with respect to any information, product, service, 
or process available from an energy efficiency borrower. The approval by 
RUS and its employees of an energy efficiency borrower's quality 
assurance plan is solely for the benefit of RUS. Approval of the quality 
assurance plan does not constitute an RUS endorsement. The quality 
assurance plan must have the following elements:
    (a) Quality assurance assessments shall include the use of qualified 
energy managers or professional engineers to evaluate program activities 
and investments;
    (b) Where applicable, program evaluation activities should use the 
protocols for determining energy savings as developed by the U.S. 
Department of

[[Page 123]]

Energy in the Uniform Methods Project.
    (c) Energy audits shall be performed for energy efficiency 
investments involving the building envelope at an Ultimate Recipient 
premises;
    (d) Energy audits must be performed by certified energy auditors; 
and
    (e) Follow up audits shall be performed within one year after 
installation on a sample of investments made to confirm whether 
efficiency improvement expectations are being met.
    (f) In cases involving energy efficiency upgrades to a single system 
(such as a ground source heat pump) the new system must be designed and 
installed by certified and insured professionals acceptable to the 
utility.
    (g) Industry or manufacturer standard performance tests, as 
applicable, shall be required on any system upgraded as a result of an 
EE Program. This testing shall indicate the installed system is meeting 
its designed performance parameters.
    (h) In some programs the utility may elect to recommend independent 
contractors who can perform energy efficiency related work for their 
customers. In these cases utilities shall monitor the work done by the 
contractors and confirm that the contractors are performing quality 
work. Utilities should remove substandard contractors from their 
recommended lists if the subcontractors fail to perform at a 
satisfactory level. RUS does not endorse or recommend any particular 
independent contractors.
    (i) Contractors not hired by the utility may not act as agents of 
the utility in performing work financed under this subpart.
    (j) The borrowers are strongly encouraged to follow a bulletin or 
other publication that RUS deems appropriate and contains and describes 
best practices for energy efficiency quality assurance plans. RUS will 
make this bulletin or publication publicly available and revise it from 
time-to-time as RUS deems it necessary.



Sec. 1710.409  Loan provisions.

    (a) Loan term. The maximum term for loans under this subpart shall 
be 15 years unless the loans relate to ground source loop investments or 
technology on an aggregate basis that has a useful life greater than 15 
years. Ground source loop investments as the term is used in this 
paragraph do not include ancillary equipment related to ground source 
heat pump systems.
    (b) Loan feasibility. Loan feasibility must be demonstrated for all 
loans made under this subpart. Loans made under this subpart shall be 
secured.
    (c) Reimbursement for completed projects. (1) A borrower may request 
an initial advance not to exceed five percent of the total loan amount 
for working capital purposes to implement an eligible EE Program;
    (2) Except for the initial advance provided for in paragraph (c)(1) 
of this section, all advances under this subpart shall be used for 
reimbursement of expenditures relating to a completed activity or 
investment; and
    (3) Advances shall be in accordance with RUS procedures.
    (d) Loan amounts. (1) Cumulative loan amounts outstanding under this 
subpart will be determined by the Assistant Administrator of the 
Electric Program and based an applicant's business plan; and
    (2) Financing for administrative costs may not exceed 5 percent of 
the total loan amount.
    (3) The Rural Utilities Service reserves the right to place a cap on 
both the total amount of funds an eligible entity can apply for, as well 
as a cap on the total amount of funds the Energy Efficiency and 
Conservation Program can utilize in the appropriations.



Sec. 1710.410  Application documents.

    The required application documentation listed in this section is not 
all inclusive but is specific to Eligible borrowers requesting a loan 
under this subpart and in most cases is supplemental to the general 
requirements for loan applications provided for in this part 1710:
    (a) A letter from the Borrower's General Manager requesting a loan 
under this subpart.
    (b) A copy of the board resolution establishing the EE Program that 
reflects an undertaking that funds collected in excess of then current 
amortization requirements for the related RUS loan will be redeployed 
for EE

[[Page 124]]

Program purposes or used to prepay the RUS loan.
    (c) Current RUS-approved EE Program documentation that includes:
    (1) A Business Plan that meets the requirements of Sec. 1710.407;
    (2) A Quality Assurance Plan that meets the requirements of 
Sec. 1710.408;
    (3) Analytical support documentation that meets the requirements of 
Sec. 1710.411;
    (4) A copy of RUS' written approval of the EE Program.
    (d) An EE program work plan that meets the requirements of 
Sec. 1710.255;
    (e) A statement of whether an initial working capital advance 
pursuant to Sec. 1710.409(c)(1) is included in the loan budget together 
with a schedule of how these funds will be used.
    (f) A proposed draft Schedule C pursuant to 7 CFR part 1718 that 
lists assets to be financed under this subpart as excepted property 
under the RUS mortgage, as applicable.



Sec. 1710.411  Analytical support documentation.

    Applications for loans under this subpart may only be made for 
eligible activities and investments included in an RUS-approved EE 
Program. In addition to a business plan and operations plan, a request 
for EE program approval must include analytical support documentation 
that demonstrates the program meets the requirements of Sec. 1710.303 
and assures RUS of the operational and financial integrity of the EE 
Program. This documentation must include, but is not necessarily limited 
to, the following:
    (a) A comparison of the utility's projected annual growth in demand 
after incorporating the EE Program together with an updated baseline 
forecast on file with RUS, where each includes an estimate of energy 
consuming devices used by customers in the service territory and a 
specific time horizon as determined by the utility for meeting the 
performance objectives established by them for the EE Program;
    (b) Demonstration that the required periods of performance under 
Sec. 1710.405(c) can reasonably be expected to be met;
    (c) A report of discussions and coordination conducted with the 
power supplier, where applicable, issues identified as a result, and the 
outcome of this effort.
    (d) An estimate of the amount of direct investment in utility-owned 
generation that will be deferred as a result of the EE Program;
    (e) A description of efforts to identify state and local sources of 
funding and, if available, how they are to be integrated in the 
financing of the EE Program; and
    (f) Copies of sample documentation used by the utility in 
administering its EE Program.
    (g) Such other documents and reports as the Administrator may 
require.



Sec. 1710.412  Borrower accounting methods, management reporting, and audits.

    Nothing in this subpart changes a Borrower's obligation to comply 
with RUS's accounting, monitoring and reporting requirements. In 
addition thereto, the Administrator may also require additional 
management reports that provide the agency with a means of evaluating 
the extent to which the goals and objectives identified in the EE Plan 
are being accomplished.



Sec. 1710.413  Compliance with other laws and regulations.

    Nothing in this subpart changes a Borrower's obligation to comply 
with all laws and regulations to which it is subject.



Secs. 1710.414-1710.499  [Reserved]



       Subpart I_Application Requirements and Procedures for Loans

    Source: 60 FR 3731, Jan. 19, 1995, unless otherwise noted.



Sec. 1710.400  Initial contact.

    (a) Loan applicants that do not have outstanding loans from RUS 
should write to the Rural Utilities Service Administration, United 
States Department of Agriculture, Washington, DC 20250-1500. A field or 
headquarters staff representative may be assigned by RUS

[[Page 125]]

to visit the applicant and discuss its financial needs and eligibility. 
Borrowers that have outstanding loans should contact their assigned RUS 
general field representative (GFR) or, in the case of a power supply 
borrower, the Director, Power Supply Division. Borrowers may consult 
with RUS field representatives and headquarters staff, as necessary.
    (b) Before submitting an application for an insured loan the 
borrower shall ascertain from RUS the amount of supplemental financing 
required, as set forth in Sec. 1710.110. If the borrower is applying for 
either a municipal rate loan subject to the interest rate cap or a 
hardship rate loan, the application must provide a preliminary breakdown 
of residential consumers either by county or by census tract. Final data 
must be included with the application. See Sec. 1710.401(a)(8).

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.400 was 
redesignated as 1710.500, effective Feb. 3, 2014.



Sec. 1710.401  Loan application documents.

    (a) All borrowers. All applications for electric loans shall include 
the documents listed in this paragraph. The first page of the 
application shall be a list of the documents included in the 
application. The borrower may use RUS Form 726, Checklist for Electric 
Loan Application, or a computer generated equivalent as this list.
    (1) Transmittal letter. A letter signed by the borrower's manager 
indicating the actual corporate name and taxpayer identification number 
of the borrower and addressing the following items:
    (i) The need for flood hazard insurance;
    (ii) Breakdown of requested loan funds by state;
    (iii) A listing of the counties served by the borrower;
    (iv) A listing of threatened actions by third parties that could 
adversely affect the borrower's financial condition, including 
annexations or other actions affecting service territory, loads, or 
rates; and
    (v) A listing of pending regulatory proceedings pertaining to the 
borrower.
    (2) Board resolution. This document is the formal request by the 
borrower's board of directors for a loan from RUS. The board resolution 
shall include:
    (i) The requested loan type, loan amount, loan term, final maturity 
and method of amortization (Sec. 1710.110(b));
    (ii) The sources and amounts of any supplemental or other financing;
    (iii) Authorization for RUS to release appropriate information to 
supplemental or other lender(s), and authorization for these lenders to 
release appropriate information to RUS; and
    (iv) For an insured loan, a statement of whether the application is 
for a municipal rate loan, with or without the interest rate cap, or a 
hardship loan. If the application is for a municipal rate loan, the 
board resolution must indicate whether the borrower intends to elect the 
prepayment option. See 7 CFR 1714.4(c).
    (3) RUS Form 740c, Cost Estimates and Loan Budget for Electric 
Borrowers. This form together with its attachments lists the 
construction, equipment, facilities and other cost estimates from the 
construction work plan or engineering and cost studies, and the sources 
of financing for each component. The date on page 1 of the form is the 
beginning date of the loan period and shall be the same as the date on 
the Financial and Statistical Report submitted with the application 
(paragraph (a)(5) of this section). Form 740c also includes the 
following information, exhibits, and attachments:
    (i) Description of funds and materials. This description details the 
availability of materials and equipment, any unadvanced funds from prior 
loans, and any general funds the borrower designates, to determine the 
amount of such materials and funds to be applied against the capital 
requirements estimated for the loan period.
    (ii) Useful life of facilities financed by the loan. Form 740c must 
include, as a note, either a statement certifying that at least 90 
percent of the loan funds are for facilities that have a useful life of 
33 years or longer, or a schedule showing the costs and useful life of 
those facilities with a useful life of less than 33 years. This 
statement or schedule will be used to determine the final maturity of 
the loan. See Sec. 1710.115.

[[Page 126]]

    (iii) Reimbursement schedule. This schedule lists the date, amount, 
and identification number of each inventory of work orders and special 
equipment summary that form the basis for the borrower's request for 
reimbursement of general funds on the RUS Form 740c. See Sec. 1710.109. 
If the borrower is not requesting reimbursement, this schedule need not 
be submitted.
    (iv) Location of consumers. If the application is for a municipal 
rate loan subject to the interest rate cap, or for a loan at the 
hardship rate, and the average number of consumers per mile of the total 
electric system exceeds 17, Form 740c must include, as a note, a 
breakdown of funds included in the proposed loan to furnish or improve 
service to consumers located in an urban area. See 7 CFR 1714.7(c) and 
1714.8(d). This breakdown must indicate the method used by the borrower 
for allocating loan funds between urban and non urban consumers.
    (4) RUS Form 740g, Application for Headquarters Facilities. This 
form lists the individual cost estimates from the construction work plan 
or other engineering study that support the need for RUS financing for 
any warehouse and service type facilities included, and funding 
requested for such facilities shown on RUS Form 740c. If no loan funds 
are requested for headquarters facilities, Form 740g need not be 
submitted.
    (5) Financial and statistical report. Distribution borrowers shall 
submit these data on RUS Form 7; power supply borrowers shall use RUS 
Form 12. The form shall contain the most recent data available, which 
shall not be more than 60 days old when received by RUS.
    (6) Pending litigation statement. A statement from the borrower's 
counsel listing any pending litigation, including levels of related 
insurance coverage and the potential effect on the borrower. This 
statement and the statements from counsel required by paragraphs (a)(7) 
and (15) of this section may be combined into a single document.
    (7) Mortgage information. A new mortgage will be required if this is 
a borrower's first application for a loan under the RE Act. A restated 
mortgage, or a mortgage supplement will be required if there has been a 
material change to the real property owned by the borrower since the 
most recent RUS loan, loan guarantee, or lien accommodation, if the 
requested loan would cause the borrower to exceed its previously 
authorized debt limit, or if RUS otherwise determines it necessary. If 
there has been no material change to the real property owned by the 
borrower since the most recent RUS loan or loan guarantee, the borrower 
must submit an opinion of its counsel to that effect. If a new or 
restated mortgage or a mortgage supplement is required, the borrower 
must provide the following:
    (i) Property schedule. For a new or restated mortgage or for a 
mortgage supplement, the following information shall be submitted in a 
form satisfactory to RUS:
    (A) A listing of the counties where the borrower's existing electric 
facilities and new facilities are or will be located;
    (B) A listing and description of all real property owned by the 
borrower; and
    (C) An opinion of the borrower's counsel certifying that the 
property schedule is complete and adequate for inclusion in a security 
instrument to be executed by the borrower to secure an RUS loan.
    (ii) Maximum debt limit. For a new mortgage, or if the proposed loan 
would result in the borrower's existing mortgage debt limit being 
exceeded, a resolution of the borrower's board of directors, and any 
other authorizations or certifications required by State law, certifying 
that a new debt limit has been legally established that is adequate to 
accommodate existing indebtedness and the proposed new financing, 
including any concurrent loans.
    (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 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.

[[Page 127]]

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.
    (9) Standard Form 100--Equal Employment Opportunity Employer Report 
EEO--1. This form, required by the Department of Labor, sets forth 
employment data for borrowers with 100 or more employees. A copy of this 
form, as submitted to the Department of Labor, is to be included in the 
application for an insured loan if the borrower has more than 100 
employees. See Sec. 1710.122.
    (10) Form AD-1047, Certification Regarding Debarment, Suspension, 
and Other Responsibility Matters--Primary Covered Transactions. This 
statement certifies that the borrower will comply with certain 
regulations on debarment and suspension required by Executive Order 
12549, Debarment and Suspension (3 CFR, 1986 Comp., p. 189). See 7 CFR 
part 3017 and Sec. 1710.123.
    (11) Uniform Relocation Act assurance statement. This assurance, 
which need not be resubmitted if previously submitted, provides that the 
borrower shall comply with 49 CFR part 24, which implements the Uniform 
Relocation Assistance and Real Property Acquisition Policy Act of 1970, 
as amended by the Uniform Relocation Act Amendments of 1987 and 1991. 
See Sec. 1710.124.
    (12) Lobbying. The following information on lobbying is required 
pursuant to 7 CFR part 3018 and Sec. 1710.125. Borrowers applying for 
both insured and guaranteed financing should consult RUS before 
submitting this information.
    (i) Certification regarding lobbying. This statement certifies that 
the borrower shall comply with certain requirements with respect to 
restrictions on lobbying activities.
    (ii) Standard Form LLL--Disclosure of Lobbying Activities. This 
disclosure form is required from those borrowers engaged in lobbying 
activities.
    (13) Federal debt delinquency requirements. See 1710.126. The 
following documents are required:
    (i) Report on Federal debt delinquency. This report indicates 
whether or not a borrower is delinquent on any Federal debt.
    (ii) Certification Regarding Federal Government Collection Options. 
This statement certifies that a borrower has been informed of the 
collection options the Federal Government may use to collect delinquent 
debt. The Federal Government is authorized by law to take any or all of 
the following actions in the event that a borrower's loan payments 
become delinquent or the borrower defaults on its loans:
    (A) Report the borrower's delinquent account to a credit bureau;
    (B) Assess additional interest and penalty charges for the period of 
time that payment is not made;
    (C) Assess charges to cover additional administrative costs incurred 
by the Government to service the borrower's account;
    (D) Offset amounts owed directly or indirectly to the borrower under 
other Federal programs;
    (E) Refer the borrower's debt to the Internal Revenue Service for 
offset against any amount owed to the borrower as an income tax refund;
    (F) Refer the borrower's account to a private collection agency to 
collect the amount due; and
    (G) Refer the borrower's account to the Department of Justice for 
collection.
    (14) Articles of incorporation and bylaws. The following are 
required if either document has been amended since the last loan 
application was submitted to RUS, or if this is a borrower's first 
application for a loan under the RE Act:
    (i) The borrower's articles of incorporation currently in effect, as 
filed with the appropriate state office, setting forth the borrower's 
corporate purpose; and
    (ii) The bylaws currently in effect, as adopted by the borrower's 
board of directors, setting forth the manner by which the borrower's 
organization will be governed and regulated.
    (15) State regulatory approvals. In states in which regulatory 
authorities

[[Page 128]]

have jurisdiction over the borrower's rates, the borrower must provide 
satisfactory evidence, pursuant to Secs. 1710.105 and 1710.151(f), based 
on the information available, such as an opinion of counsel or of 
another qualified source, that the state regulatory authority will not 
exclude from the borrower's rate base any of the facilities included in 
the loan request, or otherwise prevent the borrower from charging rates 
sufficient to repay with interest the debt incurred for the facilities.
    (16) Seismic safety certifications. This certification shall be 
included, if required under 7 CFR part 1792.
    (17) Rates. (i) A distribution borrower shall explain any recent or 
planned changes in retail rates, the status of any pending rate cases 
before a state regulatory authority, or other pertinent rate 
information.
    (ii) A power supply borrower shall submit a schedule of its 
wholesale rates currently in effect. Any changes in this schedule are 
subject to RUS approval.
    (18) Additional supporting data. Additional supporting data may be 
required by RUS depending on the individual application or conditions. 
Examples of such additional supporting data include information about 
acquisitions, headquarters facilities, generation or transmission 
facilities, large power loads or special loads.
    (b) Distribution borrowers. In addition to the items in paragraph 
(a) of this section, applications for loans submitted by distribution 
borrowers shall include the borrower's area coverage and line extension 
policies. If there have been any amendments to area coverage or line 
extension policies since the last loan application submitted to RUS, or 
if this is a borrower's first application for a loan under the RE Act, 
the borrower shall submit the board of directors' approved policies on 
area coverage and line extensions. See Secs. 1710.103 and 1710.151(a).
    (c) Primary support documents. In addition to the loan application, 
consisting of the documents required by paragraphs (a) and (b) of this 
section, all borrowers must also provide RUS with the following primary 
support documents pursuant to Sec. 1710.152:
    (1) Along with the loan application, the borrower shall submit to 
RUS a Long-Range Financial Forecast (LRFF), that meets the requirements 
of subpart G of this part. The forecast shall include any sensitivity 
analysis or analysis of alternative scenarios required by subpart G of 
this part, and shall be accompanied by a certified board resolution 
adopting, and indicating the board of directors' approval of, the LRFF, 
and directing management to take whatever steps may be necessary, 
including the filing for rate increases, to achieve the TIER goals set 
forth in the LRFF.
    (2) Prior to RUS's acceptance of the loan application, the borrower 
shall submit to RUS and receive approval of:
    (i) Power Requirements Study (PRS) that meets the requirements of 
subpart E of this part, and is accompanied by a certified board 
resolution adopting, and indicating the board of directors' approval of, 
the PRS.
    (ii) Construction Work Plan (CWP) and/or related engineering and 
cost studies that meets the requirements of subpart F of this part, and 
is accompanied by a certified board resolution adopting, and indicating 
the board of directors' approval of, the CWP and/or engineering and cost 
studies.
    (iii) Borrower's Environmental Report (BER), or other environmental 
information as required by 7 CFR part 1794.
    (iv) Demand Side Management Plan and/or Integrated Resource Plan, if 
required by subpart H of this part.
    (d) Submission of documents. (1) Generally, all information required 
by paragraphs (a), (b), and (c)(1) of this section is submitted to RUS 
in a single application package. The information required by paragraph 
(c)(2) of this section is generally submitted to, and approved by RUS 
before the application is submitted.
    (2) To facilitate loan review, RUS urges borrowers to ensure that 
their applications contain all of the information required by this 
section before submitting the application to RUS. Borrowers may consult 
with RUS field representatives and headquarters staff as necessary for 
assistance in preparing loan applications.

[[Page 129]]

    (3) RUS may, in its discretion, return an application to the 
borrower if the application is not materially complete to the 
satisfaction of RUS within 10 months of receipt of any of the items 
listed in paragraph (a) or (b) of this section. RUS will generally 
advise the borrower in writing at least 2 months prior to returning the 
application as to the elements of the application that are not complete.
    (4) If an application is returned, an application for the same loan 
purposes will be accepted by RUS if satisfactory evidence is provided 
that all of the information required by this section will be submitted 
to RUS within a reasonable time. An application for loan purposes 
included in an application previously returned to the borrower will be 
treated as an entirely new application.
    (e) Complete applications. An application is complete when all 
information required by RUS to approve a loan is materially complete in 
form and substance satisfactory to RUS.
    (f) Change in borrower circumstances. A borrower shall, after 
submitting a loan application, promptly notify RUS of any changes in its 
circumstances that materially affect the information contained in the 
loan application or in the primary support documents.
    (g) Interest rate category. For pending loans, RUS will promptly 
notify the borrower if its eligibility for an interest rate category 
changes pursuant to new information from the Department of Energy or the 
Bureau of the Census. See 7 CFR part 1714.

(Approved by the Office of Management and Budget under control numbers 
0572-0017, 0572-0032 and 0572-1013)

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.401 was 
redesignated as 1710.501, effective Feb. 3, 2014.



Secs. 1710.502-1710.503  [Reserved]



Sec. 1710.404  Additional requirements.

    Additional requirements for insured electric loans are set forth in 
7 CFR part 1714.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.404 was 
redesignated as 1710.504, effective Feb. 3, 2014.



Sec. 1710.405  Supplemental financing documents.

    (a) The borrower is responsible for ensuring that the loan documents 
required for supplemental financing pursuant to Sec. 1710.110 are 
executed in a timely fashion. These documents are subject to RUS 
approval.
    (b) Security. Any security offered by the borrower to a supplemental 
lender is subject to RUS approval.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.405 was 
redesignated as 1710.505, effective Feb. 3, 2014.



Sec. 1710.406  Loan approval.

    (a) A loan is approved when the Administrator signs the 
administrative findings.
    (b) If the loan is not approved, RUS will notify the borrower of the 
reason.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.406 was 
redesignated as 1710.506, effective Feb. 3, 2014.



Sec. 1710.407  Loan documents.

    Following approval of a loan, RUS will forward the loan documents to 
the borrower for execution, delivery, recording, and filing, as directed 
by RUS.

    Effective Date Note: At 78 FR 73366, Dec. 5, 2013, Sec. 1710.407 was 
redesignated as 1710.507, effective Feb. 3, 2014.



PART 1714_PRE-LOAN POLICIES AND PROCEDURES FOR INSURED
ELECTRIC LOANS--Table of Contents



                            Subpart A_General

Sec.
1714.1  [Reserved]
1714.2  Definitions.
1714.3  Applicability of provisions.
1714.4  Interest rates.
1714.5  Determination of interest rates on municipal rate loans.
1714.6  Interest rate term.
1714.7  Interest rate cap.
1714.8  Hardship rate loans.
1714.9  Prepayment of insured loans.
1714.10-1714.49  [Reserved]

                    Subpart B_Terms of Insured Loans

1714.50-1714.54  [Reserved]
1714.55  Advance of funds from insured loans.
1714.56  Fund advance period.
1714.57  Sequence of advances.
1714.58  Amortization of principal.
1714.59  Rescission of loans.


[[Page 130]]


    Authority: 7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.

    Source: 58 FR 66260, Dec. 20, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 1714.1  [Reserved]



Sec. 1714.2  Definitions.

    The definitions set forth in 7 CFR 1710.2 are applicable to this 
part, unless otherwise stated. References to specific RUS forms and 
other RUS documents, and to specific sections of such forms and 
documents, shall include the corresponding forms, documents, sections 
and lines in any subsequent revisions of these forms and documents.



Sec. 1714.3  Applicability of provisions.

    (a) Insured electric loans approved on or after November 1, 1993. On 
November 1, 1993, the Rural Electrification Loan Restructuring Act, Pub. 
L. 103-129, 107 Stat. 1356, (RELRA) amended the Rural Electrification 
Act of 1936, 7 U.S.C. 901 et seq., (RE Act) to establish a new interest 
rate structure for insured electric loans. Insured electric loans 
approved on or after this date, are either municipal rate loans or 
hardship rate loans. Borrowers meeting the criteria set forth in 
Sec. 1714.8 are eligible for 5 percent hardship rate loans. The interest 
rate on loans to other borrowers is the municipal interest rate, and 
borrowers meeting the criteria set forth in Sec. 1714.7 are eligible for 
the interest rate cap on their municipal rate loans. Interest rates for 
the initial interest rate term and rollover terms (Sec. 1714.6) will be 
determined pursuant to Sec. 1714.4. Provisions for prepayment are set 
forth in Sec. 1714.9. The provisions of this subpart apply to loans 
approved on or after November 1, 1993, unless otherwise stated.
    (b) Insured electric loans approved prior to November 1, 1993. These 
loans have a single interest rate applicable to the entire loan. The 
rate is generally 5 percent, but, in some cases, may be as low as 2 
percent. These loans have a single interest rate term and may be prepaid 
at face value at any time. Provisions for discounted prepayment of these 
loans are set forth in 7 CFR part 1786.



Sec. 1714.4  Interest rates.

    (a) Municipal rate loans. Each advance of funds on a municipal rate 
loan shall bear interest at a single rate for each interest rate term. 
All interest rates applicable to municipal rate loans will be increased 
by one eighth of one percent (0.125 percent), if the borrower elects to 
include in the loan agreement a prepayment option (call provision), 
allowing the borrower to prepay all or a portion of an advance on a date 
other than a rollover maturity date. However, no interest rate for any 
advances of a loan to a borrower who qualifies for the interest rate cap 
may exceed 7 percent.
    (b) Hardship rate loans. All advances of funds on hardship rate 
loans shall bear interest at a rate of 5 percent.
    (c) Application procedure. The borrower's board resolution submitted 
with the loan application must indicate whether the application is for a 
municipal rate loan, with or without the interest rate cap, or a 
hardship rate loan. If the application is for a municipal rate loan, the 
board resolution must also indicate whether the borrower intends to 
elect the prepayment option.

[58 FR 66260, Dec. 20, 1993, as amended at 67 FR 16969, Apr. 9, 2002]



Sec. 1714.5  Determination of interest rates on municipal rate loans.

    (a) RUS will post on the RUS website, Electric Program HomePage, a 
schedule of interest rates for municipal rate loans at the beginning of 
each calendar quarter. The schedule will show the year of maturity and 
the applicable interest rates in effect for all funds advanced on 
municipal rate loans during the calendar quarter and all interest rate 
terms beginning in the quarter. All interest rates will be adjusted to 
the nearest one eighth of one percent (0.125 percent).
    (b) The rate for interest rate terms of 20 years or longer will be 
the average of the 20 year rates published in the Bond Buyer in the 4 
weeks specified in paragraph (d) of this section for the ``11-Bond GO 
Index'' of Aa rated general obligation municipal bonds, or the successor 
to this index.

[[Page 131]]

    (c) The rate for terms of less than 20 years will be the average of 
the rates published in the Bond Buyer in the 4 weeks specified in 
paragraph (d) of this section in the table of ``Municipal Market Data--
General Obligation Yields'' for Aa rated bonds, or the successor to this 
table, for obligations maturing in the same year as the interest rate 
term selected by the borrower.
    (d) The interest rates on municipal rate loans shall not exceed the 
interest rate determined under section 307(a)(3)(A) of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1927(a)(3)(A)) for Water and 
Waste Disposal loans. The method used to determine this rate is set 
forth in the regulations of the Farmers Home Administration (FmHA) at 7 
CFR 1942.17(f) (1) and (4). Pursuant to the FmHA rule, the interest 
rates are set using as guidance the average of the Bond Buyer Index for 
the four weeks prior to the first Friday of the last month before the 
beginning of the quarter. Information about the Bond Buyer is available 
by writing Bond Buyer, One State Street Plaza, New York, NY 10004-1549, 
or by calling 1-800-982-0633.

[58 FR 66260, Dec. 20, 1993, as amended at 67 FR 16969, Apr. 9, 2002]



Sec. 1714.6  Interest rate term.

    (a) Municipal rate loans. Selection of interest rate terms shall be 
made by the borrower for each advance of funds. The minimum interest 
rate term shall be one year. RUS will send the borrower written 
confirmation of each rollover maturity date and the applicable interest 
rate.
    (1) The initial interest rate term will begin on the date of the 
advance. All rollover interest rate terms will begin on the first day of 
a month, and except for the last interest rate term to final maturity, 
shall end on the last day of a month. All terms except for the initial 
interest rate term on an advance, and the last term to final maturity 
shall be in yearly increments.
    (2) The following limits apply to the number of advances of funds 
that may be made to the borrower on any municipal rate loan:
    (i) If the loan period is 2 years or less, not more than 6 advances;
    (ii) If the loan period is more than 2 years, not more than 8 
advances.
    (3) For the initial interest rate term of an advance, a letter from 
an authorized official of the borrower indicating the selection of the 
term shall accompany the request for the advance.
    (4) At the end of any interest rate term, the borrower shall pay all 
accrued interest and principal balance then due, and either prepay the 
remaining principal of the advance at face value, or roll over the 
remaining principal for a new term, provided that no interest rate term 
may end later than the date of the final maturity.
    (i) If the borrower elects to prepay all or part of the remaining 
principal of the advance at face value, it must notify the Director of 
the appropriate Regional Division or the Power Supply Division in 
writing not later than 20 days before the rollover maturity date.
    (ii) If the borrower wishes to elect a new interest rate term that 
is different from the term previously selected, it must notify RUS in 
writing of the new term not later than 20 days before the end of the 
current term. The election of the new term shall be addressed to the 
Director, Financial Operations Division, Rural Utilities Service, 
Washington, DC 20250-1500.
    (iii) If the borrower fails to notify RUS within the timeframes set 
out in this paragraph of its intention to prepay or elect a different 
interest rate term, RUS will automatically roll over the remaining 
principal for the shorter of, and at the interest rate applicable to:
    (A) A period equal in length to the term that is expiring; or
    (B) The remaining period to final maturity.
    (b) Hardship rate loans. Loans made at the 5 percent hardship rate 
are made for a single term that cannot exceed the final maturity as set 
forth in 7 CFR 1710.115. The hardship interest rate applies to the 
entire amount of the loan.

[58 FR 66260, Dec. 20, 1993, as amended at 60 FR 3734, Jan. 19, 1995]



Sec. 1714.7  Interest rate cap.

    Except as provided in paragraph (c) of this section, the municipal 
interest rate may not exceed 7 percent on a loan advance to a borrower 
primarily

[[Page 132]]

engaged in providing retail electric service if the borrower meets, at 
the time of loan approval, either the consumer density test set forth in 
paragraph (a) of this section, or both the rate disparity test for the 
interest rate cap and the consumer income test set forth in paragraph 
(b) of this section.
    (a) Low consumer density test. The borrower meets this test if the 
average number of consumers per mile of line of its total electric 
system, based on the most recent data available at the time of loan 
approval is less than 5.50.
    (b)(1) Rate disparity test for the interest rate cap. The borrower 
meets this test if its average revenue per kWh sold is more than the 
average revenue per kWh sold by all electric utilities in the state in 
which the borrower provides service. To determine whether a borrower 
meets this test, RUS will compare the borrower's average total revenue 
with statewide data in the table of Average Revenue per Kilowatthour for 
Electric Utilities by Sector, Census Division and State, in the Electric 
Power Annual issued by the Energy Information Administration of the 
Department of Energy (DOE), or the successor to this table. The test 
will be based on the most recent calendar year for which full year DOE 
data are available at the time of loan approval and borrower data for 
the same year.
    (2) Consumer income test.The borrower meets this test if either the 
average per capita income of the residents receiving electric service 
from the borrower is less than the average per capita income of 
residents of the state in which the borrower provides service or the 
median household income of the households receiving electric service 
from the borrower is less than the median household income of the 
households in the state.
    (i) To qualify under the consumer income test, the borrower must 
include in its loan application information about the location of its 
residential consumers. The borrower must provide to RUS, based on the 
most recent data available at the time of loan application, either the 
number of consumers in each county it serves or the number of consumers 
in each census tract it serves. Using the most recently published 
decennial census data on income from the Bureau of the Census, RUS will 
compare, on a weighted average basis, the average per capita and median 
household income of the counties or census tracts served by the borrower 
with state figures.
    (ii) In cases where conditions have substantially changed so that 
the decennial census data no longer accurately describes the economic 
conditions of the borrower's consumers, the borrower may provide RUS 
with more current income data from a reliable source such as a State 
agency. The Administrator has the sole discretion to determine whether 
such data submitted by the borrower is sufficient to determine whether 
the borrower qualifies under the consumer income test.
    (3) Borrowers serving 2 or more states. If a borrower serves 
consumers in 2 or more states, the rate disparity test and the consumer 
income test will be determined on a weighted average based on the 
percentage of the borrower's total consumers that are served in each 
state.
    (c) High density test. If the average number of consumers per mile 
of the borrower's total electric system exceeds 17, the interest rate 
cap will not apply to funds used for the purpose of furnishing or 
improving electric service to consumers located in an area that is an 
urban area at the time of loan approval, notwithstanding that the area 
must have been deemed a rural area for the purpose of qualifying for a 
loan under this part. (See the definition of ``rural area'' in 7 CFR 
1710.2.) If the average number of consumers per mile of line of the 
borrower's total electric system exceeds 17, the borrower must include, 
as a note on RUS Form 740c, Cost Estimates and Loan Budget for Electric 
Borrowers, submitted as part of the loan application for a loan subject 
to the interest rate cap, a breakdown of funds included in the proposed 
loan to furnish or improve service to consumers located in such urban 
areas. For such borrowers only funds for those facilities serving 
consumers located outside an urban area are eligible for the interest 
rate cap.



Sec. 1714.8  Hardship rate loans.

    Except as provided in paragraph (d) of this section, the 
Administrator shall

[[Page 133]]

make an insured electric loan for eligible purposes at the 5 percent 
hardship rate to a borrower primarily engaged in providing retail 
electric service if the borrower meets, at the time of loan approval, 
both the rate disparity test for hardship and the consumer income test 
described in paragraph (a) of this section; or the extremely high rates 
test set forth in paragraph (b) of this section. A loan at the 5 percent 
hardship rate may also be made to any borrower pursuant to paragraph (c) 
of this section who, in the sole discretion of the Administrator, has 
experienced a severe hardship. The Administrator may not require a loan 
from a supplemental source in connection with a hardship rate loan.
    (a)(1) Rate disparity test for hardship. The borrower meets this 
test if its average revenue per kWh sold is not less than 120 percent of 
the average revenue per kWh sold by all electric utilities in the state 
in which the borrower provides service, and its average residential 
revenue per kWh is not less than 120 percent of the average residential 
revenue per kWh sold by all electric utilities in the state in which the 
borrower provides service. To determine whether a borrower meets this 
test, RUS will compare the borrower's average total revenue and average 
residential revenue with statewide data in the table of Average Revenue 
per Kilowatthour for Electric Utilities by Sector, Census Division and 
State, in the Electric Power Annual issued by the Energy Information 
Administration of the Department of Energy (DOE), or the successor to 
this table. The test will be based on the most recent calendar year for 
which full year DOE data are available at the time of loan approval and 
borrower data for the same year.
    (2) Consumer income test. The borrower meets this test if either the 
average per capita income of the residents receiving electric service 
from the borrower is less than the average per capita income of the 
residents of the state in which the borrower provides service or the 
median household income of the residents receiving electric service from 
the borrower is less than the median household income of the households 
in the state. RUS will determine whether the borrower qualifies under 
this test according to the procedure set forth in Sec. 1714.7(b)(2).
    (3) Borrowers serving 2 or more states. If a borrower serves 
consumers in 2 or more states, the rate disparity test and the consumer 
income tests will be determined on a weighted average based on the 
percentage of the borrower's total consumers that are served in each 
state.
    (b) Extremely high rates test. Except as provided in this paragraph, 
the Administrator shall make an insured electric loan at the 5 percent 
hardship rate to any borrower whose residential revenue exceeds 15.0 
cents per kWh sold. Residential revenue shall be calculated for the most 
recent full calendar year for which data are available and shall include 
sales to both seasonal and nonseasonal consumers. If, at the time of 
loan approval, the area to be served is an urbanized area 
(notwithstanding that the area must be deemed a rural area to qualify 
for a loan under this part (See the definition of ``rural area'' in 7 
CFR 1710.2)), then the borrower must satisfy the provisions of 
paragraphs (a) and (d) of this section to qualify to the 5 percent 
hardship interest rate. If at the time of loan approval, such area is 
outside an urbanized area, the loan shall not be subject to the 
conditions and limitations set forth in paragraphs (a) and (d) of this 
section.
    (c) Administrator's discretion. The Administrator may make a 
hardship rate loan if, in the sole discretion of the Administrator, the 
borrower has experienced a severe hardship. The Administrator shall 
consider, among other matters, whether factors beyond the control or 
substantial influence of the borrower have had severe adverse effect on 
the borrower's ability to provide service consistent with the purposes 
of the RE Act, and which prudent management could not reasonably 
anticipate and either prevent or insure against. Among the factors that 
may be considered are system damage due to unusual weather or other 
natural disasters or Acts of God, loss of substantial loads, extreme 
rate disparity compared to a contiguous utility, and other factors that 
cause severe financial hardship. The Administrator will

[[Page 134]]

also consider whether a hardship rate loan will provide significant 
relief to the borrower in dealing with the severe hardship.
    (d) High density test. Except as provided in paragraph (b) of this 
section, if the average number of consumers per mile of the borrower's 
total electric system exceeds 17, the 5 percent hardship rate will not 
apply to funds used for the purpose of furnishing or improving electric 
service to consumers located in an area that is an urban area at the 
time of loan approval, notwithstanding that the area must have been 
deemed a rural area for the purpose of qualifying for a loan under this 
part. (See the definition of ``rural area'' in 7 CFR 1710.2.) If the 
average number of consumers per mile of line of the borrower's total 
electric system exceeds 17, the borrower must include, as a note on RUS 
Form 740c, Cost Estimates and Loan Budget for Electric Borrowers, 
submitted as part of the loan application for a loan at the 5 percent 
hardship rate, a breakdown of funds included in the proposed loan to 
furnish or improve service to consumers located in urban areas. For such 
borrowers only funds for those facilities serving consumers located 
outside an urban area are eligible for the 5 percent hardship rate.

(Approved by the Office of Management and Budget under control number 
0572-1013)



Sec. 1714.9  Prepayment of insured loans.

    This section sets out provisions for prepayment of insured electric 
loans at face value. Provisions for discounted prepayment of RUS loans 
are set out in 7 CFR part 1786.
    (a) Municipal rate loans. Loan documents for municipal rate loans 
shall provide for the following:
    (1) Prepayment on a rollover maturity date. All, or a portion of, 
the outstanding balance on any advance from a municipal rate loan may be 
prepaid on any rollover maturity date pursuant to Sec. 1714.6(a)(4).
    (2) Prepayment on a date other than a rollover maturity date. A 
borrower may elect at the time of loan approval to include a prepayment 
option (call provision) that will allow the borrower to prepay all, or a 
portion of, the outstanding balance on any advance on a date other than 
a rollover maturity date. Interest rates on advances from loans with a 
prepayment provision will be increased as set forth in Sec. 1714.4(a).
    (b) Hardship rate loans. Loan documents for hardship loans shall 
provide that the loan may be prepaid at face value at any time without 
penalty.



Secs. 1714.10-1714.49  [Reserved]



                    Subpart B_Terms of Insured Loans

    Source: 60 FR 3734, Jan. 19, 1995, unless otherwise noted.



Secs. 1714.50-1714.54  [Reserved]



Sec. 1714.55  Advance of funds from insured 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. 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 7 CFR 
part 1710 and any concurrent loan guaranteed by RUS are available to the 
borrower under terms and conditions satisfactory to RUS.



Sec. 1714.56  Fund advance period.

    (a) For loans approved on or after February 21, 1995, the fund 
advance period begins on the date of the loan note and is one year 
longer than the loan period, but not less than 4 years. For example, the 
fund advance period for a loan with a 2-year loan period terminates 
automatically 4 years after the date of the loan note; a loan with a 4-
year loan period terminates automatically 5 years after the date of the 
loan note. The Administrator may extend the fund advance period on any 
loan if the borrower meets the requirements of paragraph (c) of this 
section. As defined in 7 CFR 1710.2, the loan period begins on the date 
shown on page 1 of RUS Form 740c submitted with the loan application.
    (b) For loans approved on or after June 1, 1984, and before February 
21, 1995, the fund advance period begins on

[[Page 135]]

the date of the loan contract, or the most recent amendment thereto, and 
terminates automatically 4 years from the date of the loan contract, or 
the most recent amendment thereto, except as provided in paragraph (c) 
of this section.
    (c) The Administrator may agree to an extension of the fund advance 
period for loans approved on or after June 1, 1984, if the borrower 
demonstrates to the satisfaction of the Administrator that the loan 
funds continue to be needed for approved loan purposes (i.e., facilities 
included in an 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 send to RUS, at 
least 120 days before the automatic termination date, 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) In the case of financial hardship, as determined by the 
Administrator, RUS may agree to an extension of the fund advance period 
even though the borrower has failed to meet the 120-day requirement of 
paragraph (c)(1) of this section.
    (3) 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 
obtained in writing prior to the automatic termination date.
    (d) Advances of funds from loans approved before June 1, 1984, are 
generally made during the first 6 years of the note.
    (e) RUS will rescind the balance of any loan funds not advanced to a 
borrower as of the final date approved for advancing funds.

[60 FR 3734, Jan. 19, 1995, as amended at 61 FR 66871, Dec. 19, 1996]



Sec. 1714.57  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) 50 percent of the RUS insured loan funds;
    (2) 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. 1714.58  Amortization of principal.

    (a) For insured loans approved on or after February 21, 1995:
    (1) 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 (a)(2) 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.
    (2) For advances made 2 years or more after the date of the note, 
the Administrator may 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 RE Act.
    (b) For insured loans approved before February 21, 1995, 
amortization of principal shall begin 2 years after the date of the note 
for advances made during the first and second years of the loan, and 4 
years after the date of the note for advances made during the third and 
fourth years.



Sec. 1714.59  Rescission of loans.

    (a) A borrower may request rescission of a loan with respect to any 
funds unadvanced by submitting a certified copy of a resolution by the 
borrower's board of directors.
    (b) RUS may rescind loans pursuant to Sec. 1714.56.

[[Page 136]]

    (c) Borrowers who prepay RUS loans at a discounted present value 
pursuant to 7 CFR part 1786, subpart F, are required to rescind the 
unadvanced balance of all outstanding electric notes pursuant to 7 CFR 
1786.158(j).



PART 1717_POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND
GUARANTEED ELECTRIC LOANS--Table of Contents



Subparts A-C [Reserved]

       Subpart D_Mergers and Consolidations of Electric Borrowers

Sec.
1717.150  General.
1717.151  Definitions.
1717.152  Required documentation for all mergers.
1717.153  Transitional assistance.
1717.154  Transitional assistance in connection with new loans.
1717.155  Transitional assistance affecting new and preexisting loans.
1717.156  Transitional assistance affecting preexisting loans.
1717.157  Requests for transitional assistance.
1717.158  Mergers with borrowers who prepaid RUS loans.
1717.159  Applications for RUS approvals of mergers.
1717.160  Application contents.
1717.161  Application process.

Subparts E-F [Reserved]

 Subpart G_Federal Pre-emption in Rate Making in Connection With Power 
                            Supply Borrowers

1717.300  Purpose.
1717.301  Policy.
1717.302  Definitions and rules of construction.
1717.303  Requirements of RUS documents.
1717.304  State regulatory authority rate jurisdiction.
1717.305  Pre-emption.
1717.306  RUS required rates.
1717.307  Distribution members' rates.
1717.308  RUS approval of nonconforming rates.
1717.309  Additional statutory pre-emption.
1717.310-1717.349  [Reserved]

  Subpart H_Federal Pre-emption in Rate Making in Connection With RUS 
                    Electric Borrowers in Bankruptcy

1717.350  Purpose.
1717.351  Policy.
1717.352  Definitions and rules of construction.
1717.353  Requirements of RUS documents.
1717.354  Pre-emption.
1717.355  RUS required rates.
1717.356  Additional statutory pre-emption.

Subparts I-L [Reserved]

                     Subpart M_Operational Controls

1717.600  General.
1717.601  Applicability.
1717.602  Definitions.
1717.603  RUS approval of extensions and additions.
1717.604  Long-range engineering plans and construction work plans.
1717.605  Design standards, plans and specifications, construction 
          standards, and RUS accepted materials.
1717.606  Standard forms of construction contracts, and engineering and 
          architectural services contracts.
1717.607  Contract bidding requirements.
1717.608  RUS approval of contracts.
1717.609  RUS approval of general manager.
1717.610  RUS approval of compensation of the board of directors.
1717.611  RUS approval of expenditures for legal, accounting, 
          engineering, and supervisory services.
1717.612  RUS approval of borrower's bank or other depository.
1717.613  RUS approval of data processing and system control equipment.
1717.614  Notification of rate changes.
1717.615  Consolidations and mergers.
1717.616  Sale, lease, or transfer of capital assets.
1717.617  Limitations on distributions.

   Subpart N_Investments, Loans, and Guarantees by Electric Borrowers

1717.650  Purpose.
1717.651  General.
1717.652  Definitions.
1717.653  Borrowers in default.
1717.654  Transactions below the 15 percent level.
1717.655  Exclusion of certain investments, loans, and guarantees.
1717.656  Exemption of certain borrowers from controls.
1717.657  Investments above the 15 percent level by certain borrowers 
          not exempt under Sec. 1717.656(a).
1717.658  Records, reports and audits.
1717.659  Effect of this subpart on RUS loan contract and mortgage.

Subpart O [Reserved]

1717.700-1717.749  [Reserved]

Subpart P [Reserved]

[[Page 137]]

1717.750-1717.799  [Reserved]

Subpart Q [Reserved]

1717.800-1717.849  [Reserved]

Subpart R_Lien Accommodations and Subordinations for 100 Percent Private 
                                Financing

1717.850  General.
1717.851  Definitions.
1717.852  Financing purposes.
1717.853  Loan terms and conditions.
1717.854  Advance approval--100 percent private financing of 
          distribution, subtransmission and headquarters facilities, and 
          certain other community infrastructure.
1717.855  Application contents: Advance approval--100 percent private 
          financing of distribution, subtransmission and headquarters 
          facilities, and certain other community infrastructure.
1717.856  Application contents: Normal review--100 percent private 
          financing.
1717.857  Refinancing of existing secured debt--distribution and power 
          supply borrowers.
1717.858  Lien subordination for rural development investments.
1717.859  Application process and timeframes.
1717.860  Lien accommodations and subordinations under section 306E of 
          the RE Act.
1717.861-1717.899  [Reserved]

 Subpart S_Lien Accommodations for Supplemental Financing Required by 7 
                              CFR 1710.110

1717.900  Qualification requirements.
1717.901  Early approval.
1717.902  Other RUS requirements.
1717.903  Liability.
1717.904  Exemptions pursuant to section 306E of the RE Act.
1717.905-1717.949  [Reserved]

Subpart T [Reserved]

1717.950-1717.999  [Reserved]

Subpart U [Reserved]

1717.1000-1717.1049  [Reserved]

Subpart V [Reserved]

1717.1050-1717.1099  [Reserved]

Subpart W [Reserved]

1717.1100-1717.1149  [Reserved]

Subpart X [Reserved]

1717.1150-1717.1199  [Reserved]

                      Subpart Y_Settlement of Debt

1717.1200  Purpose and scope.
1717.1201  Definitions.
1717.1202  General policy.
1717.1203  Relationship between RUS and Department of Justice.
1717.1204  Policies and conditions applicable to settlements.
1717.1205  Waiver of existing conditions on borrowers.
1717.1206  Loans subsequent to settlement.
1717.1207  RUS obligations under loan guarantees.
1717.1208  Government's rights under loan documents.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

    Source: 55 FR 38646, Sept. 19, 1990, unless otherwise noted.

Subparts A-C [Reserved]



       Subpart D_Mergers and Consolidations of Electric Borrowers

    Source: 61 FR 66871, Dec. 19, 1996, unless otherwise noted.



Sec. 1717.150  General.

    (a) This subpart establishes RUS policies and procedures for mergers 
of electric borrowers. These policies and procedures are intended to 
provide borrowers with the flexibility to negotiate and enter into 
mergers that offer advantages to the borrowers and to rural communities, 
and adequately protect the integrity and credit quality of RUS loans and 
loan guarantees.
    (b) Consistent with prudent lending practices, the maintenance of 
adequate security for RUS loans and loan guarantees, and the objectives 
of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 901 et 
seq.) (RE Act), RUS encourages electric borrowers to consider mergers 
when such action is likely to contribute, in the long-term, to greater 
operating efficiency and financial soundness. Borrowers are specifically 
encouraged to explore mergers that are likely to enhance the ability of 
the successor to provide reliable electric service at reasonable cost to 
RE Act beneficiaries.
    (c) Pursuant to the loan documents and RUS regulations, certain 
mergers are subject to RUS approval. See Sec. 1717.615.

[[Page 138]]

    (d) Since RUS must take action in order to advance funds and 
otherwise conduct business with a successor, RUS encourages borrowers to 
consult RUS early in the process regardless of whether RUS approval of 
the merger is required. RUS will provide technical assistance and 
guidance to borrowers to help expedite the processing of their requests 
and to help resolve potential problems early in the process.



Sec. 1717.151  Definitions.

    The definitions set forth in 7 CFR 1710.2 are applicable to this 
subpart unless otherwise stated. In addition, for the purpose of this 
subpart, the following terms shall have the following meanings:
    Active borrower means an electric borrower that has, on the 
effective date, an outstanding insured or guaranteed loan from RUS for 
rural electrification, and whose eligibility for future RUS financing is 
not restricted pursuant to 7 CFR part 1786.
    Active distribution borrower means an electric distribution borrower 
that has, on the effective date, an outstanding insured or guaranteed 
loan from RUS for rural electrification, and whose eligibility for 
future RUS financing is not restricted pursuant to 7 CFR part 1786.
    Consolidation. See Merger.
    Coverage ratios means collectively TIER, OTIER, DSC and ODSC, as 
these terms are defined in 7 CFR 1710.2.
    Effective date means the date a merger is effective pursuant to 
applicable state law.
    Former distribution borrower means any organization that
    (1) Sells or intends to sell electric power and energy at retail;
    (2) At one time had an outstanding loan made or guaranteed by RUS, 
or its predecessor the Rural Electrification Administration (REA) for 
rural electrification; and
    (3) Either repaid such loans at face value or prepaid pursuant to 7 
CFR part 1786.
    Loan documents means the mortgage (or other security instrument 
acceptable to RUS), the loan contract, and the promissory note(s) 
entered into between the borrower and RUS.
    Merger means:
    (1) A consolidation where two or more companies are extinguished and 
a new successor is created, acquiring the assets, liabilities, 
franchises and powers of those passing out of existence;
    (2) A merger where one company is absorbed by another, the former 
ceasing to exist as a separate business entity, and the latter retaining 
its own identity and acquiring the assets, liabilities, franchises and 
powers of the former; or
    (3) A transfer of mortgaged property by one company to another where 
the transferee acquires substantially as an entirety the assets, 
liabilities, franchises, and powers of the transferor.
    New loan means a loan to a successor approved by RUS on or after the 
effective date.
    Preexisting loan means a loan to a borrower approved by RUS prior 
to, and outstanding on the effective date.
    Successor means the entity that continues as the surviving business 
entity as of the effective date, and acquires all the assets, 
liabilities, franchises, and powers of the entity or entities ceasing to 
exist as of the effective date.
    Transitional assistance means financial relief provided to borrowers 
by RUS during a limited period of time following a merger.



Sec. 1717.152  Required documentation for all mergers.

    In order for RUS to advance funds, send bills, and otherwise conduct 
business with a successor, the documents listed in this section must be 
submitted to RUS regardless of the need for RUS approval of the merger. 
Borrowers are responsible for ensuring that these documents are received 
by RUS in timely fashion. In cases of mergers that require RUS approval, 
or cases where borrowers must submit requests for transitional 
assistance, the documents listed in this section may be combined with 
the documents required by Sec. 1717.157 and/or Sec. 1717.160 where 
appropriate.
    (a) Prior to the effective date, borrowers must submit:
    (1) A transmittal letter on corporate letterhead signed by the 
manager of each active borrower that is a party to the proposed merger 
indicating the

[[Page 139]]

borrower's intention to merge and tentative timeframes, including the 
proposed effective date;
    (2) An original certified board resolution from each party to the 
proposed merger affirming the board's support of the merger;
    (3) All documents necessary to evidence the merger pursuant to 
applicable law. Examples include plan of merger, articles of merger, 
amended articles of incorporation, bylaws, and notices and filings 
required by law. These documents may be copies of documents filed 
elsewhere, unless otherwise specified by RUS; and
    (4) A letter addressed to the Administrator from the counsel of at 
least one of the active borrowers briefly describing the merger and 
indicating the relevant statutes under which the merger will be 
consummated.
    (b) On or after the effective date, borrowers must submit:
    (1) An opinion of counsel from the successor addressing, among other 
things, any pending litigation, proper authorization and consummation of 
the merger, proper filing and perfection of RUS' security interest, and 
all approvals required by law. RUS will provide the form of the opinion 
of counsel to the successor;
    (2) A letter signed by the manager of the successor advising RUS of 
the effective date of the merger; the corporate name, address, and phone 
number; the names of the officers of the successor; and the taxpayer 
identification number; and
    (3) Evidence of proper filing and perfection of RUS' security 
interest, as instructed by RUS, and an executed loan contract.



Sec. 1717.153  Transitional assistance.

    RUS recognizes that short-term financial stresses can follow even 
the most beneficial mergers. To help stabilize electric rates, enhance 
the credit quality of outstanding loans made or guaranteed by the 
Government, and otherwise ease the transition period before the long-
term efficiencies and economies of a merger can be realized, RUS may 
approve one or more types of transitional assistance to a successor 
under the conditions set forth in this part.



Sec. 1717.154  Transitional assistance in connection with new loans.

    Requests for transitional assistance in connection with new loans 
may be submitted to RUS no later than the loan application.
    (a) Loan processing priority. (1) RUS loans are generally processed 
in chronological order based on the date the complete application is 
received in the regional or division office. At the borrower's request, 
RUS may offer loan processing priority for the first loan to a 
successor, provided that the loan is approved by RUS not later than 5 
years after the effective date of the merger. In considering the 
request, the Administrator will take into account, among other factors, 
the amount of the loan application, whether there is a significant 
backlog in pending loan applications, the impact that loan priority 
would have on the backlog, the savings and efficiencies to be realized 
from the merger and the relative importance of loan priority to 
facilitating the merger. The Administrator may, in his or her sole 
discretion, grant or decline to grant priority, or grant priority for a 
limited amount of the loan application while deferring for later 
consideration the remainder of the application.
    (2) For any subsequent loans approved during those 5 years, RUS may 
offer loan processing priority. In reviewing requests for loan 
processing priority on subsequent loans, RUS will consider the loan 
authority for the fiscal year, the borrower's projected cash flows, its 
electric rates and rate disparity, and the likely mitigation effects of 
priority loan processing. See 7 CFR 1710.108 and 1710.119.
    (3) Loan processing priority is available following any merger where 
at least one of the merging parties is an active borrower.
    (b) Supplemental financing.(1) RUS generally requires that an 
applicant for a municipal rate loan obtain a portion of its debt 
financing from a supplemental source without an RUS guarantee. See 7 CFR 
1710.110. RUS will, at the borrower's request, waive the requirement to 
obtain supplemental financing for the first RUS loan approved after the 
effective date if that first loan is a municipal rate loan whose loan 
period does not exceed 2

[[Page 140]]

years, and the loan is approved by RUS not later than 5 years after the 
effective date. For any subsequent loans approved during these 5 years, 
or if the borrower requests a loan period longer than 2 years, RUS may, 
subject to the availability of loan funds, waive or reduce the amount of 
supplemental financing required. In reviewing requests to reduce or 
waive supplemental financing on subsequent loans or on loans with a loan 
period longer than 2 years, RUS will consider the differences in 
interest rates between RUS and supplemental loans and the impacts of 
this difference on the borrower's projected cash flows and its electric 
rates and rate disparity. If significant differences would result, the 
waiver will be granted.
    (2) Waiver of supplemental financing may be available if:
    (i) All parties to the merger are active distribution borrowers, or
    (ii) At least one of the merging parties is an active distribution 
borrower, all merging parties are either active distribution borrowers 
or former distribution borrowers, and the merger is effective after 
December 19, 1996.
    (c) Reimbursement of general funds and interim financing. (1) 
Borrowers may request RUS loan funds to reimburse general funds and/or 
interim financing used to finance equipment and facilities included in a 
RUS approved construction work plan or amendment if the construction was 
completed immediately preceding the current loan period. This 
reimbursement period is generally limited to 24 months. See 7 CFR 
1710.109. RUS may, in connection with the first RUS loan approved after 
the effective date, approve a reimbursement period of up to 48 months 
prior to the current loan period if the loan is approved not later than 
5 years after the effective date. In reviewing requests for this longer 
reimbursement period, RUS will consider the stresses that the 
transaction and other costs of entering into the merger places on the 
borrower's rates and cash flows, and the mitigating effects of more 
generous reimbursement.
    (2) A longer reimbursement period may be available if:
    (i) All parties to the merger are active distribution borrowers, or
    (ii) At least one of the merging parties is an active distribution 
borrower, all merging parties are either active distribution borrowers 
of former distribution borrowers, and the merger is effective after 
December 19, 1996.

[61 FR 66871, Dec. 19, 1996, as amended at 67 FR 58322, Sept. 16, 2002]



Sec. 1717.155  Transitional assistance affecting new and preexisting loans.

    Requests for transitional assistance affecting new and preexisting 
loans must be received by RUS no later than 2 years after the effective 
date.
    (a) Section 12 deferments. (1) Section 12 of the RE Act (7 U.S.C. 
912) allows RUS to extend the time of payment of interest or principal 
of RUS loans. Section 12 deferments do not extend the final maturity of 
the loan; lower payments during the deferment period result in higher 
payments later. Therefore, RUS may approve a Section 12 deferment of 
loan payments of up to 5 years only if such deferments will help to 
avoid substantial increases in retail electric rates during the 
transition period, without placing borrowers in financial stress after 
the deferment period.
    (2) Section 12 deferment may be available following any merger where 
at least one of the merging parties is an active borrower.
    (b) Coverage ratios. Required levels for coverage ratios are set 
forth in 7 CFR 1710.114 and in the loan documents. RUS may approve a 
plan, on a case by case basis, that provides for a phase-in period for 
these coverage ratios of up to 5 years from the effective date. Under 
such a plan the successor would be permitted to project and achieve 
lower levels for one or more of these coverage ratios during the phase-
in period.
    (1) A phase-in plan for coverage ratios must provide a pro forma 
level for each ratio during each year of the phase-in period and be 
supported by a financial forecast covering a period of not less than 10 
years from the effective date of the merger. The plan must demonstrate 
that a minimum TIER level of 1.00 will be achieved in each year, that 
trends will be generally favorable, that the borrower will achieve the 
levels required in its loan documents and RUS regulations by the end

[[Page 141]]

of the phase-in period, and that these levels will be maintained in 
subsequent years.
    (2) In reviewing phase-in plans for coverage ratios, RUS will review 
rates, rate disparity, and likely mitigating effects of the proposed 
phase-in plan.
    (3) The borrower is responsible for obtaining approvals of 
supplemental lenders.
    (4) Upon RUS approval of a phase-in plan, the levels in that plan 
will be substituted for the levels required in the borrower's 
preexisting loan documents and will be incorporated in any new loan or 
security documents.
    (5) A phase in plan for coverage ratios may be available if:
    (i) All parties to the merger are active distribution borrowers, or
    (ii) At least one of the merging parties is an active distribution 
borrower, all merging parties are either active distribution borrowers 
or former distribution borrowers, and the merger is effective after 
December 19, 1996.



Sec. 1717.156  Transitional assistance affecting preexisting loans.

    The fund advance period for an insured loan, which is the period 
during which RUS may advance loan funds to a borrower, terminates 
automatically after a specific period of time. See 7 CFR 1714.56. If, on 
the effective date the original fund advance period or the fund advance 
period as extended pursuant to 7 CFR 1714.56(c), on any preexisting RUS 
loan to any of the active borrowers involved in a merger has not 
terminated, such fund advance period shall be automatically lengthened 
by 2 years. On the borrower's request RUS will prepare documents 
necessary for the advance of loan funds. RUS will prepare documents for 
the borrower's execution that will reflect this extension and will 
provide the legal authority for RUS to advance funds to the successor.



Sec. 1717.157  Requests for transitional assistance.

    (a) If the merger requires RUS approval, the borrower should, where 
possible, indicate that it desires transitional assistance at the time 
it requests approval of the merger. The formal request for transitional 
assistance must be received by RUS as specified in Secs. 1717.155 and 
171.156. Documents listed in this section may be combined with the 
documents required by Secs. 1717.152 and/or 1717.160 where appropriate. 
If the request for transitional assistance is submitted at the same time 
as a loan application, documents listed in this section may be combined 
with the loan application documents where appropriate. See 7 CFR part 
1710, subpart I. A request for transitional assistance must include:
    (1) Transmittal letter(s) formally listing the types of transitional 
assistance requested. If the request is submitted before the effective 
date, a transmittal letter must be signed by the manager of each party 
to the transaction. If the request is submitted on or after the 
effective date, a transmittal letter must be signed by the manager of 
the successor. Transmittal letter(s) must be signed originals on 
corporate letterhead stationery;
    (2) Board resolution(s). If the request is submitted before the 
effective date, a separate board resolution must be submitted from each 
entity involved in the merger. If the request is submitted on or after 
the effective date, a board resolution from the successor must be 
submitted. Each board resolution must be a certified original;
    (3) A merger plan, financial forecasts, and any available studies 
such as net present value analyses showing the anticipated costs and 
benefits of the merger and likely timeframes for the merger. The merger 
plan must clearly identify those benefits that cannot be achieved 
without a merger, and those benefits that can be achieved through other 
means;
    (4) If the transitional assistance requires RUS approval, the type 
and extent of the mitigation that the transitional assistance is 
expected to provide; and
    (5) Other information that may be relevant.
    (b) Borrowers are responsible for ensuring that requests for 
transitional assistance are complete and sound in form and substance 
when they are submitted to RUS. After submitting a request, borrowers 
shall promptly notify

[[Page 142]]

RUS of any changes or events that materially affect the request or any 
information in the request.
    (c) In considering whether to approve requests for transitional 
assistance, RUS will evaluate the costs and benefits of the merger; the 
type and extent of the likely transitional stress; whether the 
transitional assistance requested is likely to materially mitigate such 
stress; and the likely impacts on electric rates and on the security of 
RUS loans. Review factors applicable to each type of transitional 
assistance are set forth in Secs. 1717.154-1717.156.



Sec. 1717.158  Mergers with borrowers who prepaid RUS loans.

    In some cases, an active distribution borrower may merge with a 
borrower that has prepaid RUS debt at a discount pursuant to 7 CFR part 
1786, and whose eligibility for future RUS financing is thereby 
restricted. During the period when the restrictions on future financing 
are in effect, the successor will be eligible for RUS loans to finance 
facilities to serve consumers located in the territory that was served 
by the active distribution borrower immediately prior to the effective 
date, provided that other requirements for loan eligibility are met.



Sec. 1717.159  Applications for RUS approvals of mergers.

    If a proposed merger requires RUS approval according to RUS 
regulations and/or the loan documents executed by any of the active 
borrowers involved, the application must be submitted to RUS not later 
than 90 days prior to the effective date of the proposed borrower 
action. A distribution borrower should consult with its assigned RUS 
general field representative, and a power supply borrower with the 
Director, Power Supply Division for general information prior to 
submitting the request.



Sec. 1717.160  Application contents.

    An application for RUS approval of a merger must include the 
documents listed in this section. Documents listed in this section may 
be combined with the documents required by Secs. 1717.152 and/or 
1717.157 where appropriate.
    (a) Transmittal letters signed by the managers of all borrowers and 
non-borrowers who are parties to the proposed merger. These letters must 
include the actual corporate name, address, and taxpayer identification 
number of all parties to the proposed merger. The transmittal letters 
must be signed originals on corporate letterhead stationery.
    (b) Resolutions from the boards of directors of all borrowers and 
non-borrowers who are parties to the proposed merger. This document is 
the formal request by each entity for RUS approval of the proposed 
merger. The board resolution must include a description of the proposed 
merger, including timeframes, and authorization for RUS to release 
appropriate information to supplemental or other lenders, and for these 
lenders to release appropriate information to RUS. Each board resolution 
must be a certified original.
    (c) Evidence that the proposed merger will result in a viable 
entity, and that the security of outstanding RUS loans will not be 
adversely affected by the action. This evidence shall include financial 
forecasts, and any available studies such as net present value analyses 
covering a period of not less than 10 years from the effective date of 
the merger, as well as information about any threatened actions by other 
parties that could adversely affect the financial condition of any of 
the parties to the proposed merger, or of the successor. Such threatened 
actions may include annexations or other actions affecting service 
territory, loads, rates or other such matters.
    (d) Regulatory information about pending federal or state 
proceedings pertaining to any of the parties that could have material 
effects on the successor.
    (e) Rate information. Distribution and power supply borrowers shall 
submit schedules of proposed rates after the merger, including the 
effects of the proposed action on rates and the status of any pending 
rate cases before a state regulatory authority. The rates of power 
supply borrowers are subject to RUS approval. If rates are not projected 
to change after the merger, a statement to that effect will suffice.
    (f) Area coverage and line extension policies. If any distribution 
systems are parties to the proposed merger, a statement of proposed area 
coverage and

[[Page 143]]

line extension policies for the successor.



Sec. 1717.161  Application process.

    (a) Borrowers are responsible for ensuring that their applications 
for RUS approval of a merger are complete and sound in form and 
substance when they are submitted to RUS. After submitting an 
application, borrowers shall promptly notify RUS of any changes or 
events that materially affect the application or any information in the 
application.
    (b) In reviewing borrower requests for approval of mergers, RUS will 
consider the likely effects of the action on the ability of the 
successor to provide reliable electric service at reasonable cost to RE 
Act beneficiaries and on the security of outstanding RUS loans. Among 
the factors RUS will consider are whether the proposed merger is likely 
to:
    (1) Contribute to greater operating efficiency and financial 
soundness;
    (2) Mitigate high electric rates and or rate disparity;
    (3) Help borrowers to diversify their loads or otherwise hedge 
risks;
    (4) Have beneficial effects on rural economic development in the 
community served by the borrower, such as diversifying the economic base 
or alleviating unemployment; and
    (5) Provide other benefits consistent with the purposes of the RE 
Act.
    (c) RUS will not approve a merger if, in the sole judgment of the 
Administrator, such action is likely to have an adverse effect on the 
credit quality of outstanding loans made or guaranteed by the 
Government. RUS will thoroughly review each request for approval of such 
action, including review of the feasibility and security of outstanding 
Government loans according to the standards in 7 CFR 1710.112 and 
1710.113, respectively, and in other RUS regulations.
    (d) RUS will keep the borrowers apprised of the progress of their 
applications.

Subparts E-F [Reserved]



 Subpart G_Federal Pre-emption in Rate Making in Connection With Power 
                            Supply Borrowers



Sec. 1717.300  Purpose.

    This subpart contains regulations of the Rural Utilities Service 
(RUS) implementing provisions of Section 4 of the RE Act (7 U.S.C. 904) 
which authorize the Administrator to establish terms and conditions of 
loans and implementing provisions of the RUS wholesale power contracts 
and other RUS documents which provide for the establishment of rates to 
be charged by power supply borrowers for the sale of electric power and 
energy. This subpart contains the general regulations of RUS for the 
pre-emption, under certain circumstances, which are not exclusive, of 
the regulation of a power supply borrower's rates by a state regulatory 
authority under state law and for the exercise of exclusive jurisdiction 
over rates by RUS pursuant to the RUS documents.



Sec. 1717.301  Policy.

    (a) RUS makes and guarantees loans to borrowers to bring electric 
service to persons in rural areas. RUS requires, as a condition to 
making or guaranteeing any loans to power supply borrowers, that the 
borrower enter into RUS wholesale power contracts with its several 
members and assign and pledge such contracts as security for the 
repayment of loans made or guaranteed by RUS and for other loans which, 
pursuant to the RE Act, RUS has permitted to be secured pursuant to the 
RUS mortgage. The RUS wholesale power contract requires, among other 
matters, that the rates charged for power and energy sold thereunder 
produce revenues sufficient to enable the power supply borrower to make 
payments on account of all indebtedness of the power supply borrower. 
The Administrator relies upon the RUS wholesale power contracts together 
with other RUS documents to find and certify, as required in section 4 
of the RE Act (7 U.S.C. 904), that the security for the loan is 
reasonably adequate and the loan will be repaid within the time agreed.
    (b) RUS requires power supply borrowers to take such actions as may 
be

[[Page 144]]

necessary to charge rates for the sale of electric power and energy 
which are sufficient to pay the principal and interest on loans made or 
guaranteed by RUS in a timely manner and to meet the requirements of the 
RUS wholesale power contract and other RUS documents.
    (c) With respect to power supply borrowers which are not subject to 
rate regulation by a state regulatory authority, RUS requires that such 
borrowers establish rates and obtain RUS approval of such rates as 
required by the terms of the RUS wholesale power contract and other RUS 
documents.
    (d) With respect to power supply borrowers which are subject to 
regulation by a state regulatory authority, RUS does not make or 
guarantee a loan for the construction, operation or enlargement of any 
generating plant or transmission facility unless the consent of the 
state regulatory authority having jurisdiction in the premises is first 
obtained.
    (e) Pursuant to applicable provisions of state law state regulatory 
authorities regulate many aspects of a power supply borrowers business 
activities, including such matters as the setting of wholesale electric 
rates, the borrowing of money, and the mortgaging of property. A state 
regulatory authority's jurisdiction over the rates charged by a power 
supply borrower shall be pre-empted where the Administrator has 
determined that such jurisdiction has compromised Federal interests, 
including without limitation, the ability of the borrower to repay its 
secured loans in accordance with the terms of the RUS documents. 
Thereupon, RUS shall, pursuant to the RUS documents, exercise exclusive 
jurisdiction over the rates charged by a power supply borrower.

[55 FR 38646, Sept. 19, 1990; 55 FR 53100, Dec. 26, 1990]



Sec. 1717.302  Definitions and rules of construction.

    (a) Definitions. For the purpose of this subpart, the following 
terms shall have the following meanings:
    Administrator means the Administrator of RUS.
    Borrower means any organization which has an outstanding loan made 
or guaranteed by RUS for rural electrification. Unless otherwise stated 
in the text, ``borrower'' shall mean power supply borrower.
    Loan contract means the agreement, as amended, supplemented, or 
restated from time to time, between a borrower and RUS providing for 
loans made or guaranteed pursuant to the RE Act.
    Power supply borrower means any borrower engaged in the wholesale 
sale of electric power and energy to distribution members either 
directly or though other power supply borrowers pursuant to RUS 
wholesale power contracts.
    RE Act means Rural Electrification Act of 1936, as amended (7 U.S.C. 
901 et seq.).
    REA means the Rural Electrification Administration formerly an 
agency of the United States Department of Agriculture and predecessor 
agency to RUS with respect to administering certain electric and 
telephone loan programs.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    RUS documents means the loan contract, mortgage and RUS wholesale 
power contract of a power supply borrower.
    RUS mortgage means the mortgage and security agreement, as from time 
to time supplemented, amended and restated, made by and among the 
borrower, RUS, and, if a party thereto, third party lenders, or any 
other form of mortgage or security instrument or indenture of mortgage 
and deed of trust, securing the payment of outstanding loans made or 
guaranteed by RUS and other lenders.
    RUS wholesale power contract means the contract for the wholesale 
sale of electric power and energy between a power supply borrower and 
its member as approved by RUS.
    Secured loans shall mean outstanding loans secured pursuant to the 
RUS mortgage.
    State regulatory authority means any state board or local governing 
body

[[Page 145]]

having jurisdiction under state law to regulate, or in any way, approve 
the electric rates charged by a power supply borrower or electric 
distribution member of a power supply borrower.
    (b) Rules of Construction. Unless the context shall otherwise 
indicate, the terms defined in Sec. 1717.302(a) hereof include the 
plural as well as the singular, and the singular as well as the plural. 
The words ``herein,'' and ``hereunder'', and words of similar import, 
refer to this subpart as a whole. ``Includes'' and ``including'' are not 
limiting and ``or'' is not exclusive.

[55 FR 38646, Sept. 19, 1990, as amended at 59 FR 66440, Dec. 27, 1994]



Sec. 1717.303  Requirements of RUS documents.

    (a) Pursuant to the terms of the RUS documents each power supply 
borrower shall establish and adjust rates for the sale of electric power 
and energy in such a manner as to assure that the borrower will be able 
to make required payments on secured loans.
    (b) Pursuant to the terms of the RUS wholesale power contract, the 
Board of Directors or Board of Trustees of the power supply borrower 
shall review rates not less frequently than once each calendar year and 
revise its rates as therein set forth. \1\ The RUS wholesale power 
contract further provides that the borrower shall notify the 
Administrator not less than 30 nor more than 45 days prior to the 
effective date of any adjustment and shall set forth the basis upon 
which the rate is to be adjusted and established. The RUS wholesale 
power contract provides that no final revision in rates shall be 
effective unless approved in writing by the Administrator.
---------------------------------------------------------------------------

    \1\ The Wholesale Power Contract, with minor modifications which are 
approved by RUS on a case by case basis, provides that the rate charged 
for electric power and energy, shall produce revenues which shall be 
sufficient, but only sufficient, with the revenues of the Seller from 
all other sources, to meet the cost of the operation and maintenance 
(including without limitation, replacements, insurance, taxes and 
administrative and general overhead expenses) of the generating plant 
transmission system and related facilities of the Seller, the cost of 
any power and energy purchased for resale hereunder by the Seller, the 
cost of transmission service, make payments on account of principal and 
interest on all indebtedness of the Seller, and to provide for the 
establishment and maintenance of reasonable reserves. (Section 4. Rates 
(b), RUS Form 444, ``Wholesale Power Contract--Federated Cooperative''; 
Rev. 6-60.)
---------------------------------------------------------------------------

    (c) Pursuant to the terms of the RUS mortgage, each power supply 
borrower must design its rates as therein set forth and must give 90 
days prior notice to RUS of any proposed change in its general rate 
structure.

(Approved by the Office of Management and Budget under control number 
0572-0089)



Sec. 1717.304  State regulatory authority rate jurisdiction.

    (a) In the event that rate revisions required by the terms of the 
RUS wholesale power contract or other RUS documents may be subject to 
the approval of a state regulatory authority, the power supply borrower 
shall seek such required approval in a timely manner.
    (b) RUS recognizes the need of state regulatory authorities for 
documents, information and records for use in connection with an 
application for rate approval and will consider any reasonable request 
by a borrower or a state regulatory authority for such documents, 
information and records. The failure of RUS to provide requested 
documents, information or records shall not limit any rights of RUS 
including the right with respect to pre-emption of the state regulatory 
authority as provided in this subpart.
    (c) In the event that the state regulatory authority shall fail to 
act favorably upon the borrower's application for rate increases 
required by terms of the RUS wholesale power contract or other RUS 
documents, the borrower shall pursue such legal and administrative 
appeals as may be available to it, unless RUS shall approve otherwise in 
writing.



Sec. 1717.305  Pre-emption.

    (a) Inadequate rates. State regulatory authority jurisdiction over a 
power supply borrower's rates shall be pre-empted by the RE Act if the 
Administrator shall have determined that the borrower's rates approved 
by the state regulatory authority are, after taking

[[Page 146]]

into account the borrower's costs and expenses, inadequate to produce 
revenues sufficient to permit the borrower to make required payments on 
its secured loans and the borrower has failed to make required payments 
on its secured loans.
    (b) Public notice. The Administrator shall:
    (1) Notify the borrower and the state regulatory authority in 
writing of the determination, indicating the jurisdiction of the state 
regulatory authority over the rates of the borrower has been pre-empted 
pursuant to this part and the borrower shall henceforth establish its 
rates in accordance with the term of the RUS documents.
    (2) publish a notice in the Federal Register informing the public of 
the action.

[55 FR 38646, Sept. 19, 1990; 55 FR 53100, Dec. 26, 1990]



Sec. 1717.306  RUS required rates.

    (a) Upon the publication in the Federal Register of the notice of 
pre-emption of state regulatory authority as provided in this subpart, 
RUS will exercise exclusive jurisdiction over the rates of the borrower 
pursuant to the terms of the RUS documents. The borrower shall 
immediately establish rates with the approval of RUS that are sufficient 
to satisfy the requirements of the RUS wholesale power contract and 
other RUS documents described in Sec. 1717.303 of this subpart. The 
borrower shall establish such rates notwithstanding provisions of state 
law, and rules, orders or other actions of state regulatory authorities, 
and notwithstanding any provision of the RUS documents referring to such 
laws, rules, orders or actions.
    (b) So long as the state regulatory authority shall be pre-empted 
hereunder, RUS shall be considered the governmental regulatory body with 
jurisdiction over rates for the purposes of the RUS documents and for 
the purposes of section 1129(a)(6) of the Bankruptcy Code of 1978, as 
amended (11 U.S.C. 1129(a)(6)).
    (c) If a borrower, which is subject to exclusive RUS rate 
jurisdiction, shall fail to establish rates in accordance with terms of 
the RUS wholesale power contract and other RUS documents in a timely 
fashion, RUS may proceed to exercise any and all rights and remedies 
available pursuant under the RUS documents or otherwise.
    (d) The jurisdiction of the state regulatory authority over the 
rates of the borrower shall continue to be pre-empted hereunder until 
the Administrator shall in writing approve the resumption of 
jurisdiction by the state regulatory authority and publish in the 
Federal Register a notice to such effect. The Administrator shall 
approve resumption only after determining that such jurisdiction shall 
be exercised in a manner consistent with Federal interests.

[55 FR 38646, Sept. 19, 1990; 55 FR 53100, Dec. 26, 1990]



Sec. 1717.307  Distribution members' rates.

    A state regulatory authority which has been pre-empted as provided 
in this subpart may continue to exercise jurisdiction, pursuant to 
applicable provisions of state law, over all other business affairs of 
the power supply borrower and over the rates of its distribution 
members: Provided, however, that the state regulatory authority shall 
treat any RUS approved rate for the power supply borrower as fair and 
reasonable and shall not in any manner, directly or indirectly, prevent 
or impede the distribution member from recovering the costs of paying 
the RUS approved rates to the power supply borrower.



Sec. 1717.308  RUS approval of nonconforming rates.

    Borrowers may request and RUS may approve rates which do not conform 
with the requirements of the RUS wholesale power contract and other RUS 
documents if RUS determines, in its sole discretion, that such approval 
is in the interests of RUS. If RUS approval is granted prior to pre-
emption hereunder, and if the state regulatory authority shall have 
approved such rates, then, so long as RUS's approval of the 
nonconforming rates remains in effect, the jurisdiction of the state 
regulatory authority over the rates of the borrower shall not be pre-
empted hereunder.

[[Page 147]]



Sec. 1717.309  Additional statutory pre-emption.

    This subpart addresses pre-emption of state law and state regulatory 
authority in only those specific circumstances herein described. Nothing 
in this subpart waives, limits, or otherwise affects the explicit pre-
emption or pre-emption, which is implicit and shall occur pursuant to 
the RE Act as a matter of law, of state law or action of a state 
regulatory authority where such state law or such action compromises 
Federal interests, including the ability of any borrower, including 
power supply borrowers, to repay loans made or guaranteed by RUS.



Secs. 1717.310-1717.349  [Reserved]



  Subpart H_Federal Pre-emption in Rate Making in Connection With RUS 
                    Electric Borrowers in Bankruptcy

    Source: 55 FR 38653, Sept. 19, 1990, unless otherwise noted.



Sec. 1717.350  Purpose.

    This subpart contains regulations of the Rural Utilities Service 
(RUS) implementing provisions of section 4 of the RE Act (7 U.S.C. 904) 
which authorizes the Administrator to establish terms and conditions of 
loans, and provisions of the RUS documents which provide for the 
establishment of rates for electric service to be charged by RUS 
electric borrowers. This subpart contains the general regulations of RUS 
for the pre-emption of the regulation by a State Regulatory Authority 
under State law of an RUS borrower's rates and for the exercise by RUS, 
pursuant to the RUS documents, of exclusive jurisdiction over rates of a 
borrower by or against whom a case under the Bankruptcy Code of 1978, as 
amended, has commenced.



Sec. 1717.351  Policy.

    (a) RUS makes and guarantees loans to borrowers to bring electric 
service to persons in rural areas. To accomplish this objective, RUS 
normally requires, as a condition to making or guaranteeing any loans to 
an electric borrower, that the borrower execute and deliver the RUS 
documents in the form prescribed by RUS. The RUS mortgage secures 
repayment of the loans made or guaranteed by RUS and other loans which, 
pursuant to the RE Act, RUS has permitted to be secured pursuant to the 
RUS mortgage. The Administrator relies upon the RUS mortgage together 
with other RUS documents to find and certify, as required by section 4 
of the RE Act (7 U.S.C. 904), that the security for the loan is 
reasonably adequate and the loan will be repaid within the time agreed.
    (b) RUS requires borrowers to take such actions as may be necessary 
to establish rates for electric service which are sufficient to pay the 
principal of and interest on the loans made or guaranteed by RUS in a 
timely manner and to meet the requirements of the RUS documents.
    (c) With respect to borrowers whose rates are not regulated by a 
State Regulatory Authority, RUS requires that such borrowers establish 
rates and to obtain RUS approval of such rates as required by the RUS 
documents.
    (d) To protect Federal interests, including without limitation the 
ability of the borrower to repay RUS loans, RUS's policy is to exercise, 
pursuant to the RUS documents, exclusive jurisdiction over the rates for 
electric service charged by a borrower by or against whom a case under 
the Bankruptcy Code of 1978, as amended, has commenced.



Sec. 1717.352  Definitions and rules of construction.

    (a) Definitions. For the purpose of this subpart, the following 
terms shall have the following meanings:
    Administrator means the Administrator of RUS.
    Bankruptcy code of 1978, as amended, means the Bankruptcy Reform Act 
of 1978, as amended (11 U.S.C. 101 et seq.).
    Borrower means any organization which has an outstanding loan made 
or guaranteed by RUS for rural electrification.
    RE Act means Rural Electrification Act of 1936, as amended (7 U.S.C. 
901 et seq.).
    REA means the Rural Electrification Administration formerly an 
agency of

[[Page 148]]

the United States Department of Agriculture and predecessor agency to 
RUS with respect to administering certain electric and telephone loan 
programs.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    RUS documents means the RUS loan contract, RUS mortgage and, if the 
Borrower is engaged in the wholesale sale of electric power and energy 
to members pursuant to RUS Wholesale Power Contracts, the RUS Wholesale 
Power Contract.
    RUS loan contract means the agreement, as amended, supplemented, or 
restated from time to time, between a borrower and RUS providing for 
loans made or guaranteed pursuant to the RE Act.
    RUS mortgage means the mortgage and security agreement, as from time 
to time supplemented, amended and restated, made by and among the 
borrower, RUS, and, if a party thereto, third party lenders, or any 
other form of mortgage or security instrument or indenture of mortgage 
and deed of trust, securing the payment of outstanding loans made or 
guaranteed by RUS and other lenders.
    RUS wholesale power contract means the contract for the wholesale 
sale of electric power and energy between a power supply borrower and 
its member as approved by RUS.
    Secured loans shall mean outstanding loans secured pursuant to the 
RUS mortgage.
    State regulatory authority means any state board or local governing 
body having jurisdiction under state law to regulate, or in any way, 
approve the electric rates charged by a borrower.
    (b) Rules of construction. Unless the context shall otherwise 
indicate, the terms defined in Sec. 1717.352(a) hereof include the 
plural as well as the singular, and the singular as well as the plural. 
The words ``herein,'' and ``hereunder'', and words of similar import, 
refer to this subpart as a whole. ``Includes'' and ``including'' are not 
limiting and ``or'' is not exclusive.

[55 FR 38653, Sept. 19, 1990, as amended at 59 FR 66440, Dec. 27, 1994]



Sec. 1717.353  Requirements of RUS documents.

    Each borrower shall establish and adjust rates for electric service 
as set forth in the RUS documents to assure that the borrower will be 
able to make required payments on secured loans and to otherwise meet 
the terms of the RUS documents.



Sec. 1717.354  Pre-emption.

    State Regulatory Authority jurisdiction over an RUS borrower's rates 
shall be pre-empted by the RE Act and RUS shall have exclusive 
jurisdiction over the borrower's rates:
    (a) On October 19, 1990, with respect to any borrower by or against 
whom a case under the Bankruptcy Code of 1978, as amended, was commenced 
prior to and remains outstanding on October 19, 1990; and
    (b) With respect to all other borrowers, upon the filing of a 
petition by or against the borrower commencing a case under the 
Bankruptcy Code of 1978, as amended.



Sec. 1717.355  RUS required rates.

    (a) Upon the pre-emption of State Regulatory Authority as provided 
in this subpart, RUS will exercise exclusive jurisdiction over the rates 
of the borrower pursuant to the terms of the RUS documents.
    (b) So long as the State Regulatory Authority shall be pre-empted 
hereunder, RUS shall be considered the governmental regulatory body with 
jurisdiction over rates for all purposes, including for the purposes of 
the RUS documents and for the purposes of section 1129(a)(6) of the 
Bankruptcy Code of 1978, as amended (11 U.S.C. 1129(a)(6)).
    (c) RUS shall, pursuant to the terms of the RUS documents, exercise 
exclusive jurisdiction over the rates of the borrower until the 
Administrator shall in writing approve the resumption of jurisdiction by 
the State Regulatory Authority. The Administrator shall approve 
resumption only after determining that such jurisdiction shall be

[[Page 149]]

exercised in a manner consistent with Federal interests.



Sec. 1717.356  Additional statutory pre-emption.

    This subpart addresses pre-emption of State law and State Regulatory 
Authority upon the filing of a petition by or against the borrower 
commencing a case under the Bankruptcy Code of 1978, as amended. Nothing 
in this subpart waives, limits, or otherwise affects the explicit pre-
emption or pre-emption, which is implicit and shall occur pursuant to 
the RE Act as a matter of law, of State law or action of a State 
Regulatory Authority where such State law or such action compromises 
Federal interests, including the ability of any borrower to repay loans 
made or guaranteed by RUS.

Subparts I-L [Reserved]



                     Subpart M_Operational Controls

    Source: 60 FR 67405, Dec. 29, 1995, unless otherwise noted.



Sec. 1717.600  General.

    (a) General. The loan contract and mortgage between the Rural 
Utilities Service (RUS) and electric borrowers imposes certain 
restrictions and controls on the borrowers and gives RUS (and other co-
mortgagees in the case of the mortgage) the right to approve or 
disapprove certain actions contemplated by the borrowers. Certain of 
these controls and approval rights are referred to informally as 
``operational controls'' because they pertain to decisions or actions 
with respect to the operation of the borrowers' electric systems. The 
approval authority granted to RUS by the loan contract or mortgage 
regarding each decision or action subject to controls is often stated in 
broad, unlimited terms. This subpart lists the main operational controls 
affecting borrowers and establishes for each area of control the 
circumstances under which RUS approval of a decision or action by a 
borrower is either required or not required. In some cases, only the 
general principles or general circumstances pertaining to RUS approval 
or control are presented in this subpart, while the details regarding 
the circumstances and requirements of RUS approval or control are set 
forth in other RUS regulations. Since this subpart addresses only the 
main operational controls, failure to address a control or approval 
right in this subpart in no way invalidates such controls or rights 
established by the loan contract, mortgage, other agreements between a 
borrower and RUS, and RUS regulations.
    (b) Case by case amendments. Upon written notice to a borrower, RUS 
may amend or annul the approvals and exceptions to controls set forth in 
this subpart or other RUS regulations if the borrower is in violation of 
any provision of its loan documents or any other agreement with RUS, or 
if RUS determines that loan security and/or repayment is threatened. 
Such amendment or annulment will apply to decisions and actions of the 
borrower after said written notice has been provided by RUS.
    (c) Generic notices. By written notice to all borrowers or a group 
of borrowers, RUS may grant or waive approval of decisions and actions 
by the borrowers that are controlled under the loan documents and RUS 
regulations. RUS may also by written notice withdraw or cut back its 
grant or waiver of approval of said decisions and actions made by 
previous written notice, but may not by such notice extend its authority 
to approve decisions and actions by borrowers beyond the authority 
granted by the loan documents and RUS regulations.



Sec. 1717.601  Applicability.

    (a) The approvals and exceptions to controls conveyed by this 
subpart apply only to controls and approval rights normally included in 
RUS loan documents dated prior to January 29, 1996. They do not apply to 
special controls and approval requirements included in loan documents or 
other agreements executed between a borrower and RUS that relate to 
individual problems or circumstances specific to an individual borrower.
    (b) The approvals and exceptions to controls granted by RUS in this 
subpart shall not in any way affect the rights of other co-mortgagees 
under the mortgage or their loan contracts.

[[Page 150]]



Sec. 1717.602  Definitions.

    Terms used in this subpart that are not defined in this section have 
the meanings set forth in 7 CFR part 1710. In addition, for the purposes 
of this subpart:
    Default means an event of default as defined in the borrower's loan 
documents or other agreement with RUS, and furthermore includes any 
event that has occurred and is continuing which, with notice or lapse of 
time and notice, would become an event of default.
    Equity means the borrower's total margins and equities computed 
pursuant to RUS accounting requirements but excluding any regulatory 
created assets.
    Financed or funded by RUS means financed or funded wholly or in part 
by a loan made or guaranteed by RUS, including concurrent supplemental 
loans required by 7 CFR 1710.110, loans to reimburse funds already 
expended by the borrower, and loans to replace interim financing.
    Interchange agreement means a contractual arrangement that can 
include a variety of services utilities provide each other to increase 
reliability and efficiency, and to avoid duplicating expenses. Some 
examples are: transmission service (the use of transmission lines to 
move power and energy from one area to another); emergency service (an 
agreement by one utility to furnish another with power and energy to 
protect it in times of emergency, such as power plant outages); reserve 
sharing (contributions to a common pool of generating plant reserves so 
that each individual utility's reserves can be reduced); and economic 
exchanges (swapping power and energy from different plants to avoid 
running the most expensive units).
    Interconnection agreement means a contract governing the terms for 
establishing or using one or more electrical connections between two or 
more electric systems permitting a flow of power and energy among the 
systems.
    Loan documents means the mortgage (or other security instrument 
acceptable to RUS), the loan contract, and the promissory note entered 
into between the borrower and RUS.
    Net utility plant means the amount constituting the total utility 
plant of the borrower, less depreciation, computed in accordance with 
RUS accounting requirements.
    Pooling agreement means a contract among two or more interconnected 
electric systems to operate on a coordinated basis to achieve economies 
and/or enhance reliability in supplying their respective loads.
    Power supply contract means any contract entered into by a borrower 
for the sale or purchase, at wholesale, of electric energy.
    Regulatory created assets means the sum of any amounts properly 
recordable as unrecovered plant and regulatory study costs or as other 
regulatory assets, computed pursuant to RUS accounting requirements.
    RUS accounting requirements means the system of accounts prescribed 
for electric borrowers by RUS regulations as such RUS accounting 
requirements exist at the date of applicability thereof.
    RUS regulations mean regulations of general applicability published 
by RUS from time to time as they exist at the date of applicability 
thereof, and shall also include any regulations of other federal 
entities which RUS is required by law to implement.
    Total assets means an amount constituting the total assets of the 
borrower as computed pursuant to RUS accounting requirements, but 
excluding any regulatory created assets.
    Wheeling agreement means a contract providing for the use of the 
electric transmission facilities of one electric utility to transmit 
power and energy of another electric utility or other entity to a third 
party. Such transmission may be accomplished directly or by 
displacement.



Sec. 1717.603  RUS approval of extensions and additions.

    (a) Distribution borrowers. Prior written approval by RUS is 
required for a distribution borrower to extend or add to its electric 
system if the extension or addition will be financed by RUS. For 
extensions and additions that will not be financed by RUS, approval is 
hereby given to distribution borrowers to make such extensions and 
additions

[[Page 151]]

to their electric systems, including the use of (or commitment to use) 
general funds of the borrower, except for the following:
    (1) Construction, procurement, or leasing of generating facilities 
if the combined capacity of the facilities to be built, procured, or 
leased, including any future facilities included in the planned project, 
will exceed the lesser of 5 megawatts or 30 percent of the borrower's 
equity;
    (2) Acquisition or leasing of existing electric facilities or 
systems in service whose purchase price, or capitalized value in the 
case of a lease, exceeds 10 percent of the borrower's net utility plant; 
and
    (3) Construction, procurement, or leasing of electric facilities to 
serve a customer whose annual kWh purchases or maximum annual kW demand 
in the foreseeable future is projected to exceed 25 percent of the 
borrower's total kWh sales or maximum kW demand in the year immediately 
preceding the acquisition or start of construction.
    (b) Power supply borrowers. Prior written approval by RUS is 
required for a power supply borrower to extend or add to its electric 
system if the extension or addition will be financed by RUS. 
Requirements for RUS approval of extensions and additions that will not 
be financed by RUS are set forth in other RUS regulations.
    (c) Additional details. Additional details relating to RUS approval 
of extensions and additions of a borrower's electric system financed by 
RUS are set forth in other RUS regulations, e.g., in 7 CFR parts 1710 
and 1726.



Sec. 1717.604  Long-range engineering plans and construction work plans.

    (a) All borrowers are required to maintain up-to-date long-range 
engineering plans and construction work plans (CWPs) in form and 
substance as set forth in 7 CFR part 1710, subpart F.
    (b) Applications for financing from RUS must be supported by a long-
range engineering plan and CWP approved by RUS.
    (c) RUS approval is not required for long-range engineering plans 
and CWPs if the borrower does not intend to seek RUS financing for any 
of the facilities, equipment or other purposes included in those plans. 
However, if requested by RUS, a borrower must provide an informational 
copy of such plans to RUS.



Sec. 1717.605  Design standards, plans and specifications, construction 
standards, and RUS accepted materials.

    All borrowers, regardless of the source of funding, are required to 
comply with applicable RUS requirements with respect to system design, 
construction standards, and the use of RUS accepted materials. Borrowers 
must comply with applicable RUS requirements with respect to plans and 
specifications only if the construction or procurement will be financed 
by RUS. These requirements are set forth in other RUS regulations, 
especially in 7 CFR parts 1724 and 1728.



Sec. 1717.606  Standard forms of construction contracts, and engineering 
and architectural services contracts.

    All borrowers are encouraged to use the standard forms of contracts 
promulgated by RUS for construction, materials, equipment, engineering 
services, and architectural services, regardless of the source of 
funding for such construction and services. Borrowers are required to 
use these standard forms of contracts only if the construction, 
procurement or services are financed by RUS, and only to the extent 
required by RUS regulations. RUS requirements with respect to such 
standard forms of contract are set forth in 7 CFR part 1724 for 
architectural and engineering services, and in 7 CFR part 1726 for 
construction, materials, and equipment.



Sec. 1717.607  Contract bidding requirements.

    Borrowers must follow RUS requirements regarding bidding for 
contracts for construction, materials, and equipment only if financing 
of the construction or procurement will be provided by RUS. These 
requirements are set forth in 7 CFR part 1726.



Sec. 1717.608  RUS approval of contracts.

    (a) Construction contracts and architectural and engineering 
contracts. RUS approval of contracts for construction and procurement 
and for architectural and engineering services is required

[[Page 152]]

only when such construction, procurement or services are financed by 
RUS. Detailed requirements regarding RUS approval of such contracts are 
set forth in 7 CFR part 1724 for architectural and engineering services, 
and in 7 CFR part 1726 for construction and procurement.
    (b) Large retail power contracts. RUS approval of contracts to sell 
electric power to retail customers is required only if the contract is 
for longer than 2 years and the kWh sales or kW demand for any year 
covered by the contract exceeds 25 percent of the borrower's total kWh 
sales or maximum kW demand for the year immediately preceding execution 
of the contract. This requirement applies regardless of the source of 
funding of any plant extensions, additions or improvements that may be 
involved in connection with the contract.
    (c) Power supply arrangements. (1) Power supply contracts (including 
but not limited to economy energy sales and emergency power and energy 
sales), interconnection agreements, interchange agreements, wheeling 
agreements, pooling agreements, and any other similar power supply 
arrangements subject to approval by RUS are deemed approved if they have 
a term of 2 years or less. Amendments to said power supply arrangements 
are also deemed approved provided that the amendment does not extend the 
term of the arrangement for more than 2 years beyond the date of the 
amendment.
    (2) Any amendment to a schedule or exhibit contained in any power 
supply arrangement subject to RUS approval, which merely has the effect 
of either altering a list of interconnection or delivery points or 
changing the value of a variable term (but not the formula itself) 
contained in a formulary rate or charge is deemed approved.
    (3) The provisions of this paragraph (c) apply regardless of whether 
the borrower is a seller or purchaser of the services furnished by the 
contracts or arrangements, and regardless of whether or not a Federal 
power marketing agency is a party to any of them.
    (d) System management and maintenance contracts. RUS approval of 
contracts for the management and operation of a borrower's electric 
system or for the maintenance of the electric system is required only if 
such contracts cover all or substantially all of the electric system.
    (e) Other contracts. [Reserved]



Sec. 1717.609  RUS approval of general manager.

    (a) If a borrower's mortgage or loan contract grants RUS the 
unconditioned right to approve the employment and/or the employment 
contract of the general manager of the borrower's system, such approval 
is hereby granted provided that the borrower is in compliance with all 
provisions of its loan documents and any other agreements with RUS.
    (b) If a borrower is in default with respect to any provision of its 
loan documents or any other agreement with RUS:
    (1) Such borrower, if directed in writing by RUS, shall replace its 
general manager within 30 days after the date of such written notice; 
and
    (2) Such borrower shall not hire a general manager without prior 
written approval by RUS.



Sec. 1717.610  RUS approval of compensation of the board of directors.

    If a borrower's mortgage or loan contract requires the borrower to 
obtain approval from RUS for compensation provided to members of the 
borrower's board of directors, such requirement is hereby waived.



Sec. 1717.611  RUS approval of expenditures for legal, accounting, 
engineering, and supervisory services.

    (a) If a borrower's mortgage or loan contract requires the borrower 
to obtain approval from RUS before incurring expenses for legal, 
accounting, supervisory (other than for the management and operation of 
the borrower's electric system, see Sec. 1717.608(d)), or other similar 
services, such approval is hereby granted. However, while expenditures 
for accounting do not require RUS approval, the selection of a certified 
public accountant by the borrower to prepare audited reports required by 
RUS remains subject to RUS approval.

[[Page 153]]

    (b) If a borrower's mortgage or loan contract requires the borrower 
to obtain approval from RUS before incurring expenses for engineering 
services, such approval is hereby granted if such services will not be 
financed by RUS. Approval requirements with respect to engineering 
services financed by RUS are set forth in other RUS regulations.



Sec. 1717.612  RUS approval of borrower's bank or other depository.

    If a borrower's mortgage or loan contract gives RUS the authority to 
approve the bank or other depositories used by the borrower, such 
approval is hereby granted. However, without the prior written approval 
of RUS, a borrower shall not deposit funds from loans made or guaranteed 
by RUS in any bank or other depository that is not insured by the 
Federal Deposit Insurance Corporation or other Federal agency acceptable 
to RUS, or in any account not so insured.



Sec. 1717.613  RUS approval of data processing and system control equipment.

    If a borrower's mortgage or loan contract requires the borrower to 
obtain approval from RUS before purchasing data processing equipment or 
system control equipment, such approval is hereby granted if the 
equipment will not be financed by RUS.



Sec. 1717.614  Notification of rate changes.

    If a distribution borrower is required by its loan documents to 
notify RUS in writing of proposed changes in electric rates more than 30 
days prior to the effective date of such rates, the required 
notification period shall be 30 days. Moreover, such notification shall 
be required only upon the request of RUS.



Sec. 1717.615  Consolidations and mergers.

    A distribution or power supply borrower may without the prior 
approval of RUS, consolidate or merge with any other corporation or 
convey or transfer the mortgaged property substantially as an entirety 
if the following conditions are met:
    (a) Such consolidation, merger, conveyance or transfer shall be on 
such terms as shall fully preserve the lien and security of the RUS 
mortgage and the rights and powers of the mortgagees;
    (b) The entity formed by such consolidation or with which the 
borrower is merged or the corporation which acquires by conveyance or 
transfer the mortgaged property substantially as an entirety shall 
execute and deliver to the mortgagees a mortgage supplemental in 
recordable form and containing an assumption by such successor entity of 
the due and punctual payment of the principal of and interest on all of 
the outstanding notes and the performance and observance of every 
covenant and condition of the mortgage;
    (c) Immediately after giving effect to such transaction, no default 
under the mortgage shall have occurred and be continuing;
    (d) The borrower shall have delivered to the mortgagees a 
certificate of its general manager or other officer, in form and 
substance satisfactory to each of the mortgagees, which shall state that 
such consolidation, merger, conveyance or transfer and such supplemental 
mortgage comply with this section and that all conditions precedent 
herein provided for relating to such transaction have been complied 
with;
    (e) The borrower shall have delivered to the mortgagees an opinion 
of counsel in form and substance satisfactory to each of the mortgagees; 
and
    (f) The entity formed by such consolidation or with which the 
borrower is merged or the corporation which acquires by conveyance or 
transfer the mortgaged property substantially as an entirety shall be an 
entity having:
    (1) Equity equal to at least 27% of its total assets on a pro forma 
basis after giving effect to such transaction;
    (2) A pro forma TIER of not less than 1.25 and a pro forma DSC of 
not less than 1.25 for each of the two preceding calendar years;
    (3) Net utility plant equal to or greater than 1.0 times its total 
long-term debt on a pro forma basis.

[60 FR 67405, Dec. 29, 1995, as amended at 65 FR 51748, Aug. 25, 2000; 
67 FR 70153, Nov. 21, 2002]

[[Page 154]]



Sec. 1717.616  Sale, lease, or transfer of capital assets.

    A distribution borrower may without the prior approval of RUS sell, 
lease, or transfer any capital asset if the following conditions are 
met:
    (a) The borrower is not in default;
    (b) In the most recent year for which data are available, the 
borrower achieved a TIER of at least 1.25, DSC of at least 1.25, OTIER 
of at least 1.1, and ODSC of at least 1.1 in each case based on the 
average or the best 2 out of the 3 most recent years;
    (c) The sale, lease, or transfer 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;
    (d) Fair market value is obtained for the assets;
    (e) The aggregate value of assets sold, leased, or transferred in 
any 12-month period is less than 10 percent of the borrower's net 
utility plant prior to the transaction;
    (f) The proceeds of such sale, lease, or transfer, less ordinary and 
reasonable expenses incident to such transaction, are immediately:
    (1) Applied as a prepayment of all notes secured under the mortgage 
equally and ratably;
    (2) In the case of dispositions of equipment, materials or scrap, 
applied to the purchase of other property useful in the borrower's 
utility business; or
    (3) Applied to the acquisition of construction of utility plant.

[60 FR 67405, Dec. 29, 1995, as amended at 65 FR 51748, Aug. 25, 2000]



Sec. 1717.617  Limitations on distributions.

    If a distribution or power supply borrower is required by its loan 
documents to obtain prior approval from RUS before declaring or paying 
any dividends, paying or determining to pay any patronage refunds, or 
retiring any patronage capital, or making any other cash distributions, 
such approval is hereby given if the following conditions are met:
    (a) After giving effect to the distribution, the borrower's equity 
will be greater than or equal to 30 percent of its total assets;
    (b) The borrower is current on all payments due on all notes secured 
under the mortgage;
    (c) The borrower is not otherwise in default under its loan 
documents; and
    (d) After giving effect to the distribution, the borrower's current 
and accrued assets will be not less than its current and accrued 
liabilities.



   Subpart N_Investments, Loans, and Guarantees by Electric Borrowers

    Authority: 7 U.S.C. 901-950b; Pub.L. 103-354, 108 Stat. 3178 (7 
U.S.C. 6941 et seq.); Title I, Subtitle D, Pub.L. 100-203, 101 Stat. 
1330.

    Source: 60 FR 48877, Sept. 21, 1995, unless otherwise noted.



Sec. 1717.650  Purpose.

    This subpart sets forth general regulations for implementing and 
interpreting provisions of the RUS mortgage and loan contract regarding 
investments, loans, and guarantees made by electric borrowers, as well 
as the provisions of the Rural Electrification Act of 1936, as amended, 
including section 312 (7 U.S.C. 901 et seq.) (RE Act), permitting, in 
certain circumstances, that electric borrowers under the RE Act may, 
without restriction or prior approval of the Administrator of the Rural 
Utilities Service (RUS), invest their own funds and make loans or 
guarantees.



Sec. 1717.651  General.

    (a) Policy. RUS electric borrowers are encouraged to utilize their 
own funds to participate in the economic development of rural areas, 
provided that such activity does not in any way put government funds at 
risk or impair a borrower's ability to repay its indebtedness to RUS and 
other lenders. In considering whether to make loans, investments, or 
guarantees, borrowers are expected to act in accordance with prudent 
business practices and in conformity with the laws of the jurisdictions 
in which they serve. RUS assumes that borrowers will use the latitude 
afforded them by section 312 of the RE Act primarily to make needed

[[Page 155]]

investments in rural community infrastructure projects (such as water 
and waste systems, garbage collection services, etc.) and in job 
creation activities (such as providing technical, financial, and 
managerial assistance) and other activities to promote business 
development and economic diversification in rural communities. 
Nonetheless, RUS believes that borrowers should continue to give primary 
consideration to safety and liquidity in the management of their funds.
    (b) Applicability of this subpart. This subpart applies to all 
distribution and power supply borrowers regardless of when their loan 
contract or mortgage was executed.



Sec. 1717.652  Definitions.

    As used in this subpart:
    Borrower means any organization that has an outstanding loan made or 
guaranteed by RUS for rural electrification.
    Cash-construction fund-trustee account means the account described 
in the Uniform System of Accounts as one to which funds are deposited 
for financing the construction or purchase of electric facilities.
    Distribution borrower means a Distribution Borrower as defined in 7 
CFR 1710.2.
    Electric system means all of the borrower's interests in all 
electric production, transmission, distribution, conservation, load 
management, general plant and other related facilities, equipment or 
property and in any mine, well, pipeline, plant, structure or other 
facility for the development, production, manufacture, storage, 
fabrication or processing of fossil, nuclear, or other fuel or in any 
facility or rights with respect to the supply of water, in each case for 
use, in whole or in major part, in any of the borrower's generating 
plants, including any interest or participation of the borrower in any 
such facilities or any rights to the output or capacity thereof, 
together with all lands, easements, rights-of-way, other works, 
property, structures, contract rights and other tangible and intangible 
assets of the borrower in each case used or useful in such electric 
system.
    Equity means the Margins and Equities of the borrower as defined in 
the Uniform System of Accounts, less regulatory created assets.
    Guarantee means to undertake collaterally to answer for the payment 
of another's debt or the performance of another's duty, liability, or 
obligation, including, without limitation, the obligations of 
subsidiaries. Some examples of such guarantees include guarantees of 
payment or collection on a note or other debt instrument (assuring 
returns on investments); issuing performance bonds or completion bonds; 
or cosigning leases or other obligations of third parties.
    Invest means to commit money in order to earn a financial return on 
assets, including, without limitation, all investments properly recorded 
on the borrower's books and records in investment accounts as those 
accounts are used in the Uniform System of Accounts for RUS Borrowers. 
Borrowers may submit any proposed transaction to RUS for an 
interpretation of whether the action is an investment for the purposes 
of this definition.
    Make loans means to lend out money for temporary use on condition of 
repayment, usually with interest.
    Mortgaged property means any asset of the borrower which is pledged 
in the RUS mortgage.
    Natural gas distribution system means any system of community 
infrastructure that distributes natural gas and whose services are 
available by design to all or a substantial portion of the members of 
the community.
    Operating DSC means Operating Debt Service Coverage (ODSC) of the 
borrower's electric system calculated as:
[GRAPHIC] [TIFF OMITTED] TR21SE95.001


[[Page 156]]


where:

All amounts are for the same year and are based on the RUS system of 
          accounts;
A=Depreciation and Amortization Expense of the electric system;
B=Interest on Long-term Debt of the electric system, except that 
          Interest on Long-term Debt shall be increased by \1/3\ of the 
          amount, if any, by which the rentals of Restricted Property of 
          the electric system exceed 2 percent of Total Margins and 
          Equities;
C=Patronage Capital & Operating Margins of the electric system 
          (distribution borrowers) or Operating Margins of the electric 
          system (power supply borrowers); and
D=Debt Service Billed (RUS + other) which equals all interest and 
          principal billed or billable during the calendar year for 
          long-term debt of the electric system plus \1/3\ of the 
          amount, if any, by which the rentals of Restricted Property of 
          the electric system exceed 2 percent of Total Margins and 
          Equities. Unless otherwise indicated, all terms used in 
          defining ODSC and OTIER are as defined in RUS Bulletin 1717B-2 
          Instructions for the Preparation of the Financial and 
          Statistical Report for Electric Distribution Borrowers, and 
          RUS Bulletin 1717B-3 Instructions for the Preparation of the 
          Operating Report for Power Supply Borrowers and for 
          Distribution Borrowers with Generating Facilities, or the 
          successors to these bulletins.

    Operating TIER means Operating Times Interest Earned Ratio (OTIER) 
of the borrower's electric system calculated as:
[GRAPHIC] [TIFF OMITTED] TR21SE95.002

where:

All amounts are for the same year and are based on the RUS system of 
          accounts;
A=Interest on Long-term Debt of the electric system, except that 
          Interest on Long-term Debt shall be increased by \1/3\ of the 
          amount, if any, by which the rentals of Restricted Property of 
          the electric system exceed 2 percent of Total Margins and 
          Equities; and
B=Patronage Capital & Operating Margins of the electric system 
          (distribution borrowers) or Operating Margins of the electric 
          system (power supply borrowers).

    Own funds means money belonging to the borrower other than funds on 
deposit in the cash-construction fund-trustee account.
    Power supply borrower means a Power Supply Borrower as defined in 7 
CFR 1710.2.
    Regulatory created assets means the sum of the amounts properly 
recordable in Account 182.2 Unrecovered Plant and Regulatory Study 
Costs, and Account 182.3 Other Regulatory Assets of the Uniform System 
of Accounts.
    RUS means the Rural Utilities Service, an agency of the U.S. 
Department of Agriculture established pursuant to Section 232 of the 
Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178, 7 U.S.C. 
6941 et seq.) and, for purposes of this subpart, includes its 
predecessor, the Rural Electrification Administration.
    RUS loan contract means the loan contract between the borrower and 
RUS.
    RUS mortgage means any and all instruments creating a lien on or 
security interest in the borrower's assets in connection with loans or 
guarantees under the RE Act.
    Solid waste disposal system means any system of community 
infrastructure that provides collection and/or disposal of solid waste 
and whose services are available by design to all or a substantial 
portion of the members of the community.
    Subsidiary means a company which is controlled by the borrower 
through ownership of voting stock, and is further defined in 7 CFR 
1767.10.
    Supplemental lender means a lender that has provided a supplemental 
source of financing that is secured by the RUS mortgage.
    Telecommunication and other electronic communication system means 
any community infrastructure that provides telecommunication or other 
electronic communication services and whose services are available by 
design to all or a substantial portion of the members of the community.
    Total assets means the total assets of the borrower as calculated 
according to the Uniform System of Accounts, less regulatory created 
assets.
    Total utility plant means the sum of the borrower's Electric Plant 
Accounts and Construction Work in Progress--Electric Accounts, as such 
terms are

[[Page 157]]

used in the Uniform System of Accounts.
    Uniform System of Accounts means the system of accounts prescribed 
for RUS borrowers in 7 CFR part 1767.
    Water and waste disposal system means any system of community 
infrastructure that supplies water and/or collects and treats waste 
water and whose services are available by design to all or a substantial 
portion of the members of the community.



Sec. 1717.653  Borrowers in default.

    Any borrower not in compliance with all provisions of its mortgage, 
loan contract, or any other agreements with RUS must, unless the 
borrower's mortgage, loan contract, or other agreement with RUS 
specifically provides otherwise with respect to such a borrower:
    (a) Obtain prior written approval from the Administrator to invest 
its own funds or to make loans or guarantees regardless of the aggregate 
amount of such investments, loans, or guarantees; and
    (b) If requested by the Administrator, restructure or reduce the 
amount of its investments, loans, and guarantees to a level determined 
by the Administrator, in his or her sole discretion, to be in the 
financial interest of the government with respect to loan security and/
or repayment. If the borrower does not so restructure or reduce its 
portfolio within a reasonable period of time determined by the 
Administrator, which shall not exceed 12 months from the date the 
borrower was notified of the required action, then, upon written notice 
from RUS, the borrower shall be in default of its RUS loan contract and 
mortgage.



Sec. 1717.654  Transactions below the 15 percent level.

    (a) A borrower in compliance with all provisions of its RUS 
mortgage, RUS loan contract, and any other agreements with RUS may, 
without prior written approval of the Administrator, invest its own 
funds or make loans or guarantees not in excess of 15 percent of its 
total utility plant without regard to any provision contained in any RUS 
mortgage or RUS loan contract to the effect that the borrower must 
obtain prior approval from RUS, provided, however, that the borrower may 
not, without the prior written approval of the Administrator, make such 
investments, loans, and guarantees to extend, add to, or modify its 
electric system. Moreover, funds necessary to make timely payments of 
principal and interest on loans secured by the RUS mortgage remain 
subject to RUS controls on borrower investments, loans and guarantees.
    (b) RUS will not consider requests from borrowers to exclude 
investments, loans, or guarantees made below the 15 percent level. 
(Categorical exclusions are set forth in Sec. 1717.655.)



Sec. 1717.655  Exclusion of certain investments, loans, and guarantees.

    (a) In calculating the amount of investments, loans and guarantees 
permitted under this subpart, there is excluded from the computation any 
investment, loan or guarantee of the type which by the terms of the 
borrower's RUS mortgage or RUS loan contract the borrower may make in 
unlimited amounts without RUS approval.
    (b) Furthermore, the borrower may make unlimited investments, 
without prior approval of the Administrator, in:
    (1) Securities or deposits issued, guaranteed or fully insured as to 
payment by the United States Government or any agency thereof;
    (2) Capital term certificates, bank stock, or other similar 
securities of the supplemental lender which have been purchased as a 
condition of membership in the supplemental lender, or as a condition of 
receiving financial assistance from such lender, as well as any other 
investment made in, or loans made to, the National Rural Utilities 
Cooperative Finance Corporation, the Saint Paul Bank for Cooperatives, 
and CoBank, ACB;
    (3) Patronage capital allocated from an electric power supply 
cooperative of which the borrower is a member; and
    (4) Patronage capital allocated from an electric distribution 
cooperative to a power supply borrower.
    (c) Without prior approval of the Administrator, the borrower may 
also:
    (1) Invest or lend funds derived directly from:

[[Page 158]]

    (i) Grants which the borrower in not obligated to repay, regardless 
of the source or purpose of the grant; and
    (ii) Loans received from or guaranteed by any Federal, State or 
local government program designed to promote rural economic development, 
provided that the borrower uses the loan proceeds for such purpose;
    (2) Make loans guaranteed by an agency of USDA, up to the amount of 
principal whose repayment, with interest, is fully guaranteed; and
    (3)(i) Make unlimited investments in and unlimited loans to finance 
the following community infrastructure that serves primarily consumers 
located in rural areas as defined in 7 CFR 1710.2, and guarantee debt 
issued for the construction or acquisition of such infrastructure, up to 
an aggregate amount of such guarantees not to exceed 20 percent of the 
borrower's equity:
    (A) Water and waste disposal systems;
    (B) Solid waste disposal systems;
    (C) Telecommunication and other electronic communication systems; 
and
    (D) Natural gas distribution systems.
    (ii) In each of the four cases in paragraph (c)(3)(i) of this 
section, if the system is a component of a larger organization other 
than the borrower itself (e.g., if it is a component of a subsidiary of 
the borrower or a corporation independent of the borrower), to be 
eligible for the exemption the borrower must certify annually that a 
majority of the gross revenues of the larger organization during the 
most recent fiscal year came from customers of said system who were 
located in a rural area.
    (d) Also excluded from the calculation of investments, loans and 
guarantees made by the borrower are:
    (1) Amounts properly recordable in Account 142 Customer Accounts 
Receivable, and Account 143 Other Accounts Receivable;
    (2) Any investment, loan, or guarantee that the borrower is required 
to make by an agency of USDA, for example, as a condition of obtaining 
financial assistance for itself or any other person or organization;
    (3) Investments included in an irrevocable trust for the purpose of 
funding post-retirement benefits of the borrower's employees;
    (4) Reserves required by a reserve bond agreement or other agreement 
legally binding on the borrower, that are dedicated to making required 
payments on debt secured under the RUS mortgage, not to exceed the 
amount of reserves specifically required by such agreements; and
    (5) Investments included in an irrevocable trust approved by RUS and 
dedicated to the payment of decommissioning costs of nuclear facilities 
of the borrower.
    (e) Grandfathered exclusions. All amounts of individual investments, 
loans, and guarantees excluded by RUS as of February 16, 1995 shall 
remain excluded. Such exclusions must have been based on the RUS 
mortgage, RUS loan contract, regulations, bulletins, memoranda, or other 
written notice from RUS. Profits, interest, and other returns earned 
(regardless of whether or not they are reinvested) on such investments, 
loans and guarantees after February 16, 1995 shall be excluded only if 
they are eligible for exclusion under paragraphs (a) through (d) of this 
section. Any new commitments of money to such investments, loans and 
guarantees shall likewise be excluded only if they are eligible under 
paragraphs (a) through (d) of this section.
    (f) Any investment, loan or guarantee made by a borrower that is not 
excluded under this section or under Sec. 1717.657(d) shall be included 
in the aggregate amount of investments, loans and guarantees made by the 
borrower, regardless of whether RUS has specifically approved the 
investment, loan or guarantee under Sec. 1717.657(c), or has approved a 
related transaction (e.g., a lien accommodation).



Sec. 1717.656  Exemption of certain borrowers from controls.

    (a) Any distribution or power supply borrower that meets all of the 
following criteria is exempted from the provisions of the RUS mortgage 
and loan contract that require RUS approval of investments, loans, and 
guarantees, except investments, loans, and guarantees made to extend, 
add to, or modify the borrower's electric system:

[[Page 159]]

    (1) The borrower is in compliance with all provisions of its RUS 
mortgage, RUS loan contract, and any other agreements with RUS;
    (2) The average revenue per kWh for residential service received by 
the borrower during the two most recent calendar years does not exceed 
130 percent of the average revenue per kWh for residential service 
during the same period for all residential consumers located in the 
state or states served by the borrower. This criterion applies only to 
distribution borrowers and does not apply to power supply borrowers. If 
a borrower serves customers in more than one state, the state average 
revenue per kWh will be based on a weighted average using the kWh sales 
by the borrower in each state as the weight. The calculation will be 
based on the two most recent calendar years for which both borrower and 
state-wide data are available. If a borrower fails to qualify for an 
exemption based solely on its failure to meet this criterion on rate 
disparity, at the borrower's request the Administrator may, at his or 
her sole discretion, exempt the borrower if he or she finds that the 
borrower's strengths with respect to the other criteria are sufficient 
to offset any weakness due to rate disparity;
    (3) In the most recent calendar year for which data are available, 
the borrower achieved an operating TIER of at least 1.0 and an operating 
DSC of at least 1.0, in each case based on the average of the two 
highest ratios achieved in the three most recent calendar years;
    (4) The borrower's ratio of net utility plant to long-term debt is 
at least 1.1, based on year-end data for the most recent calendar year 
for which data are available; and
    (5) The borrower's equity is equal to at least 27 percent of its 
total assets, based on year-end data for the most recent calendar year 
for which data are available.
    (b) While borrowers meeting the criteria in paragraph (a) of this 
section are exempt from RUS approval of investments, loans and 
guarantees, they are nevertheless subject to the record-keeping, 
reporting, and other requirements of Sec. 1717.658.
    (c) Any borrower exempt under paragraph (a) of this section that 
ceases to meet the criteria for exemption shall, upon written notice 
from RUS, no longer be exempt and shall be subject to the provisions of 
this subpart applicable to non-exempt borrowers. A borrower may regain 
its exemption if it subsequently meets the criteria in paragraph (a) of 
this section, and is so notified in writing by RUS.
    (d)(1) A borrower that loses its exemption and is not in compliance 
with all provisions of its mortgage, loan contract, or any other 
agreement with RUS may be required to restructure or reduce its 
portfolio of investments, loans and guarantees as provided in 
Sec. 1717.653(b). If the borrower's portfolio exceeds the 15 percent 
level, the borrower will be required to restructure or reduce its 
portfolio to the 15 percent level or below. For example, if the 
borrower's mortgage or loan contract has an approval threshold, the 
borrower may be required to reduce its portfolio to that level, which in 
many cases is 3 percent of total utility plant.
    (2) A borrower that loses its exemption but is in compliance with 
all provisions of its mortgage, loan contract, and any other agreements 
with RUS will be required, if its investments, loans and guarantees 
exceed the 15 percent level, to restructure or reduce its portfolio to 
the 15 percent level, unless the Administrator, in his or her sole 
discretion, determines that such action would not be in the financial 
interest of the government with respect to loan security and/or 
repayment. (Such borrower is eligible to ask RUS to exclude a portion of 
its investments under the conditions set forth in Sec. 1717.657(d).)
    (3) If a borrower required to reduce or restructure its portfolio 
does not fully comply within a reasonable period of time determined by 
the Administrator, which shall not exceed 12 months from the date the 
borrower was notified of its loss of exemption, then, upon written 
notice from RUS, the borrower shall be in default of its RUS loan 
contract and/or RUS mortgage.
    (e) By no later than July 1 of each year, RUS will provide written 
notice

[[Page 160]]

to any borrowers whose exemption status has changed as a result of more 
recent data being available for the qualification criteria set forth in 
paragraph (a) of this section, or as a result of other reasons, such as 
corrections in the available data. An explanation of the reasons for any 
changes in exemption status will also be provided to the borrowers 
affected.



Sec. 1717.657  Investments above the 15 percent level by certain
borrowers not exempt under Sec. 1717.656(a).

    (a) General. (1) This section applies only to borrowers that are in 
compliance with all provisions of their mortgage, loan contract, and any 
other agreements with RUS and that do not qualify for an exemption from 
RUS investment controls under Sec. 1717.656(a).
    (2) Nothing in this section shall in any way affect the 
Administrator's authority to exercise approval rights over investments, 
loans, and guarantees made by a borrower that is not in compliance with 
all provisions of its mortgage, loan contract and any other agreements 
with RUS.
    (b) Distribution borrowers. Distribution borrowers not exempt from 
RUS investment controls under Sec. 1717.656(a) may not make investments, 
loans and guarantees in an aggregate amount in excess of 15 percent of 
total utility plant. Above the 15 percent level, such borrowers will be 
restricted to excluded investments, loans and guarantees as defined in 
Sec. 1717.655. (However, they are eligible to ask RUS to exclude a 
portion of their investments under the conditions set forth in paragraph 
(d) of this section.)
    (c) Power supply borrowers. (1) Power supply borrowers not exempt 
from RUS investment controls under Sec. 1717.656(a) may request approval 
to exceed the 15 percent level if all of the following criteria are met:
    (i) Satisfactory evidence has been provided that the borrower is in 
compliance with all provisions of its RUS mortgage, RUS loan contract, 
and any other agreements with RUS;
    (ii) The borrower is not in financial workout and has not had its 
government debt restructured;
    (iii) The borrower has equity equal to at least 5 percent of its 
total assets; and
    (iv) After approval of the investment, loan or guarantee, the 
aggregate of the borrower's investments, loans and guarantees will not 
exceed 20 percent of the borrower's total utility plant.
    (2) Borrower requests for approval to exceed the 15 percent level 
will be considered on a case by case basis. The requests must be made in 
writing.
    (3) In considering borrower requests, the Administrator will take 
the following factors into consideration:
    (i) The repayment of all loans secured under the RUS mortgage will 
continue to be assured, and loan security must continue to be reasonably 
adequate, even if the entire investment or loan is lost or the borrower 
is required to perform for the entire amount of the guarantee. These 
risks will be considered along with all other risks facing the borrower, 
whether or not related to the investment, loan or guarantee;
    (ii) In the case of investments, the investment must be made in an 
entity separate from the borrower, such as a subsidiary, whereby the 
borrower is protected from any liabilities incurred by the separate 
entity, unless the borrower demonstrates to the satisfaction of the 
Administrator that making the investment directly rather than through a 
separate entity will present no substantial risk to the borrower in 
addition to the possibility of losing all or part of the original 
investment;
    (iii) The borrower must be economically and financially sound as 
indicated by its costs of operation, competitiveness, operating TIER and 
operating DSC, physical condition of the plant, ratio of equity to total 
assets, ratio of net utility plant to long-term debt, and other factors; 
and
    (iv) Other factors affecting the security and repayment of 
government debt, as determined by the Administrator on a case by case 
basis.
    (4) If the Administrator approves an investment, loan or guarantee, 
such investment, loan or guarantee will continue to be included when 
calculating the borrower's ratio of aggregate investments, loans and 
guarantees to total utility plant.

[[Page 161]]

    (d) Distribution and power supply borrowers. If the aggregate of the 
investments, loans and guarantees of a distribution or power supply 
borrower exceeds 15 percent of the borrower's total utility plant as a 
result of the cumulative profits or margins, net of losses, earned on 
said transactions over the past 10 calendar years (i.e., the sum of all 
profits earned during the 10 years on all transactions--including 
interest earned on cash accounts, loans, and similar transactions--less 
the sum of all losses experienced on all transactions during the 10 
years) then:
    (1) The borrower will not be in default of the RUS loan contract or 
RUS mortgage with respect to required approval of investments, loans and 
guarantees, provided that the borrower had not made additional net 
investments, loans or guarantees without approval after reaching the 15 
percent level; and
    (2) At the request of the borrower, the Administrator in his or her 
sole discretion may decide to exclude up to the amount of net profits or 
margins earned on the borrower's investments, loans and guarantees 
during the past 10 calendar years, if the Administrator determines that 
such exclusion will not increase loan security risks. The borrower must 
provide documentation satisfactory to the Administrator as to the 
current status of its investments, loans and guarantees and the net 
profits earned during the past 10 years. Any exclusion approved by the 
Administrator may or may not reduce the level of investments, loans and 
guarantees to or below the 15 percent level. If such exclusion does not 
reduce the level to or below the 15 percent level, RUS will notify the 
borrower in writing that it must reduce or restructure its investments, 
loans and guarantees to a level of not more than 15 percent of total 
utility plant. If the borrower does not come within the 15 percent level 
within a reasonable period of time determined by the Administrator, 
which shall not exceed 12 months from the date the borrower was notified 
of the required action, then, upon written notice from RUS, the borrower 
shall be in default of its RUS loan contract and mortgage.



Sec. 1717.658  Records, reports and audits.

    (a) Every borrower shall maintain accurate records concerning all 
investments, loans and guarantees made by it. Such records shall be kept 
in a manner that will enable RUS to readily determine:
    (1) The nature and source of all income, expenses and losses 
generated from the borrower's loans, guarantees and investments;
    (2) The location, identity and lien priority of any loan collateral 
resulting from activities permitted by this subpart; and
    (3) The effects, if any, which such activities may have on the 
feasibility of loans made, guaranteed or lien accommodated by RUS.
    (b) In determining the aggregate amount of investments, loans and 
guarantees made by a borrower, the borrower shall use the recorded value 
of each investment, loan or guarantee as reflected on its books and 
records for the next preceding end-of-month, except for the end-of-year 
report which shall be based on December 31 information. Every borrower 
shall also report annually to RUS, in the manner and on the form 
specified by the Administrator, the current status of each investment, 
outstanding loan and outstanding guarantee which it has made pursuant to 
this subpart.
    (c) The records of borrowers shall be subject to the auditing 
procedures prescribed in part 1773 of this chapter. RUS reserves the 
right to review the financial records of any subsidiaries of the 
borrower to determine if the borrower is in compliance with this 
subpart, and to ascertain if the debts, guarantees (as defined in this 
subpart), or other obligations of the subsidiaries could adversely 
affect the ability of the borrower to repay its debts to the Government.
    (d) RUS will monitor borrower compliance with this subpart based 
primarily on the annual financial and statistical report submitted by 
the borrower to RUS and the annual auditor's report on the borrower's 
operations. However, RUS may inspect the borrower's records at any time 
during the year to determine borrower compliance. If a borrower's most 
recent annual financial and statistical report

[[Page 162]]

shows the aggregate of the borrower's investments, loans and guarantees 
to be below the 15 percent level, that in no way relieves the borrower 
of its obligation to comply with its RUS mortgage, RUS loan contract, 
and this subpart with respect to Administrator approval of any 
additional investment, loan or guarantee that would cause the aggregate 
to exceed the 15 percent level.



Sec. 1717.659  Effect of this subpart on RUS loan contract and mortgage.

    (a) Nothing in this subpart shall affect any provision, covenant, or 
requirement in the RUS mortgage, RUS loan contract, or any other 
agreement between a borrower and RUS with respect to any matter other 
than the prior approval by RUS of investments, loans, and guarantees by 
the borrower, such matters including, without limitation, extensions, 
additions, and modifications of the borrower's electric system. Also, 
nothing in this subpart shall affect any rights which supplemental 
lenders have under the RUS mortgage, or under their loan contracts or 
other agreements with their borrowers, to limit investments, loans and 
guarantees by their borrowers to levels below 15 percent of total 
utility plant.
    (b) RUS will require that any electric loan made or guaranteed by 
RUS after October 23, 1995 shall be subject to a provision in the loan 
contract or mortgage restricting investments, loans and guarantees by 
the borrower substantially as follows: The borrower shall not make any 
loan or advance to, or make any investment in, or purchase or make any 
commitment to purchase any stock, bonds, notes or other securities of, 
or guaranty, assume or otherwise become obligated or liable with respect 
to the obligations of, any other person, firm or corporation, except as 
permitted by the RE Act and RUS regulations.
    (c) RUS reserves the right to change the provisions of the RUS 
mortgage and loan contract relating to RUS approval of investments, 
loans and guarantees made by the borrower, on a case-by-case basis, in 
connection with providing additional financial assistance to a borrower 
after October 23, 1995.

Subpart O [Reserved]



Secs. 1717.700-1717.749  [Reserved]

Subpart P [Reserved]



Secs. 1717.750-1717.799  [Reserved]

Subpart Q [Reserved]



Secs. 1717.800-1717.849  [Reserved]



Subpart R_Lien Accommodations and Subordinations for 100 Percent Private 
                                Financing

    Source: 58 FR 53843, Oct. 19, 1993, unless otherwise noted.



Sec. 1717.850  General.

    (a) Scope and applicability. (1) This subpart R establishes policies 
and procedures for the accommodation, subordination or release of the 
Government's lien on borrower assets, including approvals of supporting 
documents and related loan security documents, in connection with 100 
percent private sector financing of facilities and other purposes. 
Policies and procedures regarding lien accommodations for concurrent 
supplemental financing required in connection with an RUS insured loan 
are set forth in subpart S of this part.
    (2) This subpart and subpart S of this part apply only to debt to be 
secured under the mortgage, the issuance of which is subject to the 
approval of the Rural Utilities Service (RUS) by the terms of the 
borrower's mortgage with respect to the issuance of additional debt or 
the refinancing or refunding of debt. If RUS approval is not required 
under such terms of the mortgage itself, a lien accommodation is not 
required. If the loan contract or other agreement between the borrower 
and RUS requires RUS approval with respect to the issuance of debt or 
making additions to or extensions of the borrower's system, such 
required approvals do not by themselves result in the need for a lien 
accommodation.

[[Page 163]]

    (b) Overall policy. (1) Consistent with prudent lending practices, 
the maintenance of adequate security for RUS's loans, and the objectives 
of the Rural Electrification Act (RE Act), it is the policy of RUS to 
provide effective and timely assistance to borrowers in obtaining 
financing from other lenders by sharing RUS's lien on a borrower's 
assets in order to finance electric facilities, equipment and systems, 
and certain other types of community infrastructure. In certain 
circumstances, RUS may facilitate the financing of such assets by 
subordinating its lien on specific assets financed by other lenders.
    (2) It is also the policy of RUS to provide effective and timely 
assistance to borrowers in promoting rural development by subordinating 
RUS's lien for financially sound rural development investments under the 
conditions set forth in Sec. 1717.858.
    (c) Decision factors. In determining whether to accommodate, 
subordinate, or release its lien on property pledged by the borrower 
under the RUS mortgage, RUS will consider the effects of such action on 
the achievement of the purposes of the RE Act, the repayment and 
security of RUS loans secured by the mortgage, and other factors set 
forth in this subpart. The following factors will be considered in 
assessing the effects on the repayment and security of RUS loans:
    (1) The value of the added assets compared with the amount of new 
debt to be secured;
    (2) The value of the assets already pledged under the mortgage, and 
any effects of the proposed transaction on the value of those assets;
    (3) The ratio of the total outstanding debt secured under the 
mortgage to the value of all assets pledged as security under the 
mortgage;
    (4) The borrower's ability to repay debt owed to the Government, as 
indicated by the following factors:
    (i) Revenues, costs (including interest, lease payments and other 
debt service costs), margins, Times Interest Earned Ratio (TIER), Debt 
Service Coverage (DSC), and other case-specific economic and financial 
factors;
    (ii) The variability and uncertainty of future revenues, costs, 
margins, TIER, DSC, and other case-specific economic and financial 
factors;
    (iii) Future capital needs and the ability of the borrower to meet 
those needs at reasonable cost;
    (iv) The ability of the borrower's management to manage and control 
its system effectively and plan for future needs; and
    (5) Other factors that may be relevant in individual cases, as 
determined by RUS.
    (d) Environmental considerations. Under certain circumstances, such 
as when the project does not qualify for a categorical exclusion, the 
environmental requirements of 7 CFR part 1794 may apply to applications 
for lien accommodations, subordinations, and releases.
    (e) Co-mortgagees. Other mortgagees under existing mortgages shared 
with RUS may have the right to approve requests for lien accommodations, 
subordinations and releases. In those cases, borrowers would have to 
obtain the approval of such mortgagees in order for the lien of the 
mortgage to be accommodated, subordinated or released. Any reference in 
this subpart to waiving by RUS of any of its rights under the mortgage 
shall apply only to the rights of RUS and shall not apply to the rights 
of any other co-mortgagee.
    (f) Safety and performance standards. (1) To be eligible for a lien 
accommodation or subordination from RUS, a borrower must comply with RUS 
standards regarding facility and system planning and design, 
construction, procurement, and the use of materials accepted by RUS, as 
required by the borrower's mortgage, loan contract, or other agreement 
with RUS, and as further specified in RUS regulations.
    (2) RUS ``Buy American'' requirements shall not apply.
    (g) Advance of funds. (1) The advance of funds from 100 percent 
private loans lien accommodated or subordinated by RUS will not be 
subject to RUS approval. It is the private lender's responsibility to 
adopt reasonable measures to ensure that such loan funds are used for 
the purposes for which the loan was made and the lien accommodation or 
subordination granted. RUS encourages lenders to adopt the following 
measures:

[[Page 164]]

    (i) Remit loan advances to a separate subaccount of the Cash-
Construction Fund-Trustee Account;
    (ii) Obtain a certification from a registered professional engineer, 
for each year during which funds from the separate subaccount are 
utilized by the borrower, that all materials and equipment purchased and 
facilities constructed during the year from said funds comply with RUS 
safety and performance standards, as required by paragraph (f) of this 
section, and are included in an CWP or CWP amendment approved by the 
borrower's board of directors;
    (iii) Obtain an auditor's certification from a Certified Public 
Accountant, for each year during which funds are advanced to or remitted 
from the separate subaccount, certifying:
    (A) The amount of loan funds advanced to and remitted from the 
separate subaccount during the period of review;
    (B) That based on the auditor's review of construction work orders 
and other records, all moneys disbursed from the separate subaccount 
during the period of review were used for purposes contemplated in the 
loan agreement and the lien accommodation; and
    (iv) Immediately notify RUS in writing if the lender is unable to 
obtain the certifications cited in paragraphs (g)(1)(ii) and (g)(1)(iii) 
of this section.
    (2) The measures listed in paragraph (g)(1) of this section will 
normally be sufficient to meet the lender's responsibility provided that 
additional measures are not reasonably required based on the particular 
circumstances of an individual case. Should a lender fail to carry out 
its responsibility in the manner described in this paragraph (g) or in 
another manner acceptable to RUS, RUS may disqualify such lender from 
participation in advance approval under Secs. 1717.854 and 1717.857 and 
condition the lender's receipt of a lien accommodation or subordination 
upon the lender providing satisfactory evidence that it will fulfill its 
responsibility under this paragraph (g).
    (h) Contracting and procurement procedures. (1) Facilities financed 
with debt obtained entirely from non-RUS sources, without an RUS loan 
guarantee, are not subject to RUS post-loan requirements regarding 
contracting, procurement and bidding procedures; contract close-out 
procedures pertaining to project completion, final payment of 
contractor, and related matters; and standard forms of construction and 
procurement contracts listed in 7 CFR 1726.300.
    (2) To the extent that provisions in a borrower's loan contract or 
mortgage in favor of RUS may be inconsistent with paragraphs (g)(1) and 
(h)(1) of this section, paragraphs (g)(1) and (h)(1) of this section are 
intended to constitute an approval or waiver under the terms of such 
instruments, and in any regulations implementing such instruments, with 
respect to facilities financed with debt obtained entirely from non-RUS 
sources without an RUS guarantee.
    (i) Access of handicapped to buildings and seismic safety. A 
borrower must meet the following requirements to be eligible for a lien 
accommodation or subordination for 100 percent private financing of the 
construction of buildings:
    (1) The borrower must provide RUS with a certification by the 
project architect that the buildings will be designed and constructed in 
compliance with Section 504 of the Rehabilitation Act of 1973 as amended 
(29 U.S.C. 794), as applicable under that Act, and that the facilities 
will be readily accessible to and usable by persons with handicaps in 
accordance with the Uniform Federal Accessibility Standards (UFAS), 
(Appendix A to 41 CFR part 101.19, subpart 101-19.6). The certification 
must be included in the borrower's application for a lien accommodation 
or subordination. In addition to these requirements, building 
construction may also be subject to requirements of The Americans with 
Disabilities Act (42 U.S.C. 12101 et seq.); and
    (2) The borrower must comply with RUS's seismic safety requirements 
set forth in 7 CFR part 1792, subpart C.
    (j) Breach of warranty. Any breach of any warranty or agreement or 
any material inaccuracy in any representation, warranty, certificate, 
document, or opinion submitted pursuant to this subpart, including, 
without limitation, any agreement or representation regarding the use of 
funds from loans lien

[[Page 165]]

accommodated or subordinated pursuant to this subpart, shall constitute 
a default by the borrower under the terms of its loan agreement with 
RUS.
    (k) Guaranteed loans. The provisions of this subpart do not apply to 
lien accommodations or subordinations sought for loans guaranteed by 
RUS. Such lien accommodations and subordinations are governed by RUS 
regulations on guaranteed loans.
    (l) Release of lien. To avoid repetition, release of lien is not 
mentioned in every instance where it may be an acceptable alternative to 
subordination of RUS's lien. Generally, lien subordination is favored 
over release of lien, and any decision to release RUS's lien is at the 
sole discretion of RUS.
    (m) Waiver authority. Consistent with the RE Act and other 
applicable laws, any requirement, condition, or restriction imposed by 
this subpart, or subpart S of this part, on a borrower, private lender, 
or application for a lien accommodation or subordination may be waived 
or reduced by the Administrator, if the Administrator determines that 
said action is in the Government's financial interest with respect to 
ensuring repayment and reasonably adequate security for loans made or 
guaranteed by RUS.
    (n) Liability. It is the intent of this subpart that any failure on 
the part of RUS to comply with any provisions hereof, including without 
limitation, those provisions setting forth specified timeframes for 
action by RUS on applications for lien accommodations or lien 
subordinations, shall not give rise to liability of any kind on the part 
of the Government or any employees of the Government including, without 
limitation, liability for damages, fees, expenses or costs incurred by 
or on behalf of a borrower, private lender or any other party.

[58 FR 53843, Oct. 19, 1993, as amended at 60 FR 67408, Dec. 29, 1995]



Sec. 1717.851  Definitions.

    Terms used in this subpart have the meanings set forth in 7 CFR 
1710.2. References to specific RUS forms and other RUS documents, and to 
specific sections or lines of such forms and documents, shall include 
the corresponding forms, documents, sections and lines in any subsequent 
revisions of these forms and documents. In addition to the terms defined 
in 7 CFR 1710.2, the following terms have the following meanings for the 
purposes of this subpart:
    Borrower's financial and statistical report means RUS Form 7, Parts 
A through D, for distribution borrowers, and RUS Form 12a for power 
supply borrowers.
    Calendar day means any day of the year, except a Federal holiday 
that falls on a work day.
    Capital investment. For the purposes of Sec. 1717.860, capital 
investment means an original investment in an asset that is intended for 
long-term continued use or possession and, for accounting purposes, is 
normally depreciated or depleted as it is used. For example, such assets 
may include land, facilities, equipment, buildings, mineral deposits, 
patents, trademarks, and franchises. Original investments do not include 
refinancings or refundings.
    Current refunding means any refunding of debt where the proceeds of 
the new debt are applied to refund the old debt within 90 days of the 
issuance of the new debt.
    Default under the RUS mortgage, loan contract, restructuring 
agreement, or any other agreement between the borrower and RUS means any 
event of default or any event which, with the giving of notice or lapse 
of time or both, would become an event of default.
    Equity, less deferred expenses, means Line 33 of Part C of RUS Form 
7 less assets properly recordable in Account 182.2, Unrecovered Plant 
and Regulatory Study Costs, and Account 182.3, Other Regulatory Assets.
    Front-end costs means the reasonable cost of engineering, 
architectural, environmental and other studies and plans needed to 
support the construction of facilities and other investments eligible 
for a lien accommodation or subordination under this subpart.
    Lien accommodation means the sharing of the Government's (RUS's) 
lien on property, usually all property, covered by the lien of the RUS 
mortgage.
    Lien subordination means allowing another lender to take a first 
mortgage lien on certain property covered by the

[[Page 166]]

lien of the RUS mortgage, and the Government (RUS) taking a second lien 
on such property.
    Natural gas distribution system means any system of community 
infrastructure whose primary function is the distribution of natural gas 
and whose services are available by design to all or a substantial 
portion of the members of the community.
    Net utility plant means Part C, Line 5 of RUS Form 7 (distribution 
borrowers) or Section B, Line 5 of RUS Form 12a (power supply 
borrowers).
    Power cost study means the study defined in 7 CFR 1710.303.
    Solid waste disposal system means any system of community 
infrastructure whose primary function is the collection and/or disposal 
of solid waste and whose services are available by design to all or a 
substantial portion of the members of the community.
    Telecommunication and other electronic communication system means 
any system of community infrastructure whose primary function is the 
provision of telecommunication or other electronic communication 
services and whose services are available by design to all or a 
substantial portion of the members of the community.
    Total assets, less deferred expenses means Line 26 of Part C of RUS 
Form 7 less assets properly recordable in Account 182.2, Unrecovered 
Plant and Regulatory Study Costs, and Account 182.3, Other Regulatory 
Assets.
    Total outstanding long-term debt means Part C, Line 38 of RUS Form 
7.
    Transaction costs means the reasonable cost of legal advice, 
accounting fees, filing fees, recording fees, call premiums and 
prepayment penalties, financing costs (including, for example, 
underwriting commissions, letter of credit fees and bond insurance), and 
printing associated with borrower financing.
    Water and waste disposal system means any system of community 
infrastructure whose primary function is the supplying of water and/or 
the collection and treatment of waste water and whose services are 
available by design to all or a substantial portion of the members of 
the community.
    Weighted average life of the loan means the average life of the loan 
based on the proportion of original loan principal paid during each year 
of the loan. It shall be determined by calculating the sum of all loan 
principal payments, expressed as a fraction of the original loan 
principal amount, times the number of years and fractions of years 
elapsed at the time of each payment since issuance of the loan. For 
example, given a $5 million loan, with a maturity of 5 years and equal 
principal payments of $1 million due on the anniversary date of the 
loan, the weighted average life would be: (.2)(1 year) + (.2)(2 years) + 
(.2)(3 years) + (.2)(4 years) + (.2)(5 years) = .2 years + .4 years + .6 
years + .8 years + 1.0 years = 3.0 years. If instead the loan had a 
balloon payment of $5 million at the end of 5 years, the weighted 
average life would be: ($5 million/$5 million)(5 years) = 5 years.

[58 FR 53843, Oct. 19, 1993, as amended at 59 FR 3986, Jan. 28, 1994; 60 
FR 67409, Dec. 29, 1995]



Sec. 1717.852  Financing purposes.

    (a) Purposes eligible. The following financing purposes, except as 
excluded in paragraph (b) of this section, are eligible for a lien 
accommodation from RUS, or in certain circumstances a subordination of 
RUS's lien on specific assets, provided that all applicable provisions 
of this subpart are met:
    (1) The acquisition, construction, improvement, modification, and 
replacement (less salvage value) of systems, equipment, and facilities, 
including real property, used to supply electric and/or steam power to:
    (i) RE Act beneficiaries; and/or
    (ii) End-user customers of the borrower who are not beneficiaries of 
the RE Act. Such systems, equipment, and facilities include those listed 
in 7 CFR 1710.251(c) and 1710.252(c), as well as others that are 
determined by RUS to be an integral component of the borrower's system 
of supplying electric and/or steam power to consumers, such as, for 
example, coal mines, coal handling facilities, railroads and other 
transportation systems that supply fuel for generation, programs of 
demand side management and energy conservation, and on-grid and off-grid 
renewable energy systems;

[[Page 167]]

    (2) The purchase, rehabilitation and integration of existing 
distribution facilities, equipment and systems, and associated service 
territory;
    (3) The following types of community infrastructure substantially 
located within the electric service territory of the borrower: water and 
waste disposal systems, solid waste disposal systems, telecommunication 
and other electronic communications systems, and natural gas 
distribution systems;
    (4) Front-end costs, when and as the borrower has obtained a binding 
commitment from the non-RUS lender for the financing required to 
complete the procurement or construction of the facilities;
    (5) Transaction costs included as part of the cost of financing 
assets or refinancing existing debt, provided, however, that the amount 
of transaction costs eligible for lien accommodation or subordination 
normally shall not exceed 5 percent of the principal amount of financing 
or refinancing provided, net of all transaction costs;
    (6) The refinancing of existing debt secured under the mortgage;
    (7) Interest during construction of generation and transmission 
facilities if approved by RUS, case by case, depending on the financial 
condition of the borrower, the terms of the financing, the nature of the 
construction, the treatment of these costs by regulatory authorities 
having jurisdiction, and such other factors deemed appropriate by RUS; 
and
    (8) Lien subordinations for certain rural development investments, 
as provided in Sec. 1717.858.
    (b) Purposes ineligible. The following financing purposes are not 
eligible for a lien accommodation or subordination from RUS:
    (1) Working capital, including operating funds, unless in the 
judgment of RUS the working capital is required to ensure the repayment 
of RUS loans and/or other loans secured under the mortgage;
    (2) Facilities, equipment, appliances, or wiring located inside the 
premises of the consumer, except:
    (i) Certain load-management equipment (see 7 CFR 1710.251(c));
    (ii) Renewable energy systems and RUS-approved programs of demand 
side management and energy conservation; and
    (iii) As determined by RUS on a case by case basis, facilities 
included as part of certain cogeneration projects to furnish electric 
and/or steam power to end-user customers of the borrower;
    (3) Investments in a lender required of the borrower as a condition 
for obtaining financing; and
    (4) Debt incurred by a distribution or power supply borrower to 
finance facilities, equipment or other assets that are not part of the 
borrower's electric system or one of the four community infrastructure 
systems cited in paragraph (a)(3) of this section, except for certain 
rural development investments eligible for a lien subordination under 
Sec. 1717.858.
    (c) Lien subordination for electric utility investments. RUS will 
consider subordinating its lien on specific electric utility assets 
financed by the lender, when the assets can be split off without 
materially reducing the stability, safety, reliability, operational 
efficiency, or liquidation value of the rest of the system.

[58 FR 53843, Oct. 19, 1993, as amended at 59 FR 3986, Jan. 28, 1994; 60 
FR 67409, Dec. 29, 1995]

    Effective Date Note: At 78 FR 73370, Dec. 5, 2013, Sec. 1717.852 was 
by revising paragraph (b)(2)(ii), effective Feb. 3, 2014. For the 
convenience of the user, the revised text is set forth as follows:



Sec. 1717.852  Financing purposes.

                                * * * * *

    (b) * * *
    (2) * * *
    (ii) Renewable energy systems and RUS-approved programs of Demand 
side management, energy efficiency and energy conservation; and

                                * * * * *



Sec. 1717.853  Loan terms and conditions.

    (a) Terms and conditions. A loan, bond or other financing 
instrument, for which a lien accommodation or subordination is requested 
from RUS, must comply with the following terms and conditions:

[[Page 168]]

    (1) The maturity of the loan or bond used to finance facilities or 
other capital assets must not exceed the weighted average of the 
expected remaining useful lives of the assets being financed;
    (2) The loan or bond must have a maturity of not less than 5 years, 
except for loans or bonds used to refinance debt that has a remaining 
maturity of less than 5 years;
    (3) The principal of the loan or bond must be amortized at a rate 
that will yield a weighted average life not greater than the weighted 
average life that would result from level payments of principal and 
interest; and
    (4) The loan, or any portion of the loan, may bear either a variable 
(set annually or more frequently) or a fixed interest rate.
    (b) RUS approval. Loan terms and conditions and the loan agreement 
between the borrower and the lender are subject to RUS approval. 
However, RUS will usually waive its right of approval for distribution 
borrowers that meet the conditions for advance approval of a lien 
accommodation or subordination set forth in Sec. 1717.854. RUS may also 
waive its right of approval in other cases. RUS's decision to waive its 
right of approval will depend on the adequacy of security for RUS's 
loans, the current and projected financial strength of the borrower and 
its ability to meet its financial obligations, RUS's familiarity with 
the lender and its lending practices, whether the transaction is 
ordinary or unusual, and the uncertainty and credit risks involved in 
the transaction.



Sec. 1717.854  Advance approval--100 percent private financing of 
distribution, subtransmission and headquarters facilities, and certain 
other community infrastructure.

    (a) Policy. Requests for a lien accommodation or subordination from 
distribution borrowers for 100 percent private financing of 
distribution, subtransmission and headquarters facilities, and for 
community infrastructure listed in Sec. 1717.852(a)(3), qualify for 
advance approval by RUS if they meet the conditions of this section and 
all other applicable provisions of this subpart. Advance approval means 
RUS will approve these requests once RUS is satisfied that the 
conditions of this section and all other applicable provisions of this 
subpart have been met.
    (b) Eligible purposes. Lien accommodations or subordinations for the 
financing of distribution, subtransmission, and headquarters facilities 
and community infrastructure listed in Sec. 1717.852(a)(3) are eligible 
for advance approval, except those that involve the purchase of existing 
facilities and associated service territory.
    (c) Qualification criteria. To qualify for advance approval, the 
following requirements, as well as all other applicable requirements of 
this subpart, must be met:
    (1) The borrower has achieved a TIER of at least 1.25 and a DSC of 
at least 1.25 for each of 2 calendar years immediately preceding, or any 
2 consecutive 12 month periods ending within 180 days immediately 
preceding, the issuance of the debt;
    (2) The ratio of the borrower's equity, less deferred expenses, to 
total assets, less deferred expenses, is not less than 27 percent, after 
adding the principal amount of the proposed loan to the total assets of 
the borrower;
    (3) The borrower's net utility plant as a ratio to its total 
outstanding long-term debt is not less than 1.0, after adding the 
principal amount of the proposed loan to the existing outstanding long-
term debt of the borrower;
    (4) There are no actions or proceedings against the borrower, 
pending or overtly threatened in writing before any court, governmental 
agency, or arbitrator that would materially adversely affect the 
borrower's operations and/or financial condition;
    (5) The borrower is current on all debt payments and all other 
financial obligations, and is not in default under the RUS mortgage, the 
RUS loan contract, the borrower's wholesale power contract, any debt 
restructuring agreement, or any other agreement with RUS;
    (6) The borrower has:
    (i) Submitted the annual auditor's report, report on compliance, 
report on internal controls, and management letter in accordance with 7 
CFR part 1773;
    (ii) Received an unqualified opinion in the most recent auditor's 
report;

[[Page 169]]

    (iii) Resolved all material findings and recommendations made in the 
most recent Loan Fund and Accounting Review;
    (iv) Resolved all material findings and recommendations made in the 
most recent financial statement audit, including those material findings 
and recommendations made in the report on internal control, report on 
compliance, and management letter;
    (v) Resolved all outstanding material accounting issues with RUS; 
and
    (vi) Resolved any significant irregularities to RUS's satisfaction; 
and
    (7) If the borrower has a power supply contract with a power supply 
borrower, the power supply borrower is current on all debt payments and 
all other financial obligations, and is not in default under the RUS 
mortgage, the loan contract, any debt restructuring agreement, or any 
other agreement with RUS.
    (d) Right of normal review reserved. RUS reserves the right to 
review any request for lien accommodation or subordination under its 
normal review process rather than under advance approval procedures if 
RUS, in its sole discretion, determines there is reasonable doubt as to 
whether the requirements of paragraphs (b) and (c) of this section have 
been or will be met, or whether the borrower will be able to meet all of 
its present and future financial obligations.

[58 FR 53843, Oct. 19, 1993, as amended at 60 FR 67410, Dec. 29, 1995; 
65 FR 51748, Aug. 25, 2000]



Sec. 1717.855  Application contents: Advance approval--100 percent
private financing of distribution, subtransmission and headquarters
facilities, and certain other community infrastructure.

    Applications for a lien accommodation or subordination that meet the 
requirements of Sec. 1717.854 must include the following information and 
documents:
    (a) A certification by an authorized official of the borrower that 
the borrower and, as applicable, the loan are in compliance with all 
conditions set forth in Sec. 1717.854(c) and all applicable provisions 
of Secs. 1717.852 and 1717.853;
    (b) A resolution of the borrower's board of directors requesting the 
lien accommodation or subordination and including the amount and 
maturity of the proposed loan, a general description of the facilities 
or other purposes to be financed, the name and address of the lender, 
and an attached term sheet summarizing the terms and conditions of the 
proposed loan;
    (c) The borrower's financial and statistical report, the data in 
which shall not be more than 60 days old when the complete application 
is received by RUS;
    (d) Draft copy of any new mortgage or mortgage amendment 
(supplement) required by RUS or the lender, unless RUS has notified the 
borrower that it wishes to prepare these documents itself;
    (e) A copy of the loan agreement, loan note, bond or other financing 
instrument, unless RUS has notified the borrower that these documents 
need not be submitted;
    (f) Borrower's environmental report and/or other environmental 
documentation, if required by 7 CFR part 1794;
    (g) RUS Form 740c, Cost Estimates and Loan Budget for Electric 
Borrowers, and RUS Form 740g, Application for Headquarters Buildings;
    (h) A CWP or CWP amendment covering the proposed project, in 
accordance with 7 CFR part 1710, subpart F, and subject to RUS approval, 
and a resolution of the borrower's board of directors adopting the CWP;
    (i) The certification by the project architect for any buildings to 
be constructed, as required by Sec. 1717.850(i);
    (j) A certification by an authorized official of the borrower that 
flood hazard insurance will be obtained for the full value of any 
buildings, or other facilities susceptible to damage if flooded, that 
will be located in a flood hazard area;
    (k) Form AD-1047, Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Primary Covered Transactions, as required 
by 7 CFR part 3017;
    (l) A report by the borrower stating whether or not it is delinquent 
on any Federal debt, and if delinquent, the amount and age of the 
delinquency and

[[Page 170]]

the reasons therefor; and a certification, if not previously provided, 
that the borrower has been informed of the Government's collection 
options;
    (m) The written acknowledgement from a registered engineer or 
architect regarding compliance with seismic provisions of applicable 
model codes for any buildings to be constructed, as required by 7 CFR 
1792.104; and
    (n) Other information that RUS may require to determine whether all 
of the applicable provisions of this subpart have been met.

[58 FR 53843, Oct. 19, 1993, as amended at 60 FR 67410, Dec. 29, 1995]



Sec. 1717.856  Application contents: Normal review--100 percent
private financing.

    Applications for a lien accommodation or subordination for 100 
percent private financing for eligible purposes that do not meet the 
requirements of Sec. 1717.854 must include the following information and 
documents:
    (a) A certification by an authorized official of the borrower that:
    (1) The borrower and, as applicable, the loan are in compliance with 
all applicable provisions of Secs. 1717.852 and 1717.853; and
    (2) There are no actions or proceedings against the borrower, 
pending or overtly threatened in writing before any court, governmental 
agency, or arbitrator that would materially adversely affect the 
borrower's operations and/or financial condition. If this certification 
cannot be made, the application must include:
    (i) An opinion of borrower's counsel regarding any actions or 
proceedings against the borrower, pending or overtly threatened in 
writing before any court, governmental agency, or arbitrator that would 
materially adversely affect the borrower's operations and/or financial 
condition. The opinion shall address the merits of the claims asserted 
in the actions or proceedings, and include, if appropriate, an estimate 
of the amount or range of any potential loss; and
    (ii) A certification by an authorized official of the borrower as to 
the amount of any insurance coverage applicable to any loss that may 
result from the actions and proceedings addressed in the opinion of 
borrower's counsel;
    (b) The information and documents set forth in Sec. 1717.855 (b) 
through (n);
    (c) A long-range financial forecast providing financial projections 
for at least 10 years, which demonstrates that the borrower's system is 
economically viable and that the proposed loan is financially feasible, 
and a resolution of the borrower's board of directors adopting the long-
range financial forecast. The financial forecast must comply with the 
requirements of 7 CFR part 1710 subpart G. RUS may, in its sole 
discretion, waive the requirement of this paragraph that a long range 
financial forecast be provided, if:
    (1) The borrower is current on all of its financial obligations and 
is in compliance with all requirements of its mortgage and loan 
agreement with RUS;
    (2) In RUS's judgment, granting a lien accommodation or 
subordination for the proposed loan will not adversely affect the 
repayment and security of outstanding debt of the borrower owed to or 
guaranteed by RUS;
    (3) The borrower has achieved the TIER and DSC and any other 
coverage ratios required by its mortgage or loan contract in each of the 
two most recent calendar years; and
    (4) The amount of the proposed loan does not exceed the lesser of 
$10 million or 10 percent of the borrower's current net utility plant;
    (d) [Reserved]
    (e) As applicable to the type of facilities being financed, a CWP, 
related engineering and cost studies, a power cost study, and a 
resolution of the borrower's board of directors adopting these 
documents. These documents must meet the requirements of 7 CFR part 
1710, subpart F and, as applicable, subpart G;
    (f) Unless the requirement has been waived in writing by RUS, a 
current, RUS-approved power requirements study, which must meet the 
requirements of 7 CFR part 1710, subpart E, to the same extent as if the 
loan were being made by RUS, and a resolution of the borrower's board of 
directors adopting the study; and
    (g) A discussion of the borrower's compliance with RUS requirements 
on

[[Page 171]]

accounting, financial reporting, record keeping, and irregularities (see 
Sec. 1717.854(c)(5)). RUS will review the case and determine the effect 
of any noncompliance on the feasibility and security of RUS's loans, and 
whether the requested lien accommodation or subordination can be 
approved.

[58 FR 53843, Oct. 19, 1993, as amended at 60 FR 3735, Jan. 19, 1995; 60 
FR 67410, Dec. 29, 1995]



Sec. 1717.857  Refinancing of existing secured debt--distribution
and power supply borrowers.

    (a) Advance approval. All applications for a lien accommodation or 
subordination for the refinancing of existing secured debt that meet the 
qualification criteria of this paragraph, except applications from 
borrowers in default under their mortgage or loan contract with RUS, are 
eligible for advance approval. Such lien accommodations and 
subordinations are deemed to be in the Government's interest, and RUS 
will approve them once RUS is satisfied that the requirements of this 
paragraph and paragraph (c) of this section have been met. The 
qualification criteria are as follows:
    (1) The refinancing is a current refunding and does not involve 
interest rate swaps, forward delivery contracts, or similar features;
    (2) The principal amount of the refinancing loan does not exceed the 
sum of the outstanding principal amount of the debt being refinanced 
plus the amount of transactions costs included in the refinancing loan 
that are eligible for lien accommodation or subordination under 
Sec. 1717.852(a)(4);
    (3) The weighted average life of the refinancing loan is not greater 
than the weighted average remaining life of the loan being refinanced; 
and
    (4) The present value of the cost of the refinancing loan, including 
all transaction costs and any required investments in the lender, is 
less than the present value of the cost of the loan being refinanced, as 
determined by a method acceptable to RUS. The discount rate used in the 
present value analysis shall be equal to either:
    (i) The current rate on Treasury securities having a maturity equal 
to the weighted average life of the refunding loan, plus one-eighth 
percent, or
    (ii) A rate approved by RUS based on documentation provided by the 
borrower as to its marginal long-term borrowing cost.
    (b) Other applications. Applications for a lien accommodation or 
subordination for refinancing that do not meet the requirements of 
paragraph (a) of this section will be reviewed by RUS under normal 
review procedures for these applications. In the case of either advance 
approval or normal review, a lien subordination would be authorized only 
if the lien of the mortgage was subordinated with respect to the assets 
securing the loan being refinanced.
    (c) Application contents--advance approval of refinancing. 
Applications for a lien accommodation or subordination for refinancing 
of existing secured debt that meet the qualification criteria for 
advance approval set forth in paragraph (a) of this section, must 
include the following information and documents:
    (1) A certification by an authorized official of the borrower that 
the application meets the requirements of paragraph (a) of this section 
and all applicable provisions of Secs. 1717.852 and 1717.853;
    (2) Documentation and analysis demonstrating that the application 
meets the qualification criteria set forth in paragraph (a) of this 
section;
    (3) A resolution of the borrower's board of directors requesting the 
lien accommodation or subordination and including the amount and 
maturity of the proposed loan, a general description of the debt to be 
refinanced, the name and address of the lender, and an attached term 
sheet summarizing the terms and conditions of the proposed loan;
    (4) The borrower's financial and statistical report, the data in 
which shall not be more than 60 days old when the complete application 
is received by RUS;
    (5) Draft copy of any new mortgage or mortgage amendment 
(supplement) required by RUS or the lender, unless RUS has notified the 
borrower that it wishes to prepare these documents itself;

[[Page 172]]

    (6) A copy of the loan agreement, loan note, bond or other financing 
instrument, unless RUS has notified the borrower that these documents 
need not be submitted;
    (7) Form AD-1047, Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Primary Covered Transactions, as required 
by 7 CFR part 3017;
    (8) A report by the borrower stating whether or not it is delinquent 
on any Federal debt, and if delinquent, the amount and age of the 
delinquency and the reasons therefor; and a certification, if not 
previously provided, that the borrower has been informed of the 
Government's collection options; and
    (9) Other information, documents and opinions that RUS may require 
to determine whether all of the applicable provisions of this subpart 
have been met.
    (d) Application contents--normal review of refinancing. Applications 
for a lien accommodation or subordination for refinancing of existing 
secured debt that do not meet the requirements for advance approval set 
forth in paragraph (a) of this section, must include the following 
information and documents:
    (1) The information and documents set forth in paragraphs (c)(3) 
through (9) of this section;
    (2) A complete description of the refinancing loan and the 
outstanding debt to be refinanced;
    (3) An analysis comparing the refinancing loan with the loan being 
refinanced as to the weighted average life and the net present value of 
the costs of the two loans; and
    (4) If the present value of the cost of the refinancing loan is 
greater than the present value of the cost of the debt being refinanced, 
financial forecasts for at least 5 years comparing the borrower's debt 
service and other costs, revenues, margins, cash flows, TIER, and DSC, 
with and without the proposed refinancing.
    (e) Application process and timeframes. The application process and 
timeframes for RUS review and action for refinancings are set forth in 
Sec. 1717.859(d).
    (f) Prepayments of concurrent RUS insured loans. If the loan being 
refinanced was made concurrently as supplemental financing required by 
RUS in connection with an RUS insured loan, the refinancing will not be 
considered a prepayment under the RUS mortgage, and no proportional 
prepayment of the concurrent RUS insured loan will be required, provided 
that the principal amount of the refinancing loan is not less than the 
amount of loan principal being refinanced, and the weighted average life 
of the refinancing loan is materially equal to the weighted average 
remaining life of the loan being refinanced. The refinancing loan shall 
be considered a concurrent loan.

[58 FR 53843, Oct. 19, 1993, as amended at 60 FR 67410, Dec. 29, 1995]



Sec. 1717.858  Lien subordination for rural development investments.

    (a) Policy. RUS encourages borrowers to consider investing in 
financially sound projects that are likely to have a positive effect on 
economic development and employment in rural areas. In addition to the 
guidance set forth in Sec. 1717.651, RUS recommends that such 
investments be made through a subsidiary of the borrower in order to 
clearly separate the financial risks and the revenues and costs of the 
rural development enterprise from those of the borrower's electric 
utility business. This should reduce credit risks to the borrower's 
primary business, and minimize the possibility of undisclosed cross 
subsidization of the rural development enterprise by electric rate 
payers.
    (b) Lien subordination. RUS will consider subordinating or releasing 
its lien on the stock held by a borrower in a subsidiary whose primary 
business directly contributes to or supports economic development and 
employment in rural areas, as defined in section 13 of the RE Act, when 
requested by a lender to the subsidiary, other than the borrower. To be 
eligible for said lien subordination or release:
    (1) The borrower must be current on all of its financial obligations 
and be in compliance with all provisions of its mortgage and loan 
agreement with RUS; and
    (2) In the judgment of RUS, the borrower must be able to repay all 
of its outstanding debt, and the security

[[Page 173]]

forall outstanding loans made to the borrower by RUS, including loans 
guaranteed by RUS, must be adequate, after taking into account the 
proposed subordination or release of lien.
    (c) Application contents. Applications for a lien subordination or 
release of lien for rural development investments must include the 
following information and documents:
    (1) A resolution of the borrower's board of directors requesting the 
lien subordination or release of lien;
    (2) A certification by an authorized official of the borrower that 
the borrower is current on all of its financial obligations and is in 
compliance with all provisions of its mortgage and loan agreement with 
RUS;
    (3) A description of the facilities or other purposes to be financed 
and the projected effects on economic development and employment in 
rural areas;
    (4) The borrower's financial and statistical report, the data in 
which shall not be more than 60 days old when the complete application 
is received by RUS;
    (5) If requested by RUS, a long-range financial forecast providing 
financial projections for at least 10 years, in form and substance 
satisfactory to RUS, which demonstrates that the borrower's system is 
economically viable and that the borrower will be able to repay all of 
its outstanding debt and meet all other financial obligations;
    (6) A discussion of the borrower's compliance with RUS requirements 
on accounting, financial reporting, record keeping, and irregularities 
(see Sec. 1717.854(c)(5)). RUS will review the case and determine the 
effect of any noncompliance on the feasibility and security of RUS's 
loans, and whether the requested lien subordination or release of lien 
can be approved;
    (7) If any buildings are to be constructed with the proceeds of the 
loan to be made to the subsidiary:
    (i) A certification by the project architect that the buildings will 
be designed and constructed in compliance with Section 504 of the 
Rehabilitation Act of 1973 as amended (29 U.S.C. 794), as applicable 
under that Act, and that the facilities will be readily accessible to 
and usable by persons with handicaps in accordance with the Uniform 
Federal Accessibility Standards; and
    (ii) A written acknowledgement from a registered engineer or 
architect regarding compliance with seismic provisions of applicable 
model codes, as required by 7 CFR 1792.104;
    (8) A certification by an authorized official of the borrower that 
flood hazard insurance will be obtained for the full value of any 
buildings, or other facilities susceptible to damage if flooded, that 
will be located in a flood hazard area;
    (9) Form AD-1047, Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Primary Covered Transactions, as required 
by 7 CFR part 3017;
    (10) A report by the borrower stating whether or not it is 
delinquent on any Federal debt, and if delinquent, the amount and age of 
the delinquency and the reasons therefor; and a certification, if not 
previously provided, that the borrower has been informed of the 
Government's collection options; and
    (11) Other information that RUS may require to determine whether all 
of the applicable provisions of this subpart have been met.



Sec. 1717.859  Application process and timeframes.

    (a) General. (1) Borrowers are responsible for ensuring that their 
applications for a lien accommodation or subordination are complete and 
sound as to substance and form before they are submitted to RUS. RUS 
will not accept any application that, on its face, is incomplete or 
inadequate as to the substantive information required by this subpart. 
RUS will notify borrowers in writing when their applications are 
complete and in form and substance satisfactory to RUS. A copy of all 
notifications of borrowers cited in this section will also be sent to 
the private lender.
    (2) It is recommended that borrowers consult with RUS staff before 
submitting their applications to determine whether they will likely 
qualify for advance approval or normal review, and to obtain answers to 
any questions about the information and documents required for the 
application.

[[Page 174]]

    (3) A borrower shall, after submitting an application, promptly 
notify RUS of any changes that materially affect the information 
contained in its application.
    (4) After submitting an application and having been notified by RUS 
of additional information and documents and other changes needed to 
complete the application, if the required information and documents are 
not supplied to RUS within 30 calendar days of the borrower's receipt of 
the notice, RUS may return the application to the borrower. The borrower 
may resubmit the application when the required additional information 
and documents are available.
    (5) Timeframes. The timeframes for review of applications set forth 
in this section are based on the following conditions:
    (i) The types of lien accommodations or subordinations requested are 
of the ``standard'' types that RUS has approved previously, i.e., the 
so-called Type I, II and III lien accommodations. Future revisions of 
the RUS mortgage may result in other ``standard'' types of lien 
accommodations and lien subordinations acceptable to RUS. Requests for 
lien accommodations or subordinations that are substantially different 
than the ``standard'' types previously approved by RUS may require 
additional time for review and action;
    (ii) The requested lien accommodation or subordination does not 
require the preparation of an environmental assessment or an 
Environmental Impact Statement. Preparation of these documents often 
will require additional time beyond the timeframes cited in this 
section; and
    (iii) The timeframes set forth in this section, except for paragraph 
(b)(4) of this section, which deals only with approval of a new mortgage 
or mortgage amendment, include RUS review and/or approval of a loan 
contract, if required as part of the application, and required 
supporting documents, such as a CWP.
    (b) Advance approval--100 percent private financing of distribution, 
subtransmission, and headquarters facilities. (1) Applications that 
qualify under Sec. 1717.854 for advance approval of a lien accommodation 
or subordination for 100 percent private financing of distribution, 
subtransmission, and headquarters facilities are submitted to the 
general field representative (GFR). The GFR will work with the borrower 
to ensure that all components of the application are assembled. Once the 
application is satisfactory to the GFR, it will be sent promptly to the 
Washington office for further review and action. If a new mortgage or 
mortgage amendment is required, a draft of these documents must be 
included in the application, unless the borrower has been notified that 
RUS wishes to prepare the documents itself.
    (2) If no additional or amended information is needed for RUS to 
complete its review of the application once it is received in the 
Washington Office, RUS will, within 45 calendar days of receiving the 
application in the Washington Office, either:
    (i) Approve the lien accommodation or subordination if the borrower 
has demonstrated satisfactorily to RUS that all requirements of this 
subpart applicable to advance approval have been met, and send written 
notice to the borrower. RUS's approval, in this case and all other 
cases, will be conditioned upon execution and delivery by the borrower 
of a satisfactory security instrument, if required, and such additional 
information, documents, and opinions of counsel as RUS may require;
    (ii) If all requirements have not been met, so notify the borrower 
in writing. The application will be returned to the borrower unless the 
borrower requests that it be reconsidered under the requirements and 
procedures for normal review set forth in paragraph (c) of this section 
and in Sec. 1717.856; or
    (iii) Send written notice to the borrower explaining why a decision 
cannot be made at that time and giving the estimated date when a 
decision is expected.
    (3) If additional or amended information is needed after the 
application is received in the Washington Office, RUS will so notify the 
borrower in writing within 15 calendar days of receiving the application 
in the Washington Office. If RUS subsequently becomes aware of other 
deficiencies in the application, additional written notice will be sent 
to the borrower. Within 30 calendar

[[Page 175]]

days of receiving all of the information required by RUS to complete its 
review, RUS will act on the application as described in paragraphs 
(b)(2)(i) through (b)(2)(iii) of this section.
    (4) If a new mortgage or mortgage amendment is required, within 30 
days of receiving such documents satisfactory to RUS, including required 
execution counterparts, RUS will execute the documents and send them to 
the borrower, along with instructions pertaining to recording of the 
mortgage, an opinion of borrower's counsel, and other matters. RUS will 
promptly notify the borrower upon receiving satisfactory evidence that 
the borrower has complied with said instructions.
    (c) Normal review--100 percent private financing of distribution, 
transmission, and/or generation facilities--(1) Distribution borrowers. 
(i) Applications from distribution borrowers for a lien accommodation or 
subordination for 100 percent private financing of distribution, 
transmission, and/or generation facilities (including other eligible 
electric utility purposes) that do not meet the criteria for advance 
approval, are also submitted to the GFR. Procedures at this stage are 
the same as in paragraph (b)(1) of this section.
    (ii) If no additional or amended information is needed for RUS to 
complete its review of the application once it is received in the 
Washington office, RUS will, within 90 calendar days of receiving the 
application in the Washington office, send written notice to the 
borrower either approving the request, disapproving the request, or 
explaining why a decision cannot be made at that time and giving the 
estimated date when a decision is expected.
    (iii) If additional or amended information is needed after the 
application is received in the Washington Office, RUS will so notify the 
borrower in writing within 15 calendar days of receiving the application 
in the Washington Office. If RUS subsequently becomes aware of other 
deficiencies in the application, additional written notice will be sent 
to the borrower. Within 90 calendar days of receiving all of the 
information required by RUS to complete its review, RUS will act on the 
application as described in paragraph (c)(1)(ii) of this section.
    (iv) If a new mortgage or mortgage amendment is required, the 
procedures and timeframes of paragraph (b)(4) of this section will 
apply.
    (2) Power supply borrowers. (i) Applications from power supply 
borrowers for a lien accommodation or subordination for 100 percent 
private financing of distribution, transmission, and/or generation 
facilities, and other eligible electric utility purposes, are submitted 
to the RUS Power Supply Division, or its successor, in Washington, DC.
    (ii) Within 30 calendar days of receiving the borrower's application 
containing the information and documents required by Sec. 1717.856, RUS 
will send written notice to the borrower of any deficiencies in its 
application as to completeness and acceptable form and substance. 
Additional written notices may be sent to the borrower if RUS 
subsequently becomes aware of other deficiencies in the borrower's 
application.
    (iii) Within 90 calendar days of receiving all of the information 
required by RUS to complete its review, RUS will act on the application 
as described in paragraph (c)(1)(ii) of this section.
    (iv) If a new mortgage or mortgage amendment is required, these 
documents will be reviewed and executed pursuant to the procedures and 
timeframes of paragraph (b)(4) of this section.
    (d) Refinancing of existing debt. All requests for a lien 
accommodation or subordination for refinancing are sent directly to the 
Washington office.
    (1) Advance approval. (i) Within 15 calendar days of receiving the 
borrower's application containing the information and documents required 
by Sec. 1717.857(c), RUS will send written notice to the borrower of any 
deficiencies in its application as to completeness and acceptable form 
and substance. Additional written notices may be sent to the borrower if 
RUS subsequently becomes aware of other deficiencies in the borrower's 
application.
    (ii) Within 15 calendar days of receiving all of the required 
information and documents, in form and substance satisfactory to RUS, 
RUS will either:
    (A) Approve the lien accommodation or subordination if the borrower 
has demonstrated satisfactorily to RUS

[[Page 176]]

that all requirements of Sec. 1717.857(a) and (c) have been met, and 
send written notice to the borrower;
    (B) If all requirements have not been met, so notify the borrower in 
writing. The application will be returned to the borrower unless the 
borrower requests that it be reconsidered under the requirements and 
procedures for normal review set forth in paragraph (d)(2) of this 
section and in Sec. 1717.857; or
    (C) Send written notice to the borrower explaining why a decision 
cannot be made at that time and giving the estimated date when a 
decision is expected.
    (iii) If a new mortgage or mortgage amendment is required, these 
documents will be reviewed and executed pursuant to the procedures and 
timeframes of paragraph (b)(4) of this section.
    (2) Normal review. (i) Within 20 calendar days of receiving the 
borrower's application containing the information and documents required 
by Sec. 1717.857(d), RUS will send written notice to the borrower of any 
deficiencies in its application as to completeness and acceptable form 
and substance. Additional written notices may be sent to the borrower if 
RUS subsequently becomes aware of other deficiencies in the borrower's 
application.
    (ii) Within 30 calendar days of receiving all of the required 
information and documents, in form and substance satisfactory to RUS, 
RUS will notify the borrower in writing either approving the request, 
disapproving the request, or explaining why a decision cannot be made at 
that time and giving the estimated date when a decision is expected. If 
the proposed refinancing involves complicated transactions such as 
interest rate swaps or forward delivery contracts, additional time may 
be required for RUS review and final action.
    (iii) If a new mortgage or mortgage amendment is required, these 
documents will be reviewed and executed pursuant to the procedures and 
timeframes of paragraph (b)(4) of this section.
    (e) Rural development investments. (1) Applications for a lien 
subordination for rural development investments are submitted by 
distribution borrowers to the GFR and by power supply borrowers to the 
RUS Power Supply Division, or its successor, in Washington, DC.
    (2) The GFR will work with the borrower to ensure that all 
components of the application are assembled. Once the application is 
satisfactory to the GFR, it will be sent promptly to the Washington 
Office for further review and action. After the application is received 
in the Washington Office, if additional or amended information is needed 
for RUS to complete its review, RUS will so notify the borrower in 
writing within 15 calendar days of receiving the application.
    (3) Applications from power supply borrowers containing the 
information and documents required by Sec. 1717.858(c) will be reviewed 
in the Washington office and the borrower given written notice within 30 
calendar days of receiving the application of any deficiencies as to 
completeness and acceptable form and substance. Additional written 
notices may be sent to the borrower if RUS subsequently becomes aware of 
other deficiencies in the borrower's application.
    (4) Within 60 calendar days of receiving in the Washington office 
all of the required information and documents, in form and substance 
satisfactory to RUS, RUS will give written notice to the borrower either 
approving the request, disapproving the request, or explaining why a 
decision cannot be made at that time and giving the estimated date when 
a decision is expected.
    (5) If a new mortgage or mortgage amendment is required, these 
documents will be reviewed and executed pursuant to the procedures and 
timeframes of paragraph (b)(4) of this section.



Sec. 1717.860  Lien accommodations and subordinations under section 306E of the RE Act.

    (a) General. Under section 306E of the RE Act, when requested by a 
private lender providing financing for capital investments by a borrower 
whose net worth exceeds 110 percent of the outstanding principal balance 
of all loans made or guaranteed to the borrower by RUS, the 
Administrator will, without

[[Page 177]]

delay, offer to share the government's lien on the borrower's system or 
subordinate the government's lien on the property financed by the 
private lender, provided that the security, including the assurance of 
repayment, for loans made or guaranteed by RUS will remain reasonably 
adequate. To qualify for a lien accommodation or subordination under 
this section, the investment must be an original capital investment, 
i.e., not a refinancing or refunding. (See Sec. 1717.851 for the 
definition of capital investment.)
    (b) Determination of net worth to RUS debt ratio. (1) In the case of 
applications for a lien accommodation, a borrower's net worth will be 
based on the borrower's most recent financial and statistical report, 
the data in which shall not be more than 60 days old at the time the 
application is received by RUS, and the outstanding debt owed to or 
guaranteed by RUS will be based on latest RUS records available. The 
financial and statistical reports (Form 7 for distribution borrowers and 
Form 12a for power supply borrowers) are subject to RUS review and 
revision, and they must comply with RUS's system of accounts and 
accounting principles set forth in 7 CFR part 1767. Since sinking fund 
depreciation is not approved under part 1767, net worth for borrowers 
using sinking fund depreciation will be calculated as if the borrower 
had been using straight line depreciation.
    (2) Net worth shall be calculated by taking total margins and 
equities (Line 33 of Part C of RUS Form 7 for distribution borrowers, or 
Line 34 of Section B of RUS Form 12a for power supply borrowers) and 
subtracting assets properly recordable in account 182.2, Unrecovered 
Plant and Regulatory Study Costs, and account 182.3, Other Regulatory 
Assets, as defined in 7 CFR part 1767.
    (c) Application requirements and process. (1) If a borrower's net 
worth to RUS debt ratio exceeds 110 percent, as determined by RUS, and 
the borrower is in compliance with all requirements of its mortgage, 
loan agreement with RUS, and any other agreement with RUS that have not 
been exempted in writing by RUS, if requested RUS will expeditiously 
approve a lien accommodation or subordination for 100 percent private 
financing of capital investments, provided that the security, including 
the assurance of repayment, for loans made or guaranteed by RUS will 
remain reasonably adequate. RUS's approval will be conditioned upon 
execution and delivery by the borrower of a security instrument 
satisfactory to RUS, if required, and such additional information, 
documents, and opinions of counsel as RUS may require.
    (2) The application must include the following:
    (i) A resolution of the borrower's board of directors requesting the 
lien accommodation and including the amount and maturity of the proposed 
loan, a general description of the facilities or other purposes to be 
financed, the name and address of the lender, and an attached term sheet 
summarizing the terms and conditions of the proposed loan;
    (ii) A certification by an authorized official of the borrower that 
the borrower is in compliance with all requirements of its mortgage, 
loan agreement with RUS, and any other agreement with RUS that have not 
been exempted in writing by RUS;
    (iii) The borrower's financial and statistical report, the data in 
which shall not be more than 60 days old when the complete application 
is received by RUS;
    (iv) Draft copy of any new mortgage or mortgage amendment 
(supplement) required by RUS or the lender, unless RUS has notified the 
borrower that it wishes to prepare these documents itself;
    (v) A copy of the loan agreement, loan note, bond or other financing 
instrument, unless RUS has notified the borrower that these documents 
need not be submitted. These documents will not be subject to RUS 
approval, but may be reviewed to determine whether they contain any 
provisions that would result in the security, including assurance of 
repayment, for loans made or guaranteed by RUS no longer being 
reasonably adequate;
    (vi) The following certifications and reports required by law:

[[Page 178]]

    (A) The certification by the project architect for any buildings to 
be constructed, as required by 7 CFR 1717.850(i);
    (B) A certification by an authorized official of the borrower that 
flood hazard insurance will be obtained for the full value of any 
buildings, or other facilities susceptible to damage if flooded, that 
will be located in a flood hazard area;
    (C) Form AD-1047, Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Primary Covered Transactions, as required 
by 7 CFR part 3017;
    (D) A report by the borrower stating whether or not it is delinquent 
on any Federal debt, and if delinquent, the amount and age of the 
delinquency and the reasons therefor; and a certification, if not 
previously provided, that the borrower has been informed of the 
Government's collection options; and
    (E) The written acknowledgement from a registered engineer or 
architect regarding compliance with seismic provisions of applicable 
model codes for any buildings to be constructed, as required by 7 CFR 
1792.104. All other elements of an application listed in Sec. 1717.855, 
Sec. 1717.856, and Sec. 1717.858(c) not listed in this paragraph (c) are 
exempted.
    (3) Applications from distribution borrowers are submitted to the 
general field representative (GFR), while applications from power supply 
borrowers are submitted to the RUS Power Supply Division, or its 
successor, in Washington, DC. When an application is satisfactory to the 
GFR, it will be sent promptly to the Washington office. If Washington 
office staff determine that an application is incomplete, the borrower 
will be promptly notified in writing about the deficiencies. When the 
application is complete, and if the security, including assurance of 
repayment, of loans made or guaranteed by RUS will remain reasonably 
adequate after granting the lien accommodation or subordination, the 
borrower and the lender will be promptly notified in writing that the 
lien accommodation or subornation has been approved, subject to the 
conditions cited in paragraph (c)(1) of this section.
    (d) Rural development and other non-electric utility investments. 
Although RUS recommends the use of separate subsidiaries as set forth in 
Sec. 1717.858, if requested by a borrower that meets the 110 percent 
equity test and all other applicable requirements of this section, RUS 
will provide a lien subordination on the specific assets financed in the 
case of loans made directly to the borrower for rural development and 
other non-electric utility purposes, provided that the outstanding 
balance of all such loans lien subordinated under this paragraph (d), 
after taking into consideration the effect of the new loan, does not 
exceed 15 percent of the borrower's net worth and the security, 
including assurance of repayment, of loans made or guaranteed by RUS 
will remain reasonably adequate after granting the lien subordination. 
Investments lien subordinated under this paragraph shall be included 
among those investments subject to the 15 percent of total utility plant 
limitation set forth in 7 CFR 1717.654(b)(1), and granting of the lien 
subordination will not constitute approval of the investment under 7 CFR 
part 1717, subpart N.
    (e) Requirements and controls not exempted. All requirements and 
limitations imposed with respect to lien accommodations and 
subordinations by this subpart R that are not specifically exempted by 
this section are not exempted and shall continue to apply according to 
their terms.

[59 FR 3986, Jan. 28, 1994, as amended at 60 FR 3735, Jan. 19, 1995; 60 
FR 67410, Dec. 29, 1995]



Secs. 1717.861-1717.899  [Reserved]



 Subpart S_Lien Accommodations for Supplemental Financing Required by 7 
                              CFR 1710.110

    Source: 58 FR 53851, Oct. 19, 1993, unless otherwise noted.



Sec. 1717.900  Qualification requirements.

    Applications for a lien accommodation for supplemental financing 
required by 7 CFR 1710.110 must meet the same requirements as an RUS 
insured loan. The justification and documentation materials submitted as 
part of the borrower's application for an insured

[[Page 179]]

loan also serve as the justification and documentation of the request 
for a lien accommodation for the required supplemental loan. Unless 
early approval under Sec. 1717.901 is requested by a borrower, these 
applications will be processed during the same time as RUS's review of 
the borrower's application for the concurrent insured loan.



Sec. 1717.901  Early approval.

    (a) Conditions. If requested by a borrower in writing, RUS will 
review the application for a lien accommodation for required 
supplemental financing early in the process, before funding is available 
for the concurrent RUS insured loan, and approve the lien accommodation 
if the following conditions are met:
    (1) The required supplemental loan meets the requirements for an 
insured loan, as set forth in 7 CFR part 1710, subparts A through G, and 
other RUS regulations pertaining to required supplemental loans;
    (2) The borrower has demonstrated the ability to obtain the funds 
that would be needed to complete other portions of the project, if the 
portion to be constructed with private loan funds could not be used 
productively without completion of such other portions, in the event 
concurrent RUS insured loan funds are not forthcoming. Such evidence may 
include financial records demonstrating the availability of general 
funds, and/or a written commitment from the private lender to provide a 
loan for the remaining amount of financing required, with such 
commitment being conditioned upon the availability of a lien 
accommodation from RUS; and
    (3) An authorized official of the borrower has requested early 
approval of the lien accommodation and explained the reasons therefor, 
and has certified that the funds are needed and will be drawn down 
before funds from the concurrent insured loan are expected to be 
available, assuming that the insured loan is approved.
    (b) Timeframe for RUS action. (1) RUS will either approve or 
disapprove the lien accommodation within 90 days of receiving the 
borrower's request for early approval and the complete application for 
the concurrent RUS loan and required supplemental financing, in form and 
substance satisfactory to RUS, or notify the borrower in writing of the 
estimated date when a decision is expected. If an environmental 
assessment or an Environmental Impact Statement is required, additional 
time beyond the 90 days may be required to prepare these documents. 
RUS's approval of the lien accommodation will be conditioned upon 
execution and delivery by the borrower of a satisfactory security 
instrument, if required, and such additional information, documents, and 
opinions of counsel as RUS may require.
    (2) If a mortgage or mortgage amendment is required, RUS will 
consult with the other mortgagees as to who will prepare the documents. 
Within 30 days of obtaining the documents satisfactory to RUS, including 
required execution counterparts, RUS will execute the documents and send 
them to the borrower, along with instructions pertaining to recording of 
the mortgage, an opinion of borrower's counsel, and other matters. RUS 
will promptly notify the borrower upon receiving satisfactory evidence 
that the borrower has complied with said instructions.
    (c) Approval of concurrent insured loan. Early approval of a lien 
accommodation for a required supplemental loan does not ensure that the 
concurrent RUS insured loan will be approved. The request for the 
concurrent insured loan will be reviewed when funds are available to 
make the loan. The borrower may be requested to update certain 
supporting information in the loan application if substantial time has 
elapsed since the lien accommodation or subordination was approved.



Sec. 1717.902  Other RUS requirements.

    Supplemental loans required by 7 CFR 1710.110 are subject to the 
same post-loan requirements as insured RUS loans regarding accepted 
materials, construction standards, contracting and procurement 
procedures, standard forms of contracts, RUS approval of the advance of 
loan funds, and other matters.

[[Page 180]]



Sec. 1717.903  Liability.

    It is the intent of this subpart that any failure on the part of RUS 
to comply with any provisions of this subpart, including without 
limitation, those provisions setting forth specified timeframes for 
action by RUS on applications for lien accommodations or lien 
subordinations, shall not give rise to liability of any kind on the part 
of the Government or any employees of the Government including, without 
limitation, liability for damages, fees, expenses or costs incurred by 
or on behalf of a borrower, private lender or any other party.



Sec. 1717.904  Exemptions pursuant to section 306E of the RE Act.

    (a) General policy. If a borrower's net worth to RUS debt ratio 
exceeds 110 percent, as determined by RUS, and the borrower is in 
compliance with all requirements of its mortgage, loan agreement with 
RUS, and any other agreement with RUS that have not been exempted in 
writing by RUS, RUS will expeditiously approve a lien accommodation for 
a concurrent supplemental loan if requested in writing by the borrower, 
provided that the security, including assurance of repayment, of loans 
made or guaranteed by RUS will remain reasonably adequate. RUS's 
approval will be conditioned upon execution and delivery by the borrower 
of a security instrument satisfactory to RUS, if required, and such 
additional information, documents, and opinions of counsel as RUS may 
require.
    (b) Determination of net worth to RUS debt ratio. A borrower's ratio 
of net worth to RUS debt will be determined as set forth in 
Sec. 1717.860(b).
    (c) Procedures. If a borrower meets the requirements of this 
section, upon receipt of a complete application RUS will promptly notify 
the borrower and lender in writing that the lien accommodation has been 
approved subject to the conditions set forth in paragraph (a) of this 
section.

[59 FR 3987, Jan. 28, 1994, as amended at 67 FR 70153, Nov. 21, 2002]



Secs. 1717.905-1717.949  [Reserved]

Subpart T [Reserved]



Secs. 1717.950-1717.999  [Reserved]

Subpart U [Reserved]



Secs. 1717.1000-1717.1049  [Reserved]

Subpart V [Reserved]



Secs. 1717.1050-1717.1099  [Reserved]

Subpart W [Reserved]



Secs. 1717.1100-1717.1149  [Reserved]

Subpart X [Reserved]



Secs. 1717.1150-1717.1199  [Reserved]



                      Subpart Y_Settlement of Debt

    Source: 62 FR 50491, Sept. 26, 1997, unless otherwise noted.



Sec. 1717.1200  Purpose and scope.

    (a) Section 331(b) of the Consolidated Farm and Rural Development 
Act (Con Act), as amended on April 4, 1996 by Public Law 104-127, 110 
Stat. 888 (7 U.S.C. 1981), grants authority to the Secretary of 
Agriculture to compromise, adjust, reduce, or charge-off debts or claims 
arising from loans made or guaranteed under the Rural Electrification 
Act of 1936, as amended (RE Act). Section 331(b) of the Con Act also 
authorizes the Secretary of Agriculture to adjust, modify, subordinate, 
or release the terms of security instruments, leases, contracts, and 
agreements entered into or administered by the Rural Utilities Service 
(RUS). The Secretary, in 7 CFR 2.47, has delegated authority under 
section 331(b) of the Con Act to the Administrator of the RUS, with 
respect to loans made or guaranteed by RUS.
    (b) This subpart sets forth the policy and standards of the 
Administrator of RUS with respect to the settlement of debts and claims 
arising from loans made or guaranteed to rural electric borrowers under 
the RE Act. Nothing in this subpart limits the Administrator's authority 
under section 12 of the RE Act.

[[Page 181]]



Sec. 1717.1201  Definitions.

    Terms used in this subpart that are not defined in this section have 
the meanings set forth in 7 CFR part 1710. In addition, for the purposes 
of this subpart:
    Application for debt settlement means a written application 
containing all of the information required by Sec. 1717.1204(b)(2), in 
form and substance satisfactory to RUS.
    Attorney General means the Attorney General of the United States of 
America.
    Claim means any claim of the government arising from loans made or 
guaranteed under the RE Act to a rural electric borrower.
    Con Act means the Consolidated Farm and Rural Development Act (7 
U.S.C. 1921 et seq.).
    Debt means outstanding debt of a rural electric borrower (including, 
but not necessarily limited to, principal, accrued interest, penalties, 
and the government's costs of debt collection) arising from loans made 
or guaranteed under the RE Act.
    Enforced collection procedures means any procedures available to the 
Administrator for the collection of debt that are authorized by law, in 
equity, or under the borrower's loan documents or other agreements with 
RUS.
    Loan documents means the mortgage (or other security instrument 
acceptable to RUS), the loan contract, and the promissory note entered 
into between the borrower and RUS.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901-950b).
    Restructure means to settle a debt or claim.
    Settle means to reamortize, adjust, compromise, reduce, or charge-
off a debt or claim.



Sec. 1717.1202  General policy.

    (a) It is the policy of the Administrator that, wherever possible, 
all debt owed to the government, including but not limited to principal 
and interest, shall be collected in full in accordance with the terms of 
the borrower's loan documents.
    (b) Nothing in this subpart by itself modifies, reduces, waives, or 
eliminates any obligation of a borrower under its loan documents. Any 
such modifications regarding the debt owed by a borrower may be granted 
under the authority of the Administrator only by means of the explicit 
written approval of the Administrator in each case.
    (c) The Administrator's authority to settle debts and claims will 
apply to cases where a borrower is unable to pay its debts and claims in 
accordance with their terms, as further defined in Sec. 1717.1204(b)(1), 
and where settlement will maximize, on a present value basis, the 
recovery of debts and claims owed to the government.
    (d) In structuring settlements and determining the capability of the 
borrower to repay debt and the amount of debt recovery that is possible, 
the Administrator will consider, among other factors, the RE Act, the 
National Energy Policy Act of 1992 (Pub. L. 102-486, 106 Stat. 2776), 
the policies and regulations of the Federal Energy Regulatory 
Commission, state legislative and regulatory actions, and other market 
and nonmarket forces as to their effects on competition in the electric 
utility industry and on rural electric systems in particular. Other 
factors the Administrator will consider are set forth in more detail in 
Sec. 1717.1204.



Sec. 1717.1203  Relationship between RUS and Department of Justice.

    (a) The Attorney General will be notified by the Administrator 
whenever the Administrator intends to use his or her authority under 
section 331(b)of the Con Act to settle a debt or claim.
    (b) If an outstanding claim has been referred in writing to the 
Attorney General, the Administrator will not use his or her own 
authority to settle the claim without the approval of the Attorney 
General.
    (c) If an application for additional debt relief is received from a 
borrower whose debt has been settled in the past under the authority of 
the Attorney General, the Administrator will promptly notify the 
Attorney General before proceeding to consider the application.

[[Page 182]]



Sec. 1717.1204  Policies and conditions applicable to settlements.

    (a) General. Settlement of debts and claims shall be subject to the 
policies, requirements, and conditions set forth in this section and in 
Sec. 1717.1202.
    (b) Need for debt settlement. (1) The Administrator will not settle 
any debt or claim unless the Administrator has determined that the 
borrower is unable to meet its financial obligations under its loan 
documents according to the terms of those documents, or that the 
borrower will not be able to meet said obligations sometime within the 
period of 24 months following the month the borrower submits its 
application for debt settlement to RUS, and, in either case, such 
default is likely to continue indefinitely. The determination of a 
borrower's ability to meet its financial obligations will be based on 
analyses and documentation by RUS of the borrower's historical, current, 
and projected costs, revenues, cash flows, assets, opportunities to 
reduce costs and/or increase revenues, and other factors that may be 
relevant on a case by case basis.
    (2) In its application to RUS for debt settlement, the borrower must 
provide, in form and substance satisfactory to RUS, an in-depth analysis 
supporting the borrower's contention that it is unable or will not be 
able to meet its financial obligations as described in paragraph (b)(1) 
of this section. The analysis must include:
    (i) An explanation and analysis of the causes of the borrower's 
inability to meet its financial obligations;
    (ii) A thorough review and analysis of the opportunities available 
or potentially available to the borrower to reduce administrative 
overhead and other costs, improve efficiency and effectiveness, and 
expand markets and revenues, including but not limited to opportunities 
for sharing services, merging, and/or consolidating, raising rates when 
appropriate, and renegotiating supplier and service contracts. In the 
case of a power supply borrower, the study shall include such 
opportunities among the members of the borrower, unless the 
Administrator waives this requirement;
    (iii) Documentation of the actions taken, in progress, or planned by 
the borrower (and its member systems, if applicable) to take advantage 
of the opportunities cited in paragraph (b)(2)(ii) of this section; and
    (iv) Other analyses and documentation prescribed by RUS on a case by 
case basis.
    (3) RUS may require that an independent consultant provide an 
analysis of the efficiency and effectiveness of the borrower's 
organization and operations, and those of its member systems in the case 
of a power supply borrower. The following conditions will apply:
    (i) RUS will select the independent consultant taking into account, 
among other matters, the consultant's experience and expertise in 
matters relating to electric utility operations, finance, and 
restructuring;
    (ii) The contract with the consultant shall be to provide services 
to RUS on such terms and conditions as RUS deems appropriate. The 
consultant's scope of work may include, but shall not be limited to, an 
analysis of the following:
    (A) How to maximize the value of the government's collateral, such 
as through mergers, consolidations, or sales of all or part of the 
collateral;
    (B) The viability of the borrower's system, taking into account such 
matters as system size, service territory and markets, asset base, 
physical condition of the plant, operating efficiency, competitive 
pressures, industry trends, and opportunities to expand markets and 
improve efficiency and effectiveness;
    (C) The feasibility and the potential benefits and risks to the 
borrower and the government of corporate restructuring, including 
aggregation and disaggregation;
    (D) In the case of a power supply borrower, the retail rate mark-up 
by member systems and the potential benefits to be achieved by member 
restructuring through mergers, consolidations, shared services, and 
other alliances;
    (E) The quality of the borrower's management, management advisors, 
consultants, and staff;
    (F) Opportunities for reducing overhead and other costs, for 
expanding

[[Page 183]]

markets and revenues, and for improving the borrower's existing and 
prospective contractual arrangements for the purchase and sale of power, 
procurement of supplies and services, and the operation of plant and 
facilities;
    (G) Opportunities to achieve efficiency gains and increased revenues 
based on comparisons with benchmark electric utilities; and
    (H) The accuracy and completeness of the borrower's analysis 
provided under paragraph (b)(2) of this section;
    (iii) RUS and, as appropriate, other creditors, will determine the 
extent to which the borrower and third parties (including the members of 
a power supply borrower) will be required to participate in funding the 
costs of the independent consultant;
    (iv) The borrower will be required to make available to the 
consultant all corporate documents, files, and records, and to provide 
the consultant with access to key employees. The borrower will also 
normally be required to provide the consultant with office space 
convenient to the borrower's operations and records; and
    (v) All analyses, studies, opinions, memoranda, and other documents 
and information produced by the independent consultant shall be provided 
to RUS on a confidential basis for consideration in evaluating the 
borrower's application for debt settlement. Such documents and 
information may be made available to the borrower and other appropriate 
parties if authorized in writing by RUS.
    (4) The borrower may be required to employ a temporary or permanent 
manager acceptable to the Administrator, to manage the borrower's 
operations to ensure that all actions are taken to avoid or minimize the 
need for debt settlement. The employment could be on a temporary basis 
to manage the system during the time the debt settlement is being 
considered, and possibly for some time after any debt settlement, or it 
could be on a permanent basis.
    (5) The borrower must submit, at a time determined by RUS, a 
resolution of its board of directors requesting debt settlement and 
stating that the borrower is either currently unable to meet its 
financial obligations to the government or will not be able to meet said 
obligations sometime within the next 24 months, and that, in either 
case, the default is likely to continue indefinitely.
    (c) Debt settlement measures. (1) If the Administrator determines 
that debt settlement is appropriate, the debt settlement measures the 
Administrator will consider under this subpart with respect to direct, 
insured, or guaranteed loans include, but are not limited to, the 
following:
    (i) Reamortization of debt;
    (ii) Extension of debt maturity, provided that the maturity of the 
borrower's outstanding debt after settlement shall not extend more than 
10 years beyond the latest maturity date prior to settlement;
    (iii) Reduction of the interest rate charged on the borrower's debt, 
provided that the interest rate on any portion of the restructured debt 
shall not be reduced to less than 5 percent, unless the Administrator 
determines that reducing the rate below 5 percent would maximize debt 
recovery by the government;
    (iv) Forgiveness of interest accrued, penalties, and costs incurred 
by the government to collect the debt; and
    (v) With the concurrence of the Under Secretary for Rural 
Development, forgiveness of loan principal.
    (2) In the event that RUS has, under section 306 of the RE Act, 
guaranteed loans made by the Federal Financing Bank or other third 
parties, the Administrator may restructure the borrower's obligations 
by: acquiring and restructuring the guaranteed loan; restructuring the 
loan guarantee obligation; restructuring the borrower's reimbursement 
obligations; or by such means as the Administrator deems appropriate, 
subject to such consents and approvals, if any, that may be required by 
the third party lender.
    (d) Borrower's obligations to other creditors. The Administrator 
will not grant relief on debt owed to the government unless similar 
relief, on a pro rata basis, is granted with respect to other secured 
obligations of the borrower, or the other secured creditors provide 
other benefits or value to the debt restructuring. Unsecured creditors 
will also be expected to contribute to

[[Page 184]]

the restructuring. If it is not possible to obtain the expected 
contributions from other creditors, the Administrator may proceed to 
settle a borrower's debt if that will maximize recovery by the 
government and will not result in material benefits accruing to other 
creditors at the expense of the government.
    (e) Competitive bids for system assets. If requested by RUS, the 
borrower or the independent consultant provided for in paragraph (b)(3) 
of this section shall solicit competitive bids from potential buyers of 
the borrower's system or parts thereof. The bidding process must be 
conducted in consultation with RUS and use standards and procedures 
acceptable to RUS. The Administrator may use the competitive bids 
received as a basis for requiring the sale of all or part of the 
borrower's system as a condition of settlement of the borrower's debt. 
The Administrator may also consider the bids in evaluating alternative 
settlement measures.
    (f) Valuation of system. (1) The Administrator will consider the 
value of the borrower's system, including, in the case of a power supply 
borrower, the wholesale power contracts between the borrower and its 
member systems. The valuation of the wholesale power contracts shall 
take into account, among other matters, the rights of the government 
and/or third parties, to assume the rights and obligations of the 
borrower under such contracts, to charge reasonable rates for service 
provided under the contracts, and to otherwise enforce the contracts in 
accordance with their terms. In no case will the Administrator settle a 
debt or claim for less than the value (after considering the 
government's collection costs) of the borrower's system and other 
collateral securing the debt or claim.
    (2) RUS may use such methods, analyses, and assessments as the 
Administrator deems appropriate to determine the value of the borrower's 
system.
    (g) Rates. The Administrator will consider the rates charged for 
electric service by the borrower and, in the case of a power supply 
borrower, by its members, taking into account, among other factors, the 
practices of the Federal Energy Regulatory Commission (FERC), as adapted 
to the cooperative structure of borrowers, and, where applicable, FERC 
treatment of any investments by co-owners in projects jointly owned by 
the borrower.
    (h) Collection action. The Administrator will consider whether a 
settlement is favorable to the government in comparison with the amount 
that can be recovered by enforced collection procedures.
    (i) Regulatory approvals. Before the Administrator will approve a 
settlement, the borrower must provide satisfactory evidence that it has 
obtained all approvals required of regulatory bodies that the 
Administrator determines are needed to implement rates or other 
provisions of the settlement, or that are needed in any other way for 
the borrower to fulfill its obligations under the settlement.
    (j) Conditions regarding management and operations. As a condition 
of debt settlement, the borrower, and in the case of a power supply 
borrower, its members, will be required to implement those changes in 
structure, management, operations, and performance deemed necessary by 
the Administrator. Those changes may include, but are not limited to, 
the following:
    (1) The borrower may be required to undertake a corporate 
restructuring and/or sell a portion of its plant, facilities, or other 
assets
    (2) The borrower may be required to replace senior management and/or 
hire outside experts acceptable to the Administrator. Such changes may 
include a commitment by the borrower's board of directors to restructure 
and/or obtain new membership to improve board oversight and leadership;
    (3) The borrower may be required to agree to:
    (i) Controls by RUS on the general funds of the borrower, as well as 
on any investments, loans or guarantees by the borrower, notwithstanding 
any limitations on RUS' control rights in the borrower's loan documents 
or RUS regulations; and
    (ii) Requirements deemed necessary by RUS to perfect and protect its 
lien on cash deposits, securities, equipment, vehicles, and other items 
of real or non-real property; and

[[Page 185]]

    (4) In the case of a power supply borrower, the borrower may be 
required to obtain credit support from its member systems, as well as 
pledges and action plans by the members to change their operations, 
management, and organizational structure (e.g., shared services, 
mergers, or consolidations) in order to reduce operating costs, improve 
efficiency, and/or expand markets and revenues.
    (k) Conveyance of assets. As a condition of a settlement, a borrower 
may be required to convey some or all its assets to the government.
    (l) Additional conditions. The borrower will be required to warrant 
and agree that no bonuses or similar extraordinary compensation has been 
or will be provided, for reasons related to the settlement of government 
debt, to any officer or employee of the borrower or to other persons or 
entities identified by RUS. The Administrator may impose such other 
terms and conditions of debt settlement as the Administrator determines 
to be in the government's interests.
    (m) Certification of accuracy. Before the Administrator will approve 
a debt settlement, the manager or other appropriate official of the 
borrower must certify that all information provided to the government by 
the borrower or by any agent of the borrower, in connection with the 
debt settlement, is true, correct, and complete in all material 
respects.



Sec. 1717.1205  Waiver of existing conditions on borrowers.

    Pursuant to section 331(b) of the Con Act, the Administrator, at his 
or her sole discretion, may waive or otherwise reduce conditions and 
requirements imposed on a borrower by its loan documents if the 
Administrator determines that such action will contribute to enhancement 
of the government's recovery of debt. Such waivers or reductions in 
conditions and requirements under this section shall not include the 
exercise of any of the debt settlement measures set forth in 
Sec. 1717.1204(c), which are subject to all of the requirements of said 
Sec. 1717.1204.



Sec. 1717.1206  Loans subsequent to settlement.

    In considering any future loan requests from a borrower whose debt 
has been settled in whole or in part (including the surviving entity of 
merged or consolidated borrowers, where at least one of said borrowers 
had its debts settled), it will be presumed that credit support for the 
full amount of the requested loan will be required. Such support may be 
in a number of forms, provided that they are acceptable to the 
Administrator on a case by case basis. They may include, but need not be 
limited to, equity infusions and guarantees of debt repayment, either 
from the applicant's members (in the case of a power supply borrower), 
or from a third party.



Sec. 1717.1207  RUS obligations under loan guarantees.

    Nothing in this subpart affects the obligations of RUS under loan 
guarantee commitments it has made to the Federal Financing Bank or other 
lenders.



Sec. 1717.1208  Government's rights under loan documents.

    Nothing in this subpart limits, modifies, or otherwise affects the 
rights of the government under loan documents executed with borrowers, 
or under law or equity.



PART 1718_LOAN SECURITY DOCUMENTS FOR ELECTRIC BORROWERS--Table of Contents



                            Subpart A_General

Sec.
1718.1-1718.49  [Reserved]

              Subpart B_Mortgage for Distribution Borrowers

1718.50  Definitions.
1718.51  Policy.
1718.52  Existing mortgages.
1718.53  Rights of other mortgagees.
1718.54  Availability of model mortgage.

Appendix A to Subpart B--Model Form of Mortgage for Electric 
          Distribution Borrowers

[[Page 186]]

          Subpart C_Loan Contracts With Distribution Borrowers

1718.100  General.
1718.101  Applicability.
1718.102  Definitions.
1718.103  Loan contract provisions.
1718.104  Availability of model loan contract.

Appendix A to Subpart C--Model Form of Loan Contract for Electric 
          Distribution Borrowers

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.



                            Subpart A_General



Secs. 1718.1-1718.49  [Reserved]



              Subpart B_Mortgage for Distribution Borrowers

    Source: 60 FR 36888, July 18, 1995, unless otherwise noted.



Sec. 1718.50  Definitions.

    Unless otherwise indicated, terms used in this subpart are defined 
as set forth in 7 CFR 1710.2.



Sec. 1718.51  Policy.

    (a) Adequate loan security must be provided for loans made or 
guaranteed by RUS. The loans are required to be secured by a first 
mortgage lien on most of the borrower's assets substantially in the form 
set forth in appendix A of this subpart. At the discretion of RUS, this 
model form of mortgage may be adapted to satisfy different legal 
requirements among the states and individual differences in lending 
circumstances, provided that such adaptations are consistent with the 
policies set forth in this subpart.
    (b) Some borrowers, such as certain public power districts, may not 
be able to provide security in the form of a first mortgage lien on 
their assets. In these cases RUS will consider accepting other forms of 
security, such as resolutions and pledges of revenues.
    (c) RUS may require supplemental and amending mortgages to protect 
its security, or in connection with additional loans.
    (d) RUS may also require such other security instruments (such as 
loan contracts, security agreements, financing statements, guarantees, 
and pledges) as it deems appropriate.
    (e) All distribution borrowers that receive a loan or loan guarantee 
from RUS on or after August 17, 1995 will be required to enter into a 
mortgage with RUS that meets the requirements of this subpart. The 
concurrence of any other lenders secured under the borrower's existing 
mortgage may be required before the borrower can enter into a new 
mortgage.



Sec. 1718.52  Existing mortgages.

    Nothing contained in this subpart amends, invalidates, terminates or 
rescinds any existing mortgage entered into between the borrower and RUS 
and any other mortgagees.



Sec. 1718.53  Rights of other mortgagees.

    Nothing contained in this subpart is intended to alter or affect any 
other mortgagee's rights under an existing mortgage.



Sec. 1718.54  Availability of model mortgage.

    Single copies of the model mortgage (RUS Informational Publication 
1718 B) are available from the Administrative Services Division, Rural 
Utilities Service, United States Department of Agriculture, Washington, 
DC 20250-1500. This document may be reproduced.



 Sec. Appendix A to Subpart B of Part 1718--Model Form of Mortgage for 
                     Electric Distribution Borrowers

      RESTATED MORTGAGE AND SECURITY AGREEMENT Made By And Between

________________________________________________________________________
Mortgagor

                    and UNITED STATES OF AMERICA and

________________________________________________________________________
MORTGAGEE

Dated as of_____________________________________________________________

[[Page 187]]

  THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A TRANSMITTING UTILITY

           THIS INSTRUMENT CONTAINS FUTURE ADVANCE PROVISIONS

       THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS

                            TABLE OF CONTENTS

                            GRANTING CLAUSES

FIRST
SECOND
THIRD
FOURTH
EXCEPTED PROPERTY

                                HABENDUM

    ARTICLE I--DEFINITIONS & OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 1.01  Definitions
SECTION 1.02  General Rules of Construction
SECTION 1.03  Special Rules of Construction if RUS is a Mortgagee
SECTION 1.04  Governing Law
SECTION 1.05  Notices

                      ARTICLE II--ADDITIONAL NOTES

SECTION 2.01  Additional Notes
SECTION 2.02  Refunding or Refinancing Notes
SECTION 2.03  Other Additional Notes
SECTION 2.04  Additional Lenders Entitled to the Benefits of This 
          Mortgage
SECTION 2.05  Form of Supplemental Mortgage

           ARTICLE III--PARTICULAR COVENANTS OF THE MORTGAGOR

SECTION 3.01  Payment of Debt Service on Notes
SECTION 3.02  Warranty of Title
SECTION 3.03  After-Acquired Property; Further Assurances: Recording
SECTION 3.04  Environmental Requirements and Indemnity
SECTION 3.05  Payment of Taxes
SECTION 3.06  Authority to Execute and Deliver Notes, Loan Agreements 
          and Mortgage; All Action Taken; Enforceable Obligations
SECTION 3.07  Restrictions on Further Encumbrances on Property
SECTION 3.08  Restrictions on Additional Permitted Debt
SECTION 3.09  Preservation of Corporate Existence and Franchises
SECTION 3.10  Limitations on Consolidations and Mergers
SECTION 3.11  Limitations on Transfers of Property
SECTION 3.12  Maintenance of Mortgaged Property
SECTION 3.13  Insurance; Restoration of Damaged Mortgaged Property
SECTION 3.14  Mortgagee Right to Expend Money to Protect Mortgaged 
          Property
SECTION 3.15  Time Extensions for Payment of Notes
SECTION 3.16  Application of Proceeds from Condemnation
SECTION 3.17  Compliance with Loan Agreements; Notice of Amendments to 
          and Defaults under Loan Agreements
SECTION 3.18  Rights of Way, etc., Necessary in Business
SECTION 3.19  Limitations on Providing Free Electric Services
SECTION 3.20  Keeping Books; Inspection by Mortgagee

               ARTICLE IV--EVENTS OF DEFAULT AND REMEDIES

SECTION 4.01  Events of Default
SECTION 4.02  Acceleration of Maturity; Rescission and Annulment
SECTION 4.03  Remedies of Mortgagees
SECTION 4.04  Application of Proceeds from Remedial Actions
SECTION 4.05  Remedies Cumulative; No Election
SECTION 4.06  Waiver of Appraisement Rights, Marshaling of Assets Not 
          Required
SECTION 4.07  Notice of Default

         ARTICLE V--POSSESSION UNTIL DEFAULT--DEFEASANCE CLAUSE

SECTION 5.01  Possession Until Default
SECTION 5.02  Defeasance
SECTION 5.03  Special Defeasance

                        ARTICLE VI--MISCELLANEOUS

SECTION 6.01  Property Deemed Real Property
SECTION 6.02  Mortgage to Bind and Benefit Successors and Assigns
SECTION 6.03  Headings
SECTION 6.04  Severability Clause
SECTION 6.05  Mortgage Deemed Security Agreement
SECTION 6.06    Indemnification by Mortgagor of Mortgagees
Schedule A
Schedule B
Schedule C
Exhibit A--Manager's Certificate
Exhibit B--Form of Supplemental Mortgage
Supplemental Mortgage Schedule A--Maximum Debt Limit and Other 
          Information
Supplemental Mortgage Schedule B--Property Schedule
Supplemental Mortgage Schedule C--Excepted Property

    RESTATED MORTGAGE AND SECURITY AGREEMENT, dated as of -------------- 
19----, hereinafter sometimes called this ``Mortgage'') is made by and 
between
________________________________________________________________________

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(hereinafter called the ``Mortgagor''), a corporation existing under the 
laws of the State of --------------------, and the UNITED STATES OF 
AMERICA acting by and through the Administrator of the Rural Utilities 
Service (hereinafter called the ``Government''), ---------------- { 
Supplemental Lender{time} , (hereinafter called ``----------------'') a 
---------------- existing under the laws of ----------------, and is 
intended to confer rights and benefits on both the Government and ------
------------ as well as any and all other lenders pursuant to Article II 
of this Mortgage that enter into a supplemental mortgage in accordance 
with Section [2.04] of Article II hereof (the Government and any such 
other lenders being herein sometimes collectively referred to as the 
``Mortgagees'').

                                RECITALS

    WHEREAS, the Mortgagor, the Government and ---------------- are 
parties to that certain ---------------- Mortgage and Security Agreement 
dated as of ------------------, 19----, as supplemented, amended or 
restated (the ``Original Mortgage'' identified in Schedule ``A'' of this 
Mortgage) originally entered into between the Mortgagor, the Government 
acting by and through the Administrator of the Rural Electrification 
Administration, the predecessor of RUS, and ----------------;
    WHEREAS, the Mortgagor deems it necessary to borrow money for its 
corporate purposes and to issue its promissory notes and other debt 
obligations therefor from time to time in one or more series, and to 
mortgage and pledge its property hereinafter described or mentioned to 
secure the payment of the same;
    WHEREAS, the Mortgagor desires to enter into this Mortgage pursuant 
to which all secured debt of the Mortgagor hereunder shall be secured on 
parity;
    WHEREAS, this Mortgage restates and consolidates the Original 
Mortgage while preserving the priority of the Lien under the Original 
Mortgage securing the payment of Mortgagor's outstanding obligations 
secured under the Original Mortgage, which indebtedness is described 
more particularly by listing the Original Notes in Schedule ``A'' 
hereto; and
    WHEREAS, all acts necessary to make this Mortgage a valid and 
binding legal instrument for the security of such notes and obligations, 
subject to the terms of this Mortgage, have been in all respects duly 
authorized;
    NOW, THEREFORE, THIS MORTGAGE WITNESSETH: That to secure the payment 
of the principal of (and premium, if any) and interest on the Original 
Notes and all Notes issued hereunder according to their tenor and 
effect, and the performance of all provisions therein and herein 
contained, and in consideration of the covenants herein contained and 
the purchase or guarantee of Notes by the guarantors or holders thereof, 
the Mortgagor has mortgaged, pledged and granted a continuing security 
interest in, and by these presents does hereby grant, bargain, sell, 
alienate, remise, release, convey, assign, transfer, hypothecate, 
pledge, set over and confirm, pledge, and grant a continuing security 
interest and lien in for the purposes hereinafter expressed [other 
language may be required under various state laws], unto the Mortgagees 
all property, rights, privileges and franchises of the Mortgagor of 
every kind and description, real, personal or mixed, tangible and 
intangible, of the kind or nature specifically mentioned herein OR ANY 
OTHER KIND OR NATURE, except any Excepted Property, now owned or 
hereafter acquired by the Mortgagor (by purchase, consolidation, merger, 
donation, construction, erection or in any other way) wherever located, 
including (without limitation) all and singular the following:

                          GRANTING CLAUSE FIRST

    A. all of those fee and leasehold interests in real property set 
forth in Schedule ``B'' hereto, subject in each case to those matters 
set forth in such Schedule;
    B. all of the Mortgagor's interest in fixtures, easements, permits, 
licenses and rights-of-way comprising real property, and all other 
interests in real property, comprising any portion of the Utility System 
(as herein defined) located in the Counties listed in Schedule ``B'' 
hereto;
    C. all right, title and interest of the Mortgagor in and to those 
contracts of the Mortgagor (i) relating to the ownership, operation or 
maintenance of any generation, transmission or distribution facility 
owned, whether solely or jointly, by the Mortgagor, (ii) for the 
purchase of electric power and energy by the Mortgagor and having an 
original term in excess of 3 years, (iii) for the sale of electric power 
and energy by the Mortgagor and having an original term in excess of 3 
years, and (iv) for the transmission of electric power and energy by or 
on behalf of the Mortgagor and having an original term in excess of 3 
years, including in respect of any of the foregoing, any amendments, 
supplements and replacements thereto;
    D. all the property, rights, privileges, allowances and franchises 
particularly described in the annexed Schedule ``B'' are hereby made a 
part of, and deemed to be described in, this Granting Clause as fully as 
if set forth in this Granting Clause at length; and
    ALSO ALL OTHER PROPERTY, real estate, lands, easements, servitudes, 
licenses, permits, allowances, consents, franchises, privileges, rights 
of way and other rights in or relating to real estate or the occupancy 
of the same; all power sites, storage rights,

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water rights, water locations, water appropriations, ditches, flumes, 
reservoirs, reservoir sites, canals, raceways, waterways, dams, dam 
sites, aqueducts, and all other rights or means for appropriating, 
conveying, storing and supplying water; all rights of way and roads; all 
plants for the generation of electric and other forms of energy (whether 
now known or hereafter developed) by steam, water, sunlight, chemical 
processes and/or (without limitation) all other sources of power 
(whether now known or hereafter developed); all power houses, gas 
plants, street lighting systems, standards and other equipment 
incidental thereto; all telephone, radio, television and other 
communications, image and data transmission systems, air conditioning 
systems and equipment incidental thereto, water wheels, waterworks, 
water systems, steam and hot water plants, substations, lines, service 
and supply systems, bridges, culverts, tracks, ice or refrigeration 
plants and equipment, offices, buildings and other structures and the 
equipment thereto all machinery, engines, boilers, dynamos, turbines, 
electric, gas and other machines, prime movers, regulators, meters, 
transformers, generators (including, but not limited to, engine-driven 
generators and turbogenerator units), motors, electrical, gas and 
mechanical appliances, conduits, cables, water, steam, gas or other 
pipes, gas mains and pipes, service pipes, fittings, valves and 
connections, pole and transmission lines, towers, overhead conductors 
and devices, underground conduits, underground conductors and devices, 
wires, cables, tools, implements, apparatus, storage battery equipment, 
and all other fixtures and personalty; all municipal and other 
franchises, consents, certificates or permits; all emissions allowances; 
all lines for the transmission and distribution of electric current and 
other forms of energy, gas, steam, water or communications, images and 
data for any purpose including towers, poles, wires, cables, pipes, 
conduits, ducts and all apparatus for use in connection therewith, and 
(except as hereinbefore or hereinafter expressly excepted) all the 
right, title and interest of the Mortgagor in and to all other property 
of any kind or nature appertaining to and/or used and/or occupied and/or 
employed in connection with any property hereinbefore described, but in 
all circumstances excluding Excepted Property;

                         GRANTING CLAUSE SECOND

    All other property, real, personal or mixed, of whatever kind and 
description and wheresoever situated, including without limitation 
goods, accounts, money held in a trust account pursuant hereto or to a 
Loan Agreement, and general intangibles now owned or which may be 
hereafter acquired by the Mortgagor, but excluding Excepted Property, 
now owned or which may be hereafter acquired by the Mortgagor, it being 
the intention hereof that all property, rights, privileges, allowances 
and franchisees now owned by the Mortgagor or acquired by the Mortgagor 
after the date hereof (other than Excepted Property) shall be as fully 
embraced within and subjected to the lien hereof as if such property 
were specifically described herein.

                          GRANTING CLAUSE THIRD

    Also any Excepted Property that may, from time to time hereafter, by 
delivery or by writing of any kind, be subjected to the lien hereof by 
the Mortgagor or by anyone in its behalf; and any Mortgagee is hereby 
authorized to receive the same at any time as additional security 
hereunder for the benefit of all the Mortgagees. Such subjection to the 
lien hereof of any Excepted Property as additional security may be made 
subject to any reservations, limitations or conditions which shall be 
set forth in a written instrument executed by the Mortgagor or the 
person so acting in its behalf or by such Mortgagee respecting the use 
and disposition of such property or the proceeds thereof.

                         GRANTING CLAUSE FOURTH

    Together with (subject to the rights of the Mortgagor set forth on 
Section [5.01]) all and singular the tenements, hereditaments and 
appurtenances belonging or in anywise appertaining to the aforesaid 
property or any part thereof, with the reversion and reversions, 
remainder and remainders and all the tolls, earnings, rents, issues, 
profits, revenues and other income, products and proceeds of the 
property subjected or required to be subjected to the lien of this 
Mortgage, and all other property of any nature appertaining to any of 
the plants, systems, business or operations of the Mortgagor, whether or 
not affixed to the realty, used in the operation of any of the premises 
or plants or the System, or otherwise, which are now owned or acquired 
by the Mortgagor, and all the estate, right, title and interest of every 
nature whatsoever, at law as well as in equity, of the Mortgagor in and 
to the same and every part thereof (other than Excepted Property with 
respect to any of the foregoing).

                            EXCEPTED PROPERTY

    There is, however, expressly excepted and excluded from the lien and 
operation of this Mortgage the following described property of the 
Mortgagor, now owned or hereafter acquired (herein sometimes referred to 
as ``Excepted Property''):
    A. all shares of stock, securities or other interests of the 
Mortgagor in the National Rural Utilities Cooperative Finance 
Corporation, the National Bank for Cooperatives and the St. Paul Bank 
for Cooperatives other

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than any stock, securities or other interests that are specifically 
described in Subclause D of Granting Clause First as being subjected to 
the lien hereof;
    B. all rolling stock (except mobile substations), automobiles, 
buses, trucks, truck cranes, tractors, trailers and similar vehicles and 
movable equipment, and all tools, accessories and supplies used in 
connection with any of the foregoing;
    C. all vessels, boats, ships, barges and other marine equipment, all 
airplanes, airplane engines and other flight equipment, and all tools, 
accessories and supplies used in connection with any of the foregoing;
    D. all office furniture, equipment and supplies that is not data 
processing, accounting or other computer equipment or software;
    E. all leasehold interests for office purposes;
    F. all leasehold interests of the Mortgagor under leases for an 
original term (including any period for which the Mortgagor shall have a 
right of renewal) of less than five (5) years;
    G. all timber and crops (both growing and harvested) and all coal, 
ore, gas, oil and other minerals (both in place or severed);
    H. the last day of the term of each leasehold estate (oral or 
written) and any agreement therefor, now or hereafter enjoyed by the 
Mortgagor and whether falling within a general or specific description 
of property herein: PROVIDED, HOWEVER, that the Mortgagor covenants and 
agrees that it will hold each such last day in trust for the use and 
benefit of all of the Mortgagees and Noteholders and that it will 
dispose of each such last day from time to time in accordance with such 
written order as the Mortgagee in its discretion may give;
    I. all permits, licenses, franchises, contracts, agreements, 
contract rights and other rights not specifically subjected or required 
to be subjected to the lien hereof by the express provisions of this 
Mortgage, whether now owned or hereafter acquired by the Mortgagor, 
which by their terms or by reason of applicable law would become void or 
voidable if mortgaged or pledged hereunder by the Mortgagor, or which 
cannot be granted, conveyed, mortgaged, transferred or assigned by this 
Mortgage without the consent of other parties whose consent has been 
withheld, or without subjecting any Mortgagee to a liability not 
otherwise contemplated by the provisions of this Mortgage, or which 
otherwise may not be, hereby lawfully and effectively granted, conveyed, 
mortgaged, transferred and assigned by the Mortgagor; and
    J. the property identified in Schedule ``C'' hereto.
    PROVIDED, HOWEVER, that (i) if, upon the occurrence of an Event of 
Default, any Mortgagee, or any receiver appointed pursuant to statutory 
provision or order of court, shall have entered into possession of all 
or substantially all of the Mortgaged Property, all the Excepted 
Property described or referred to in the foregoing Subdivisions A 
through H, inclusive, then owned or thereafter acquired by the Mortgagor 
shall immediately, and, in the case of any Excepted Property described 
or referred to in Subdivisions I through J, inclusive, upon demand of 
any Mortgagee or such receiver, become subject to the lien hereof to the 
extent permitted by law, and any Mortgagee or such receiver may, to the 
extent permitted by law, at the same time likewise take possession 
thereof, and (ii) whenever all Events of Default shall have been cured 
and the possession of all or substantially all of the Mortgaged Property 
shall have been restored to the Mortgagor, such Excepted Property shall 
again be excepted and excluded from the lien hereof to the extent and 
otherwise as hereinabove set forth.
    However, pursuant to Granting Clause Third, the Mortgagor may 
subject to the lien of this Mortgage any Excepted Property, whereupon 
the same shall cease to be Excepted Property.

                                HABENDUM

    TO HAVE AND TO HOLD all said property, rights, privileges and 
franchises of every kind and description, real, personal or mixed, 
hereby and hereafter (by supplemental mortgage or otherwise) granted, 
bargained, sold, aliened, remised, released, conveyed, assigned, 
transferred, mortgaged, encumbered, hypothecated, pledged, setover, 
confirmed, or subjected to a continuing security interest and lien as 
aforesaid, together with all the appurtenances thereto appertaining 
(said properties, rights, privileges and franchises, including any cash 
and securities hereafter deposited with any Mortgagee ((other than any 
such cash, if any, which is specifically stated herein not to be deemed 
part of the Mortgaged Property)), being herein collectively called the 
``Mortgaged Property'') unto the Mortgagees and the respective assigns 
of the Mortgagees forever, to secure equally and ratably the payment of 
the principal of (and premium, if any) and interest on the Notes, 
according to their terms, without preference, priority or distinction as 
to interest or principal (except as otherwise specifically provided 
herein) or as to lien or otherwise of any Note over any other Note by 
reason of the priority in time of the execution, delivery or maturity 
thereof or of the assignment or negotiation thereof, or otherwise, and 
to secure the due performance of all of the covenants, agreements and 
provisions herein and in the Loan Agreements contained, and for the uses 
and purposes and upon the terms, conditions, provisos and agreements 
hereinafter expressed and declared.

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    SUBJECT, HOWEVER, to Permitted Encumbrances (as defined in Section 
1.01).

                                ARTICLE I

          DEFINITIONS & OTHER PROVISIONS OF GENERAL APPLICATION

    Section 1.01. Definitions. In addition to the terms defined 
elsewhere in this Mortgage, the terms defined in this Article I shall 
have the meanings specified herein and under the UCC, unless the context 
clearly requires otherwise. The terms defined herein include the plural 
as well as the singular and the singular as well as the plural.
    Accounting Requirements shall mean the requirements of any system of 
accounts prescribed by RUS so long as the Government is the holder, 
insurer or guarantor of any Notes, or, in the absence thereof, the 
requirements of generally accepted accounting principles applicable to 
businesses similar to that of the Mortgagor.
    Additional Notes shall mean any Notes issued by the Mortgagor to the 
Government or any other lender pursuant to Article II of this Mortgage 
including any refunding, renewal, or substitute Notes which may from 
time to time be executed and delivered by the Mortgagor pursuant to the 
terms of Article II.
    Board shall mean either the Board of Directors or the Board of 
Trustees, as the case may be, of the Mortgagor.
    Business Day shall mean any day that the Government is open for 
business.
    Debt Service Coverage Ratio (``DSC'') shall mean the ratio 
determined as follows: for each calendar year add (i) Patronage Capital 
or Margins of the Mortgagor, (ii) Interest Expense on Total Long Term 
Debt of the Mortgagor (as computed in accordance with the principles set 
forth in the definition of TIER) and (iii) Depreciation and Amortization 
Expense of the Mortgagor, and divide the total so obtained by an amount 
equal to the sum of all payments of principal and interest required to 
be made on account of Total Long-Term Debt during such calendar year 
increasing said sum by any addition to interest expense on account of 
Restricted Rentals as computed with respect to the Times Interest Earned 
Ratio herein.
    Depreciation and Amortization Expense shall mean an amount 
constituting the depreciation and amortization of the Mortgagor as 
computed pursuant to Accounting Requirements.
    Electric System shall mean, and shall be broadly construed to 
encompass and include, all of the Mortgagor's interests in all electric 
production, transmission, distribution, conservation, load management, 
general plant and other related facilities, equipment or property and in 
any mine, well, pipeline, plant, structure or other facility for the 
development, production, manufacture, storage, fabrication or processing 
of fossil, nuclear or other fuel of any kind or in any facility or 
rights with respect to the supply of water, in each case for use, in 
whole or in major part, in any of the Mortgagor's generating plants, now 
existing or hereafter acquired by lease, contract, purchase or otherwise 
or constructed by the Mortgagor, including any interest or participation 
of the Mortgagor in any such facilities or any rights to the output or 
capacity thereof, together with all additions, betterments, extensions 
and improvements to such Electric System or any part thereof hereafter 
made and together with all lands, easements and rights-of-way of the 
Mortgagor and all other works, property or structures of the Mortgagor 
and contract rights and other tangible and intangible assets of the 
Mortgagor used or useful in connection with or related to such Electric 
System, including without limitation a contract right or other 
contractual arrangement referred to in Granting Clause First, Subclause 
[(C)] but excluding any excepted property.
    Environmental Law and Environmental Laws shall mean all federal, 
state, and local laws, regulations, and requirements related to 
protection of human health or the environment, including but not limited 
to the Comprehensive Environmental Response, Compensation and Liability 
Act of 1980 (42 U.S.C. 9601 et seq.), the Resource Conservation and 
Recovery Act (42 U.S.C. 6901 et seq.), the Clean Water Act (33 U.S.C. 
1251 et seq.) and the Clean Air Act (42 U.S.C. 7401 et seq.), and any 
amendments and implementing regulations of such acts.
    Equity shall mean the total margins and equities and margins 
computed pursuant to Accounting Requirements, but excluding any 
Regulatory Created Assets.
    Event of Default shall have the meaning specified in Section [4.01] 
hereof.
    Excepted Property shall have the meaning stated in the Granting 
Clauses.
    Government shall mean the United States of America acting by and 
through the Administrator of RUS and shall include its successors and 
assigns.
    Government Notes shall mean the Original Notes, and any Additional 
Notes, issued by the Mortgagor to the Government, or guaranteed or 
insured as to payment by the Government.
    Independent shall mean when used with respect to any specified 
person or entity means such a person or entity who (1) is in fact 
independent, (2) does not have any direct financial interest or any 
material indirect financial interest in the Mortgagor or in any 
affiliate of the Mortgagor and (3) is not connected with the Mortgagor 
as an officer, employee, promoter, underwriter, trustee, partner, 
director or person performing similar functions.

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    Interest Expense shall mean an amount constituting the interest 
expense of the Mortgagor as computed pursuant to Accounting 
Requirements.
    Lien shall mean any statutory or common law consensual or non-
consensual mortgage, pledge, security interest, encumbrance, lien, right 
of set off, claim or charge of any kind, including, without limitation, 
any conditional sale or other title retention transaction, any lease 
transaction in the nature thereof and any secured transaction under the 
UCC.
    Loan Agreement shall mean any agreement executed by and between the 
Mortgagor and the Government or any other lender in connection with the 
execution and delivery of any Notes secured hereby.
    Long-Term Debt shall mean any amount included in Total Long-Term 
Debt pursuant to Accounting Requirements.
    Long-Term Lease shall mean a lease having an unexpired term (taking 
into account terms of renewal at the option of the lessor, whether or 
not such lease has previously been renewed) of more than 12 months.
    Margins shall mean the sum of amounts recorded as operating margins 
and non-operating margins as computed in accordance with Accounting 
Requirements.
    Maximum Debt Limit, if any, shall mean the amount more particularly 
described in Schedule ``A'' hereof.
    Mortgage shall mean this Restated Mortgage and Security Agreement, 
including any amendments or supplements thereto from time to time.
    Mortgaged Property shall have the meaning specified as stated in the 
Habendum to the Granting Clauses.
    MORTGAGEE or MORTGAGEES shall mean the Government, ---------- {the 
supplemental lender{time} , ---------- their successors and assigns as 
well as any and all other lenders pursuant to Article II of this 
Mortgage that enter into a supplemental mortgage in accordance with 
Section [2.04] of Article II hereof, their successors and assigns.
    Net Utility Plant shall mean the amount constituting the total 
utility plant of the Mortgagor less depreciation computed in accordance 
with Accounting Requirements.
    Note or Notes shall mean one or more of the Government Notes, and 
any other Notes which may, from time to time, be secured under this 
Mortgage.
    Noteholder or Noteholders shall mean one or more of the holders of 
Notes secured by this Mortgage; PROVIDED, however, that in the case of 
any Notes that have been guaranteed or insured as to payment by RUS, as 
to such Notes Noteholder or Noteholders shall mean RUS, exclusively, 
regardless of whether such notes are in the possession of RUS.
    Original Mortgage means the instrument(s) identified as such in 
Schedule ``A'' hereof.
    Original Notes shall mean the Notes listed on Schedule ``A'' hereto 
as such, such Notes being instruments evidencing outstanding 
indebtedness of the Mortgagor (i) to the Government (including 
indebtedness which has been issued by the Mortgagor to a third party and 
guaranteed or insured as to payment by the Government) and (ii) to each 
other Mortgagee on the date of this Mortgage.
    Outstanding Notes shall mean as of the date of determination, (i) 
all Notes theretofore issued, executed and delivered to any Mortgagee 
and (ii) any Notes guaranteed or insured as to payment by the 
Government, except (a) Notes referred to in clause (i) or (ii) for which 
the principal and interest have been fully paid and which have been 
canceled by the Noteholder, and (b) Notes the payment for which has been 
provided for pursuant to Section [5.03].
    Permitted Debt shall have the meaning specified in Section [3.08].
    Permitted Encumbrances shall mean:
    (1) as to the property specifically described in Granting Clause 
First, the restrictions, exceptions, reservations, conditions, 
limitations, interests and other matters which are set forth or referred 
to in such descriptions and each of which fits one or more of the 
clauses of this definition, PROVIDED, such matters do not in the 
aggregate materially detract from the value of the Mortgaged Property 
taken as a whole and do not materially impair the use of such property 
for the purposes for which it is held by the Mortgagor;
    (2) liens for taxes, assessments and other governmental charges 
which are not delinquent;
    (3) liens for taxes, assessments and other governmental charges 
already delinquent which are currently being contested in good faith by 
appropriate proceedings; PROVIDED the Mortgagor shall have set aside on 
its books adequate reserves with respect thereto;
    (4) mechanics', workmen's, repairmen's, materialmen's, 
warehousemen's and carriers' liens and other similar liens arising in 
the ordinary course of business for charges which are not delinquent, or 
which are being contested in good faith and have not proceeded to 
judgment; PROVIDED the Mortgagor shall have set aside on its books 
adequate reserves with respect thereto;
    (5) liens in respect of judgments or awards with respect to which 
the Mortgagor shall in good faith currently be prosecuting an appeal or 
proceedings for review and with respect to which the Mortgagor shall 
have secured a stay of execution pending such appeal or proceedings for 
review; PROVIDED the Mortgagor shall have set aside on its books 
adequate reserves with respect thereto;

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    (6) easements and similar rights granted by the Mortgagor over or in 
respect of any Mortgaged Property, PROVIDED that in the opinion of the 
Board or a duly authorized officer of the Mortgagor such grant will not 
impair the usefulness of such property in the conduct of the Mortgagor's 
business and will not be prejudicial to the interests of the Mortgagees, 
and similar rights granted by any predecessor in title of the Mortgagor;
    (7) easements, leases, reservations or other rights of others in any 
property of the Mortgagor for streets, roads, bridges, pipes, pipe 
lines, railroads, electric transmission and distribution lines, 
telegraph and telephone lines, the removal of oil, gas, coal or other 
minerals and other similar purposes, flood rights, river control and 
development rights, sewage and drainage rights, restrictions against 
pollution and zoning laws and minor defects and irregularities in the 
record evidence of title, PROVIDED that such easements, leases, 
reservations, rights, restrictions, laws, defects and irregularities do 
not materially affect the marketability of title to such property and do 
not in the aggregate materially impair the use of the Mortgaged Property 
taken as a whole for the purposes for which it is held by the Mortgagor;
    (8) liens upon lands over which easements or rights of way are 
acquired by the Mortgagor for any of the purposes specified in Clause 
[(7)] of this definition, securing indebtedness neither created, assumed 
nor guaranteed by the Mortgagor nor on account of which it customarily 
pays interest, which liens do not materially impair the use of such 
easements or rights of way for the purposes for which they are held by 
the Mortgagor;
    (9) leases existing at the date of this instrument affecting 
property owned by the Mortgagor at said date which have been previously 
disclosed to the Mortgagees in writing and leases for a term of not more 
than two years (including any extensions or renewals) affecting property 
acquired by the Mortgagor after said date;
    (10) terminable or short term leases or permits for occupancy, which 
leases or permits expressly grant to the Mortgagor the right to 
terminate them at any time on not more than six months' notice and which 
occupancy does not interfere with the operation of the business of the 
Mortgagor;
    (11) any lien or privilege vested in any lessor, licensor or 
permittor for rent to become due or for other obligations or acts to be 
performed, the payment of which rent or performance of which other 
obligations or acts is required under leases, subleases, licenses or 
permits, so long as the payment of such rent or the performance of such 
other obligations or acts is not delinquent;
    (12) liens or privileges of any employees of the Mortgagor for 
salary or wages earned but not yet payable;
    (13) the burdens of any law or governmental regulation or permit 
requiring the Mortgagor to maintain certain facilities or perform 
certain acts as a condition of its occupancy of or interference with any 
public lands or any river or stream or navigable waters;
    (14) any irregularities in or deficiencies of title to any rights-
of-way for pipe lines, telephone lines, telegraph lines, power lines or 
appurtenances thereto, or other improvements thereon, and to any real 
estate used or to be used primarily for right-of-way purposes, PROVIDED 
that in the opinion of counsel for the Mortgagor, the Mortgagor shall 
have obtained from the apparent owner of the lands or estates therein 
covered by any such right-of-way a sufficient right, by the terms of the 
instrument granting such right-of-way, to the use thereof for the 
construction, operation or maintenance of the lines, appurtenances or 
improvements for which the same are used or are to be used, or PROVIDED 
that in the opinion of counsel for the Mortgagor, the Mortgagor has 
power under eminent domain, or similar statutes, to remove such 
irregularities or deficiencies;
    (15) rights reserved to, or vested in, any municipality or 
governmental or other public authority to control or regulate any 
property of the Mortgagor, or to use such property in any manner, which 
rights do not materially impair the use of such property, for the 
purposes for which it is held by the Mortgagor;
    (16) any obligations or duties, affecting the property of the 
Mortgagor, to any municipality or governmental or other public authority 
with respect to any franchise, grant, license or permit;
    (17) any right which any municipal or governmental authority may 
have by virtue of any franchise, license, contract or statute to 
purchase, or designate a purchaser of or order the sale of, any property 
of the Mortgagor upon payment of cash or reasonable compensation 
therefor or to terminate any franchise, license or other rights or to 
regulate the property and business of the Mortgagor; PROVIDED, HOWEVER, 
that nothing in this clause 17 is intended to waive any claim or rights 
that the Government may otherwise have under Federal laws;
    (18) as to properties of other operating electric companies acquired 
after the date of this Mortgage by the Mortgagor as permitted by Section 
[3.10] hereof, reservations and other matters as to which such 
properties may be subject as more fully set forth in such Section;
    (19) any lien required by law or governmental regulations as a 
condition to the transaction of any business or the exercise of any 
privilege or license, or to enable the Mortgagor to maintain self-
insurance or to participate in any fund established to cover any 
insurance risks or in connection with

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workmen's compensation, unemployment insurance, old age pensions or 
other social security, or to share in the privileges or benefits 
required for companies participating in such arrangements; PROVIDED, 
HOWEVER, that nothing in this clause 19 is intended to waive any claim 
or rights that the Government may otherwise have under Federal laws;
    (20) liens arising out of any defeased mortgage or indenture of the 
Mortgagor;
    (21) the undivided interest of other owners, and liens on such 
undivided interests, in property owned jointly with the Mortgagor as 
well as the rights of such owners to such property pursuant to the 
ownership contracts;
    (22) any lien or privilege vested in any lessor, licensor or 
permittor for rent to become due or for other obligations or acts to be 
performed, the payment of which rent or the performance of which other 
obligations or acts is required under leases, subleases, licenses or 
permits, so long as the payment of such rent or the performance of such 
other obligations or acts is not delinquent;
    (23) purchase money mortgages permitted by Section [3.08]; and
    (24) the Original Mortgage.
    Property Additions shall mean Utility System property as to which 
the Mortgagor shall provide Title Evidence and which shall be (or, if 
retired, shall have been) subject to the lien of this Mortgage, which 
shall be properly chargeable to the Mortgagor's utility plant accounts 
under Accounting Requirements (including property constructed or 
acquired to replace retired property credited to such accounts) and 
which shall be:
    (1) acquired (including acquisition by merger, consolidation, 
conveyance or transfer) or constructed by the Mortgagor after the date 
hereof, including property in the process of construction, insofar as 
not reflected on the books of the Mortgagor with respect to periods on 
or prior to the date hereof, and
    (2) used or useful in the utility business of the Mortgagor 
conducted with the properties described in the Granting Clauses of this 
Mortgage, even though separate from and not physically connected with 
such properties.
    ``Property Additions'' shall also include:
    (3) easements and rights-of-way that are useful for the conduct of 
the utility business of the Mortgagor, and
    (4) property located or constructed on, over or under public 
highways, rivers or other public property if the Mortgagor has the 
lawful right under permits, licenses or franchises granted by a 
governmental body having jurisdiction in the premises or by the law of 
the State in which such property is located to maintain and operate such 
property for an unlimited, indeterminate or indefinite period or for the 
period, if any, specified in such permit, license or franchise or law 
and to remove such property at the expiration of the period covered by 
such permit, license or franchise or law, or if the terms of such 
permit, license, franchise or law require any public authority having 
the right to take over such property to pay fair consideration therefor.
    ``Property Additions'' shall NOT include:
    (a) good will, going concern value, contracts, agreements, 
franchises, licenses or permits, whether acquired as such, separate and 
distinct from the property operated in connection therewith, or acquired 
as an incident thereto, or
    (b) any shares of stock or indebtedness or certificates or evidences 
of interest therein or other securities, or
    (c) any plant or system or other property in which the Mortgagor 
shall acquire only a leasehold interest, or any betterments, extensions, 
improvements or additions (other than movable physical personal property 
which the Mortgagor has the right to remove), of, upon or to any plant 
or system or other property in which the Mortgagor shall own only a 
leasehold interest unless (i) the term of the leasehold interest in the 
property to which such betterment, extension, improvement or addition 
relates shall extend for at least 75% of the useful life of such 
betterment, extension, improvement or addition and (ii) the lessor shall 
have agreed to give the Mortgagee reasonable notice and opportunity to 
cure any default by the Mortgagor under such lease and not to disturb 
any Mortgagee's possession of such leasehold estate in the event any 
Mortgagee succeeds to the Mortgagor's interest in such lease upon any 
Mortgagee's exercise of any remedies under this Mortgage so long as 
there is no default in the performance of the tenant's covenants 
contained therein, or
    (d) any property of the Mortgagor subject to the Permitted 
Encumbrance described in clause [(23)] of the definition thereof.
    Prudent Utility Practice shall mean any of the practices, methods 
and acts which, in the exercise of reasonable judgment, in light of the 
facts, including, but not limited to, the practices, methods and acts 
engaged in or approved by a significant portion of the electric utility 
industry prior thereto, known at the time the decision was made, would 
have been expected to accomplish the desired result consistent with 
cost-effectiveness, reliability, safety and expedition. It is recognized 
that Prudent Utility Practice is not intended to be limited to optimum 
practice, method or act to the exclusion of all others, but rather is a 
spectrum of possible practices, methods or acts which could have been 
expected to accomplish the desired result at the lowest reasonable cost 
consistent with cost-effectiveness, reliability, safety and expedition.

[[Page 195]]

    REA shall mean the Rural Electrification Administration of the 
United States Department of Agriculture, the predecessor of RUS.
    Regulatory Created Assets shall mean the sum of any amounts properly 
recordable as unrecovered plant and regulatory study costs or as other 
regulatory assets, pursuant to Accounting Requirements.
    Restricted Rentals shall mean all rentals required to be paid under 
finance leases and charged to income, exclusive of any amounts paid 
under any such lease (whether or not designated therein as rental or 
additional rental) for maintenance or repairs, insurance, taxes, 
assessments, water rates or similar charges. For the purpose of this 
definition the term ``finance lease'' shall mean any lease having a 
rental term (including the term for which such lease may be renewed or 
extended at the option of the lessee) in excess of 3 years and covering 
property having an initial cost in excess of $250,000 other than 
aircraft, ships, barges, automobiles, trucks, trailers, rolling stock 
and vehicles; office, garage and warehouse space; office equipment and 
computers.
    RUS shall mean the Rural Utilities Service, an agency of the United 
States Department of Agriculture, or if at any time after the execution 
of this Mortgage RUS is not existing and performing the duties of 
administering a program of rural electrification as currently assigned 
to it, then the entity performing such duties at such time.
    Security Interest shall mean any assignment, transfer, mortgage, 
hypothecation or pledge.
    Subordinated Indebtedness shall mean secured indebtedness of the 
Mortgagor, payment of which shall be subordinated to the prior payment 
of the Notes in accordance with the provisions of Section [3.08] hereof 
by subordination agreement in form and substance satisfactory to each 
Mortgagee which approval will not be unreasonably withheld.
    Supplemental Mortgage shall mean an instrument of the type described 
in Section [2.04].
    Times Interest Earned Ratio (``TIER'') shall mean the ratio 
determined as follows: for each calendar year: add (i) patronage capital 
or margins of the Mortgagor and (ii) Interest Expense on Total Long-Term 
Debt of the Mortgagor and divide the total so obtained by Interest 
Expense on Total Long-Term Debt of the Mortgagor, provided, however, 
that in computing Interest Expense on Total Long-Term Debt, there shall 
be added, to the extent not otherwise included, an amount equal to 33-1/
3% of the excess of Restricted Rentals paid by the Mortgagor over 2% of 
the Mortgagor's Equity.
    Title Evidence shall mean with respect to any real property:
    (1) an opinion of counsel to the effect that the Mortgagor has 
title, whether fairly deducible of record or based upon prescriptive 
rights (or, as to personal property, based on such evidence as counsel 
shall determine to be sufficient), as in the opinion of counsel is 
satisfactory for the use thereof in connection with the operations of 
the Mortgagor, and counsel in giving such opinion may disregard any 
irregularity or deficiency in the record evidence of title which, in the 
opinion of such counsel, can be cured by proceedings within the power of 
the Mortgagor or does not substantially impair the usefulness of such 
property for the purpose of the Mortgagor and may base such opinion upon 
counsel's own investigation or upon affidavits, certificates, abstracts 
of title, statements or investigations made by persons in whom such 
counsel has confidence or upon examination of a certificate or guaranty 
of title or policy of title insurance in which counsel has confidence; 
or
    (2) a mortgagee's policy of title insurance in the amount of the 
cost to the Mortgagor of the land included in Property Additions, as 
such cost is determined by the Mortgagor in accordance with the 
Accounting Requirements, issued in favor of the Mortgagees by an entity 
authorized to insure title in the states where the subject property is 
located, showing the Mortgagor as the owner of the subject property and 
insuring the lien of this Mortgage; and with respect to any personal 
property a certificate of the general manage or other duly authorized 
officer that the Mortgagor lawfully owns and is possessed of such 
property.
    Total Assets shall mean an amount constituting total assets of the 
Mortgagor as computed pursuant to Accounting Requirements, but excluding 
any Regulatory Created Assets.
    Total Long-Term Debt shall mean the total outstanding long-term debt 
of the Mortgagor as computed pursuant to Accounting Requirements.
    Total Utility Plant shall mean the total of all property properly 
recorded in the utility plant accounts of the Mortgagor, pursuant to 
Accounting Requirements.
    Uniform Commercial Code or UCC shall mean the UCC of the state 
referred to in Section [1.04], and if Mortgaged Property is located in a 
state other than that state, then as to such Mortgaged Property UCC 
refers to the UCC in effect in the state where such property is located.
    Utility System shall mean the Electric System and all of the 
Mortgagor's interest in community infrastructure located substantially 
within its electric service territory, namely water and waste systems, 
solid waste disposal facilities, telecommunications and other electronic 
communications systems, and natural gas distribution systems.
    SECTION 1.02. General Rules of Construction:
    a. Accounting terms not referred to above are used in this Mortgage 
in their ordinary

[[Page 196]]

sense and any computations relating to such terms shall be computed in 
accordance with the Accounting Requirements.
    b. Any reference to ``directors'' or ``board of directors'' shall be 
deemed to mean ``trustees'' or ``board of trustees,'' as the case may 
be.
    SECTION 1.03. Special Rules of Construction if RUS is a Mortgagee: 
During any period that RUS is a Mortgagee, the following additional 
provisions shall apply:
    a. In the case of any Notes that have been guaranteed or insured as 
to payment by RUS, as to such Notes RUS shall be considered to be the 
Noteholder, exclusively, regardless of whether such Notes are in the 
possession of RUS.
    b. In the case of any prior approval rights conferred upon RUS by 
Federal statutes, including (without limitation) Section 7 of the Rural 
Electrification Act of 1936, as amended, with respect to the sale or 
disposition of property, rights, or franchises of the Mortgagor, all 
such statutory rights are reserved except to the extent that they are 
expressly modified or waived in this Mortgage.
    SECTION 1.04. Governing Law: This Mortgage shall be construed in and 
governed by Federal law to the extent applicable, and otherwise by the 
laws of the State of --------.
    SECTION 1.05 Notices: All demands, notices, reports, approvals, 
designations, or directions required or permitted to be given hereunder 
shall be in writing and shall be deemed to be properly given if sent by 
registered or certified mail, postage prepaid, or delivered by hand, or 
sent by facsimile transmission, receipt confirmed, addressed to the 
proper party or parties at the following address:
    As to the Mortgagor:

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
    As to the Mortgagee:

    Rural Utilities Service,
    United States Department of Agriculture,
    Washington, DC 20250-1500

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

and as to any other person, firm, corporation or governmental body or 
agency having an interest herein by reason of being a Mortgagee, at the 
last address designated by such person, firm, corporation, governmental 
body or agency to the Mortgagor and the other Mortgagees. Any such party 
may from time to time designate to each other a new address to which 
demands, notices, reports, approvals, designations or directions may be 
addressed, and from and after any such designation the address 
designated shall be deemed to be the address of such party in lieu of 
the address given above.

                               ARTICLE II

                            ADDITIONAL NOTES

    SECTION 2.01. Additional Notes: (a) Without the prior consent of any 
Mortgagee or any Noteholder, the Mortgagor may issue Additional Notes to 
the Government or to another lender or lenders for the purpose of 
acquiring, procuring or constructing new or replacement Eligible 
Property Additions which Notes will thereupon be secured equally and 
ratably with the Notes if each of the following requirements are 
satisfied:
    (1) As evidenced by a certificate of an Independent certified public 
accountant sent to each Mortgagee on or before the first advance of 
proceeds from such Additional Notes:
    (i) The Mortgagor shall have achieved for each of the two calendar 
years immediately preceding the issuance of such Additional Notes, a 
TIER of not less than 1.25 and a DSC of not less than 1.25;
    (ii) After taking into account the effect of such Additional Notes 
on the Total Long Term Debt of the Mortgagor, the ratio of the 
Mortgagor's Net Utility Plant to its Total Long Term Debt shall be 
greater than or equal to 1.0 on a pro forma basis;
    (iii) After taking into account the effect of such Additional Notes 
on the Total Assets of such Mortgagor, the Mortgagor shall have Equity 
greater than or equal to 27 percent of Total Assets on a pro forma 
basis; and
    (iv) The sum of the aggregate principal amount of such Additional 
Notes (if any) that are not related to the Electric System if added to 
the aggregate outstanding principal amount of all the existing Notes (if 
any) that are not related to the Electric System will not exceed 30% of 
the Mortgagor's Equity on a pro forma basis.
    (2) No Event of Default has occurred and is continuing hereunder, or 
any event which with the giving of notice or lapse of time or both would 
become an Event of Default has occurred and is continuing.
    (3) The Eligible Property Additions being constructed, acquired, 
procured or replaced are part of the Mortgagor's Utility System.
    (4) The Borrower's general manager or other duly authorized officer 
shall send to each of the Mortgagees a certificate in substantially the 
form attached hereto as [Exhibit A] on or before the date of the first 
advance of proceeds from such Additional Notes.
    (b) For purposes of this section:
    (1) ``Eligible Property Additions'' shall mean Property Additions 
acquired or whose construction was completed not more than 5 years prior 
to the issuance of the Additional Notes and Property Additions acquired 
or whose construction is started and/or completed not more than 4 years 
after issuance of the Additional Notes, but shall exclude any Property 
Additions financed by any

[[Page 197]]

other debt secured under the Mortgage at the time additional Notes are 
issued;
    (2) Notes are considered to be ``issued'' on, and the date of 
``issuance'' shall be, the date on which they are executed by the 
Mortgagor; and
    (3) For purposes of calculating the pro forma ratios in 
subparagraphs (a)(1)(ii) and (iii), the values for Total Long Term Debt 
and Total Assets before debt issuance and the values for Equity and Net 
Utility Plant shall be the most recently available end-of-month figures 
preceding the issuance of the Additional Notes, but in no case for a 
month ending more than 180 days preceding such issuance.
    SECTION 2.02. Refunding or Refinancing Notes: The Mortgagor shall 
also have the right without the consent of any Mortgagee or any 
Noteholder to issue Additional Notes for the purpose of refunding or 
refinancing any Notes so long as the total amount of outstanding 
indebtedness evidenced by such Additional Note or Notes is not greater 
than 105% of the then outstanding principal balance of the Note or Notes 
being refunded or refinanced. PROVIDED, HOWEVER, that the Mortgagor may 
not exercise its rights under this Section if an Event of Default has 
occurred and is continuing, or any event which with the giving of notice 
or lapse of time or both would become an Event of Default has occurred 
and is continuing. On or before the first advance of proceeds from Notes 
issued under this section, the Mortgagor shall notify each Mortgagee of 
the refunding or refinancing. Additional Notes issued pursuant to this 
Section [2.02] will thereupon be secured equally and ratably with the 
Notes.
    SECTION 2.03. Other Additional Notes.With the prior written consent 
of each Mortgagee, the Mortgagor may issue Additional Notes to the 
Government or any lender or lenders, which Notes will thereupon be 
secured equally and ratably with Notes without regard to whether any of 
the requirements of Sections [2.01] or [2.02] are satisfied.
    SECTION 2.04. Additional Lenders Entitled to the Benefits of This 
Mortgage: Without the prior consent of any Mortgagee or any Noteholder, 
each new lender designated as a payee in any Additional Notes issued by 
the Mortgagor pursuant to Section [2.01] or [2.02] of this Mortgage 
shall become a Mortgagee hereunder upon the execution and delivery by 
the Mortgagor and such lender of a supplemental mortgage hereto 
designating such lender as a Mortgagee hereunder. Such new lender shall 
be entitled to the benefits of this Mortgage without further act or 
deed. Each Mortgagee and each person or entity that becomes a lender 
pursuant to Section [2.01] or [2.02] of this Mortgage shall, upon the 
request of the Mortgagor to do so, execute and deliver a supplement to 
this Mortgage in substantially the form set forth in Section [2.05] to 
evidence the addition of such new lender as an additional Mortgagee 
entitled to the benefits of this Mortgage. The failure of any existing 
Mortgagee to enter into such supplemental mortgage shall not deprive the 
new lender of its rights under this Mortgage; provided that such 
additional indebtedness otherwise conforms in all respects with the 
requirements for issuing Additional Notes under this Mortgage.
    SECTION 2.05. Form of Supplemental Mortgage: (a) The form of 
supplemental mortgage referred to in Section [2.04] is attached to this 
Mortgage as Exhibit B and hereby incorporated by reference as if set 
forth in full at this point.
    (b) In the event that the Mortgagor subsequently issues Additional 
Notes pursuant to Sections [2.01] or [2.02] to any existing Mortgagee 
and that Mortgagee desires further assurance that such Additional Notes 
will be secured by the lien of the Mortgage, an instrument substantially 
in the form of the supplemental mortgage attached as Exhibit B may be 
used.
    (c) In the event that the Mortgagor issues Additional Notes pursuant 
to Section [2.03] to either an existing Mortgagee or a new lender, in 
either case with the prior written consent of each Mortgagee, then an 
instrument substantially in the form of the supplemental mortgage 
attached as Exhibit B may also be used.

           ARTICLE III--PARTICULAR COVENANTS OF THE MORTGAGOR

    SECTION 3.01. Payment of Debt Service on Notes: The Mortgagor will 
duly and punctually pay the principal, premium, if any, and interest on 
the Notes in accordance with the terms of the Notes, the Loan Contracts, 
this Mortgage and any Supplemental Mortgage authorizing such Notes.
    SECTION 3.02. Warranty of Title: (a) At the time of the execution 
and delivery of this instrument, the Mortgagor has good and marketable 
title in fee simple to the real property specifically described in 
Granting Clause First as owned in fee and good and marketable title to 
the interests in real property specifically described in Granting Clause 
[First], subject to no mortgage, lien, charge or encumbrance except as 
stated therein, and has full power and lawful authority to grant, 
bargain, sell, alien, remise, release, convey, assign, transfer, 
encumber, mortgage, pledge, set over and confirm said real property and 
interests in real property in the manner and form aforesaid.
    (b) At the time of the execution and delivery of this instrument, 
the Mortgagor lawfully owns and is possessed of the personal property 
specifically described in Granting Clauses [First and Second], subject 
to no mortgage, lien, charge or encumbrance except as stated therein, 
and has full power and lawful authority to mortgage, assign,

[[Page 198]]

transfer, deliver, pledge and grant a continuing security interest in 
said property and, including any proceeds thereof, in the manner and 
form aforesaid.
    (c) The Mortgagor hereby does and will forever warrant and defend 
the title to the property specifically described in Granting Clause 
First against the claims and demands of all persons whomsoever, except 
Permitted Encumbrances.
    SECTION 3.03. After-Acquired Property; Further Assurances; 
Recording: (a) All property of every kind, other than Excepted Property, 
acquired by the Mortgagor after the date hereof, shall, immediately upon 
the acquisition thereof by the Mortgagor, and without any further 
mortgage, conveyance or assignment, become subject to the lien of this 
Mortgage; SUBJECT, HOWEVER, to Permitted Encumbrances and the 
exceptions, if any, to which all of the Mortgagees consent. 
Nevertheless, the Mortgagor will do, execute, acknowledge and deliver 
all and every such further acts, conveyances, mortgages, financing 
statements and assurances as any Mortgagee shall require for 
accomplishing the purposes of this Mortgage.
    (b) The Mortgagor will cause this Mortgage and all Supplemental 
Mortgages and other instruments of further assurance, including all 
financing statements covering security interests in personal property, 
to be promptly recorded, registered and filed, and will execute and file 
such financing statements and cause to be issued and filed such 
continuation statements, all in such manner and in such places as may be 
required by law fully to preserve and protect the rights of all of the 
Mortgagees and Noteholders hereunder to all property comprising the 
Mortgaged Property. The Mortgagor will furnish to each Mortgagee:
    (1) promptly after the execution and delivery of this instrument and 
of each Supplemental Mortgage or other instrument of further assurance, 
an Opinion of Counsel stating that, in the opinion of such Counsel, this 
instrument and all such Supplemental Mortgages and other instruments of 
further assurance have been properly recorded, registered and filed to 
the extent necessary to make effective the lien intended to be created 
by this Mortgage, and reciting the details of such action or referring 
to prior Opinions of Counsel in which such details are given, and 
stating that all financing statements and continuation statements have 
been executed and filed that are necessary fully to preserve and protect 
the rights of all of the Mortgagees and Noteholders hereunder, or 
stating that, in the opinion of such Counsel, no such action is 
necessary to make the lien effective; and
    (2) within 30 days after ---------- in each year beginning with the 
year ----, an Opinion of Counsel, dated as of such date, either stating 
that, in the opinion of such Counsel, such action has been taken with 
respect to the recording, registering, filing, re-recording, re-
registering and re-filing of this instrument and of all Supplemental 
Mortgages, financing statements, continuation statements or other 
instruments of further assurances as is necessary to maintain the lien 
of this Mortgage (including the lien on any property acquired by the 
Mortgagor after the execution and delivery of this instrument and owned 
by the Mortgagor at the end of preceding calendar year) and reciting the 
details of such action or referring to prior Opinions of Counsel in 
which such details are given, and stating that all financing statements 
and continuation statements have been executed and filed that are 
necessary to fully preserve and protect the rights of all of the 
Mortgagees and Noteholders hereunder, or stating that, in the opinion of 
such Counsel, no such action is necessary to maintain such lien.
    SECTION 3.04. Environmental Requirements and Indemnity: (a) The 
Mortgagor shall, with respect to all facilities which may be part of the 
Mortgaged Property, comply with all Environmental Laws.
    (b) The Mortgagor shall defend, indemnify, and hold harmless each 
Mortgagee, its successors and assigns, from and against any and all 
liabilities, losses, damages, costs, expenses (including but not limited 
to reasonable attorneys' fees and expenses), causes of actions, 
administrative proceedings, suits, claims, demands, or judgments of any 
nature arising out of or in connection with any matter related to the 
Mortgage Property and any Environmental Law, including but not limited 
to:
    (1) the past, present, or future presence of any hazardous 
substance, contaminant, pollutant, or hazardous waste on or related to 
the Mortgaged Property;
    (2) any failure at any time by the undersigned to comply with the 
terms of any order related to the Mortgaged Property and issued by any 
federal, state, or municipal department or agency (other than RUS) 
exercising its authority to enforce any Environmental Law; and
    (3) any lien or claim imposed under any Environmental Law related to 
clause (1).
    (c) Within 10 (ten) business days after receiving knowledge of any 
liability, losses, damages, costs, expenses (including but not limited 
to reasonable attorneys' fees and expenses), cause of action, 
administrative proceeding, suit, claim, demand, judgment, lien, 
reportable event including but not limited to the release of a hazardous 
substance, or potential or actual violation or non-compliance arising 
out of or in connection with the Mortgaged Property and any 
Environmental Law, the Mortgagor shall provide each Mortgagee with 
written notice of such matter. With respect to any matter upon which it 
has provided such notice, the Mortgagor

[[Page 199]]

shall immediately take any and all appropriate actions to remedy, cure, 
defend, or otherwise affirmatively respond to the matter.
    SECTION 3.05. Payment of Taxes: The Mortgagor will pay or cause to 
be paid as they become due and payable all taxes, assessments and other 
governmental charges lawfully levied or assessed or imposed upon the 
Mortgaged Property or any part thereof or upon any income therefrom, and 
also (to the extent that such payment will not be contrary to any 
applicable laws) all taxes, assessments and other governmental charges 
lawfully levied, assessed or imposed upon the lien or interest of the 
Noteholders or of the Mortgagees in the Mortgaged Property, so that (to 
the extent aforesaid) the lien of this Mortgage shall at all times be 
wholly preserved at the cost of the Mortgagor and without expense to the 
Mortgagees or the Noteholders; PROVIDED, HOWEVER, that the Mortgagor 
shall not be required to pay and discharge or cause to be paid and 
discharged any such tax, assessment or governmental charge to the extent 
that the amount, applicability or validity thereof shall currently be 
contested in good faith by appropriate proceedings and the Mortgagor 
shall have established and shall maintain adequate reserves on its books 
for the payment of the same.
    SECTION 3.06. Authority to Execute and Deliver Notes, Loan 
Agreements and Mortgage; All Action Taken; Enforceable Obligations: The 
Mortgagor is authorized under its articles of incorporation and bylaws 
[or code of regulations] and all applicable laws and by corporate action 
to execute and deliver the Notes, any Additional Notes, the Loan 
Agreements and this Mortgage. The Notes, the Loan Agreements and this 
Mortgage are, and any Additional Notes and Loan Agreements when executed 
and delivered will be, the valid and enforceable obligations of the 
Mortgagor in accordance with their respective terms.
    SECTION 3.07. Restrictions on Further Encumbrances on Property: 
Except to secure Additional Notes, the Mortgagor will not, without the 
prior written consent of each Mortgagee, create or incur or suffer or 
permit to be created or incurred or to exist any Lien, charge, 
assignment, pledge, mortgage on any of the Mortgaged Property inferior 
to, prior to, or on a parity with the Lien of this Mortgage except for 
the Permitted Encumbrances. Subject to the provisions of Section [3.08], 
or unless approved by each of the Mortgagees, the Mortgagor will 
purchase all materials, equipment and replacements to be incorporated in 
or used in connection with the Mortgaged Property outright and not 
subject to any conditional sales agreement, chattel mortgage, bailment, 
lease or other agreement reserving to the seller any right, title or 
Lien.
    SECTION 3.08. Restrictions On Additional Permitted Debt: The 
Mortgagor shall not incur, assume, guarantee or otherwise become liable 
in respect of any debt for borrowed money and Restricted Rentals 
(including Subordinated Debt) other than the following: (``Permitted 
Debt'')
    (1) Additional Notes issued in compliance with Article II hereof;
    (2) Purchase money indebtedness in non-Utility System property, in 
an amount not exceeding 10% of Net Utility Plant;
    (3) Restricted Rentals in an amount not to exceed 5% of Equity 
during any 12 consecutive calendar month period;
    (4) Unsecured lease obligations incurred in the ordinary course of 
business except Restricted Rentals;
    (5) Debt represented by dividends declared but not paid; and
    (6) Subordinated Indebtedness approved by each Mortgagee.
    PROVIDED, However, that the Mortgagor may incur Permitted Debt 
without the consent of the Mortgagee only so long as there exists no 
Event of Default hereunder and there has been no continuing occurrence 
which with the passage of time and giving of notice could become an 
Event of Default hereunder.
    PROVIDED, FURTHER, by executing this Mortgage any consent of RUS 
that the Mortgagor would otherwise be required to obtain under this 
Section is hereby deemed to be given or waived by RUS by operation of 
law to the extent, but only to the extent, that to impose such a 
requirement of RUS consent would clearly violate existing federal laws 
or government regulations.
    SECTION 3.09. Preservation of Corporate Existence and Franchises: 
The Mortgagor will, so long as any Outstanding Notes exist, take or 
cause to be taken all such action as from time to time may be necessary 
to preserve its corporate existence and to preserve and renew all 
franchises, rights of way, easements, permits, and licenses now or 
hereafter to be granted or upon it conferred the loss of which would 
have a material adverse affect on the Mortgagor's financial condition or 
business. The Mortgagor will comply with all laws, ordinances, 
regulations, orders, decrees and other legal requirements applicable to 
it or its property the violation of which could have a material adverse 
affect on the Mortgagor's financial condition or business.
    SECTION 3.10. Limitations on Consolidations and Mergers: The 
Mortgagor shall not, without the prior written approval of each 
Mortgagee, consolidate or merge with any other corporation or convey or 
transfer the Mortgaged Property substantially as an entirety unless: (1) 
such consolidation, merger, conveyance or transfer shall be on such 
terms as shall fully preserve the lien and security hereof and the 
rights and powers of the

[[Page 200]]

Mortgagees hereunder; (2) the entity formed by such consolidation or 
with which the Mortgagor is merged or the corporation which acquires by 
conveyance or transfer the Mortgaged Property substantially as an 
entirety shall execute and deliver to the Mortgagees a mortgage 
supplemental hereto in recordable form and containing an assumption by 
such successor entity of the due and punctual payment of the principal 
of and interest on all of the Outstanding Notes and the performance and 
observance of every covenant and condition of this Mortgage; (3) 
immediately after giving effect to such transaction, no default 
hereunder shall have occurred and be continuing; (4) the Mortgagor shall 
have delivered to the Mortgagees a certificate of its general manager or 
other officer, in form and substance satisfactory to each of the 
Mortgagees, which shall state that such consolidation, merger, 
conveyance or transfer and such supplemental mortgage comply with this 
subsection and that all conditions precedent herein provided for 
relating to such transaction have been complied with; (5) the Mortgagor 
shall have delivered to the Mortgagees an opinion of counsel in form and 
substance satisfactory to each of the Mortgagees; and (6) the entity 
formed by such consolidation or with which the Mortgagor is merged or 
the corporation which acquires by conveyance or transfer the Mortgaged 
Property substantially as an entirety shall be an entity--(A) having 
Equity equal to at least 27% of its Total Assets on a pro forma basis 
after giving effect to such transaction, (B) having a pro forma TIER of 
not less than 1.25 and a pro forma DSC of not less than 1.25 for each of 
the two preceding calendar years, and (C) having Net Utility Plant equal 
to or greater than 1.0 times its Total Long-Term Debt on a pro forma 
basis. Upon any consolidation or merger or any conveyance or transfer of 
the Mortgaged Property substantially as an entirety in accordance with 
this subsection, the successor entity formed by such consolidation or 
with which the Mortgagor is merged or to which such conveyance or 
transfer is made shall succeed to, and be substituted for, and may 
exercise every right and power of, the Mortgagor under this Mortgage 
with the same effect as if such successor entity had been named as the 
Mortgagor herein.
    SECTION 3.11. Limitations on Transfers of Property: The Mortgagor 
may not, except as provided in [Section 3.10] above, without the prior 
written approval of each Mortgagee, sell, lease or transfer any 
Mortgaged Property to any other person or entity (including any 
subsidiary or affiliate of the Mortgagor), unless (1) there exists no 
Event of Default or occurrence which with the passing of time and the 
giving of notice would be an Event of Default, (2) fair market value is 
obtained for such property, (3) the aggregate value of assets so sold, 
leased or transferred in any 12-month period is less than 10% of Net 
Utility Plant, and (4) the proceeds of such sale, lease or transfer, 
less ordinary and reasonable expenses incident to such transaction, are 
immediately (i) applied as a prepayment of all Notes equally and 
ratably, (ii) in the case of dispositions of equipment, materials or 
scrap, applied to the purchase of other property useful in the 
Mortgagor's utility business, not necessarily of the same kind as the 
property disposed of, which shall forthwith become subject to the Lien 
of the Mortgage, or (iii) applied to the acquisition or construction of 
utility plant.
    SECTION 3.12. Maintenance of Mortgaged Property: (a) So long as the 
Mortgagor holds title to the Mortgaged Property, the Mortgagor will at 
all times maintain and preserve the Mortgaged Property which is used or 
useful in the Mortgagor's business and each and every part and parcel 
thereof in good repair, working order and condition, ordinary wear and 
tear and acts of God excepted, and in compliance with Prudent Utility 
Practice and in compliance with all applicable laws, regulations and 
orders, and will from time to time make all needed and proper repairs, 
renewals and replacements, and useful and proper alterations, additions, 
betterments and improvements, and will, subject to contingencies beyond 
its reasonable control, at all times use all reasonable diligence to 
furnish the consumers served by it through the Mortgaged Property, or 
any part thereof, with an adequate supply of electric power and energy. 
If any substantial part of the Mortgaged Property is leased by the 
Mortgagor to any other party, the lease agreement between the Mortgagor 
and the lessee shall obligate the lessee to comply with the provisions 
of subsections (a) and (b) of this Section in respect of the leased 
facilities and to permit the Mortgagor to operate the leased facilities 
in the event of any failure by the lessee to so comply.
    (b) If in the sole judgement of any Mortgagee, the Mortgaged 
Property is not being maintained and repaired in accordance with 
paragraph (a) of this section, such Mortgagee may send to the Mortgagor 
a written report of needed improvements and the Mortgagor will upon 
receipt of such written report promptly undertake to accomplish such 
improvements.
    (c) The Mortgagor further agrees that upon reasonable written 
request of any Mortgagee, which request together with the requests of 
any other Mortgagees shall be made no more frequently than once every 
three years, the Mortgagor will supply promptly to each Mortgagee a 
certification (hereinafter called the ``Engineer's Certification''), in 
form satisfactory to the requestor, prepared by a professional engineer, 
who shall be satisfactory to the Mortgagees,

[[Page 201]]

as to the condition of the Mortgaged Property. If in the sole judgment 
of any Mortgagee the Engineer's Certification discloses the need for 
improvements to the condition of the Mortgaged Property or any other 
operations of the Mortgagor, such Mortgagee may send to the Mortgagor a 
written report of such improvements and the Mortgagor will upon receipt 
of such written report promptly undertake to accomplish such of these 
improvements as are required by such Mortgagee.
    SECTION 3.13. Insurance; Restoration of Damaged Mortgaged Property: 
(a) The Mortgagor will take out, as the respective risks are incurred, 
and maintain the classes and amounts of insurance in conformance with 
generally accepted utility industry standards for such classes and 
amounts of coverages of utilities of the size and character of the 
Mortgagor and consistent with Prudent Utility Practice.
    (b) The foregoing insurance coverage shall be obtained by means of 
bond and policy forms approved by regulatory authorities having 
jurisdiction, and, with respect to insurance upon any part of the 
Mortgaged Property, shall provide that the insurance shall be payable to 
the Mortgagees as their interests may appear by means of the standard 
mortgagee clause without contribution. Each policy or other contract for 
such insurance shall contain an agreement by the insurer that, 
notwithstanding any right of cancellation reserved to such insurer, such 
policy or contract shall continue in force for at least 30 days after 
written notice to each Mortgagee of cancellation.
    (c) In the event of damage to or the destruction or loss of any 
portion of the Mortgaged Property which is used or useful in the 
Mortgagor's business and which shall be covered by insurance, unless 
each Mortgagee shall otherwise agree, the Mortgagor shall replace or 
restore such damaged, destroyed or lost portion so that such Mortgaged 
Property shall be in substantially the same condition as it was in prior 
to such damage, destruction or loss, and shall apply the proceeds of the 
insurance for that purpose. The Mortgagor shall replace the lost portion 
of such Mortgaged Property or shall commence such restoration promptly 
after such damage, destruction or loss shall have occurred and shall 
complete such replacement or restoration as expeditiously as 
practicable, and shall pay or cause to be paid out of the proceeds of 
such insurance all costs and expenses in connection therewith.
    (d) Sums recovered under any policy or fidelity bond by the 
Mortgagor for a loss of funds advanced under the Notes or recovered by 
any Mortgagee or any Noteholder for any loss under such policy or bond 
shall, unless applied as provided in the preceding paragraph, be used to 
finance construction of utility plant secured or to be secured by this 
Mortgage, or unless otherwise directed by the Mortgagees, be applied to 
the prepayment of the Notes pro rata according to the unpaid principal 
amounts thereof (such prepayments to be applied to such Notes and 
installments thereof as may be designated by the respective Mortgagee at 
the time of any such prepayment), or be used to construct or acquire 
utility plant which will become part of the Mortgaged Property. At the 
request of any Mortgagee, the Mortgagor shall exercise such rights and 
remedies which they may have under such policy or fidelity bond and 
which may be designated by such Mortgagee, and the Mortgagor hereby 
irrevocably appoints each Mortgagee as its agent to exercise such rights 
and remedies under such policy or bond as such Mortgagee may choose, and 
the Mortgagor shall pay all costs and reasonable expenses incurred by 
the Mortgagee in connection with such exercise.
    SECTION 3.14. Mortgagee Right to Expend Money to Protect Mortgaged 
Property: The Mortgagor agrees that any Mortgagee from time to time 
hereunder may, in its sole discretion, after having given 5 Business 
days prior written notice to Mortgagor, but shall not be obligated to, 
advance funds on behalf of Mortgagor, in order to insure the Mortgagor's 
compliance with any covenant, warranty, representation or agreement of 
the Mortgagor made in or pursuant to this Mortgage or any of the Loan 
Agreements, to preserve or protect any right or interest of the 
Mortgagees in the Mortgaged Property or under or pursuant to this 
Mortgage or any of the Loan Agreements, including without limitation, 
the payment of any insurance premiums or taxes and the satisfaction or 
discharge of any judgment or any Lien upon the Mortgaged Property or 
other property or assets of Mortgagor; provided, however, that the 
making of any such advance by or through any Mortgagee shall not 
constitute a waiver by any Mortgagee of any Event of Default with 
respect to which such advance is made nor relieve the Mortgagor of any 
such Event of Default. The Mortgagor shall pay to a Mortgagee upon 
demand all such advances made by such Mortgagee with interest thereon at 
a rate equal to that on the Note having the highest interest rate but in 
no event shall such rate be in excess of the maximum rate permitted by 
applicable law. All such advances shall be included in the obligations 
and secured by the security interest granted hereunder.
    SECTION 3.15. Time Extensions for Payment of Notes: Any Mortgagee 
may, at any time or times in succession without notice to or the consent 
of the Mortgagor, or any other Mortgagee, and upon such terms as such 
Mortgagee may prescribe, grant to any person, firm or corporation who 
shall have become obligated to pay all or any part of the principal of 
(and premium, if any) or interest on any Note held by or indebtedness 
owed to

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such Mortgagee or who may be affected by the lien hereby created, an 
extension of the time for the payment of such principal, (and premium, 
if any) or interest, and after any such extension the Mortgagor will 
remain liable for the payment of such Note or indebtedness to the same 
extent as though it had at the time of such extension consented thereto 
in writing.
    SECTION 3.16. Application of Proceeds from Condemnation: (a) In the 
event that the Mortgaged Property or any part thereof, shall be taken 
under the power of eminent domain, all proceeds and avails therefrom may 
be used to finance construction of utility plant secured or to be 
secured by this Mortgage. Any proceeds not so used shall forthwith be 
applied by the Mortgagor: first, to the ratable payment of any 
indebtedness secured by this Mortgage other than principal of or 
interest on the Notes; second, to the ratable payment of interest which 
shall have accrued on the Notes and be unpaid; third, to the ratable 
payment of or on account of the unpaid principal of the Notes, to such 
installments thereof as may be designated by the respective Mortgagee at 
the time of any such payment; and fourth, the balance shall be paid to 
whomsoever shall be entitled thereto.
    (b) If any part of the Mortgaged Property shall be taken by eminent 
domain, each Mortgagee shall release the property so taken from the 
Mortgaged Property and shall be fully protected in so doing upon being 
furnished with:
    (1) A certificate of a duly authorized officer of the Mortgagor 
requesting such release, describing the property to be released and 
stating that such property has been taken by eminent domain and that all 
conditions precedent herein provided or relating to such release have 
been complied with; and
    (2) an opinion of counsel to the effect that such property has been 
lawfully taken by exercise of the right of eminent domain, that the 
award for such property so taken has become final and that all 
conditions precedent herein provided for relating to such release have 
been complied with.
    SECTION 3.17. Compliance with Loan Agreements; Notice of Amendments 
to and Defaults under Loan Agreements: The Mortgagor will observe and 
perform all of the material covenants, agreements, terms and conditions 
contained in any Loan Agreement entered into in connection with the 
issuance of any of the Notes, as from time to time amended. The 
Mortgagor will send promptly to each Mortgagee notice of any default by 
the Mortgagor under any Loan Agreement and notice of any amendment to 
any Loan Agreement. Upon request of any Mortgagee, the Mortgagor will 
furnish to such Mortgagee single copies of such Loan Agreements and 
amendments thereto as such Mortgagee may request.
    SECTION 3.18. Rights of Way, etc., Necessary in Business: The 
Mortgagor will use its best efforts to obtain all such rights of way, 
easements from landowners and releases from lienors as shall be 
necessary or advisable in the conduct of its business, and, if requested 
by any Mortgagee, deliver to such Mortgagee evidence satisfactory to 
such Mortgagee of the obtaining of such rights of way, easements or 
releases.
    SECTION 3.19. Limitations on Providing Free Electric Services. The 
Mortgagor will not furnish or supply or cause to be furnished or 
supplied any electric power, energy or capacity free of charge to any 
person, firm or corporation, public or private, and the Mortgagor will 
enforce the payment of any and all amounts owning to the Mortgagor by 
reason of the ownership and operation of the Utility System by 
discontinuing such use, output, capacity, or service, or by filing suit 
therefor within 90 days after any such accounts are due, or by both such 
discontinuance and by filing suit.
    SECTION 3.20. Keeping Books; Inspection by Mortgagee: The Mortgagor 
will keep proper books, records and accounts, in which full and correct 
entries shall be made of all dealings or transactions of or in relation 
to the Notes and the Utility Systems, properties, business and affairs 
of the Mortgagor in accordance with the Accounting Requirements. The 
Mortgagor will at any and all times, upon the written request of any 
Mortgagee and at the expense of the Mortgagor, permit such Mortgagee by 
its representatives to inspect the Utility Systems and properties and 
properties, books of account, records, reports and other papers of the 
Mortgagor and to take copies and extracts therefrom, and will afford and 
procure a reasonable opportunity to make any such inspection, and the 
Mortgagor will furnish to each Mortgagee any and all such information as 
such Mortgagee may request, with respect to the performance by the 
Mortgagor of its covenants under this Mortgage, the Notes and the Loan 
Agreements.

                               ARTICLE IV

                     EVENTS OF DEFAULT AND REMEDIES

    SECTION 4.01. Events of Default: Each of the following shall be an 
``Event of Default'' under this Mortgage:
    (a) default shall be made in the payment of any installment of or on 
account of interest on or principal of (or premium, if any associated 
with) any Note or Notes for more than five (5) Business Days after the 
same shall be required to be made;
    (b) default shall be made in the due observance or performance of 
any other of the covenants, conditions or agreements on the part of the 
Mortgagor, in any of the Notes, Loan Agreements or in this Mortgage, and 
such default shall continue for a period of thirty

[[Page 203]]

(30) days after written notice specifying such default and requiring the 
same to be remedied and stating that such notice is a ``Notice of 
Default'' hereunder shall have been given to the Mortgagor by any 
Mortgagee; PROVIDED, HOWEVER that in the case of a default on the terms 
of a Note or Loan Agreement of a particular Mortgagee, the ``Notice of 
Default'' required under this paragraph may only be given by that 
Mortgagee;
    (c) the Mortgagor shall file a petition in bankruptcy or be 
adjudicated a bankrupt or insolvent, or shall make an assignment for the 
benefit of its creditors, or shall consent to the appointment of a 
receiver of itself or of its property, or shall institute proceedings 
for its reorganization or proceedings instituted by others for its 
reorganization shall not be dismissed within sixty (60) days after the 
institution thereof;
    (d) a receiver or liquidator of the Mortgagor or of any substantial 
portion of its property shall be appointed and the order appointing such 
receiver or liquidator shall not be vacated within sixty (60) days after 
the entry thereof;
    (e) the Mortgagor shall forfeit or otherwise be deprived of its 
corporate charter or franchises, permits, easements, or licenses 
required to carry on any material portion of its business;
    (f) a final judgment for an amount of more than $---------- shall be 
entered against the Mortgagor and shall remain unsatisfied or without a 
stay in respect thereof for a period of sixty (60) days; or,
    (g) any material representation or warranty made by the Mortgagor 
herein, in the Loan Agreements or in any certificate or financial 
statement delivered hereunder or thereunder shall prove to be false or 
misleading in any material respect at the time made.
    SECTION 4.02. Acceleration of Maturity; Rescission and Annulment:
    (a) If an Event of Default described in Section [4.01(a)] has 
occurred and is continuing, any Mortgagee upon which such default has 
occurred may declare the principal of all its Notes secured hereunder to 
be due and payable immediately by a notice in writing to the Mortgagor 
and to the other Mortgagees (failure to provide said notice to any other 
Mortgagee shall not affect the validity of any acceleration of the Note 
or Notes by such Mortgagee), and upon such declaration, all unpaid 
principal (and premium, if any) and accrued interest so declared shall 
become due and payable immediately, anything contained herein or in any 
Note or Notes to the contrary notwithstanding.
    (b) If any other Event of Default shall have occurred and be 
continuing, any Mortgagee may declare the principal of all its Notes 
secured hereunder to be due and payable immediately by a notice in 
writing to the Mortgagor and to the other Mortgagees (failure to provide 
said notice to any other Mortgagee shall not affect the validity of any 
acceleration of the Note or Notes by such Mortgagee), and upon such 
declaration, all unpaid principal (and premium, if any) and accrued 
interest so declared shall become due and payable immediately, anything 
contained herein or in any Note or Notes to the contrary 
notwithstanding.
    (c) Upon receipt of actual knowledge of or any notice of 
acceleration by any Mortgagee, any other Mortgagee may declare the 
principal of all of its Notes to be due and payable immediately by a 
notice in writing to the Mortgagor and upon such declaration, all unpaid 
principal (and premium, if any) and accrued interest so declared shall 
become due and payable immediately, anything contained herein or in any 
Note or Notes or Loan Agreements to the contrary notwithstanding.
    (d) If after the unpaid principal of (and premium, if any) and 
accrued interest on any of the Notes shall have been so declared to be 
due and payable, all payments in respect of principal and interest which 
shall have become due and payable by the terms of such Note or Notes 
(other than amounts due as a result of the acceleration of the Notes) 
shall be paid to the respective Mortgagees, and (i) all other defaults 
under the Loan Agreements, the Notes and this Mortgage shall have been 
made good or cured to the satisfaction of the Mortgagees representing at 
least 80% of the aggregate unpaid principal balance of all of the Notes 
then Outstanding, (ii) proceedings to foreclose the lien of this 
Mortgage have not been commenced, and (iii) all reasonable expenses paid 
or incurred by the Mortgagees in connection with the acceleration shall 
have been paid to the respective Mortgagees, then in every such case 
such Mortgagees representing at least 80% of the aggregate unpaid 
principal balance of all of the Notes then Outstanding may by written 
notice to the Mortgagor, for purposes of this Mortgage, annul such 
declaration and waive such default and the consequences thereof, but no 
such waiver shall extend to or affect any subsequent default or impair 
any right consequent thereon.
    SECTION 4.03. Remedies of Mortgagees: If one or more of the Events 
of Default shall occur and be continuing, any Mortgagee personally or by 
attorney, in its or their discretion, may, in so far as not prohibited 
by law:
    (a) take immediate possession of the Mortgaged Property, collect and 
receive all credits, outstanding accounts and bills receivable of the 
Mortgagor and all rents, income, revenues, proceeds and profits 
pertaining to or arising from the Mortgaged Property, or any part 
thereof, whether then past due or accruing thereafter, and issue binding 
receipts therefor; and manage, control and operate

[[Page 204]]

the Mortgaged Property as fully as the Mortgagor might do if in 
possession thereof, including, without limitation, the making of all 
repairs or replacements deemed necessary or advisable by such Mortgagee 
in possession;
    (b) proceed to protect and enforce the rights of all of the 
Mortgagees by suits or actions in equity or at law in any court or 
courts of competent jurisdiction, whether for specific performance of 
any covenant or any agreement contained herein or in aid of the 
execution of any power herein granted or for the foreclosure hereof or 
hereunder or for the sale of the Mortgaged Property, or any part 
thereof, or to collect the debts hereby secured or for the enforcement 
of such other or additional appropriate legal or equitable remedies as 
may be deemed necessary or advisable to protect and enforce the rights 
and remedies herein granted or conferred, and in the event of the 
institution of any such action or suit the Mortgagee instituting such 
action or suit shall have the right to have appointed a receiver of the 
Mortgaged Property and of all proceeds, rents, income, revenues and 
profits pertaining thereto or arising therefrom, whether then past due 
or accruing after the appointment of such receiver, derived, received or 
had from the time of the commencement of such suit or action, and such 
receiver shall have all the usual powers and duties of receivers in like 
and similar cases, to the fullest extent permitted by law, and if 
application shall be made for the appointment of a receiver the 
Mortgagor hereby expressly consents that the court to which such 
application shall be made may make said appointment; and
    (c) sell or cause to be sold all and singular the Mortgaged Property 
or any part thereof, and all right, title, interest, claim and demand of 
the Mortgagor therein or thereto, at public auction at such place in any 
county (or its equivalent locality) in which the property to be sold, or 
any part thereof, is located, at such time and upon such terms as may be 
specified in a notice of sale, which shall state the time when and the 
place where the sale is to be held, shall contain a brief general 
description of the property to be sold, and shall be given by mailing a 
copy thereof to the Mortgagor at least fifteen (15) days prior to the 
date fixed for such sale and by publishing the same once in each week 
for two successive calendar weeks prior to the date of such sale in a 
newspaper of general circulation published in said locality or, if no 
such newspaper is published in such locality, in a newspaper of general 
circulation in such locality, the first such publication to be not less 
than fifteen (15) days nor more than thirty (30) days prior to the date 
fixed for such sale. Any sale to be made under this subparagraph (c) of 
this Section [4.03] may be adjourned from time to time by announcement 
at the time and place appointed for such sale or for such adjourned sale 
or sales, and without further notice or publication the sale may be had 
at the time and place to which the same shall be adjourned; provided, 
however, that in the event another or different notice of sale or 
another or different manner of conducting the same shall be required by 
law the notice of sale shall be given or the sale be conducted, as the 
case may be, in accordance with the applicable provisions of law. The 
expense incurred by any Mortgagee (including, but not limited to, 
receiver's fees, counsel fees, cost of advertisement and agents' 
compensation) in the exercise of any of the remedies provided in this 
Mortgage shall be secured by this Mortgage.
    (d) In the event that a Mortgagee proceeds to enforce remedies under 
this Section, any other Mortgagee may join in such proceedings. In the 
event that the Mortgagees are not in agreement with the method or manner 
of enforcement chosen by any other Mortgagee, the Mortgagees 
representing a majority of the aggregate unpaid principal balance on the 
then Outstanding Notes may direct the method and manner in which 
remedial action will proceed.
    SECTION 4.04. Application of Proceeds from Remedial Actions: Any 
proceeds or funds arising from the exercise of any rights or the 
enforcement of any remedies herein provided after the payment or 
provision for the payment of any and all costs and expenses in 
connection with the exercise of such rights or the enforcement of such 
remedies shall be applied first, to the ratable payment of indebtedness 
hereby secured other than the principal of or interest on the Notes; 
second, to the ratable payment of interest which shall have accrued on 
the Notes and which shall be unpaid; third, to the ratable payment of or 
on account of the unpaid principal of the Notes; and the balance, if 
any, shall be paid to whomsoever shall be entitled thereto.
    SECTION 4.05. Remedies Cumulative; No Election: Every right or 
remedy herein conferred upon or reserved to the Mortgagees or to the 
Noteholders shall be cumulative and shall be in addition to every other 
right and remedy given hereunder or now or hereafter existing at law, or 
in equity, or by statute. The pursuit of any right or remedy shall not 
be construed as an election.
    SECTION 4.06. Waiver of Appraisement Rights; Marshaling of Assets 
Not Required: The Mortgagor, for itself and all who may claim through or 
under it, covenants that it will not at any time insist upon or plead, 
or in any manner whatever claim, or take the benefit or advantage of, 
any appraisement, valuation, stay, extension or redemption laws now or 
hereafter in force in any locality where any of the Mortgaged Property 
may be situated, in order to prevent, delay or hinder

[[Page 205]]

the enforcement or foreclosure of this Mortgage, or the absolute sale of 
the Mortgaged Property, or any part thereof, or the final and absolute 
putting into possession thereof, immediately after such sale, of the 
purchaser or purchasers thereat, and the Mortgagor, for itself and all 
who may claim through or under it, hereby waives the benefit of all such 
laws unless such waiver shall be forbidden by law. Under no 
circumstances shall there be any marshalling of assets upon any 
foreclosure or to other enforcement of this Mortgage.
    SECTION 4.07. Notice of Default: The Mortgagor covenants that it 
will give immediate written notice to each Mortgagee of the occurrence 
of any Event of Default or in the event that any right or remedy 
described in Sections [4.02] and [4.03] hereof is exercised or enforced 
or any action is taken to exercise or enforce any such right or remedy.

          ARTICLE V--POSSESSION UNTIL DEFAULT-DEFEASANCE CLAUSE

    SECTION 5.01. Possession Until Default: Until some one or more of 
the Events of Default shall have happened, the Mortgagor shall be 
suffered and permitted to retain actual possession of the Mortgaged 
Property, and to manage, operate and use the same and any part thereof, 
with the rights and franchises appertaining thereto, and to collect, 
receive, take, use and enjoy the rents, revenues, issues, earnings, 
income, proceeds, products and profits thereof or therefrom, subject to 
the provisions of this Mortgage.
    SECTION 5.02. Defeasance: If the Mortgagor shall pay or cause to be 
paid the whole amount of the principal of (and premium, if any) and 
interest on the Notes at the times and in the manner therein provided, 
and shall also pay or cause to be paid all other sums payable by the 
Mortgagor hereunder or under any Loan Agreement and shall keep and 
perform, all covenants herein required to be kept and performed by it, 
then and in that case, all property, rights and interest hereby conveyed 
or assigned or pledged shall revert to the Mortgagor and the estate, 
right, title and interest of the Mortgagee so paid shall thereupon 
cease, determine and become void and such Mortgagee, in such case, on 
written demand of the Mortgagor but at the Mortgagor's cost and expense, 
shall enter satisfaction of the Mortgage upon the record. In any event, 
each Mortgagee, upon payment in full to such Mortgagee by the Mortgagor 
of all principal of (and premium, if any) and interest on any Note held 
by such Mortgagee and the payment and discharge by the Mortgagor of all 
charges due to such Mortgagee hereunder or under any Loan Agreement, 
shall execute and deliver to the Mortgagor such instrument of 
satisfaction, discharge or release as shall be required by law in the 
circumstances.
    SECTION 5.03. Special Defeasance: Other than any Notes excluded by 
the foregoing Sections 5.01 and 5.02 and Notes which have become due and 
payable, the Mortgagor may cause the Lien of this Mortgage to be 
defeased with respect to any Note for which it has deposited or caused 
to be deposited in trust solely for the purpose an amount sufficient to 
pay and discharge the entire indebtedness on such Note for principal 
(and premium, if any) and interest to the date of maturity thereof; 
PROVIDED, HOWEVER, that depository serving as trustee for such trust 
must first be accepted as such by the Mortgagee whose Notes are being 
defeased under this section. In such event, such a Note will no longer 
be considered to be an Outstanding Note for purposes of this Mortgage 
and the Mortgagee shall execute and deliver to the Mortgagor such 
instrument of satisfaction, discharge or release as shall be required by 
law in the circumstances.

                               ARTICLE VI

                              MISCELLANEOUS

    SECTION 6.01. Property Deemed Real Property: It is hereby declared 
to be the intention of the Mortgagor that any electric generating plant 
or plants and facilities and all electric transmission and distribution 
lines, or other Electric System or Utility System facilities, embraced 
in the Mortgaged Property, including (without limitation) all rights of 
way and easements granted or given to the Mortgagor or obtained by it to 
use real property in connection with the construction, operation or 
maintenance of such plant, lines, facilities or systems, and all other 
property physically attached to any of the foregoing, shall be deemed to 
be real property.
    SECTION 6.02. Mortgage to Bind and Benefit Successors and Assigns: 
All of the covenants, stipulations, promises, undertakings and 
agreements herein contained by or on behalf of the Mortgagor shall bind 
its successors and assigns, whether so specified or not, and all titles, 
rights and remedies hereby granted to or conferred upon the Mortgagees 
shall pass to and inure to the benefit of the successors and assigns of 
the Mortgagees and shall be deemed to be granted or conferred for the 
ratable benefit and security of all who shall from time to time be a 
Mortgagee. The Mortgagor hereby agrees to execute such consents, 
acknowledgements and other instruments as may be reasonably requested by 
any Mortgagee in connection with the assignment, transfer, mortgage, 
hypothecation or pledge of the rights or interests of such Mortgagee 
hereunder or under the Notes or in and to any of the Mortgaged Property.
    SECTION 6.03. Headings: The descriptive headings of the various 
articles and sections

[[Page 206]]

of this Mortgage and also the table of contents were formulated and 
inserted for convenience only and shall not be deemed to affect the 
meaning or construction of any of the provisions hereof.
    SECTION 6.04. Severability Clause: In case any provision of this 
Mortgage or in the Notes or in the Loan Agreements shall be invalid or 
unenforceable, the validity, legality and enforceability of the 
remaining provisions thereof shall not in any way be affected or 
impaired, nor shall any invalidity or unenforceability as to any 
Mortgagee hereunder affect or impair the rights hereunder of any other 
Mortgagee.
    SECTION 6.05. Mortgage Deemed Security Agreement: To the extent that 
any of the property described or referred to in this Mortgage is 
governed by the provisions of the UCC this Mortgage is hereby deemed a 
``security agreement'' under the UCC, and, if so elected by any 
Mortgagee, a ``financing statement'' under the UCC for said security 
agreement. The mailing addresses of the Mortgagor as debtor, and the 
Mortgagees as secured parties are as set forth in Section [1.05] hereof. 
If any Mortgagee so directs the Mortgagor to do so, the Mortgagor shall 
file as a financing statement under the UCC for said security agreement 
and for the benefit of all of the Mortgagees, an instrument other than 
this Mortgage. In such case, the instrument to be filed shall be in a 
form customarily accepted by the filing office as a financing statement. 
PROCEEDS OF COLLATERAL ARE COVERED HEREBY.
    SECTION 6.06. Indemnification by Mortgagor of Mortgagees: The 
Mortgagor agrees to indemnify and save harmless each Mortgagee against 
any liability or damages which any of them may incur or sustain in the 
exercise and performance of their rightful powers and duties hereunder. 
For such reimbursement and indemnity, each Mortgagee shall be secured 
under this Mortgage in the same manner as the Notes and all such 
reimbursements for expense or damage shall be paid to the Mortgagee 
incurring or suffering the same with interest at the rate specified in 
Section [3.14] hereof. The Mortgagor's obligation to indemnify the 
Mortgagees under this section and under Section [3.04] shall survive the 
satisfaction of the Notes, the reconveyance or foreclosure of this 
Mortgage, the acceptance of a deed in lieu of foreclosure, or any 
transfer or abandonment of the Mortgaged Property.
    IN WITNESS WHEREOF, ---------- as Mortgagor, has caused this 
Restated Mortgage and Security Agreement to be signed in its name and 
its corporate seal to be hereunto affixed and attested by its officers 
thereunto duly authorized, and UNITED STATES OF AMERICA, as Mortgagee, 
and as Mortgagee, has caused this Restated Mortgage and Security 
Agreement to be signed in its name by duly authorized persons, all as of 
the day and year first above written.
________________________________________________________________________

(SEAL)

By:_____________________________________________________________________
President

Attest:_________________________________________________________________
Title:__________________________________________________________________

    Executed by the Mortgagor in the presence of:

________________________________________________________________________
________________________________________________________________________

Witnesses

                        UNITED STATES OF AMERICA

By: Director, of the ---------- Rural Utilities Service

    Executed by the United States of America, Mortgagee, in the presence 
of:

________________________________________________________________________
________________________________________________________________________

Witnesses

By:

(SEAL)

Attest:_________________________________________________________________
Title:__________________________________________________________________
    Executed by the above-named Mortgagee in the presence of:

________________________________________________________________________
________________________________________________________________________

Witnesses

                               Schedule A

    1. The Maximum Debt Limit is ----------.
    2. The Original Mortgage as described in the [first] WHEREAS clause 
above is ----------.
    3. The outstanding secured indebtedness described in the [fourth] 
WHEREAS clause above as evidenced by the Original Notes is as follows:

    [Note this requires computation of principal balances, not merely a 
toting up of the original face amounts of the notes. Alternative 
approaches may be used by the parties where legally effective and 
mutually agreeable.]

                      Schedule B--Property Schedule

    The fee and leasehold interests in real property referred to in 
Section Subclause (a) of Granting Clause One are ----------.
    The counties referred to in Subclause (B) of Granting Clause One are 
----------.

                      Schedule C--Excepted Property

STATE OF ----------
COUNTY OF ----------

    On this ------ day of ----------, 19 ----, before me appeared ------
---- and ---------- personally known, by me and having been duly sworn 
by me, did say that they are the

[[Page 207]]

President and Secretary, respectively, of ----------------, a ---------- 
corporation, and that the seal affixed to the foregoing instrument is 
the corporate seal of said corporation, and that said instrument was 
signed and sealed in behalf of said corporation by authority of its 
Board, and said ---------- and ---------- acknowledged that the 
execution of said instrument was a free act and deed of said 
corporation.
    IN WITNESS whereof, I have hereunto set my hand and official seal 
the day and year last above written.
________________________________________________________________________
Notary Public

(Notarial Seal)

    My commission expires:

DISTRICT OF COLUMBIA    )    SS
    The foregoing instrument was acknowledged before me this ----------
---- day of 19----, by ------------------ Director, ---------------- 
Regional Division of the Rural Utilities Service, acknowledging an 
agency of the United States of America, on behalf of the Rural Utilities 
Service, United States of America.
________________________________________________________________________

Notary Public

(Notarial Seal)

    My Commission expires:

COMMONWEALTH OF VIRGINIA    )    SS
    BEFORE ME, a Notary Public, in and for the Commonwealth of Virginia, 
appeared in person ----------------------, signing for the Governor of 
the National Rural Utilities cooperative Finance Corporation, to me 
personally known, and known to be the identical person who subscribed 
the name of said corporation to the foregoing instrument, being by me 
duly sworn, and who stated that she/he is duly authorized to execute the 
foregoing instrument on behalf of said corporation, and further stated 
and acknowledged that she/he executed the foregoing instrument as a free 
and voluntary act and deed of said corporation for the consideration 
therein mentioned and set forth.
    IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal 
this ---------- day of ----------, 19----.
________________________________________________________________________

Notary Public

(Notarial Seal)
    My commission expires:

                    Exhibit A--Manager's Certificate

     Manager's Certificate Required Under Mortgage Section 2.01 for 
                            Additional Notes

    On behalf on ---------------------- [Name of Borrower] (the 
``Borrower''), I ------------------------ hereby certify as follows:
    1. I am the Manager of the Borrower and have been duly authorized to 
deliver this certificate in connection with the Additional Note or Notes 
to be issued on or about ---------------------- [Date Note or Notes are 
to be Signed] pursuant to Section [2.01] of the Mortgage dated --------
--------------.
    2. No Event of Default has occurred and is continuing under the 
Mortgage, or any event which with the giving of notice or lapse of time 
or both would become an Event of Default has occurred and is continuing.
    3. The Additional Notes described in paragraph 1 are for the purpose 
of funding Property Additions being constructed, acquired, procured or 
replaced that are or will become part of the Borrower's Utility System.
    4. The Property Additions referred to in paragraph 3 are Eligible 
Property Additions, i.e. Property Additions acquired or whose 
construction was completed not more than 5 years prior to the issuance 
of additional Notes and Property Additions acquired or whose 
construction is started and/or completed not more than 4 years after 
issuance of the additional Notes, but shall exclude any Property 
Additions financed by any other debt secured under the Mortgage at the 
time additional Notes are issued.
    5. I have reviewed the certificate of the Independent certified 
public accountant also being delivered to each of the Mortgagees 
pursuant to Section [2.01] in connection with the aforesaid Additional 
Note or Notes and concur with the conclusions expressed therein.
    6. Capitalized terms that are used in this certificate but are not 
defined herein have the meanings defined in the Mortgage.
[Signed]________________________________________________________________
[Dated]_________________________________________________________________
[Name]__________________________________________________________________
[Title]_________________________________________________________________
[Name and Address of Borrower]__________________________________________
________________________________________________________________________
________________________________________________________________________

                Exhibit B--Form of Supplemental Mortgage

________________________________________________________________________
    Supplemental Mortgage and Security Agreement, dated as of ----------
, ------, --------, (hereinafter sometimes called this ``Supplemental 
Mortgage'') is made by and between ---------- (hereinafter called the 
``Mortgagor''), a corporation existing under the laws of the State of --
--------, and the UNITED STATES OF AMERICA acting by and through the 
Administrator of the Rural Utilities Service (hereinafter called the 
``Government''), ---------- (Supplemental Lender) (hereinafter called --
--------), a ---------- existing under the laws of ----------, and 
intended to confer rights and benefits on both the Government and ------
---- and ---------- in accordance with

[[Page 208]]

this Supplemental Mortgage and the Original Mortgage (hereinafter 
defined) (the Government and the Supplemental Lenders being herein 
sometimes collectively referred to as the ``Mortgagees'').

                                Recitals

    Whereas, the Mortgagor, the Government and ---------- are parties to 
that certain Restated Mortgage and Security Agreement, as supplemented, 
amended or restated (the ``Original Mortgage'' identified in Schedule 
``A'' of this Mortgage) originally entered into between the Mortgagor, 
the Government acting by and through the Administrator of the Rural 
Utilities Service (hereinafter called ``RUS''), and ----------; and
    Whereas, the Mortgagor deems it necessary to borrow money for its 
corporate purposes and to issue its promissory notes and other debt 
obligations therefor, and to mortgage and pledge its property 
hereinafter described or mentioned to secure the payment of the same, 
and to enter into this Supplemental Mortgage pursuant to which all 
secured debt of the Mortgagor hereunder shall be secured on parity, and 
to add ---------- as a secured party hereunder and under the Original 
Mortgage (the Supplemental Mortgage and the Original Mortgage, as it may 
have been previously amended or supplemented, hereinafter may be called 
collectively the ``RUS Mortgage''); and
    Whereas, the RUS Mortgage, as supplemented hereby, preserves the 
priority of the Original Mortgage for the pro rata benefit of all the 
Mortgagees and secures the payment of all of the Mortgagor's outstanding 
indebtedness as listed in the Instruments Recital of Schedule ``A''; and
    Whereas, all acts necessary to make this Supplemental Mortgage a 
valid and binding legal instrument for the security of such notes and 
obligations, subject to the terms of the RUS Mortgage, have been in all 
respects duly authorized:
    Now, Therefore, This Supplemental Mortgage Witnesseth: That to 
secure the payment of the principal of (and premium, if any) and 
interest on all Notes issued hereunder according to their tenor and 
effect, and the performance of all provisions therein and herein 
contained, and in consideration of the covenants herein contained and 
the purchase or guarantee of Notes by the guarantors or holders thereof, 
the Mortgagor has mortgaged, pledged and granted a continuing security 
interest in, and by these presents does hereby grant, bargain, sell, 
alienate, remise, release, convey, assign, transfer, hypothecate, 
pledge, set over and confirm, pledge and grant a continuing security 
interest in for the purposes hereinafter expressed [other language may 
be required under various state laws], unto the Mortgagees all property, 
rights, privileges and franchises of the Mortgagor of every kind and 
description, real, personal or mixed, tangible and intangible, of the 
kind or nature specifically mentioned herein or any other kind or 
nature, except any Excepted Property set forth on Schedule ``C'' hereof 
owned or hereafter acquired by the Mortgagor (by purchase, 
consolidation, merger, donation, construction, erection or in any other 
way) wherever located, including (without limitation) all and singular 
the following:
    A. All of those fee and leasehold interests in real property set 
forth in Schedule ``B'' hereto, subject in each case to those matters 
set forth in such Schedule; and
    B. All of those fee and leasehold interests in real property set 
forth in Schedule ``B'' of the Original Mortgage or in any restatement, 
amendment or supplement thereto, subject in each case to those matters 
set forth in such Schedule; and
    C. All of the kinds, types or items of property, now owned or 
hereafter acquired, described as Mortgaged Property in the Original 
Mortgage or in any restatement, amendment to supplement thereto as 
Mortgaged Property.
    It is Further Agreed and Covenanted That the Original Mortgage, as 
previously restated, amended or supplemented, and this Supplement shall 
constitute one agreement and the parties hereto shall be bound by all of 
the terms thereof and, without limiting the foregoing.
    1. All capitalized terms not defined herein shall have the meaning 
given in Article I of the Original Mortgage.
    2. This Supplemental Mortgage is one of the Supplemental Mortgages 
contemplated by Article II of the Original Mortgage.
    In Witness Whereof, ---------- as Mortgagor.

[ACKNOWLEDGEMENTS]

     Supplemental Mortgage Schedule A--Maximum Debt Limit and Other 
                               Information

    1. The Maximum Debt Limit is ----------.
    2. The Original Mortgage as described in the first WHEREAS clause 
above is ----------.
    3. The outstanding secured indebtedness described in the third 
WHEREAS clause above is ----------.

           Supplemental Mortgage Schedule B--Property Schedule

    The fee and leasehold interests in real property referred to in 
clause A of the granting clause are ----------.

           Supplemental Mortgage Schedule C--Excepted Property

[60 FR 36888, July 18, 1995, as amended at 60 FR 67410, Dec. 29, 1995; 
65 FR 51749, Aug. 25, 2000]

[[Page 209]]



          Subpart C_Loan Contracts With Distribution Borrowers

    Source: 60 FR 67410, Dec. 29, 1995, unless otherwise noted.



Sec. 1718.100  General.

    (a) Purpose.The purpose of this subpart is to set forth the 
policies, requirements, and procedures governing loan contracts entered 
into between the Rural Utilities Service (RUS) and distribution 
borrowers or, in some cases, other electric borrowers.
    (b) Flexibility for individual circumstances.The intent of this 
subpart is to provide the flexibility to address the different needs and 
different credit risks of individual borrowers, and other special 
circumstances of individual lending situations. The model loan contract 
contained in appendix A of this subpart provides an example of what a 
loan contract with an ``average'' or ``typical'' distribution borrower 
may look like under ``average'' or ``typical'' circumstances. Depending 
on the credit risks and other circumstances of individual loans, RUS may 
execute loan contracts with provisions that are substantially different 
than those set forth in the model. RUS may develop alternative model 
loan contract provisions. If it does, such provisions will be made 
available to the public.
    (c) Resolution of any differences in contractual provisions.If any 
provision of the loan contract appears to be in conflict with provisions 
of the mortgage, the loan contract shall have precedence with respect to 
the contractual relationship between the borrower and RUS with respect 
to such provision. If either document is silent on a matter addressed in 
the other document, the other document shall have precedence with 
respect to the contractual relationship between the borrower and RUS 
with respect to such matter.
    (d) Certain loan contract provisions subject to subsequent 
rulemaking.If a loan contract provision imposes an obligation or 
limitation on the borrower whose interpretation or specification is 
subject to RUS regulations or the discretion of the Administrator or 
RUS, such interpretation or specification shall be subject to subsequent 
rulemaking. Such interpretation or specification of the borrower's 
obligations or limitations may not exceed the authority granted to the 
Administrator or RUS in the loan contract provision.



Sec. 1718.101  Applicability.

    (a) Distribution borrowers.The provisions of this subpart apply to 
all distribution borrowers that obtain a loan or loan guarantee from RUS 
approved on or after January 29, 1996. Distribution borrowers that 
obtain a lien accommodation or any other form of financial assistance 
from RUS after January 29, 1996, may be required to execute a new loan 
contract and new mortgage. Moreover, any distribution borrower may 
submit a request to RUS that a new loan contract and new mortgage be 
executed. Within the constraints of time and staff resources, RUS will 
attempt to honor such requests. Borrowers must first obtain the 
concurrence of any other mortgagees on their existing mortgage before a 
new mortgage can be executed.
    (b) Other borrowers.Borrowers other than distribution borrowers may 
also submit requests for execution of a new loan contract pursuant to 
this subpart and a new mortgage pursuant to subpart B of this part. RUS 
may approve such requests if it determines that such approval is in the 
government's financial interest. If other mortgagees are on the 
borrower's existing mortgage, their concurrence would be required before 
a new mortgage could be executed.



Sec. 1718.102  Definitions.

    For the purposes of this subpart:
    Borrower means any organization that has an outstanding loan made or 
guaranteed by the Rural Utilities Service (RUS) or its predecessor, the 
Rural Electrification Administration, for rural electrification, or that 
is seeking such financing.
    Distribution borrower means a borrower that sells or intends to sell 
electric power and energy at retail in rural areas, the latter being 
defined in 7 CFR 1710.2.
    Loan documents means the mortgage (or other security instrument 
acceptable to RUS), the loan contract, and the promissory note entered 
into between the borrower and RUS.

[[Page 210]]



Sec. 1718.103  Loan contract provisions.

    Loan contracts executed pursuant to this subpart shall contain such 
provisions as RUS determines are appropriate to further the purposes of 
the RE Act and to ensure that the security for the loan will be 
reasonably adequate and that the loan will be repaid according to the 
terms of the promissory note. Such loan contracts will contain 
provisions addressing, but not necessarily limited to, the following 
matters:
    (a) Description of the purpose of the loan;
    (b) Specification of the interest to be charged on the loan, 
including the method for determining the interest rate if it is not 
fixed for the entire term of the loan;
    (c) Specification of the method for repaying the loan principal, 
including the final maturity of the loan;
    (d) The conditions under which the loan may be prepaid before its 
maturity date, including but not limited to requirements regarding the 
prepayment of loans made concurrently by RUS and another secured lender;
    (e) The method for making scheduled payments on the loan;
    (f) Accounting principles and system of accounts, and RUS authority 
to approve the accountant used by the borrower;
    (g) The method and time period for advancing loan funds and the 
conditions precedent to the advance of funds;
    (h) Representations and warranties by the borrower as a condition of 
obtaining the loan, including but not limited to: the legal authority of 
the borrower to enter into the loan contract and operate its system; 
that the loan documents will be a legal, valid and binding obligation of 
the borrower enforceable according to their terms; compliance of the 
borrower in all material respects with all federal, state, and local 
laws, regulations, codes, and orders; existence of any pending or 
threatened legal actions that could have a material adverse effect on 
the borrower's ability to perform its obligations under the loan 
documents; the accuracy and completeness of all information provided by 
the borrower in the loan application and with respect to the loan 
contract, and the existence of any material adverse change since the 
information was provided; and the existence of any material defaults 
under other agreements of the borrower;
    (i) Representations, warranties, and covenants with respect to 
environmental matters;
    (j) Reports and notices required to be submitted to RUS, including 
but not limited to: annual financial statements; notice of defaults; 
notice of litigation; notice of orders or other directives received by 
the borrower from regulatory authorities; notice of any matter that has 
resulted in or may result in a material adverse change in the condition 
or operations of the borrower; and such other information regarding the 
condition or operations of the borrower as RUS may reasonably require;
    (k) Annual written certification that the borrower is in compliance 
with its loan contract, note, mortgage, and any other agreement with 
RUS, or if there has been a default in the fulfillment of any obligation 
under said agreements, specifying each such default and the nature and 
status thereof;
    (l) Requirement that the borrower design and implement rates for 
utility services to meet certain minimum coverage of interest expense 
and/or debt service obligations;
    (m) Requirement that the borrower maintain and preserve its 
mortgaged property in compliance with prudent utility practice and all 
applicable laws, which may include certain specific actions and 
certifications set forth in the borrower's loan contract or mortgage;
    (n) Requirement that the borrower plan, design and construct its 
electric system according to standards and other requirements 
established by RUS, and if directed by the Administrator, that the 
borrower follow RUS planning, design and construction standards and 
requirements for other utility systems constructed by the borrower;
    (o) Limitations on extensions and additions to the borrower's 
electric system without approval by RUS;
    (p) Limitations on contracts and contract amendments that the 
borrower may enter into without approval by RUS;

[[Page 211]]

    (q) Limitations of the transfer of mortgaged property by the 
borrower;
    (r) Limitations on dividends, patronage refunds, and cash 
distributions paid by the borrower;
    (s) Limitations on investments, loans, and guarantees made by the 
borrower;
    (t) Authority of RUS to approve a new general manager and to require 
that an existing general manager be replaced if the borrower is in 
default under its mortgage, loan contract, or any other agreements with 
RUS;
    (u) Description of events of default under the loan contract and the 
remedies available to RUS;
    (v) Applicability of state and federal laws;
    (w) Severability of the individual provisions of the loan documents;
    (x) Matters relating to the assignment of the loan contract;
    (y) Requirements relating to federal laws and regulations, including 
but not limited to the following matters: area coverage for electric 
service; civil rights and equal employment opportunity; access to 
buildings and other matters relating to the handicapped; design and 
construction standards relating to earthquakes; the National 
Environmental Policy Act of 1969 and other environmental laws and 
regulations; flood hazard insurance; debarment and suspension from 
federal assistance programs; and delinquency on federal debt; and
    (z) Special requirements applicable to individual loans, and such 
other provisions as RUS may require to ensure loan repayment and 
reasonably adequate loan security.



Sec. 1718.104  Availability of model loan contract.

    Single copies of the model loan contract (RUS Informational 
Publication 1718 C) are available from the Rural Utilities Service, 
United States Department of Agriculture, Washington, DC 20250-1533. This 
document may be reproduced.



 Sec. Appendix A to Subpart C of Part 1718--Model Form of Loan Contract 
                   for Electric Distribution Borrowers

LOAN CONTRACT
TABLE OF CONTENTS
RECITALS
ARTICLE I--DEFINITIONS
ARTICLE II--REPRESENTATIONS AND WARRANTIES
    Section 2.1. Representations and Warranties.
ARTICLE III--LOAN
    Section 3.1. Advances.
    Section 3.2. Interest Rate and Payment.
    Section 3.3. Prepayment.
ARTICLE IV--CONDITIONS OF LENDING
    Section 4.1. General Conditions.
    Section 4.2. Special Conditions.
ARTICLE V--AFFIRMATIVE COVENANTS
    Section 5.1. Generally.
    Section 5.2. Annual Certificates.
    Section 5.3. Simultaneous Prepayment of Contemporaneous Loans.
    Section 5.4. Rates to Provide Revenue Sufficient to Meet Coverage 
Ratios Requirements.
    Section 5.5. Depreciation Rates.
    Section 5.6. Property Maintenance.
    Section 5.7. Financial Books.
    Section 5.8. Rights of Inspection.
    Section 5.9. Area Coverage.
    Section 5.10. Real Property Acquisition.
    Section 5.11. ``Buy American'' Requirements.
    Section 5.12. Power Requirements Studies.
    Section 5.13. Long Range Engineering Plans and Construction Work 
Plans.
    Section 5.14. Design Standards, Construction Standards, and List of 
Materials.
    Section 5.15. Plans and Specifications.
    Section 5.16. Standard Forms of Construction Contracts, and 
Engineering and Architectural Services Contracts.
    Section 5.17. Contract Bidding Requirements.
    Section 5.18. Nondiscrimination.
    Section 5.19. Financial Reports.
    Section 5.20. Miscellaneous Reports and Notices.
    Section 5.21 Special Construction Account.
    Section 5.22. Additional Affirmative Covenants.
ARTICLE VI--NEGATIVE COVENANTS
    Section 6.1. General.
    Section 6.2. Limitations on System Extensions and Additions.
    Section 6.3. Limitations on Changing Principal Place of Business.
    Section 6.4. Limitations on Employment and Retention of Manager.
    Section 6.5. Limitations on Certain Types of Contracts.
    Section 6.6. Limitations on Mergers and Sale, Lease or Transfer of 
Capital Assets.
    Section 6.7. Limitations on Using non FDIC-insured Depositories.
    Section 6.8. Limitation on Distributions.
    Section 6.9. Limitations on Loans, Investments and Other 
Obligations.
    Section 6.10. Depreciation Rates.
    Section 6.11. Historic Preservation.

[[Page 212]]

    Section 6.12. Rate Reductions.
    Section 6.13. Limitations on Additional Indebtedness.
    Section 6.14. Limitations on Issuing Additional Indebtedness Secured 
Under the Mortgage.
    Section 6.15. Impairment of Contracts Pledged to RUS.
    Section 6.16. Additional Negative Covenants.
ARTICLE VII--DEFAULT
    Section 7.1. Events of Default.
ARTICLE VIII--REMEDIES
    Section 8.1. Generally.
    Section 8.2. Suspension of Advances.
ARTICLE IX--MISCELLANEOUS
    Section 9.1. Notices.
    Section 9.2. Expenses.
    Section 9.3. Late Payments.
    Section 9.4. Filing Fees.
    Section 9.5. No Waiver.
    Section 9.6. Governing Law.
    Section 9.7. Holiday Payments.
    Section 9.8. Rescission.
    Section 9.9. Successors and Assigns.
    Section 9.10. Complete Agreement; Amendments.
    Section 9.11. Headings.
    Section 9.12. Severability.
    Section 9.13. Right of Setoff.
    Section 9.14. Schedules and Exhibits.
    Section 9.15. Prior Loan Documents.
    Section 9.16. Authority of Representatives of RUS.
    Section 9.17. Term.
Schedule 1
Schedule 2--Existing Liens
Schedule 3--Additional Contracts
Exhibit A--Form of Promissory Note
Exhibit B--Equal Opportunity Contract Provisions
Exhibit C-1--Manager's Certificate Required Under Loan Contract
    Section 6.14 for Additional Notes
Exhibit C-2--Manager's Certificate Required Under Loan Contract
    Section 6.14 for Refinancing Notes

                              Loan Contract

    AGREEMENT, dated --------------------, 199----, between ------------
-------- (``Borrower''), a corporation organized and existing under the 
laws of the State of -------------------- (the ``State'') and the UNITED 
STATES OF AMERICA acting by and through the Administrator of the Rural 
Utilities Service (``RUS'').

                                Recitals

    The Borrower has applied to RUS for a loan for the purpose(s) set 
forth in Schedule 1 hereto.
    RUS is willing to make such a loan to the Borrower pursuant to the 
Rural Electrification Act of 1936, as amended, on the terms and 
conditions stated herein.
    THEREFORE, for and in consideration of the premises and the mutual 
covenants hereinafter contained, the parties hereto agree and bind 
themselves as follows:

                         Article I--Definitions

    Capitalized terms that are not defined herein shall have the 
meanings as set forth in the Mortgage. The terms defined herein include 
the plural as well as the singular and the singular as well as the 
plural.
    ``Act'' shall mean the Rural Electrification Act of 1936, as 
amended.
    ``Advance'' or ``Advances'' shall mean advances by RUS to Borrower 
pursuant to the terms and conditions of this Agreement.
    ``Agreement'' shall mean this Loan Contract together with all 
schedules and exhibits and also any subsequent supplements or 
amendments.
    ``Business Day'' shall mean any day that RUS is open for business.
    ``Contemporaneous Loan'' shall mean any loan which the Borrower has 
used to satisfy RUS Regulations or loan conditions requiring that 
supplemental financing be obtained in order to obtain a loan from RUS. 
Any loan used to refinance or refund a Contemporaneous Loan is also 
considered to be a Contemporaneous Loan.
    ``Coverage Ratios'' shall mean, collectively, the following 
financial ratios: (i) TIER of 1.25; (ii) Operating TIER of 1.1; (iii) 
DSC of 1.25; and Operating DSC of 1.1.
    ``Debt Service Coverage Ratio'' (``DSC'') shall have the meaning 
provided in the Mortgage.
    ``Distributions'' shall mean for the Borrower to, in any calendar 
year, declare or pay any dividends, or pay or determine to pay any 
patronage refunds, or retire any patronage capital or make any other 
Cash Distributions, to its members, stockholders or consumers; provided, 
however, that for the purposes of this Agreement a ``Cash Distribution'' 
shall be deemed to include any general cancellation or abatement of 
charges for electric energy or services furnished by the Borrower, but 
not the repayment of a membership fee upon termination of a membership 
or the rebate of an abatement of wholesale power costs previously 
incurred pursuant to an order of a state regulatory authority or a 
wholesale power cost adjustment clause or similar power pricing 
agreement between the Borrower and a power supplier.
    ``Electric System'' shall have the meaning as defined in the 
Mortgage.
    ``Equity'' shall mean the Borrower's total margins and equities 
computed pursuant to RUS Accounting Requirements but excluding any 
Regulatory Created Assets.
    ``Event of Default'' shall have the meaning as defined in Section 
[7.1].
    ``Independent'' when used with respect to any specified person or 
entity means such a

[[Page 213]]

person or entity who (1) is in fact independent, (2) does not have any 
direct financial interest or any material indirect financial interest in 
the Borrower or in any affiliate of the Borrower and (3) is not 
connected with the Borrower as an officer, employee, promoter, 
underwriter, trustee, partner, director or person performing similar 
functions.
    ``Interest Expense'' shall mean the interest expense of the Borrower 
computed pursuant to RUS Accounting Requirements.
    ``Loan'' shall mean the loan described in Article III which is being 
made pursuant to the RUS Commitment in furtherance of the objectives of 
the Act.
    ``Loan Documents'' shall mean, collectively, this Agreement, the 
Mortgage and the Note.
    ``Long-Term Debt'' shall mean the total of all amounts included in 
the long-term debt of the Borrower pursuant to RUS Accounting 
Requirements.
    ``Maturity Date'' shall have the meaning as defined in the Note.
    ``Monthly Payment Date'' shall have the meaning as defined in the 
Note.
    ``Mortgage'' shall have the meaning as described in Schedule 1 
hereto.
    ``Mortgaged Property'' shall have the meaning as defined in the 
Mortgage.
    ``Net Utility Plant'' shall mean the amount constituting the Total 
Utility Plant of the Borrower, less depreciation, computed in accordance 
with RUS Accounting Requirements.
    ``Note'' shall mean a promissory note executed by the Borrower in 
the form of exhibit A hereto, and any note executed and delivered to RUS 
to refund, or in substitution for such a note.
    ``Operating DSC'' or ``ODSC'' shall mean Operating Debt Service 
Coverage calculated as:
[GRAPHIC] [TIFF OMITTED] TR29DE95.004

Where:

All amounts are for the same calendar year and are computed pursuant to 
          RUS Accounting Requirements and RUS form 7;
A=Depreciation and Amortization Expense of the Electric System;
B=Interest Expense on Total Long-Term Debt of the Electric System, 
          except that such Interest Expense shall be increased by \1/3\ 
          of the amount, if any, by which the Restricted Rentals of the 
          Electric System exceed 2 percent of the Mortgagor's Equity;
C=Patronage capital & operating margins of the Electric System, (which 
          equals operating revenue and patronage capital of Electric 
          System operations, less total cost of electric service, 
          including Interest Expense on Total Long-Term Debt of the 
          Electric System) plus cash received from the retirement of 
          patronage capital by suppliers of electric power and by 
          lenders for credit extended for the Electric System; and
D=Debt service billed which equals the sum of all payments of principal 
          and interest required to be made on account of Total Long-Term 
          Debt of the Electric System during the calendar year, plus \1/
          3\ of the amount, if any, by which Restricted Rentals of the 
          Electric System exceed 2 percent of the Mortgagor's Equity.

    ``Operating TIER'' or ``OTIER'' shall mean Operating Times Interest 
Earned Ratio calculated as:
[GRAPHIC] [TIFF OMITTED] TR29DE95.005

Where:
All amounts are for the same calendar year and are computed pursuant to 
          RUS Accounting Requirements and RUS form 7;
A=Interest Expense on Total Long-Term Debt of the Electric System, 
          except that such Interest Expense shall be increased by \1/3\ 
          of the amount, if any, by which Restricted Rentals of the 
          Electric System exceed 2 percent of the Mortgagor's Equity; 
          and
B=Patronage capital & operating margins of the Electric System, (which 
          equals operating revenue and patronage capital of Electric 
          System operations, less total cost of electric service, 
          including Interest Expense on Total Long-Term Debt of the 
          Electric System) plus cash received from the retirement of 
          patronage capital by suppliers of electric power and by 
          lenders for credit extended for the Electric System.

    ``Payment Notice'' shall mean a notice furnished by RUS to Borrower 
that indicates the precise amount of each payment of principal and 
interest and the total amount of each payment.
    ``Permitted Debt'' shall have the meaning as defined in section 
[6.13].
    ``Prior Loan Contracts'' shall have the meaning as defined in 
section 9.15.
    ``Regulatory Created Assets'' shall mean the sum of any amounts 
properly recordable as unrecovered plant and regulatory study costs or 
as other regulatory assets, computed pursuant to RUS Accounting 
Requirements.
    ``RUS Accounting Requirements'' shall mean any system of accounts 
prescribed by RUS Regulations as such RUS Accounting Requirements exist 
at the date of applicability thereof.
    ``RUS Commitment'' shall have the meaning as defined in schedule 1 
hereto.

[[Page 214]]

    ``RUS Regulations'' shall mean regulations of general applicability 
published by RUS from time to time as they exist at the date of 
applicability thereof, and shall also include any regulations of other 
Federal entities which RUS is required by law to implement.
    ``Special Construction Account'' shall have the meaning as defined 
in section 5.21.
    ``Subsidiary'' shall mean a corporation that is a subsidiary of the 
Borrower and subject to the Borrower's control, as defined by RUS 
Accounting Requirements.
    ``Termination Date'' shall have the meaning as defined in the Note.
    ``Times Interest Earned Ratio'' (``TIER'') shall have the meaning 
provided in the Mortgage.
    ``Total Assets'' shall mean an amount constituting the total assets 
of the Borrower as computed pursuant to RUS Accounting Requirements, but 
excluding any Regulatory Created Assets.
    ``Total Utility Plant'' shall mean the amount constituting the total 
utility plant of the Borrower computed in accordance with RUS Accounting 
Requirements.
    ``Utility System'' shall have the meaning as defined in the 
Mortgage.

               Article II--Representations and Warranties

              Section 2.1. Representations and Warranties.

    To induce RUS to make the Loan, and recognizing that RUS is relying 
hereon, the Borrower represents and warrants as follows:
    (a) Organization; Power, Etc. The Borrower: (i) is duly organized, 
validly existing, and in good standing under the laws of its state of 
incorporation; (ii) is duly qualified to do business and is in good 
standing in each jurisdiction in which the transaction of its business 
makes such qualification necessary; (iii) has all requisite corporate 
and legal power to own and operate its assets and to carry on its 
business and to enter into and perform the Loan Documents; (iv) has duly 
and lawfully obtained and maintained all licenses, certificates, 
permits, authorizations, approvals, and the like which are material to 
the conduct of its business or which may be otherwise required by law; 
and (v) is eligible to borrow from RUS.
    (b) Authority. The execution, delivery and performance by the 
Borrower of this Agreement and the other Loan Documents and the 
performance of the transactions contemplated thereby have been duly 
authorized by all necessary corporate action and shall not violate any 
provision of law or of the Articles of Incorporation or By-Laws of the 
Borrower or result in a breach of, or constitute a default under, any 
agreement, indenture or other instrument to which the Borrower is a 
party or by which it may be bound.
    (c) Consents. No consent, permission, authorization, order, or 
license of any governmental authority is necessary in connection with 
the execution, delivery, performance, or enforcement of the Loan 
Documents, except (i) such as have been obtained and are in full force 
and effect and (ii) such as have been disclosed on Schedule 1 hereto.
    (d) Binding Agreement. Each of the Loan Documents is, or when 
executed and delivered shall be, the legal, valid, and binding 
obligation of the Borrower, enforceable in accordance with its terms, 
subject only to limitations on enforceability imposed by applicable 
bankruptcy, insolvency, reorganization, moratorium, or similar laws 
affecting creditors' rights generally.
    (e) Compliance With Laws. The Borrower is in compliance in all 
material respects with all federal, state, and local laws, rules, 
regulations, ordinances, codes, and orders (collectively, ``Laws''), the 
failure to comply with which could have a material adverse effect on the 
condition, financial or otherwise, operations, properties, or business 
of the Borrower, or on the ability of the Borrower to perform its 
obligations under the Loan Documents, except as the Borrower has 
disclosed on Schedule 1 attached hereto.
    (f) Litigation. There are no pending legal, arbitration, or 
governmental actions or proceedings to which the Borrower is a party or 
to which any of its property is subject which, if adversely determined, 
could have a material adverse effect on the condition, financial or 
otherwise, operations, properties, profits or business of the Borrower, 
or on the ability of the Borrower to perform its obligations under the 
Loan Documents, and to the best of the Borrower's knowledge, no such 
actions or proceedings are threatened or contemplated, except as the 
Borrower has disclosed to RUS in writing.
    (g) Title to Property. As to property which is presently included in 
the description of Mortgaged Property, the Borrower holds good and 
marketable title to all of its real property and owns all of its 
personal property free and clear of any Lien except the Liens 
specifically identified on Schedule 2 attached hereto (the ``Existing 
Liens''), and Permitted Encumbrances or Liens permitted under the 
Mortgage.
    (h) Financial Statements; No Material Adverse Change; Etc. All 
financial statements submitted to RUS in connection with the application 
for the Loan or in connection with this Agreement fairly and fully 
present the financial condition of the Borrower and the results of the 
Borrower's operations for the periods covered thereby and are prepared 
in accordance with RUS Accounting Requirements consistently applied. 
Since the dates thereof, there has been no material adverse

[[Page 215]]

change in the financial condition or operations of the Borrower. All 
budgets, projections, feasibility studies, and other documentation 
submitted by the Borrower to RUS are based upon assumptions that are 
reasonable and realistic, and as of the date hereof, no fact has come to 
light, and no event or transaction has occurred, which would cause any 
assumption made therein not to be reasonable or realistic.
    (i) Principal Place of Business; Records. The principal place of 
business and chief executive office of the Borrower is at the address of 
the Borrower shown on Schedule 1 attached hereto.
    (j) Location of Properties. All property owned by the Borrower is 
located in the counties identified in Schedule 1 hereto.
    (k) Subsidiaries. The Borrower has no subsidiary, except as the 
Borrower has disclosed to RUS in writing.
    (l) Defaults Under Other Agreements. The Borrower is not in default 
under any agreement or instrument to which it is a party or under which 
any of its properties are subject that is material to its financial 
condition, operations, properties, profits, or business.
    (m) Survival. All representations and warranties made by the 
Borrower herein or made in any certificate delivered pursuant hereto 
shall survive the making of the Advances and the execution and delivery 
to RUS of the Note.

                            Article III--Loan

                          Section 3.1. Advances

    RUS agrees to make, and the Borrower agrees to request, on the terms 
and conditions of this Agreement, Advances from time to time in an 
aggregate principal amount not to exceed the RUS Commitment. On the 
Termination Date, RUS may stop advancing funds and limit the RUS 
Commitment to the amount advanced prior to such date. The obligation of 
the Borrower to repay the Advances shall be evidenced by the Note in the 
principal amount of the unpaid principal amount of the Advances from 
time to time outstanding. The Borrower shall give RUS written notice of 
the date on which each Advance is to be made.

                 Section 3.2. Interest Rate and Payment

    The Note shall be payable and bear interest as follows:
    (a) Payments and Amortization. Principal shall be amortized in 
accordance with the method stated in Schedule 1 hereto and more fully 
described in the form of Note attached hereto as Exhibit A.
    (b) Application of Payments. All payments which the Borrower sends 
to RUS on any outstanding obligation owed to RUS shall be applied in the 
manner provided in the Borrower's loan documents to which such payments 
relate and in a manner consistent with RUS policies, practices, and 
procedures for obligations that have been similarly classified by RUS.
    (c) Electronic Funds Transfer. Except as otherwise prescribed by 
RUS, the Borrower shall make all payments on the Note utilizing 
electronic funds transfer procedures as specified by RUS.
    (d) Fixed or Variable Rate. The Note shall bear interest at either a 
fixed or variable rate in accordance with the method stated in Schedule 
1 hereto and as more particularly described in the form of Note attached 
hereto as Exhibit A.

                         Section 3.3. Prepayment

    The Borrower has no right to prepay the Note in whole or in part 
except such rights, if any, as are expressly provided for in the Note. 
However, prepayment of the Note (and any penalties) shall be mandatory 
under Section [5.3] hereof if the Borrower has used a Contemporaneous 
Loan in order to qualify for the RUS Commitment, and later prepays the 
Contemporaneous Loan.

                    Article IV--Conditions of Lending

                     Section 4.1. General Conditions

    The obligation of RUS to make any Advance hereunder is subject to 
satisfaction of each of the following conditions precedent on or before 
the date of such Advance:
    (a) Legal Matters. All legal matters incident to the consummation of 
the transactions hereby contemplated shall be satisfactory to counsel 
for RUS.
    (b) Loan Documents. That RUS receive duly executed originals of this 
Agreement and the other Loan Documents.
    (c) Authorization. That RUS receive evidence satisfactory to it that 
all corporate documents and proceedings of the Borrower necessary for 
duly authorizing the execution, delivery and performance of the Loan 
Documents have been obtained and are in full force and effect.
    (d) Approvals. That RUS receive evidence satisfactory to it that all 
consents and approvals (including without limitation the consents 
referred to in Section [2.1(c)] of this Agreement) which are necessary 
for, or required as a condition of, the validity and enforceability of 
each of the Loan Documents have been obtained and are in full force and 
effect.
    (e) Event of Default. That no Event of Default specified in Article 
VII and no event which, with the lapse of time or the notice and lapse 
of time specified in Article VII would become such an Event of Default, 
shall have occurred and be continuing, or shall have occurred after 
giving effect to the Advance on the books of the Borrower.
    (f) Continuing Representations and Warranties. That the 
representations and warranties of the Borrower contained in this 
Agreement

[[Page 216]]

be true and correct on and as of the date of such Advance as though made 
on and as of such date.
    (g) Opinion of Counsel. That RUS receive an opinion of counsel for 
the Borrower (who shall be acceptable to RUS) in form and content 
acceptable to RUS.
    (h) Mortgage Filing. The Mortgage shall have been duly recorded as a 
mortgage on real property, including after-acquired real property, and 
duly filed, recorded or indexed as a security interest in personal 
property, including after acquired personal property, wherever RUS shall 
have requested, all in accordance with applicable law, and the Borrower 
shall have caused satisfactory evidence thereof to be furnished to RUS.
    (i) Wholesale Power Contract. That the Borrower shall not be in 
default under the terms of, or contesting the validity of, any contract 
for sales for resale that has been pledged by any entity to RUS as 
security for the repayment of any loan made or guaranteed by RUS under 
the Act.
    (j) Material Adverse Change. That there has occurred no material 
adverse change in the business or condition, financial or otherwise, of 
the Borrower and nothing has occurred which in the opinion of RUS 
materially and adversely affects the Borrower's ability to meet its 
obligations hereunder.
    (k) Requisitions. That the Borrower shall requisition all Advances 
by submitting its requisition to RUS in form and substance satisfactory 
to RUS. Requisitions shall be made only for the purpose(s) set forth 
herein. The Borrower agrees to apply the proceeds of the Advances in 
accordance with its loan application with such modifications as may be 
mutually agreed.
    (l) Flood Insurance. That for any Advance used in whole or in part 
to finance the construction or acquisition of any building in any area 
identified by the Secretary of Housing and Urban Development pursuant to 
the Flood Disaster Protection Act of 1973 (the ``Flood Insurance Act'') 
or any rules, regulations or orders issued to implement the Flood 
Insurance Act (``Rules'') as any area having special flood hazards, or 
to finance any facilities or materials to be located in any such 
building, or in any building owned or occupied by the Borrower and 
located in such a flood hazard area, the Borrower has submitted 
evidence, in form and substance satisfactory to RUS, or RUS has 
otherwise determined, that (i) the community in which such area is 
located is then participating in the national flood insurance program, 
as required by the Flood Insurance Act and any Rules, and (ii) the 
Borrower has obtained flood insurance coverage with respect to such 
building and contents as may then be required pursuant to the Flood 
Insurance Act and any Rules.
    (m) Compliance With Loan Contract and Mortgage. That the Borrower is 
in material compliance with all provisions of this Agreement and the 
Mortgage.

                     Section 4.2. Special Conditions

    The obligation of RUS to make any Advance hereunder is also subject 
to satisfaction, on or before the date of such Advance, of each of the 
special conditions, if any, listed in Schedule 1 hereto.

                    Article V--Affirmative Covenants

                         Section 5.1. Generally

    Unless otherwise agreed to in writing by RUS, while this Agreement 
is in effect, whether or not any Advance is outstanding, the Borrower 
agrees to duly observe each of the affirmative covenants contained in 
this Article:

                    Section 5.2. Annual Certificates

    (a) Performance Under Loan Documents. The Borrower shall duly 
observe and perform all of its obligations under each of the Loan 
Documents.
    (b) Annual Certification. Within ninety (90) days after the close of 
each calendar year, commencing with the year following the year in which 
the initial Advance hereunder shall have been made, the Borrower shall 
deliver to RUS a written statement signed by its General Manager, 
stating that during such year the Borrower has fulfilled all of its 
obligations under the Loan Documents throughout such year in all 
material respects or, if there has been a default in the fulfillment of 
any such obligations, specifying each such default known to said person 
and the nature and status thereof.

      Section 5.3. Simultaneous Prepayment of Contemporaneous Loans

    If the Borrower shall at any time prepay in whole or in part the 
Contemporaneous Loan described on Schedule 1, the Borrower shall prepay 
the RUS Note correspondingly in order to maintain the ratio that the 
Contemporaneous Loan bears to the RUS Commitment. If the RUS Note calls 
for a prepayment penalty or premium, such amount shall be paid but shall 
not be used in computing the amount needed to be paid to RUS under this 
section to maintain such ratio. In the case of Contemporaneous Loans and 
RUS Notes existing prior to the date of this Agreement under previous 
agreements, prepayments shall be treated as if governed by this section. 
Provided, however, in all cases prepayments associated with refinancing 
or refunding a Contemporaneous Loan pursuant to Article II of the 
Mortgage are not considered to be prepayments for purposes of this 
Agreement if they satisfy each of the following requirements:
    (a) Principal. The principal amount of such refinancing or refunding 
loan is not less than

[[Page 217]]

the amount of loan principal being refinanced; and
    (b) Weighted Average Life. The weighted average life of the 
refinancing or refunding loan is materially equal to the weighted 
average remaining life of the loan being refinanced.

Section 5.4 Rates To Provide Revenue Sufficient to Meet Coverage Ratios 
                              Requirements

    (a) Prospective Requirement. The Borrower shall design and implement 
rates for utility service furnished by it to provide sufficient revenue 
(along with other revenue available to the Borrower in the case of TIER 
and DSC) (i) to pay all fixed and variable expenses when and as due, 
(ii) to provide and maintain reasonable working capital, and (iii) to 
maintain, on an annual basis, the Coverage Ratios. In designing and 
implementing rates under this paragraph, such rates should be capable of 
producing at least enough revenue to meet the requirements of this 
paragraph under the assumption that average weather conditions in the 
Borrower's service territory shall prevail in the future, including 
average Utility System damage and outages due to weather and the related 
costs.
    (b) The average Coverage Ratios achieved by the Borrower in the 2 
best years out of the 3 most recent calendar years must be not less than 
any of the following:

TIER=1.25
DSC=1.25
OTIER=1.1
ODSC=1.1

    (c) Prospective Notice of Change in Rates. The Borrower shall give 
thirty (30) days prior written notice of any proposed change in its 
general rate structure to RUS if RUS has requested in writing that it be 
notified in advance of such changes.
    (d) Routine Reporting of Coverage Ratios. Promptly following the end 
of each calendar year, the Borrower shall report, in writing, to RUS the 
TIER, Operating TIER, DSC and Operating DSC levels which were achieved 
during that calendar year.
    (e) Reporting Non-achievement of Retrospective Requirement. If the 
Borrower fails to achieve the average levels required by paragraph (b) 
of this section, it must promptly notify RUS in writing to that effect.
    (f) Corrective Plans. Within 30 days of sending a notice to RUS 
under paragraph (e) of this section, or of being notified by RUS, 
whichever is earlier, the Borrower in consultation with RUS, shall 
provide a written plan satisfactory to RUS setting forth the actions 
that shall be taken to achieve the required Coverage Ratios on a timely 
basis.
    (g) Noncompliance. Failure to design and implement rates pursuant to 
paragraph (a) of this section and failure to develop and implement the 
plan called for in paragraph (f) of this section shall constitute an 
Event of Default under this Agreement in the event that REA so notifies 
the Borrower to that effect under section [7.1(d)] of this Agreement.

                     Section 5.5. Depreciation Rates

    The Borrower shall adopt as its depreciation rates only those which 
have been previously approved for the Borrower by RUS.

                    Section 5.6. Property Maintenance

    The Borrower shall maintain and preserve its Utility System in 
compliance in all material respects with the provisions of the Mortgage, 
RUS Regulations and all applicable laws.

                      Section 5.7. Financial Books

    The Borrower shall at all times keep, and safely preserve, proper 
books, records and accounts in which full and true entries shall be made 
of all of the dealings, business and affairs of the Borrower and its 
Subsidiaries, in accordance with any applicable RUS Accounting 
Requirements.

                    Section 5.8. Rights of Inspection

    The Borrower shall afford RUS, through its representatives, 
reasonable opportunity, at all times during business hours and upon 
prior notice, to have access to and the right to inspect the Utility 
System, any other property encumbered by the Mortgage, and any or all 
books, records, accounts, invoices, contracts, leases, payrolls, 
canceled checks, statements and other documents and papers of every kind 
belonging to or in the possession of the Borrower or in anyway 
pertaining to its property or business, including its Subsidiaries, if 
any, and to make copies or extracts therefrom.

                       Section 5.9. Area Coverage

    (a) The Borrower shall make diligent effort to extend electric 
service to all unserved persons within the service area of the Borrower 
who (i) desire such service and (ii) meet all reasonable requirements 
established by the Borrower as a condition of such service.
    (b) If economically feasible and reasonable considering the cost of 
providing such service and/or the effects on consumers' rates, such 
service shall be provided, to the maximum extent practicable, at the 
rates and minimum charges established in the Borrower's rate schedules, 
without the payment of such persons, other than seasonal or temporary 
consumers, of a contribution in aid of construction. A seasonal consumer 
is one that demands electric service only during certain seasons of the 
year. A temporary consumer is a seasonal or year-round consumer that 
demands electric service over a period of less than five years.

[[Page 218]]

    (c) The Borrower may assess contributions in aid of construction 
provided such assessments are consistent with this section.

                 Section 5.10. Real Property Acquisition

    In acquiring real property, the Borrower shall comply in all 
material respects with the provisions of the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970 (the 
``Uniform Act''), as amended by the Uniform Relocation Act Amendments of 
1987, and 49 CFR part 24, referenced by 7 CFR part 21, to the extent the 
Uniform Act is applicable to such acquisition.

               Section 5.11. ``Buy American'' Requirements

    The Borrower shall use or cause to be used in connection with the 
expenditures of funds advanced on account of the Loan only such 
unmanufactured articles, materials, and supplies as have been mined or 
produced in the United States or any eligible country, and only such 
manufactured articles, materials, and supplies as have been manufactured 
in the United States or any eligible country substantially all from 
articles, materials, and supplies mined, produced or manufactured, as 
the case may be, in the United States or any eligible country, except to 
the extent RUS shall determine that such use shall be impracticable or 
that the cost thereof shall be unreasonable. For purposes of this 
section, an ``eligible country'' is any country that applies with 
respect to the United States an agreement ensuring reciprocal access for 
United States products and services and United States suppliers to the 
markets of that country, as determined by the United States Trade 
Representative.

                Section 5.12. Power Requirements Studies

    The Borrower shall prepare and use power requirements studies of its 
electric loads and future energy and capacity requirements in 
conformance with RUS Regulations.

 Section 5.13. Long Range Engineering Plans and Construction Work Plans

    The Borrower shall develop, maintain and use up-to-date long-range 
engineering plans and construction work plans in conformance with RUS 
Regulations.

  Section 5.14. Design Standards, Construction Standards, and List of 
                                Materials

    The Borrower shall use design standards, construction standards, and 
lists of acceptable materials in conformance with RUS Regulations.

                 Section 5.15. Plans and Specifications

    The Borrower shall submit plans and specifications for construction 
to RUS for review and approval, in conformance with RUS Regulations, if 
the construction will be financed in whole or in part by a loan made or 
guaranteed by RUS.

Section 5.16. Standard Forms of Construction Contracts, and Engineering 
                  and Architectural Services Contracts

    The Borrower shall use the standard forms of contracts promulgated 
by RUS for construction, procurement, engineering services and 
architectural services in conformance with RUS Regulations, if the 
construction, procurement, or services are being financed in whole or in 
part by a loan being made or guaranteed by RUS.

               Section 5.17. Contract Bidding Requirements

    The Borrower shall follow RUS contract bidding procedures in 
conformance with RUS Regulations when contracting for construction or 
procurement financed in whole or in part by a loan made or guaranteed by 
RUS.

                     Section 5.18. Nondiscrimination

    (a) Equal Opportunity Provisions in Construction Contracts. The 
Borrower shall incorporate or cause to be incorporated into any 
construction contract, as defined in Executive Order 11246 of September 
24, 1965 and implementing regulations, which is paid for in whole or in 
part with funds obtained from RUS or borrowed on the credit of the 
United States pursuant to a grant, contract, loan, insurance or 
guarantee, or undertaken pursuant to any RUS program involving such 
grant, contract, loan, insurance or guarantee, the equal opportunity 
provisions set forth in Exhibit B hereto entitled Equal Opportunity 
Contract Provisions.
    (b) Equal Opportunity Contract Provisions Also Bind the Borrower. 
The Borrower further agrees that it shall be bound by such equal 
opportunity clause in any federally assisted construction work which it 
performs itself other than through the permanent work force directly 
employed by an agency of government.
    (c) Sanctions and Penalties. The Borrower agrees that it shall 
cooperate actively with RUS and the Secretary of Labor in obtaining the 
compliance of contractors and subcontractors with the equal opportunity 
clause and the rules, regulations and relevant orders of the Secretary 
of Labor, that it shall furnish RUS and the Secretary of Labor such 
information as they may require for the supervision of such compliance, 
and that it shall otherwise assist the administering agency in the 
discharge of RUS's primary responsibility for securing compliance. The 
Borrower further agrees that it shall refrain from entering into any 
contract or contract modification subject to Executive Order 11246 with 
a contractor debarred

[[Page 219]]

from, or who has not demonstrated eligibility for, Government contracts 
and federally assisted construction contracts pursuant to Part II, 
Subpart D of Executive Order 11246 and shall carry out such sanctions 
and penalties for violation of the equal opportunity clause as may be 
imposed upon contractors and subcontractors by RUS or the Secretary of 
Labor pursuant to Part II, Subpart D of Executive Order 11246. In 
addition, the Borrower agrees that if it fails or refuses to comply with 
these undertakings RUS may cancel, terminate or suspend in whole or in 
part this contract, may refrain from extending any further assistance 
under any of its programs subject to Executive Order 11246 until 
satisfactory assurance of future compliance has been received from such 
Borrower, or may refer the case to the Department of Justice for 
appropriate legal proceedings.

                     Section 5.19. Financial Reports

    The Borrower shall cause to be prepared and furnished to RUS a full 
and complete annual report of its financial condition and of its 
operations in form and substance satisfactory to RUS, audited and 
certified by Independent certified public accountants satisfactory to 
RUS and accompanied by a report of such audit in form and substance 
satisfactory to RUS. The Borrower shall also furnish to RUS from time to 
time such other reports concerning the financial condition or operations 
of the Borrower, including its Subsidiaries, as RUS may reasonably 
request or RUS Regulations require.

             Section 5.20. Miscellaneous Reports and Notices

    The Borrower shall furnish to RUS:
    (a) Notice of Default. Promptly after becoming aware thereof, notice 
of: (i) the occurrence of any default; and (ii) the receipt of any 
notice given pursuant to the Mortgage with respect to the occurrence of 
any event which with the giving of notice or the passage of time, or 
both, could become an ``Event of Default'' under the Mortgage.
    (b) Notice of Non-Environmental Litigation. Promptly after the 
commencement thereof, notice of the commencement of all actions, suits 
or proceedings before any court, arbitrator, or governmental department, 
commission, board, bureau, agency, or instrumentality affecting the 
Borrower which, if adversely determined, could have a material adverse 
effect on the condition, financial or otherwise, operations, properties 
or business of the Borrower, or on the ability of the Borrower to 
perform its obligations under the Loan Documents.
    (c) Notice of Environmental Litigation. Without limiting the 
provisions of Section [5.20(b)] above, promptly after receipt thereof, 
notice of the receipt of all pleadings, orders, complaints, indictments, 
or other communications alleging a condition that may require the 
Borrower to undertake or to contribute to a cleanup or other response 
under laws relating to environmental protection, or which seek 
penalties, damages, injunctive relief, or criminal sanctions related to 
alleged violations of such laws, or which claim personal injury or 
property damage to any person as a result of environmental factors or 
conditions for which the Borrower is not fully covered by insurance, or 
which, if adversely determined, could have a material adverse effect on 
the condition, financial or otherwise, operations, properties or 
business of the Borrower, or on the ability of the Borrower to perform 
its obligations under the Loan Documents.
    (d) Notice of Change of Place of Business. Promptly in writing, 
notice of any change in location of its principal place of business or 
the office where its records concerning accounts and contract rights are 
kept.
    (e) Regulatory and Other Notices. Promptly after receipt thereof, 
copies of any notices or other communications received from any 
governmental authority with respect to any matter or proceeding which 
could have a material adverse effect on the condition, financial or 
otherwise, operations, properties, or business of the Borrower, or on 
the ability of the Borrower to perform its obligations under the Loan 
Documents.
    (f) Material Adverse Change. Promptly, notice of any matter which 
has resulted or may result in a material adverse change in the 
condition, financial or otherwise, operations, properties, or business 
of the Borrower, or the ability of the Borrower to perform its 
obligations under the Loan Documents.
    (g) Other Information. Such other information regarding the 
condition, financial or otherwise, or operations of the Borrower as RUS 
may, from time to time, reasonably request.

               Section 5.21. Special Construction Account

    The Borrower shall hold all moneys advanced to it by RUS hereunder 
in trust for RUS and shall deposit such moneys promptly after the 
receipt thereof in a bank or banks which meet the requirements of 
Section [6.7] of this Agreement. Any account (hereinafter called 
``Special Construction Account'') in which any such moneys shall be 
deposited shall be insured by the Federal Deposit Insurance Corporation 
or other federal agency acceptable to RUS and shall be designated by the 
corporate name of the Borrower followed by the words ``Trustee, Special 
Construction Account.'' Moneys in any Special Construction Account shall 
be used solely for the construction and operation of the Utility System 
and may be withdrawn only upon checks, drafts, or orders signed on 
behalf of the Borrower and countersigned by an executive officer 
thereof.

[[Page 220]]

             Section 5.22. Additional Affirmative Covenants

    The Borrower also agrees to comply with any additional affirmative 
covenant(s) identified in Schedule 1 hereto.

                     Article VI--Negative Covenants

                          Section 6.1. General

    Unless otherwise agreed to in writing by RUS, while this Agreement 
is in effect, whether or not any Advance is outstanding hereunder, the 
Borrower shall duly observe each of the negative covenants set forth in 
this Article.

       Section 6.2. Limitations on System Extensions and Additions

    (a) The Borrower shall not extend or add to its Electric System 
either by construction or acquisition without the prior written approval 
of RUS if the construction or acquisition is financed or will be 
financed, in whole or in part, by a RUS loan or loan guarantee.
    (b) The Borrower shall not extend or add to its Electric System with 
funds from other sources without prior written approval of RUS in the 
case of:
    (1) Generating facilities if the combined capacity of the facilities 
to be built, procured, or leased, including any future facilities 
included in the planned project, will exceed the lesser of 5 Megawatts 
or 30 percent of the Borrower's Equity;
    (2) Existing electric facilities or systems in service whose 
purchase price, or capitalized value in the case of a lease, exceeds ten 
percent of the Borrower's Net Utility Plant; and
    (3) Any project to serve a customer whose annual Kwh purchases or 
maximum annual Kw demand is projected to exceed 25 percent of the 
Borrower's total Kwh sales or maximum Kw demand in the year immediately 
preceding the acquisition or start of construction of facilities.

    Section 6.3. Limitations on Changing Principal Place of Business

    The Borrower shall not change its principal place of business or 
keep property in a county not shown on a schedule to the Mortgage if the 
change would cause the lien in favor of RUS to become unperfected or 
fail to become perfected, as the case may be, unless, prior thereto, the 
Borrower shall have taken all steps required by law in order to assure 
that the lien in favor of RUS remains or becomes perfected, as the case 
may be, and, in either event, such lien has the priority accorded by the 
Mortgage.

     Section 6.4. Limitations on Employment and Retention of Manager

    At any time any Event of Default, or any occurrence which with the 
passage of time or giving of notice would be an Event of Default, occurs 
and is continuing the Borrower shall not employ any general manager of 
the Utility System or the Electric System or any person exercising 
comparable authority to such a manager unless such employment shall 
first have been approved by RUS. If any Event of Default, or any 
occurrence which with the passage of time or giving of notice would be 
an Event of Default, occurs and is continuing and RUS requests the 
Borrower to terminate the employment of any such manager or person 
exercising comparable authority, or RUS requests the Borrower to 
terminate any contract for operating the Utility System or the Electric 
System, the Borrower shall do so within thirty (30) days after the date 
of such notice. All contracts in respect of the employment of any such 
manager or person exercising comparable authority, or for the operation 
of the Utility System or the Electric System, shall contain provisions 
to permit compliance with the foregoing covenants.

         Section 6.5. Limitations on Certain Types of Contracts

    Without the prior approval of RUS in writing, the Borrower shall not 
enter into any of the following contracts:
    (a) Construction Contracts. Any contract for construction or 
procurement or for architectural and engineering services in connection 
with its Electric System if the project is financed or will be financed, 
in whole or in part, by a RUS loan or loan guarantee;
    (b) Large retail power contracts. Any contract to sell electric 
power and energy for periods exceeding two (2) years if the kWh sales or 
kW demand for any year covered by such contract shall exceed 25 percent 
of the Borrower's total kWh sales or maximum kW demand for the year 
immediately preceding the execution of such contract;
    (c) Wholesale power contracts. Any contract to sell electric power 
or energy for resale and any contract to purchase electric power or 
energy that, in either case, has a term exceeding two (2) years;
    (d) Power supply arrangements. Any interconnection agreement, 
interchange agreement, wheeling agreement, pooling agreement or similar 
power supply arrangement that has a term exceeding two (2) years;
    (e) System management and maintenance contracts. Any contract for 
the management and operation of all or substantially all of its Electric 
System; or
    (f) Other contracts. Any contracts of the type described on Schedule 
3.

   Section 6.6. Limitations on Mergers and Sale, Lease or Transfer of 
                             Capital Assets

    (a) The Borrower shall not consolidate with, or merge, or sell all 
or substantially all of its business or assets, to another entity or 
person except to the extent it is permitted to do so under the Mortgage. 
The exception

[[Page 221]]

contained in this paragraph (a) is subject to the additional limitation 
set forth in paragraph (b) of this section.
    (b) The Borrower shall not, without the written approval of the 
Administrator, voluntarily or involuntarily sell, convey or dispose of 
any portion of its business or assets (including, without limitation, 
any portion of its franchise or service territory) to another entity or 
person if such sale, conveyance or disposition could reasonably be 
expected to 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 RUS.

     Section 6.7. Limitations on Using non-FDIC Insured Depositories

    Without the prior written approval of RUS, the Borrower shall not 
place the proceeds of the Loan or any loan which has been made or 
guaranteed by RUS in the custody of any bank or other depository that is 
not insured by the Federal Deposit Insurance Corporation or other 
federal agency acceptable to RUS.

                Section 6.8. Limitation on Distributions

    Without the prior written approval of RUS, the Borrower shall not in 
any calendar year make any Distributions (exclusive of any Distributions 
to the estates of deceased natural patrons) to its members, stockholders 
or consumers except as follows:
    (a) Equity above 30%. If, after giving effect to any such 
Distribution, the Equity of the Borrower shall be greater than or equal 
to 30% of its Total Assets; or
    (b) Equity above 20%. If, after giving effect to any such 
Distribution, the aggregate of all Distributions made during the 
calendar year when added to such Distribution shall be less than or 
equal to 25% of the prior year's margins.
    Provided however, that in no event shall the Borrower make any 
Distributions if there is unpaid when due any installment of principal 
of (premium, if any) or interest on its Notes, if the Borrower is 
otherwise in default hereunder or if, after giving effect to any such 
Distribution, the Borrower's current and accrued assets would be less 
than its current and accrued liabilities.

  Section 6.9. Limitations on Loans, Investments and Other Obligations

    The Borrower shall not make any loan or advance to, or make any 
investment in, or purchase or make any commitment to purchase any stock, 
bonds, notes or other securities of, or guaranty, assume or otherwise 
become obligated or liable with respect to the obligations of, any other 
person, firm or corporation, except as permitted by the Act and RUS 
Regulations.

                    Section 6.10. Depreciation Rates

    The Borrower shall not file with or submit for approval of 
regulatory bodies any proposed depreciation rates which are inconsistent 
with RUS Regulations.

                   Section 6.11. Historic Preservation

    The Borrower shall not, without approval in writing by RUS, use any 
Advance to construct any facilities which shall involve any district, 
site, building, structure or object which is included in, or eligible 
for inclusion in, the National Register of Historic Places maintained by 
the Secretary of the Interior pursuant to the Historic Sites Act of 1935 
and the National Historic Preservation Act of 1966.

                      Section 6.12. Rate Reductions

    Without the prior written approval of RUS, the Borrower shall not 
decrease its rates if it has failed to achieve all of the Coverage 
Ratios for the calendar year prior to such reduction.

          Section 6.13. Limitations on Additional Indebtedness

    Except as expressly permitted by Article II of the Mortgage and 
subject to the further limitations expressed in the next section, the 
Borrower shall not incur, assume, guarantee or otherwise become liable 
in respect of any debt for borrowed money and Restricted Rentals 
(including Subordinated Indebtedness) other than the following: 
(``Permitted Debt'')
    (a) Additional Notes issued in compliance with Article II of the 
Mortgage;
    (b) Purchase money indebtedness in non-Utility System property, in 
an amount not exceeding 10% of Net Utility Plant;
    (c) Restricted Rentals in an amount not to exceed 5% of Equity 
during any 12 consecutive calendar month period;
    (d) Unsecured lease obligations incurred in the ordinary course of 
business except Restricted Rentals;
    (e) Unsecured indebtedness for borrowed money, except when the 
aggregate amount of such indebtedness exceeds 15% of Net Utility Plant 
and after giving effect to such unsecured indebtedness the Borrower's 
Equity is less than 30% of its Total Assets;
    (f) Debt represented by dividends declared but not paid; and
    (g) Subordinated Indebtedness approved by RUS.
    PROVIDED, However, that the Borrower may incur Permitted Debt 
without the consent of RUS only so long as there exists no Event of 
Default hereunder and there has been no continuing occurrence which with 
the passage of time and giving of notice could become an Event of 
Default hereunder.

[[Page 222]]

    PROVIDED, FURTHER, by executing this Agreement any consent of RUS 
that the Borrower would otherwise be required to obtain under this 
Section is hereby deemed to be given or waived by RUS by operation of 
law to the extent, but only to the extent, that to impose such a 
requirement of RUS consent would clearly violate federal laws or RUS 
Regulations.

  Section 6.14. Limitations on Issuing Additional Indebtedness Secured 
                           Under the Mortgage

    (a) The Borrower shall not issue any Additional Notes under the 
Mortgage to finance Eligible Property Additions without the prior 
written consent of RUS unless the following additional requirements are 
met in addition to the requirements set forth in the Mortgage for 
issuing Additional Notes:
    (1) The weighted average life of the loan evidenced by such Notes 
does not exceed the weighted average of the expected remaining useful 
lives of the assets being financed;
    (2) The principal of the loan evidenced by such Notes is amortized 
at a rate that shall yield a weighted average life that is not greater 
than the weighted average life that would result from level payments of 
principal and interest; and
    (3) The principal of the loan being evidenced by such Notes has a 
maturity of not less than 5 years.
    (b) The Borrower shall not issue any Additional Notes under the 
Mortgage to refund or refinance Notes without the prior written consent 
of RUS unless, in addition to the requirements set forth in the Mortgage 
for issuing Refunding or Refinancing Notes, the weighted average life of 
any such Refunding or Refinancing Notes is not greater than the weighted 
average remaining life of the Notes being refinanced.
    (c) Any request for consent from RUS under this section, shall be 
accompanied by a certificate of the Borrower's manager substantially in 
the form attached to this Agreement as Exhibit C-1 in the case of Notes 
being issued under Section [2.01] of the Mortgage and C-2 in the case of 
Notes being issued under Section [2.02] of the Mortgage.

          Section 6.15. Impairment of Contracts Pledged to RUS

    The Borrower shall not materially breach any obligation to be paid 
or performed by the Borrower on any contract, or take any action which 
is likely to materially impair the value of any contract, which has been 
pledged as security to RUS by the Borrower or any other entity.

               Section 6.16. Additional Negative Covenants

    The Borrower also agrees to comply with any additional negative 
covenant(s) identified in Schedule 1 hereto.

                          Article VII--Default

                     Section 7.1. Events of Default

    The following shall be Events of Default under this Agreement:
    (a) Representations and Warranties. Any representation or warranty 
made by the Borrower in Article II hereof or any certificate furnished 
to RUS hereunder or under the Mortgage shall prove to have been 
incorrect in any material respect at the time made and shall at the time 
in question be untrue or incorrect in any material respect and remain 
uncured;
    (b) Payment. Default shall be made in the payment of or on account 
of interest on or principal of the Note when and as the same shall be 
due and payable, whether by acceleration or otherwise, which shall 
remain unsatisfied for five (5) Business Days;
    (c) Borrowing Under the Mortgage in Violation of the Loan Contract. 
Default by the Borrower in the observance or performance of any covenant 
or agreement contained in Section 6.14 of this Agreement.
    (d) Other Covenants. Default by the Borrower in the observance or 
performance of any other covenant or agreement contained in any of the 
Loan Documents, which shall remain unremedied for 30 calendar days after 
written notice thereof shall have been given to the Borrower by RUS;
    (e) Corporate Existence. The Borrower shall forfeit or otherwise be 
deprived of its corporate charter, franchises, permits, easements, 
consents or licenses required to carry on any material portion of its 
business;
    (f) Other Obligations. Default by the Borrower in the payment of any 
obligation, whether direct or contingent, for borrowed money or in the 
performance or observance of the terms of any instrument pursuant to 
which such obligation was created or securing such obligation;
    (g) Bankruptcy. A court having jurisdiction in the premises shall 
enter a decree or order for relief in respect of the Borrower in an 
involuntary case under any applicable bankruptcy, insolvency or other 
similar law now or hereafter in effect, or appointing a receiver, 
liquidator, assignee, custodian, trustee, sequestrator or similar 
official, or ordering the winding up or liquidation of its affairs, and 
such decree or order shall remain unstayed and in effect for a period of 
ninety (90) consecutive days or the Borrower shall commence a voluntary 
case under any applicable bankruptcy, insolvency or other similar law 
now or hereafter in effect, or under any such law, or consent to the 
appointment or taking possession by a receiver, liquidator, assignee, 
custodian or trustee, of a substantial part of its property, or make any 
general assignment for the benefit of creditors; and

[[Page 223]]

    (h) Dissolution or Liquidation. Other than as provided in the 
immediately preceding subsection, the dissolution or liquidation of the 
Borrower, or failure by the Borrower promptly to forestall or remove any 
execution, garnishment or attachment of such consequence as shall impair 
its ability to continue its business or fulfill its obligations and such 
execution, garnishment or attachment shall not be vacated within 30 
days. The term ``dissolution or liquidation of the Borrower'', as used 
in this subsection, shall not be construed to include the cessation of 
the corporate existence of the Borrower resulting either from a merger 
or consolidation of the Borrower into or with another corporation 
following a transfer of all or substantially all its assets as an 
entirety, under the conditions permitting such actions.

                         Article VIII--Remedies

                         Section 8.1. Generally

    Upon the occurrence of an Event of Default, then RUS may pursue all 
rights and remedies available to RUS that are contemplated by this 
Agreement or the Mortgage in the manner, upon the conditions, and with 
the effect provided in this Agreement or the Mortgage, including, but 
not limited to, a suit for specific performance, injunctive relief or 
damages. Nothing herein shall limit the right of RUS to pursue all 
rights and remedies available to a creditor following the occurrence of 
an Event of Default listed in Article VII hereof. Each right, power and 
remedy of RUS shall be cumulative and concurrent, and recourse to one or 
more rights or remedies shall not constitute a waiver of any other 
right, power or remedy.

                   Section 8.2. Suspension of Advances

    In addition to the rights, powers and remedies referred to in the 
immediately preceding section, RUS may, in its absolute discretion, 
suspend making Advances hereunder if (i) any Event of Default, or any 
occurrence which with the passage of time or giving of notice would be 
an Event of Default, occurs and is continuing; (ii) there has occurred a 
change in the business or condition, financial or otherwise, of the 
Borrower which in the opinion of RUS materially and adversely affects 
the Borrower's ability to meet its obligations under the Loan Documents, 
or (iii) RUS is authorized to do so under RUS Regulations.

                        Article IX--Miscellaneous

                          Section 9.1. Notices

    All notices, requests and other communications provided for herein 
including, without limitation, any modifications of, or waivers, 
requests or consents under, this Agreement shall be given or made in 
writing (including, without limitation, by telecopy) and delivered to 
the intended recipient at the ``Address for Notices'' specified below; 
or, as to any party, at such other address as shall be designated by 
such party in a notice to each other party. Except as otherwise provided 
in this Agreement, all such communications shall be deemed to have been 
duly given when transmitted by telecopier or personally delivered or, in 
the case of a mailed notice, upon receipt, in each case given or 
addressed as provided for herein. The Address for Notices of the 
respective parties are as follows:

Rural Utilities Service, United States Department of Agriculture, 
Washington, DC 20250-1500
Fax: (202) xxx-xxxx

Attention: [Administrator]
The Borrower:
The address set forth in Schedule 1 hereto

                          Section 9.2. Expenses

    To the extent allowed by law, the Borrower shall pay all costs and 
expenses of RUS, including reasonable fees of counsel, incurred in 
connection with the enforcement of the Loan Documents or with the 
preparation for such enforcement if RUS has reasonable grounds to 
believe that such enforcement may be necessary.

                       Section 9.3. Late Payments

    If payment of any amount due hereunder is not received at the United 
States Treasury in Washington, DC, or such other location as RUS may 
designate to the Borrower within five (5) Business Days after the due 
date thereof or such other time period as RUS may prescribe from time to 
time in its policies of general application in connection with any late 
payment charge (such unpaid amount being herein called the ``delinquent 
amount'', and the period beginning after such due date until payment of 
the delinquent amount being herein called the ``late-payment period''), 
the Borrower shall pay to RUS, in addition to all other amounts due 
under the terms of the Note, the Mortgage and this Agreement, any late-
payment charge as may be fixed by RUS Regulations from time to time on 
the delinquent amount for the late-payment period.

                        Section 9.4. Filing Fees

    To the extent permitted by law, the Borrower agrees to pay all 
expenses of RUS (including the fees and expenses of its counsel) in 
connection with the filing or recordation of all financing statements 
and instruments as may be required by RUS in connection with this 
Agreement, including, without limitation, all documentary stamps, 
recordation and transfer taxes and other costs and taxes incident to 
recordation of any document or

[[Page 224]]

instrument in connection herewith. Borrower agrees to save harmless and 
indemnify RUS from and against any liability resulting from the failure 
to pay any required documentary stamps, recordation and transfer taxes, 
recording costs, or any other expenses incurred by RUS in connection 
with this Agreement. The provisions of this subsection shall survive the 
execution and delivery of this Agreement and the payment of all other 
amounts due hereunder or due on the Note.

                         Section 9.5. No Waiver

    No failure on the part of RUS to exercise, and no delay in 
exercising, any right hereunder shall operate as a waiver thereof nor 
shall any single or partial exercise by RUS of any right hereunder 
preclude any other or further exercise thereof or the exercise of any 
other right.

                       Section 9.6. Governing Law

    EXCEPT TO THE EXTENT GOVERNED BY APPLICABLE FEDERAL LAW, THE LOAN 
DOCUMENTS SHALL BE DEEMED TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE 
WITH, THE LAWS OF THE STATE [IN WHICH THE BORROWER IS INCORPORATED].

                      Section 9.7. Holiday Payments

    If any payment to be made by the Borrower hereunder shall become due 
on a day which is not a Business Day, such payment shall be made on the 
next succeeding Business Day and such extension of time shall be 
included in computing any interest in respect of such payment.

                         Section 9.8. Rescission

    The Borrower may elect not to borrow the RUS Commitment in which 
event RUS shall release the Borrower from its obligations hereunder, 
provided the Borrower complies with such terms and conditions as RUS may 
impose for such release and provided also that if the Borrower has any 
remaining obligations to RUS for loans made or guaranteed by RUS under 
any Prior Loan Contracts, RUS may, under Section [9.15] of this Loan 
Contract, withhold such release until all such obligations have been 
satisfied and discharged.

                   Section 9.9. Successors and Assigns

    This Agreement shall be binding upon and inure to the benefit of the 
Borrower and RUS and their respective successors and assigns, except 
that the Borrower may not assign or transfer its rights or obligations 
hereunder without the prior written consent of RUS.

              Section 9.10. Complete Agreement; Amendments

    Subject to RUS Regulations, this Agreement and the other Loan 
Documents are intended by the parties to be a complete and final 
expression of their agreement. However, RUS reserves the right to waive 
its rights to compliance with any provision of this Agreement and the 
other Loan Documents. No amendment, modification, or waiver of any 
provision hereof or thereof, and no consent to any departure of the 
Borrower herefrom or therefrom, shall be effective unless approved in 
writing by RUS in the form of either a RUS Regulation or other writing 
signed by or on behalf of RUS, and then such waiver or consent shall be 
effective only in the specific instance and for the specific purpose for 
which given.

                         Section 9.11. Headings

    The headings and sub-headings contained in the titling of this 
Agreement are intended to be used for convenience only and do not 
constitute part of this Agreement.

                       Section 9.12. Severability

    If any term, provision or condition, or any part thereof, of this 
Agreement or the Mortgage shall for any reason be found or held invalid 
or unenforceable by any governmental agency or court of competent 
jurisdiction, such invalidity or unenforceability shall not affect the 
remainder of such term, provision or condition nor any other term, 
provision or condition, and this Agreement, the Note, and the Mortgage 
shall survive and be construed as if such invalid or unenforceable term, 
provision or condition had not been contained therein.

                      Section 9.13. Right of Setoff

    Upon the occurrence and during the continuance of any Event of 
Default, RUS is hereby authorized at any time and from time to time, 
without prior notice to the Borrower, to exercise rights of setoff or 
recoupment and apply any and all amounts held or hereafter held, by RUS 
or owed to the Borrower or for the credit or account of the Borrower 
against any and all of the obligations of the Borrower now or hereafter 
existing hereunder or under the Note. RUS agrees to notify the Borrower 
promptly after any such setoff or recoupment and the application 
thereof, provided that the failure to give such notice shall not affect 
the validity of such setoff, recoupment or application. The rights of 
RUS under this section are in addition to any other rights and remedies 
(including other rights of setoff or recoupment) which RUS may have. 
Borrower waives all rights of setoff, deduction, recoupment or 
counterclaim.

                  Section 9.14. Schedules and Exhibits

    Each Schedule and Exhibit attached hereto and referred to herein is 
each an integral part of this Agreement.

[[Page 225]]

                   Section 9.15. Prior Loan Contracts

    It is understood and agreed that with respect to all loan agreements 
previously entered into by and between RUS and the Borrower (hereinafter 
being referred to as ``Prior Loan Contracts'') the Borrower shall be 
required, after the date hereof, to meet affirmative and negative 
covenants as set forth in this Agreement rather than those set forth in 
the Prior Loan Contracts. In addition, any remaining obligation of RUS 
to make additional advances on promissory notes of the Borrower that 
have been previously delivered to RUS under Prior Loan Contracts shall, 
after the date hereof, be subject to the conditions set forth in this 
Agreement. In the event of any conflict between any provision set forth 
in a Prior Loan Contract and any provision in this Agreement, the 
requirements as set forth in this Agreement shall apply. Nothing in this 
section shall, however, eliminate or modify any special condition, 
special affirmative covenant or special negative covenant, if any, 
unless specifically agreed to in writing by RUS.

            Section 9.16. Authority of Representatives of RUS

    In the case of any consent, approval or waiver from RUS that is 
required under this Agreement or any other Loan Document, such consent, 
approval or waiver must be in writing and signed by an authorized RUS 
representative to be effective. As used in this section, ``authorized 
RUS representative'' means the Administrator of RUS, and also means a 
person to whom the Administrator has officially delegated specific or 
general authority to take the action in question.

                           Section 9.17. Term

    This Agreement shall remain in effect until one of the following two 
events has occurred:
    (a) The Borrower and RUS replace this Agreement with another written 
agreement; or
    (b) All of the Borrower's obligations under the prior loan contracts 
and this Agreement have been discharged and paid.
    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to 
be duly executed as of the day and year first above written.

________________________________________________________________________
(Name of Borrower)

(SEAL)

By______________________________________________________________________
President

Attest:_________________________________________________________________

Secretary

                         RURAL UTILITIES SERVICE

By______________________________________________________________________
Administrator

                               Schedule 1

[citations subject to change]

    1. The purpose of this loan is -------------------- and such other 
purposes that RUS may agree to in writing in order to carry out the 
purposes of the Rural Electrification Act.
    2. The Mortgage shall mean the Restated Mortgage and Security 
Agreement, dated as of --------------------, between the Borrower and 
RUS, as it may have been or shall be supplemented, amended, 
consolidated, or restated from time to time.
    3. The governmental authority referred to in Section [2.1(c)] is --
------------------.
    4. The exception being taken to the representations in Section 
[2.1(e)] concerning material compliance with laws is as follows: ------
--------------.
    5. The litigation referred to in Section [2.1(f)] is described as 
follows: --------------------.
    6. The date of the Borrower's financial information referred to in 
Section [2.1(h)] is --------------------.
    7. The principal place of business of the Borrower referred to in 
Section [2.1(i)] is --------------------.
    8. All of the property of the Borrower is located in the counties of 
--------------------.
    9. The subsidiary (or subsidiaries) referred to in Section [2.1(k)] 
is (are): --------------------.
    10. The Contemporaneous Loan referred to in Section [5.3] is 
described as follows: --------------------.

Lender:_________________________________________________________________

Amount:_________________________________________________________________

Year of Final Maturity:_________________________________________________

    11. The RUS Commitment referred to in the definitions means a loan 
in the principal amount of $---------------- which is being made by RUS 
to the Borrower at the ------ Hardship Rate ------ Municipal Rate (CHECK 
ONE) pursuant to the Rural Electrification Act and RUS Regulations.
    12. Amortization of Advance shall be based upon the method indicated 
below:

------ level principal

------ level debt service

------ other

    13. The SPECIAL condition(s) referred to in Section [4.2] is (are): 
--------------------.
    14. The additional AFFIRMATIVE covenant(s) referred to in Section 
[5.22] is (are) as follows: ----------------. 15. The additional 
NEGATIVE covenant(s) referred to in Section [6.16] is (are) as follows: 
--------------------.
    16. The address of the Borrower referred to in Section [9.1]. is --
------------------.

[[Page 226]]

                       Schedule 2--Existing Liens

    The Existing Liens referred to in Section [2.1(g)] are as follows:

[INSERT DESCRIPTION OF EXISTING LIENS, IF ANY, HERE]

                    Schedule 3--Additional Contracts

    The additional contracts referred to in Section [6.5(f)] are 
described as follows:

[INSERT LIST OF ANY ADDITIONAL CONTRACTS HERE]

                   Exhibit A--Form of Promissory Note

[INSERT EITHER MUNICIPAL or HARDSHIP RATE PROMISSORY NOTE FORM HERE]

            Exhibit B--Equal Opportunity Contract Provisions

    During the performance of this contract, the contractor agrees as 
follows:
    (a) The contractor shall not discriminate against any employee or 
applicant for employment because of race, color, religion, sex or 
national origin. The contractor shall take affirmative action to ensure 
that applicants are employed, and that employees are treated during 
employment without regard to their race, color, religion, sex or 
national origin. Such action shall include, but not be limited to the 
following: employment, upgrading, demotion or transfer, recruitment or 
recruitment advertising; layoff or termination; rates of pay or other 
forms of compensation; and selection for training, including 
apprenticeship. The contractor agrees to post in conspicuous places, 
available to employees and applicants for employment, notices to be 
provided setting forth the provisions of this nondiscrimination clause.
    (b) The contractor shall, in all solicitations or advertisements for 
employees placed by or on behalf of the contractor, state that all 
qualified applicants shall receive consideration for employment without 
regard to race, color, religion, sex or national origin.
    (c) The contractor shall send to each labor union or representative 
of workers with which he has a collective bargaining agreement or other 
contract or understanding, a notice to be provided advising the said 
labor union or workers' representative of the contractor's commitments 
under this section, and shall post copies of the notice in conspicuous 
places available to employees and applicants for employment.
    (d) The contractor shall comply with all provisions of Executive 
Order 11246 of September 24, 1965, and of the rules, regulations and 
relevant orders of the Secretary of Labor.
    (e) The contractor shall furnish all information and reports 
required by Executive Order 11246 of September 24, 1965, and by the 
rules, regulations and orders of the Secretary of Labor, or pursuant 
thereto, and shall permit access to his books, records and accounts by 
the administering agency and the Secretary of Labor for purposes of 
investigation to ascertain compliances with such rules, regulations and 
orders.
    (f) In the event of the contractor's noncompliance with the non-
discrimination clauses of this contract or with any of the said rules, 
regulations or orders, this contract may be cancelled, terminated or 
suspended in whole or in part and the contractor may be declared 
ineligible for further Government contracts or federally assisted 
construction contracts in accordance with procedures authorized in 
Executive Order 11246 of September 24, 1965, and such other sanctions 
may be imposed and remedies invoked as provided in said Executive Order 
or by rule, regulation or order of the Secretary of Labor, or as 
otherwise provided by law.
    (g) The contractor shall include the provisions of paragraphs (a) 
through (g) in every subcontract or purchase order unless exempted by 
rules, regulations or orders of the Secretary of Labor issued pursuant 
to section 204 of Executive Order 11246, dated September 24, 1965, so 
that such provisions shall be binding upon each subcontractor or vendor. 
The contractor shall take such action with respect to any subcontract or 
purchase order as the administering agency may direct as a means of 
enforcing such provisions, including sanctions for noncompliance: 
Provided, however, that in the event a contractor becomes involved in, 
or is threatened with, litigation with a subcontractor or vendor as a 
result of such direction by the agency, the contractor may request the 
United States to enter into such litigation to protect the interests of 
the United States.

Exhibit C-1--Manager's Certificate Required Under Loan Contract Section 
                        6.14 for Additional Notes

    On behalf on -------------------- [Name of Borrower] --------------
------ I hereby certify that the Additional Note or Notes to be issued 
under Section [2.01] of the Mortgage on or about -------------------- 
[Date Note or Notes are to be Signed] -------------------- meet all of 
the requirements of Section [6.14] of the Loan Contract, namely:
    (a) The weighted average life of the loan evidenced by such Notes 
(-------- years) does not exceed the weighted average of the expected 
remaining useful lives of the assets being financed (-------- years) as 
evidenced by the attached calculation of said weighted average lives.
    (b) The principal of the loan evidenced by such Notes shall either 
be [check one and provide evidence in the second case]:
    ------ (1) repaid based on level payments of principal and interest 
throughout the life of the loan, or

[[Page 227]]

    ------ (2) amortized at a rate that shall yield a weighted average 
life that is not greater than the weighted average life that would 
result from level payments of principal and interest throughout the life 
of the loan as evidenced by the attached analysis of said weighted 
average lives.
    (c) The principal of the loan evidenced by such Notes has a maturity 
of not less than 5 years.

[Signed]________________________________________________________________

[Dated]_________________________________________________________________

[Name]__________________________________________________________________

[Title]_________________________________________________________________

[Name and Address of Borrower]__________________________________________

________________________________________________________________________

________________________________________________________________________

Exhibit C-2--Manager's Certificate Required Under Loan Contract Section 
                       6.14 for Refinancing Notes

    On behalf on -------------------- [Name of Borrower] --------------
------ I hereby certify that the Additional Note or Notes to be issued 
under Section [2.02] of the Mortgage on or about -------------------- 
[Date Note or Notes are to be Signed] -------------------- meet the 
requirement of Section [6.14] of the Loan Contract that the weighted 
average life of such Notes is not greater than the weighted average 
remaining life of the Notes being refinanced, as evidenced by the 
attached calculation of said weighted average lives.
[Signed]________________________________________________________________

[Dated]_________________________________________________________________

[Name]__________________________________________________________________

[Title]_________________________________________________________________

[Name and Address of Borrower]__________________________________________

________________________________________________________________________

________________________________________________________________________

[60 FR 67410, Dec. 29, 1995, as amended at 65 FR 51749, Aug. 25, 2000]



PART 1720_GUARANTEES FOR BONDS AND NOTES ISSUED FOR ELECTRIFICATION OR 
TELEPHONE PURPOSES--Table of Contents



Sec.
1720.1  Purpose.
1720.2  Background.
1720.3  Definitions.
1720.4  General standards.
1720.5  Eligibility criteria.
1720.6  Application process.
1720.7  Application evaluation.
1720.8  Issuance of the guarantee.
1720.9  Guarantee Agreement.
1720.10  Fees.
1720.11  Servicing.
1720.12  Reporting requirement.
1720.13  Limitations on guarantees.
1720.14  Nature of guarantee; acceleration of guaranteed bonds.
1720.15  Equal opportunity requirements.

    Authority: 7 U.S.C. 901 et seq.; 7 U.S.C. 940C.

    Source: 69 FR 63049, Oct. 29, 2004, unless otherwise noted.



Sec. 1720.1  Purpose.

    This part prescribes regulations implementing a guarantee program 
for bonds and notes issued for electrification or telephone purposes 
authorized by section 313A of the Rural Electrification Act of 1936 (7 
U.S.C. 940c-1).

[75 FR 42573, July 22, 2010]



Sec. 1720.2  Background.

    The Rural Electrification Act of 1936 (the ``RE Act'') (7 U.S.C. 901 
et seq.) authorizes the Secretary to guarantee and make loans to 
persons, corporations, States, territories, municipalities, and 
cooperative, non-profit, or limited-dividend associations for the 
purpose of furnishing or improving electric and telephone service in 
rural areas. Responsibility for administering electrification and 
telecommunications loan and guarantee programs along with other 
functions the Secretary deemed appropriate have been assigned to RUS 
under the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 
6941 et seq.). The Administrator of RUS has been delegated 
responsibility for administering the programs and activities of RUS, see 
7 CFR 1700.25. Section 6101 of the Farm Security and Rural Investment 
Act of 2002 (Pub. L. 107-171) (FSRIA) amended the RE Act to include a 
new program under section 313A entitled Guarantees for Bonds and Notes 
Issued for Electrification or Telephone Purposes. This measure directed 
the Secretary of Agriculture to promulgate regulations that carry out 
the Program. The Secretary published the regulations for the program in 
the Federal Register as a final rule on October 29, 2004, adding part 
1720 to title 7 of the Code of Federal Regulations. Section 
6106(a)(1)(A) of the Food, Conservation, and Energy Act of 2008 (Pub. L. 
110-246) amended section 313A of the RE Act by replacing the level of 
``concurrent loans'' as a factor limiting the amount of bonds and notes 
that

[[Page 228]]

could be guaranteed and inserted ``for eligible electrification or 
telephone purposes'' as the limitation on the amount of bonds and notes 
that can be guaranteed under section 313A up to an annual program limit 
of $1,000,000,000, subject to availability of funds. Section 
6106(a)(1)(B) further amended section 313A of the RE Act by removing the 
prohibition against the recipient using an amount obtained from the 
reduction in funding costs as a result of a new guarantee under section 
313A to reduce the interest rate charged on a new or concurrent loan.

[75 FR 42573, July 22, 2010]



Sec. 1720.3  Definitions.

    For the purpose of this part:
    Administrator means the Administrator of RUS.
    Applicant means a bank or other lending institution organized as a 
private, not-for-profit cooperative association, or otherwise on a non-
profit basis, that is applying for RUS to guarantee a bond or note under 
this part.
    Bond Documents means the trust indenture, bond resolution, 
guarantee, guarantee agreement and all other instruments and 
documentation pertaining to the issuance of the guaranteed bonds.
    Borrower means any organization that has an outstanding loan made or 
guaranteed by RUS for rural electrification or rural telephone under the 
RE Act, or that is eligible for such financing.
    Concurrent Loan means a loan that a guaranteed lender extends to a 
borrower for up to 30 percent of the cost of an eligible electrification 
or telephone purpose under the RE Act, concurrently with an insured loan 
made by the Secretary pursuant to section 307 of the RE Act.
    Eligible loan means a loan that a guaranteed lender extends to a 
borrower for up to 100 percent of the cost of eligible electrification 
or telephone purposes consistent with the RE Act.
    Federal Financing Bank (FFB) means a government corporation and 
instrumentality of the United States of America under the general 
supervision of the Secretary of the Treasury.
    Guarantee means the written agreement between the Secretary and a 
guaranteed bondholder, pursuant to which the Secretary guarantees full 
repayment of the principal, interest, and call premium, if any, on the 
guaranteed lender's guaranteed bond.
    Guarantee Agreement means the written agreement between the 
Secretary and the guaranteed lender which sets forth the terms and 
conditions of the guarantee.
    Guaranteed Bond means any bond, note, debenture, or other debt 
obligation issued by a guaranteed lender on a fixed or variable rate 
basis, and approved by the Secretary for a guarantee under this part.
    Guaranteed Bondholder means any investor in a guaranteed bond.
    Guaranteed Lender means an applicant that has been approved for a 
guarantee under this part.
    Loan means any credit instrument that the guaranteed lender extends 
to a borrower for any electrification or telephone purpose eligible 
under the RE Act, including loans as set forth in section 4 of the RE 
Act for electricity transmission lines and distribution systems 
(excluding generating facilities) and as set forth in section 201 of the 
RE Act for telephone lines, facilities and systems.
    Loan documents means the loan agreement and all other instruments 
and documentation between the guaranteed lender and the borrower 
evidencing the making, disbursing, securing, collecting, or otherwise 
administering of a loan.
    Program means the guarantee program for bonds and notes issued for 
electrification or telephone purposes authorized by section 313A of the 
RE Act as amended.
    Rating Agency means a bond rating agency identified by the 
Securities and Exchange Commission as a nationally recognized 
statistical rating organization.
    RE Act means the Rural Electrification Act of 1936 (7 U.S.C. 901 et 
seq.) as amended.
    RUS means the Rural Utilities Service, a Rural Development agency of 
the U.S. Department of Agriculture.
    Secretary means the Secretary of Agriculture acting through the 
Administrator of RUS.

[[Page 229]]

    Subsidy Amount means the amount of budget authority sufficient to 
cover the estimated long-term cost to the Federal government of a 
guarantee, calculated on a net present value basis, excluding 
administrative costs and any incidental effects on government receipts 
or outlays, in accordance with the provisions of the Federal Credit 
Reform Act of 1990 (2 U.S.C. 661 et. seq.)

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42574, July 22, 2010]



Sec. 1720.4  General standards.

    (a) In accordance with section 313A of the RE Act, a guarantee will 
be issued by the Secretary only if the Secretary determines, in 
accordance with the requirements set forth in this part, that:
    (1) The proceeds of the guaranteed bonds will be used by the 
guaranteed lender to make loans to borrowers for electrification or 
telephone purposes eligible for assistance under this chapter, or to 
refinance bonds or notes previously issued by the guaranteed lender for 
such purposes;
    (2) At the time the guarantee is executed, the total principal 
amount of guaranteed bonds outstanding would not exceed the principal 
amount of outstanding eligible loans previously made by the guaranteed 
lender;
    (3) The proceeds of the guaranteed bonds will not be used directly 
or indirectly to fund projects for the generation of electricity; and
    (4) The guaranteed lender will not use any amounts obtained from the 
reduction in funding costs provided by a loan guarantee issued prior to 
June 18, 2008, to reduce the interest rates borrowers are paying on new 
or outstanding loans, other than new concurrent loans as provided in 
part 1710 of this chapter.
    (b) During the term of the guarantee, the guaranteed lender shall:
    (1) Limit cash patronage refunds, for guaranteed lenders having a 
credit rating below ``A-'' on its senior secured debt without regard to 
the guarantee. For such guaranteed lenders, cash patronage refunds are 
limited to five percent of the total patronage refund eligible. The 
limit on patronage refunds must be maintained until the credit rating is 
restored to ``A-'' or above. For those guaranteed lenders subject to 
patronage limitations, equity securities issued as part of the patronage 
refund shall not be redeemable in cash during the term of any part of 
the guarantee, and the guaranteed lender shall not issue any dividends 
on any class of equity securities during the term of the guarantee.
    (2) Maintain sufficient collateral equal to the principal amount 
outstanding, for guaranteed lenders having a credit rating below ``A-'' 
on its senior secured debt without regard to the guarantee, or in the 
case of a lender that does not have senior secured debt, a corporate 
(counterparty) credit rating below ``A-'' without regard to the 
guarantee. Collateral shall be in the form of specific and identifiable 
unpledged securities equal to the value of the guaranteed amount. In the 
case of a guaranteed lender's default, the U.S. government claim shall 
not be subordinated to the claims of other creditors, and the indenture 
must provide that in the event of default, the government has first 
rights on the asset. Upon application and throughout the term of the 
guarantee, guaranteed lenders not subject to collateral pledging 
requirements shall identify, with the concurrence of the Secretary, 
specific assets to be held as collateral should the credit rating of its 
senior secured debt, or its corporate credit rating, as applicable, 
without regard to the guarantee fall below ``A-.'' The Secretary has 
discretion to require collateral at any time should circumstances 
warrant.
    (c) The final maturity of the guaranteed bonds shall not exceed 20 
years.
    (d) The guaranteed bonds shall be issued to the Federal Financing 
Bank on terms and conditions consistent with comparable government-
guaranteed bonds and satisfactory to the Secretary.
    (e) The Secretary shall guarantee payment son guaranteed bonds in 
such forms and on such terms and conditions and subject to such 
covenants, representations, warranties and requirements (including 
requirements for audits) as determined appropriate for satisfying the 
requirements of this part. The Secretary shall require the

[[Page 230]]

guaranteed lender to enter into a guarantee agreement to evidence its 
acceptance of the foregoing. Any guarantee issued under this part shall 
be made in a separate and distinct offering.

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42574, July 22, 2010]



Sec. 1720.5  Eligibility criteria.

    (a) To be eligible to participate in the program, a guaranteed 
lender must be:
    (1) A bank or other lending institution organized as a private, not-
for-profit cooperative association, or otherwise organized on a non-
profit basis; and
    (2) Able to demonstrate to the Secretary that it possesses the 
appropriate expertise, experience, and qualifications to make loans for 
electrification or telephone purposes.
    (b) To be eligible to receive a guarantee, a guaranteed lender's 
bond must meet the following criteria:
    (1) The guaranteed lender must furnish the Secretary with a 
certified list of the principal balances of eligible loans then 
outstanding and certify that such aggregate balance is at least equal to 
the sum of the proposed principal amount of guaranteed bonds to be 
issued, and any previously issued guaranteed bonds outstanding; and
    (2) The guaranteed bonds to be issued by the guaranteed lender must 
receive an underlying investment grade rating from a Rating Agency, 
without regard to the guarantee;
    (c) A lending institution's status as an eligible applicant does not 
assure that the Secretary will issue the guarantee sought in the amount 
or under the terms requested, or otherwise preclude the Secretary from 
declining to issue a guarantee.

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42574, July 22, 2010]



Sec. 1720.6  Application process.

    (a) Applications shall contain the following:
    (1) Background and contact information on the applicant;
    (2) A term sheet summarizing the proposed terms and conditions of, 
and the security pledged to assure the applicant's performance under, 
the guarantee agreement;
    (3) A statement by the applicant as to how it proposes to use the 
proceeds of the guaranteed bonds, and the financial benefit it 
anticipates deriving from participating in the program;
    (4) A pro-forma cash flow projection or business plan for the next 
five years, demonstrating that there is reasonable assurance that the 
applicant will be able to repay the guaranteed bonds in accordance with 
their terms;
    (5) Consolidated financial statements of the guaranteed lender for 
the previous three years that have been audited by an independent 
certified public accountant, including any associated notes, as well as 
any interim financial statements and associated notes for the current 
fiscal year;
    (6) Evidence of having been assigned an investment grade rating on 
the debt obligations for which it is seeking the guarantee, without 
regard to the guarantee;
    (7) Evidence of a credit rating, from a Rating Agency, on its senior 
secured debt or its corporate credit rating, as applicable, without 
regard to the government guarantee and satisfactory to the Secretary; 
and
    (8) Such other application documents and submissions deemed 
necessary by the Secretary for the evaluation of applicants.
    (b) The application process occurs as follows:
    (1) The applicant submits an application to the Secretary;
    (2) The application is screened by RUS pursuant to 7 CFR 1720.7(a) 
of this part, to ascertain its threshold eligibility for the program;
    (3) RUS evaluates the application pursuant to the selection criteria 
set forth in 7 CFR 1720.7(b) of this part;
    (4) If RUS provisionally approves the application, the applicant and 
RUS negotiate terms and conditions of the bond documents, and
    (5) The applicant offers its guaranteed bonds, and the Secretary 
upon approval of the pricing, redemption provisions and other terms of 
the offering, executes the guarantee.
    (c) If requested by the applicant at the time it files its 
application, the General Counsel of the Department of

[[Page 231]]

Agriculture shall provide the Secretary with an opinion regarding the 
validity and authority of a guarantee issued to the lender under section 
313A of the RE Act.

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42574, July 22, 2010]



Sec. 1720.7  Application evaluation.

    (a) Eligibility screening. Each application will be reviewed by the 
Secretary to determine whether it is eligible under 7 CFR 1720.5, the 
information required under 7 CFR 1720.6 is complete and the proposed 
guaranteed bond complies with applicable statutes and regulations. The 
Secretary can at any time reject an application that fails to meet these 
requirements.
    (b) Evaluation. Pursuant to paragraph (a) of this section, 
applications will be subject to a substantive review, on a competitive 
basis, by the Secretary based upon the following evaluation factors, 
listed in order of importance:
    (1) The extent to which the proposed provisions indicate the 
applicant will be able to repay the guaranteed bonds;
    (2) The adequacy of the proposed provisions to protect the Federal 
government, based upon items including, but not limited to the nature of 
the pledged security, the priority of the lien position, if any, pledged 
by the applicant, and the provision for an orderly retirement of 
principal such as an amortizing bond structure or an internal sinking 
fund;
    (3) The applicant's demonstrated performance of financially sound 
business practices as evidenced by reports of regulators, auditors and 
credit rating agencies;
    (4) The extent to which the applicant is subject to supervision, 
examination, and safety and soundness regulation by an independent 
federal agency;
    (5) The extent of concentration of financial risk that RUS may have 
resulting from previous guarantees made under section 313A of the RE 
Act; and
    (6) The extent to which providing the guarantee to the applicant 
will help reduce the cost and/or increase the supply of credit to rural 
America, or generate other economic benefits, including the amount of 
fee income available to be deposited into the Rural Economic Development 
Subaccount, maintained under section 313(b)(2)(A) of the RE Act (7 
U.S.C. 940c(b)(2)(A)), after payment of the subsidy amount.
    (c) Independent Assessment. Before a guarantee decision is made by 
the Secretary, the Secretary shall request that the Federal Financing 
Bank review the adequacy of the determination by the Rating Agency, 
required under Sec. 1720.5(b)(2) as to whether the bond or note to be 
issued would be below investment grade without the guarantee.
    (d) Decisions by the Secretary. The Secretary shall approve or deny 
applications in a timely manner as such applications are received; 
provided, however, that in order to facilitate competitive evaluation of 
applications, the Secretary may from time to time defer a decision until 
more than one application is pending. The Secretary may limit the number 
of guarantees made to a maximum of five per year, to ensure a sufficient 
examination is conducted of applicant requests. RUS shall notify the 
applicant in writing of the Secretary's approval or denial of an 
application. Approvals for guarantees shall be conditioned upon 
compliance with 7 CFR 1720.4 and 1720.6 of this part. The Secretary 
reserves the discretion to approve an application for an amount less 
than that requested.

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42574, July 22, 2010]



Sec. 1720.8  Issuance of the guarantee.

    (a) The following requirements must be met by the applicant prior to 
the endorsement of a guarantee by the Secretary.
    (1) A guarantee agreement suitable in form and substance to the 
Secretary must be delivered.
    (2) Bond documents must be executed by the applicant setting forth 
the legal provisions relating to the guaranteed bonds, including but not 
limited to payment dates, interest rates, redemption features, pledged 
security, additional borrowing terms including an explicit agreement to 
make payments even if loans made using the proceeds of such bond or note 
is not repaid to the lender, other financial covenants, and events of 
default and remedies;
    (3) Prior to the issuance of the guarantee, the applicant must 
certify to

[[Page 232]]

the Secretary that the proceeds from the guaranteed bonds will be 
applied to fund new eligible loans under the RE Act, to refinance 
concurrent loans, or to refinance existing debt instruments of the 
guaranteed lender used to fund eligible loans;
    (4) The applicant provides a certified list of eligible loans and 
their outstanding balances as of the date the guarantee is to be issued;
    (5) Counsel to the applicant must furnish an opinion satisfactory to 
the Secretary as to the applicant being legally authorized to issue the 
guaranteed bonds and enter into the bond documents;
    (6) No material adverse change occurs between the date of the 
application and date of execution of the guarantee;
    (7) The applicant shall provide evidence of an investment grade 
rating from a Rating Agency for the proposed guaranteed bond without 
regard to the guarantee;
    (8) The applicant shall provide evidence of a credit rating on its 
senior secured debt or its corporate credit rating, as applicable, 
without regard to the guarantee and satisfactory to the Secretary; and
    (9) Certification by the Chairman of the Board and the Chief 
Executive Officer of the applicant (or other senior management 
acceptable to the Secretary), acknowledging the applicant's commitment 
to submit to the Secretary, an annual credit assessment of the applicant 
by a Rating Agency, an annual review and certification of the security 
of the government guarantee that is audited by an independent certified 
public accounting firm or federal banking regulator, annual consolidated 
financial statements audited by an independent certified public 
accountant each year during which the guarantee bonds are outstanding, 
and other such information requested by the Secretary.
    (b) The Secretary shall not issue a guarantee if the applicant is 
unwilling or unable to satisfy all requirements.

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42574, July 22, 2010]



Sec. 1720.9  Guarantee Agreement.

    (a) The guaranteed lender will be required to sign a guarantee 
agreement with the Secretary setting forth the terms and conditions upon 
which the Secretary guarantees the payment of the guaranteed bonds.
    (b) The guaranteed bonds shall refer to the guarantee agreement as 
controlling the terms of the guarantee.
    (c) The guarantee agreement shall address the following matters:
    (1) Definitions and principles of construction;
    (2) The form of guarantee;
    (3) Coverage of the guarantee;
    (4) Timely demand for payment on the guarantee;
    (5) Any prohibited amendments of bond documents or limitations on 
transfer of the guarantee;
    (6) Limitation on acceleration of guaranteed bonds;
    (7) Calculation and manner of paying the guarantee fee;
    (8) Consequences of revocation of payment on the guaranteed bonds;
    (9) Representations and warranties of the guaranteed lender;
    (10) Representations and warranties for the benefit of the holder of 
the guaranteed bonds;
    (11) Claim procedures;
    (12) What constitutes a failure by the guaranteed lender to pay;
    (13) Demand on RUS;
    (14) Assignment to RUS;
    (15) Conditions of guarantee which may include requiring the 
guaranteed lender to adopt measures to ensure adequate capital levels 
are retained to absorb losses relative to risk in the guaranteed 
lender's portfolio and requirements on the guaranteed lender to hold 
additional capital against the risk of default;
    (16) Payment by RUS;
    (17) RUS payment does not discharge guaranteed lender;
    (18) Undertakings for the benefit of the holders of guaranteed 
bonds, including: notices, registration, prohibited amendments, 
prohibited transfers, indemnification, multiple bond issues;
    (19) Governing law;
    (20) Notices;
    (21) Benefit of agreement;
    (22) Entirety of agreement;
    (23) Amendments and waivers;

[[Page 233]]

    (24) Counterparts;
    (25) Severability, and
    (26) Such other matters as the Secretary believes to be necessary or 
appropriate.



Sec. 1720.10  Fees.

    (a) Guarantee fee. An annual fee equal to 30 basis points (0.3 
percent) of the amount of the unpaid principal of the guarantee bond 
will be deposited into the Rural Economic Development Subaccount 
maintained under section 313(b)(2)(A) of the RE Act.
    (b) Subject to paragraph (c) of this section, up to one-third of the 
30 basis point guarantee fee may be used to fund the subsidy amount of 
providing guarantees, to the extent not otherwise funded through 
appropriation actions by Congress.
    (c) Notwithstanding subsections (c) and (e)(2) of section 313A of 
the RE Act, the Secretary shall, with the consent of the lender and if 
otherwise authorized by law, adjust the schedule for payment of the 
annual fee, not to exceed an average of 30 basis points per year for the 
term of the loan, to ensure that sufficient funds are available to pay 
the subsidy costs for note guarantees.



Sec. 1720.11  Servicing.

    The Secretary, or other agent of the Secretary on his or her behalf, 
shall have the right to service the guaranteed bond, and periodically 
inspect the books and accounts of the guaranteed lender to ascertain 
compliance with the provisions of the RE Act and the bond documents.



Sec. 1720.12  Reporting requirements.

    (a) As long as any guaranteed bonds remain outstanding, the 
guaranteed lender shall provide the Secretary with the following items 
each year within 90 days of the guaranteed lender's fiscal year end:
    (1) Consolidated financial statements and accompanying footnotes, 
audited by independent certified public accountants;
    (2) A review and certification of the security of the government 
guarantee, audited by reputable, independent certified public 
accountants or a federal banking regulator, who in the judgment of the 
Secretary, has the requisite skills, knowledge, reputation, and 
experience to properly conduct such a review;
    (3) Pro forma projection of the guaranteed lender's balance sheet, 
income statement, and statement of cash flows over the ensuing five 
years;
    (4) Credit assessment issued by a Rating Agency;
    (5) Credit rating, by a Rating Agency, on its senior secured debt or 
its corporate credit rating, as applicable, without regard to the 
guarantee and satisfactory to the Secretary; and
    (6) Other such information requested by the Secretary.
    (b) The bond documents shall specify such bond monitoring and 
financial reporting requirements as deemed appropriate by the Secretary.

[69 FR 63049, Oct. 29, 2004, as amended at 75 FR 42575, July 22, 2010]



Sec. 1720.13  Limitations on guarantees.

    In a given year the maximum amount of guaranteed bonds that the 
Secretary may approve will be subject to budget authority, together with 
receipts authority from projected fee collections from guaranteed 
lenders, the principal amount of outstanding eligible loans made by the 
guaranteed lender, and Congressionally-mandated ceilings on the total 
amount of credit. The Secretary may also impose other limitations as 
appropriate to administer this guarantee program.

[75 FR 42575, July 22, 2010]



Sec. 1720.14  Nature of guarantee; acceleration of guaranteed bonds.

    (a) Any guarantee executed by the Secretary under this part shall be 
an obligation supported by the full faith and credit of the United 
States and incontestable except for fraud or misrepresentation of which 
the guaranteed bondholder had actual knowledge at the time it purchased 
the guaranteed bonds.
    (b) Amounts due under the guarantee shall be paid within 30 days of 
demand by a bondholder, certifying the amount of payment then due and 
payable.
    (c) The guarantee shall be assignable and transferable to any 
purchaser of

[[Page 234]]

guaranteed bonds as provided in the bond documents.
    (d) The following actions shall constitute events of default under 
the terms of the guarantee agreements:
    (1) The guaranteed lender failed to make a payment of principal or 
interest when due on the guaranteed bonds;
    (2) The guaranteed bonds were issued in violation of the terms and 
conditions of the bond documents;
    (3) The guarantee fee required by 7 CFR 1720.10 of this part, has 
not been paid;
    (4) The guaranteed lender made a misrepresentation to the Secretary 
in any material respect in connection with the application, the 
guaranteed bonds, or the reporting requirements listed in 7 CFR 1720.12; 
or
    (5) The guaranteed lender failed to comply with any material 
covenant or provision contained in the bond documents.
    (e) In the event the guaranteed lender fails to cure such defaults 
within the notice terms and the timeframe set forth in the bond 
documents, the Secretary may demand that the guaranteed lender redeem 
the guaranteed bonds. Such redemption amount will be in an amount equal 
to the outstanding principal balance, accrued interest to the date of 
redemption, and prepayment premium, if any. To the extent the Secretary 
makes any payments under the guarantee, the Secretary shall be deemed 
the guaranteed bondholder.
    (f) To the extent the Secretary makes any payments under the 
guarantee, the interest rate the government will charge to the 
guaranteed lender for the period of default shall accrue at an annual 
rate of the greater of 1.5 times the 91-day Treasury-Bill rate or 200 
basis points (2.00%) above the rate on the guaranteed bonds.
    (g) Upon guaranteed lender's event of default, under the bond 
documents, the Secretary shall be entitled to take such other action as 
is provided for by law or under the bond documents.



Sec. 1720.15  Equal opportunity requirements.

    Executive Order 12898, ``Environmental Justice.'' To comply with 
Executive Order 12898, RUS will conduct a Civil Rights Analysis for each 
guarantee prior to approval. Rural Development Form 2006-28, ``Civil 
Rights Impact Analysis'', will be used to document compliance in regards 
to environmental justice. The Civil Rights Impact Analysis will be 
conducted prior to application approval or a conditional commitment of 
guarantee.



PART 1721_POST-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC LOANS
--Table of Contents



                       Subpart A_Advance of Funds

Sec.
1721.1  Advances.

       Subpart B_Extensions of Payments of Principal and Interest

1721.100  Purpose.
1721.101  General.
1721.102  Definitions.
1721.103  Policy.
1721.104  Eligible purposes.
1721.105  Application documents.
1721.106  Repayment of deferred payments.
1721.107  Agreement.
1721.108  Commencement of the deferment.
1721.109  OMB control number.

    Authority: 7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.



                       Subpart A_Advance of Funds



Sec. 1721.1  Advances.

    (a) Purpose and amount. With the exception of minor projects, 
insured loan funds will be advanced only for projects which are included 
in an RUS approved borrower's construction work plan (CWP) or approved 
amendment and in an approved loan, as amended. Loan fund advances can be 
requested in an amount representing actual costs incurred.
    (b) Minor project. Minor project means a project costing $100,000 or 
less. Such a project qualifies for advance of loan funds even though it 
may not have been included in an RUS-approved borrower's CWP, amendment 
to such CWP, or approved loan. Total advances requested shall not exceed 
the total loan amount. All projects for which loan fund advances are 
requested must be constructed to achieve purposes permitted by terms of 
the loan contract between the borrower and RUS.

[[Page 235]]

    (c) Certification. Pursuant to the applicable provisions of the RUS 
loan contract, borrowers shall certify with each request for funds to be 
approved for advance that such funds are for projects in compliance with 
this section and shall also provide for those that cost in excess of 
$100,000, a contract or work order number as applicable and a CWP cross-
reference project coded identification number. For a minor project not 
included in an RUS approved borrower's CWP, the Borrower shall describe 
the project and do one of the following to satisfy RUS' environmental 
requirements (see 7 CFR part 1794).
    (1) If applicable, state that the project is a categorical exclusion 
of a type described in Sec. 1794.21(b), which normally does not require 
preparation of an Environmental Report (ER); or
    (2) If applicable, state that the project is a categorical exclusion 
of a type that normally requires an ER and then:
    (i) Submit the ER with the request for funds to be approved for 
advance, or
    (ii) If applicable, certify that it has analyzed the minor project 
with respect to a comprehensive service area environmental map and data 
base collected and used in preparing the ER for its RUS-approved 
borrower's CWP, and that on the basis of that information, the minor 
project will not be located in an environmentally sensitive area or 
location.
    (d) Noncompliance. Where insured loan funds are found to have been 
advanced in noncompliance with this section, borrowers will be required 
to deposit the appropriate amount of the over-advance in the 
construction fund-trustee account and pay any accrued and unpaid 
interest to RUS. The Administrator will require borrowers, in order to 
remedy such noncompliance, to pay an additional amount equal to the 
interest on the funds over-advanced for the period such funds were 
outstanding, calculated at a rate equal to the difference between the 
RUS loan interest rate and the most recent rate at which RUS sold 
Certificates of Beneficial Ownership (CBO's). While RUS will generally 
permit the amount of over-advance deposited in the construction fund-
trustee account to be subsequently used by the borrower for RUS approved 
projects, nothing in this section shall be construed to preclude RUS 
from exercising any rights or remedies which RUS may have pursuant to 
the loan contract.

[64 FR 72489, Dec. 28, 1999]

    Effective Date Note: At 78 FR 73370, Dec. 5, 2013, Sec. 1721.1 was 
amended by revising paragraph (a), effective Feb. 3, 2014. For the 
convenience of the user, the revised text is set forth as follows:



Sec. 1721.1  Advances.

    (a) Purpose and amount. With the exception of minor projects, loan 
funds will be advanced only for projects which are included in an RUS 
approved construction work plan (CWP), EE Program work plan (EEWP), or 
approved amendment, and in an approved loan as amended. Loan fund 
advances can be requested in an amount representing actual costs 
incurred.

                                * * * * *



       Subpart B_Extensions of Payments of Principal and Interest

    Source: 67 FR 485, Jan. 4, 2002, unless otherwise noted.



Sec. 1721.100  Purpose.

    This subpart contains RUS procedures and conditions under which 
Borrowers of loans made by RUS may request RUS approval for extensions 
for the payment of principal and interest.



Sec. 1721.101  General.

    (a) The procedures in this subpart are intended to provide Borrowers 
with the flexibility to request an extension of principal and interest 
as authorized under section 12(a) of the RE Act and section 236 of the 
Disaster Relief Act of 1970 (Public Law 91-606).
    (b) The total amount of interest that has been deferred, including 
interest on deferred principal, will be added to the principal balance, 
and the total amount of principal and interest that has been deferred 
will be reamortized over the remaining life of the applicable note 
beginning in the first year the deferral period ends.
    (c) Payment of principal and interest will not be extended more than 
5 years after such payment is due as originally

[[Page 236]]

scheduled. However, in cases where the extension is being granted 
because, at the sole discretion of the Administrator, a severe hardship 
has been experienced, the Administrator may grant a longer extension 
provided that the maturity date of any such loan does not extend to a 
date beyond forty (40) years from the date of the note.

[67 FR 485, Jan. 4, 2002, as amended at 68 FR 37953, June 26, 2003]



Sec. 1721.102  Definitions.

    The definitions contained in 7 CFR 1710.2 are applicable to this 
subpart unless otherwise stated.



Sec. 1721.103  Policy.

    (a) In reviewing requests for extension of payment of principal and 
interest, consideration shall be given to the effect of such extensions 
on the security of the Government's loans, and on the ability of the 
Borrower to achieve program objectives. It is the policy of RUS to 
extend the time for payment of principal and interest on the basis of 
findings that such extension does not impair the security and 
feasibility of the Government's loans and:
    (1) Is essential to the effectiveness of the Borrower's operations 
in achieving RUS program objectives which include providing reliable, 
affordable electricity to RE Act beneficiaries;
    (2) Is necessary to help a Borrower place its operations on a more 
stable financial basis and thereby provide assurance of repayment of 
loans within the time when payments of such loans are due under the 
terms of the note or notes as extended; or
    (3) Is otherwise in the best interest of the Government.
    (b) Extensions will be given in the minimum amount to achieve the 
purpose of the extension.
    (c) The maximum interest rate a RUS Borrower can charge on 
deferments for programs relating to consumer loans, e.g., energy 
resource conservation (ERC) program, contribution-in-aid of construction 
(CIAC), etc., will not be more than 300 basis points above the average 
interest rate on the note(s) being deferred. For example, if the RUS 
Borrower's average interest rate on the note(s) being deferred is 5 
percent, the RUS Borrower can charge a maximum interest rate of 8 
percent.

[67 FR 485, Jan. 4, 2002, as amended at 68 FR 37953, June 26, 2003]



Sec. 1721.104  Eligible purposes.

    (a) Deferments for financial hardship. (1) In cases of financial 
hardship, a Borrower may request that RUS defer principal or interest or 
both. RUS will consider whether the deferral will help a Borrower place 
its operations on a more stable financial basis and thereby provide 
assurance of repayment of loans within the time when payment of such 
loans are due under the terms of the note or notes as extended.
    (2) RUS will determine whether a Borrower qualifies for the 
deferment on a case-by-case basis, considering such factors as the 
following:
    (i) Substantial unreimbursed or uninsured expenses relating to storm 
damage;
    (ii) Loss of large power load (as defined in Sec. 1710.7(c)(6)(ii) 
of this chapter, Large retail power contracts); or
    (iii) Substantial loss of consumers or load due to hostile 
annexations and condemnations, without adequate compensation.
    (b) Deferments for energy resource conservation (ERC) loans. (1) A 
Borrower may request that RUS defer principal payments to make funds 
available to the Borrower's consumers to conserve energy. Amounts 
deferred under this program can be used to cover the cost of labor and 
materials for the following energy conservation measures:
    (i) Caulking;
    (ii) Weather-stripping;
    (iii) Heat pump systems (including water source heat pumps);
    (iv) Heat pumps, water heaters, and central heating or central air 
conditioning system replacements or modifications, which reduce energy 
consumption;
    (v) Ceiling insulation;
    (vi) Wall insulation;
    (vii) Floor insulation;
    (viii) Duct insulation;
    (ix) Pipe insulation;
    (x) Water heater insulation;
    (xi) Storm windows;
    (xii) Thermal windows;
    (xiii) Storm or thermal doors;

[[Page 237]]

    (xiv) Electric system coordinated customer-owned devices that reduce 
the maximum kilowatt demand on the electric system;
    (xv) Clock thermostats; or
    (xvi) Attic ventilation fans.
    (2) ERC loans will be amortized over not more than 84 months, 
without penalty for prepayment of principal.
    (c) Deferments for renewable energy projects. (1) A Borrower may 
request that RUS defer principal payments to enable the Borrower to 
finance renewable energy projects. Amounts deferred under this program 
can be used to cover costs to install all or part of a renewable energy 
system including, without limitation:
    (i) Energy conversion technology;
    (ii) Electric power system interfaces;
    (iii) Delivery equipment;
    (iv) Control equipment; and
    (v) Energy consuming devices.
    (2) A Borrower may request that RUS defer principal payments for the 
purpose of enabling the Borrower to provide its consumers with loans to 
install all or part of customer-owned renewable energy systems up to 
5kW.
    (3) A renewable energy system is defined in Sec. 1710.2 of this 
chapter.
    (4) For the purpose of this subpart, a renewable energy project 
consists of one or more renewable energy systems.
    (d) Deferments for distributed generation projects. (1) A Borrower 
may request that RUS defer principal payments to enable the Borrower to 
finance distributed generation projects. Amounts deferred under this 
program can be used to cover costs to install all or part of a 
distributed generation system that:
    (i) The Borrower will own and operate, or
    (ii) The consumer owns, provided the system owned by the consumer 
does not exceed 5KW.
    (2) A distributed generation project may include one or more 
individual systems.
    (e) Deferments for contributions-in-aid of construction. (1) A 
Borrower may request RUS to defer principal payments to enable the 
Borrower to make funds available to new full time residential consumers 
to assist them in paying their share of the construction costs 
(contribution-in-aid of construction) needed to connect them to the 
Borrower's system.
    (2) Amounts available for this purpose will be limited to the amount 
of the construction costs that are in excess of the average cost per 
residential consumer incurred by the Borrower to connect new full time 
residential consumers during the last calendar year for which data are 
available. The average cost per residential consumer is the total cost 
incurred by the Borrower and will not be reduced by the amounts received 
as a contribution-in-aid of construction.

[67 FR 485, Jan. 4, 2002, as amended at 68 FR 37954, June 26, 2003]



Sec. 1721.105  Application documents.

    (a) Deferments for financial hardship. A Borrower requesting a 
section 12 deferment because of financial hardship must submit the 
following:
    (1) A summary of the financial position of the Borrower, based on 
the latest information available (usually less than 60 days old).
    (2) A copy of the board resolution requesting an extension due to 
financial hardship.
    (3) A 10-year financial forecast of revenues and expenses on a cash 
basis, by year, for the period of the extension and 5 years beyond to 
establish that the remaining payments can be made as rescheduled.
    (4) A listing of notes or portions of notes to be extended, the 
effective date for the beginning of the extension, and the length of the 
extension.
    (5) A narrative description of the nature and cause of the hardship 
and the strategy that will be instituted to mitigate or eliminate the 
effects of the hardship.
    (b) Deferments for energy resource conservation loans. A Borrower 
requesting principal deferments for an ERC loan program must submit the 
following information:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of offering an ERC loan 
program to its members and describing the details of the program.
    (2) A copy of the board resolution establishing the ERC loan 
program.

[[Page 238]]

    (c) Deferments for renewable energy projects. A Borrower requesting 
principal deferments for its renewable energy project must submit the 
following information:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of financing a renewable 
energy project and describing the details of the project.
    (2) A copy of the board resolution establishing the renewable energy 
project.
    (d) Deferments for distributed generation projects. A Borrower 
requesting principal deferments for distributed generation projects must 
submit the following information and approval is also subject to any 
applicable terms and conditions of the Borrower's loan contract, 
mortgage, or indenture:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of financing distributed 
generation projects and describing the details of the project, and
    (2) A copy of the board resolution establishing the distributed 
generation projects program.
    (e) Deferments for contribution-in-aid of construction. A Borrower 
requesting principal deferments for contribution-in-aid of construction 
must submit the following information:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of offering a 
contribution-in-aid of construction program and describing the details 
of the program.
    (2) A copy of the board resolution establishing the contribution-in-
aid of construction program.
    (3) A summary of the calculations used to determine the average cost 
per residential consumer. (See Sec. 1721.104 (e)(2)).

[67 FR 485, Jan. 4, 2002, as amended at 68 FR 37954, June 26, 2003]



Sec. 1721.106  Repayment of deferred payments.

    (a) Deferments relating to financial hardship. The total amount of 
interest that has been deferred, including interest on deferred 
principal, will be added to the principal balance, and the total amount 
of principal and interest that has been deferred will be reamortized 
over the remaining life of the applicable note beginning in the first 
year the deferral period ends. For example: the amount of interest 
deferred in years 2003, 2004, 2005, 2006, and 2007, will be added to the 
principal balance and reamortized over the life of the applicable note 
for repayment starting in year 2008.
    (b) Deferments relating to the ERC loan program, renewable energy 
project(s), distributed generation project(s), and the contribution(s)-
in-aid of construction. An extension agreement is for a term of two (2) 
years. The installment will be recalculated each time the Borrower 
defers the payment of principal and recognition of the deferred amount 
will begin with the next payment. For example: the amount deferred in 
the October payment will be reamortized over a 84 month period starting 
with the next payment (November if paying on a monthly basis). When a 
Borrower defers principal under any of these programs the scheduled 
payment on the account will increase by an amount sufficient to pay off 
the deferred amount, with interest, by the date specified in the 
agreement (usually 84 months (28 quarters)).

[67 FR 485, Jan. 4, 2002, as amended at 68 FR 37954, June 26, 2003]



Sec. 1721.107  Agreement.

    After approval of the Borrower's request for a deferment of 
principal and interest, an extension agreement, containing the terms of 
the extension, together with associated materials, will be prepared and 
forwarded to the Borrower by RUS. The extension agreement will then be 
executed and returned to RUS by the Borrower.



Sec. 1721.108  Commencement of the deferment.

    The deferment of principal and interest will not begin until the 
extension agreement and other supporting materials, in form and 
substance satisfactory to RUS, have been executed by the Borrower and 
returned to RUS. Examples of other supporting materials are items such 
as approving legal opinions from the Borrower's attorney and approvals 
from the relevant regulatory

[[Page 239]]

body for extending the maturity of existing debt and for the additional 
debt service payment incurred.



Sec. 1721.109  OMB control number.

    The information collection requirements in this part are approved by 
the Office of Management and Budget and assigned OMB control number 
0572-0123.



PART 1724_ELECTRIC ENGINEERING, ARCHITECTURAL SERVICES AND DESIGN
POLICIES AND PROCEDURES--Table of Contents



                            Subpart A_General

Sec.
1724.1  Introduction.
1724.2  Waivers.
1724.3  Definitions.
1724.4  Qualifications.
1724.5  Submission of documents to RUS.
1724.6  Insurance requirements.
1724.7  Debarment and suspension.
1724.8  Restrictions on lobbying.
1724.9  Environmental compliance.
1724.10  Standard forms of contracts for borrowers.
1724.11-1724.19  [Reserved]

                    Subpart B_Architectural Services

1724.20  Borrowers' requirements--architectural services.
1724.21  Architectural services contracts.
1724.22-1724.29  [Reserved]

                     Subpart C_Engineering Services

1724.30  Borrowers' requirements--engineering services.
1724.31  Engineering services contracts.
1724.32  Inspection and certification of work order construction.
1724.33-1724.39  [Reserved]

                   Subpart D_Electric System Planning

1724.40  General.
1724.41-1724.49  [Reserved]

                    Subpart E_Electric System Design

1724.50  Compliance with National Electrical Safety Code (NESC).
1724.51  Design requirements.
1724.52  Permitted deviations from RUS construction standards.
1724.53  Preparation of plans and specifications.
1724.54  Requirements for RUS approval of plans and specifications.
1724.55  Dam safety.
1724.56-1724.69  [Reserved]

Appendix A to Subpart E--Hazard Potential Classification for Civil Works 
          Projects

                      Subpart F_RUS Contract Forms

1724.70  Standard forms of contracts for borrowers.
1724.71  Borrower contractual obligations.
1724.72  Notice and publication of listed contract forms.
1724.73  Promulgation of new or revised contract forms.
1724.74  List of electric program standard contract forms.
1724.75-1724.99  [Reserved]

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

    Source: 63 FR 35314, June 29, 1998, unless otherwise noted.



                            Subpart A_General



Sec. 1724.1  Introduction.

    (a) The policies, procedures and requirements in this part implement 
certain provisions of the standard form of loan documents between the 
Rural Utilities Service (RUS) and its electric borrowers.
    (b) All borrowers, regardless of the source of financing, shall 
comply with RUS' requirements with respect to design, construction 
standards, and the use of RUS accepted material on their electric 
systems.
    (c) Borrowers are required to use RUS contract forms only if the 
facilities are financed by RUS.



Sec. 1724.2  Waivers.

    The Administrator may waive, for good cause on a case-by-case basis, 
requirements and procedures of this part.



Sec. 1724.3  Definitions.

    Terms used in this part have the meanings set forth in Sec. 1710.2 
of this chapter. References to specific RUS forms and other RUS 
documents, and to specific sections or lines of such forms and 
documents, shall include the corresponding forms, documents, sections 
and lines in any subsequent revisions of these forms and documents. In 
addition to the terms defined in Sec. 1710.2 of this chapter, the 
following terms have the following meanings for the purposes of this 
part:

[[Page 240]]

    Architect means a registered or licensed person employed by the 
borrower to provide architectural services for a project and duly 
authorized assistants and representatives.
    Engineer means a registered or licensed person, who may be a staff 
employee or an outside consultant, to provide engineering services and 
duly authorized assistants and representatives.
    Force account construction means construction performed by the 
borrower's employees.
    GPO means Government Printing Office.
    NESC means the National Electrical Safety Code.
    RE Act means the Rural Electrification Act of 1936 as amended (7 
U.S.C. 901 et seq.).
    Repowering means replacement of the steam generator or the prime 
mover or both at a generating plant.
    RUS means Rural Utilities Service.
    RUS approval means written approval by the Administrator or a 
representative with delegated authority. RUS approval must be in 
writing, except in emergency situations where RUS approval may be given 
orally followed by a confirming letter.
    RUS financed means financed or funded wholly or in part by a loan 
made or guaranteed by RUS, including concurrent supplemental loans 
required by Sec. 1710.110 of this chapter, loans to reimburse funds 
already expended by the borrower, and loans to replace interim 
financing.

[63 FR 35314, June 29, 1998, as amended at 63 FR 58284, Oct. 30, 1998]



Sec. 1724.4  Qualifications.

    The borrower shall ensure that:
    (a) All selected architects and engineers meet the applicable 
registration and licensing requirements of the States in which the 
facilities will be located;
    (b) All selected architects and engineers are familiar with RUS 
standards and requirements; and
    (c) All selected architects and engineers have had satisfactory 
experience with comparable work.



Sec. 1724.5  Submission of documents to RUS.

    (a) Where to send documents. Documents required to be submitted to 
RUS under this part are to be sent to the office of the borrower's 
respective RUS Regional Director, the Power Supply Division Director, or 
such other office of RUS as designated by RUS. (See part 1700 of this 
chapter.)
    (b) Contracts requiring RUS approval. The borrower shall submit to 
RUS three copies of each contract that is subject to RUS approval under 
subparts B and C of this part. At least one copy of each contract must 
be an original signed in ink (i.e., no facsimile signature). Each 
contract submittal must be accompanied by a certified copy of the board 
resolution awarding the contract.
    (c) Contract amendments requiring RUS approval. The borrower shall 
submit to RUS three copies of each contract amendment (at least one copy 
of which must be an original signed in ink) which is subject to RUS 
approval. Each contract amendment submittal to RUS must be accompanied 
by a certified copy of the board resolution approving the amendment.



Sec. 1724.6  Insurance requirements.

    (a) Borrowers shall ensure that all architects and engineers working 
under contract with the borrower have insurance coverage as required by 
part 1788 of this chapter.
    (b) Borrowers shall also ensure that all architects and engineers 
working under contract with the borrower have insurance coverage for 
Errors and Omissions (Professional Liability Insurance) in an amount at 
least as large as the amount of the architectural or engineering 
services contract but not less than $500,000.



Sec. 1724.7  Debarment and suspension.

    Borrowers shall comply with the requirements on debarment and 
suspension in connection with procurement activities as set forth in 
part 3017 of this title, particularly with respect to lower tier 
transactions, e.g., procurement contracts for goods or services.

[[Page 241]]



Sec. 1724.8  Restrictions on lobbying.

    Borrowers shall comply with the restrictions and requirements in 
connection with procurement activities as set forth in part 3018 of this 
title.



Sec. 1724.9  Environmental compliance.

    Borrowers shall comply with the requirements of part 1794 of this 
chapter, Environmental Policies and Procedures for Electric and 
Telephone Borrowers.



Sec. 1724.10  Standard forms of contracts for borrowers.

    The standard loan agreement between RUS and its borrowers provides 
that, in accordance with applicable RUS regulations in this chapter, the 
borrower shall use standard forms of contracts promulgated by RUS for 
construction, procurement, engineering services, and architectural 
services financed by a loan made or guaranteed by RUS. This part 
implements these provisions of the RUS loan agreement. Subparts A 
through E of this part prescribe when and how borrowers are required to 
use RUS standard forms of contracts for engineering and architectural 
services. Subpart F of this part prescribes the procedures that RUS 
follows in promulgating standard contract forms and identifies those 
contract forms that borrowers are required to use for engineering and 
architectural services.

[63 FR 58284, Oct. 30, 1998]



Secs. 1724.11-1724.19  [Reserved]



                    Subpart B_Architectural Services



Sec. 1724.20  Borrowers' requirements--architectural services.

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) Each borrower shall select a qualified architect to perform the 
architectural services required for the design and construction 
management of headquarters facilities. The selection of the architect is 
not subject to RUS approval unless specifically required by RUS on a 
case by case basis. Architect's qualification information need not be 
submitted to RUS unless specifically requested by RUS on a case by case 
basis.
    (b) The architect retained by the borrower shall not be an employee 
of the building supplier or contractor, except in cases where the 
building is prefabricated and pre-engineered.
    (c) The architect's duties are those specified under the 
Architectural Services Contract and under subpart E of this part, and, 
as applicable, those duties assigned to the ``engineer'' for competitive 
procurement procedures in part 1726 of this chapter.
    (d) If the facilities are RUS financed, the borrower shall submit or 
require the architect to submit one copy of each construction progress 
report to RUS upon request.
    (e) Additional information concerning RUS requirements for electric 
borrowers' headquarters facilities are set forth in subpart E of this 
part. See also RUS Bulletin 1724E-400, Guide to Presentation of Building 
Plans and Specifications, for additional guidance. This bulletin is 
available from Program Development and Regulatory Analysis, Rural 
Utilities Service, U.S. Department of Agriculture, Stop 1522, 1400 
Independence Ave., SW., Washington, DC 20250-1522.



Sec. 1724.21  Architectural services contracts.

    The provisions of this section apply only to RUS financed electric 
system facilities.
    (a) RUS Form 220, Architectural Services Contract, must be used by 
electric borrowers when obtaining architectural services.
    (b) The borrower shall ensure that the architect furnishes or 
obtains all architectural services related to the design and 
construction management of the facilities.
    (c) Reasonable modifications or additions to the terms and 
conditions in the RUS contract form may be made to define the exact 
services needed for a specific undertaking. Such modifications or 
additions shall not relieve the architect or the borrower of the basic 
responsibilities required by the RUS contract form, and shall not alter 
any terms and conditions required by law.

[[Page 242]]

All substantive changes must be approved by RUS prior to execution of 
the contract.
    (d) Architectural services contracts are not subject to RUS approval 
and need not be submitted to RUS unless specifically requested by RUS on 
a case by case basis.
    (e) Closeout. Upon completion of all services and obligations 
required under each architectural services contract, including, but not 
limited to, submission of final documents, the borrower must closeout 
that contract. The borrower shall obtain from the architect a final 
statement of cost, which must be supported by detailed information as 
appropriate. For example, out-of-pocket expense and per diem types of 
compensation should be listed separately with labor, transportation, 
etc., itemized for each service involving these types of compensation. 
RUS Form 284, Final Statement of Cost for Architectural Service, may be 
used. All computations of the compensation must be made in accordance 
with the terms of the architectural services contract. Closeout 
documents need not be submitted to RUS unless specifically requested by 
RUS on a case by case basis.



Secs. 1724.22-1724.29  [Reserved]



                     Subpart C_Engineering Services



Sec. 1724.30  Borrowers' requirements--engineering services.

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) Each borrower shall select one or more qualified persons to 
perform the engineering services involved in the planning, design, and 
construction management of the system.
    (b) Each borrower shall retain or employ one or more qualified 
engineers to inspect and certify all new construction in accordance with 
Sec. 1724.32. The engineer must not be the borrower's manager.
    (c) The selection of the engineer is not subject to RUS approval 
unless specifically required by RUS on a case by case basis. Engineer's 
qualification information need not be submitted to RUS unless 
specifically requested by RUS on a case by case basis.
    (d) The engineer's duties are specified under the Engineering 
Services Contract and under part 1726 of this chapter. The borrower 
shall ensure that the engineer executes all certificates and other 
instruments pertaining to the engineering details required by RUS.
    (e) Additional requirements related to appropriate seismic safety 
measures are contained in part 1792, subpart C, of this chapter, Seismic 
Safety of Federally Assisted New Building Construction.
    (f) If the facilities are RUS financed, the borrower shall submit or 
require the engineer to submit one copy of each construction progress 
report to RUS upon RUS' request.

    Effective Date Note: At 78 FR 73371, Dec. 5, 2013, Sec. 1724.30 was 
amended by revising paragraph (a), effective Feb. 3, 2014. For the 
convenience of the user, the revised text is set forth as follows:



Sec. 1724.30  Borrowers' requirements--engineering services.

                                * * * * *

    (a) Each borrower shall select one or more qualified persons to 
perform the engineering services involved in the planning (including the 
development of an EE Program eligible for financing pursuant to subpart 
H of part 1710 of this chapter, design, and construction management of 
the system.

                                * * * * *



Sec. 1724.31  Engineering services contracts.

    The provisions of this section apply only to RUS financed electric 
system facilities.
    (a) RUS contract forms for engineering services shall be used. 
Reasonable modifications or additions to the terms and conditions in the 
RUS contract form may be made to define the exact services needed for a 
specific undertaking. Any such modifications or additions shall not 
relieve the engineer or the borrower of the basic responsibilities 
required by the RUS contract form, and shall not alter any terms and 
conditions required by law. All substantive changes to the RUS contract 
form shall be approved by RUS prior to execution of the contract.

[[Page 243]]

    (b) RUS Form 236, Engineering Service Contract--Electric System 
Design and Construction, shall be used for all distribution, 
transmission, substation, and communications and control facilities. 
These contracts are not subject to RUS approval and need not be 
submitted to RUS unless specifically requested by RUS on a case by case 
basis.
    (c) RUS Form 211, Engineering Service Contract for the Design and 
Construction of a Generating Plant, shall be used for all new generating 
units and repowering of existing units. These contracts require RUS 
approval.
    (d) Any amendments to RUS approved engineering services contracts 
require RUS approval.
    (e) Closeout. Upon completion of all services and obligations 
required under each engineering services contract, including, but not 
limited to, submission of final documents, the borrower must closeout 
the contract. The borrower shall obtain from the engineer a completed 
final statement of engineering fees, which must be supported by detailed 
information as appropriate. RUS Form 234, Final Statement of Engineering 
Fee, may be used. All computations of the compensation shall be made in 
accordance with the terms of the engineering services contract. Closeout 
documents need not be submitted to RUS unless specifically requested by 
RUS on a case by case basis.



Sec. 1724.32  Inspection and certification of work order construction.

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) The borrower shall ensure that all field inspection and related 
services are performed within 6 months of the completion of 
construction, and are performed by a licensed engineer, except that a 
subordinate of the licensed engineer may make the inspection, provided 
the following conditions are met:
    (1) The inspection by the subordinate is satisfactory to the 
borrower;
    (2) This practice is acceptable under applicable requirements of the 
States in which the facilities are located;
    (3) The subordinate is experienced in making such inspections;
    (4) The name of the person making the inspection is included in the 
certification; and
    (5) The licensed engineer signs such certification which appears on 
the inventory of work orders.
    (b) The inspection shall include a representative and sufficient 
amount of construction listed on each RUS Form 219, Inventory of Work 
Orders (or comparable form), being inspected to assure the engineer that 
the construction is acceptable. Each work order that was field inspected 
shall be indicated on RUS Form 219 (or comparable form.) The inspection 
services shall include, but not be limited to, the following:
    (1) Determination that construction conforms to RUS specifications 
and standards and to the requirements of the National Electrical Safety 
Code (NESC), State codes, and local codes;
    (2) Determination that the staking sheets or as-built drawings 
represent the construction completed and inspected;
    (3) Preparation of a list of construction clean-up notes and staking 
sheet discrepancies to be furnished to the owner to permit correction of 
construction, staking sheets, other records, and work order inventories;
    (4) Reinspection of construction corrected as a result of the 
engineer's report;
    (5) Noting, initialing, and dating the staking or structure sheets 
or as-built drawings and noting the corresponding work order entry for 
line construction; and
    (6) Noting, initialing, and dating the as-built drawings or sketches 
for generating plants, substations, and other major facilities.
    (c) Certification. (1) The following certification must appear on 
all inventories of work orders:

    I hereby certify that sufficient inspection has been made of the 
construction reported by this inventory to give me reasonable assurance 
that the construction complies with applicable specifications and 
standards and meets appropriate code requirements as to strength and 
safety. This certification is in accordance with acceptable engineering 
practice.

    (2) A certification must also include the name of the inspector, 
name of the

[[Page 244]]

firm, signature of the licensed engineer, the engineer's State license 
number, and the date of signature.



Secs. 1724.33-1724.39  [Reserved]



                   Subpart D_Electric System Planning



Sec. 1724.40  General.

    Borrowers shall have ongoing, integrated planning to determine their 
short-term and long-term needs for plant additions, improvements, 
replacements, and retirements for their electric systems. The primary 
components of the planning system consist of long-range engineering 
plans and construction work plans. Long-range engineering plans identify 
plant investments required over a long-range period, 10 years or more. 
Construction work plans specify and document plant requirements for a 
shorter term, 2 to 4 years. Long-range engineering plans and 
construction work plans shall be in accordance with part 1710, subpart 
F, of this chapter. See also RUS Bulletins 1724D-101A, Electric System 
Long-Range Planning Guide, and 1724D-101B, System Planning Guide, 
Construction Work Plans, for additional guidance. These bulletins are 
available from Program Development and Regulatory Analysis, Rural 
Utilities Service, U.S. Department of Agriculture, Stop 1522, 1400 
Independence Ave., SW., Washington, DC 20250-1522.



Secs. 1724.41-1724.49  [Reserved]



                    Subpart E_Electric System Design



Sec. 1724.50  Compliance with National Electrical Safety Code (NESC).

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) A borrower shall ensure that its electric system, including all 
electric distribution, transmission, and generating facilities, is 
designed, constructed, operated, and maintained in accordance with all 
applicable provisions of the most current and accepted criteria of the 
National Electrical Safety Code (NESC) and all applicable and current 
electrical and safety requirements of any State or local governmental 
entity. Copies of the NESC may be obtained from the Institute of 
Electrical and Electronic Engineers, Inc., 445 Hoes Lane, Piscataway, NJ 
08855. This requirement applies to the borrower's electric system 
regardless of the source of financing.
    (b) Any electrical standard requirements established by RUS are in 
addition to, and not in substitution for or a modification of, the most 
current and accepted criteria of the NESC and any applicable electrical 
or safety requirements of any State or local governmental entity.
    (c) Overhead distribution circuits shall be constructed with not 
less than the Grade C strength requirements as described in Section 26, 
Strength Requirements, of the NESC when subjected to the loads specified 
in NESC Section 25, Loadings for Grades B and C. Overhead transmission 
circuits shall be constructed with not less than the Grade B strength 
requirements as described in NESC Section 26.



Sec. 1724.51  Design requirements.

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) Distribution. All distribution facilities must conform to the 
applicable RUS construction standards and utilize RUS accepted 
materials.
    (b) Transmission lines. (1) All transmission line design data must 
be approved by RUS.
    (2) Design data consists of all significant design features, 
including, but not limited to, transmission line design data summary, 
general description of terrain, right-of-way calculations, discussion 
concerning conductor and structure selection, conductor sag and tension 
information, design clearances, span limitations due to clearances, 
galloping or conductor separation, design loads, structure strength 
limitations, insulator selection and design, guying requirements, and 
vibration considerations. For lines composed of steel or concrete poles, 
or steel towers, in which load information will be used to purchase the 
structures, the design data shall also include loading trees, structure 
configuration and selection,

[[Page 245]]

and a discussion concerning foundation selection.
    (3) Line design data for uprating transmission lines to higher 
voltage levels or capacity must be approved by RUS.
    (4) Transmission line design data which has received RUS approval in 
connection with a previous transmission line construction project for a 
particular borrower is considered approved by RUS for that borrower, 
provided that:
    (i) The conditions on the project fall within the design data 
previously approved; and
    (ii) No significant NESC revisions have occurred.
    (c) Substations. (1) All substation design data must be approved by 
RUS.
    (2) Design data consists of all significant design features, 
including, but not limited to, a discussion of site considerations, oil 
spill prevention measures, design considerations covering voltage, 
capacity, shielding, clearances, number of low and high voltage phases, 
major equipment, foundation design parameters, design loads for line 
support structures and the control house, seismic considerations, 
corrosion, grounding, protective relaying, and AC and DC auxiliary 
systems. Reference to applicable safety codes and construction standards 
are also to be included.
    (3) Substation design data which has received RUS approval in 
connection with a previous substation construction project for a 
particular borrower is considered approved by RUS for that borrower, 
provided that:
    (i) The conditions on the project fall within the design data 
previously approved; and
    (ii) No significant NESC revisions have occurred.
    (d) Generating facilities. (1) This section covers all portions of a 
generating plant including plant buildings, the generator step-up 
transformer, and the transmission switchyard at a generating plant. 
Warehouses and equipment service buildings not associated with 
generation plants are covered under paragraph (e) of this section. 
Generation plant buildings must meet the requirements of paragraph 
(e)(1) of this section.
    (2) For all new generation units and for all repowering projects, 
the design outline shall be approved by RUS, unless RUS determines that 
a design outline is not needed for a particular project.
    (3) The design outline will include all significant design criteria. 
During the early stages of the project, RUS will, in consultation with 
the borrower and its consulting engineer, identify the specific items 
which are to be included in the design outline.
    (e) Headquarters--(1) Applicable laws. The design and construction 
of headquarters facilities shall comply with all applicable Federal, 
State, and local laws and regulations, including, but not limited to:
    (i) Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. 794), 
which states that no qualified individual with a handicap shall, solely 
by reason of their handicap, be excluded from participation in, be 
denied the benefits of, or be subject to discrimination under any 
program or activity receiving Federal financial assistance. The Uniform 
Federal Accessibility Standards (41 CFR part 101-19, subpart 101-19.6, 
appendix A) are the applicable standards for all new or altered borrower 
buildings, regardless of the source of financing.
    (ii) The Architectural Barriers Act of 1968 (42 U.S.C. 4151), which 
requires that buildings financed with Federal funds are designed and 
constructed to be accessible to the physically handicapped.
    (iii) The Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 
et seq.), and Executive Order 12699, Seismic Safety of Federal and 
Federally Assisted or Regulated New Building Construction (3 CFR 1990 
Comp., p. 269). Appropriate seismic safety provisions are required for 
new buildings for which RUS provides financial assistance. (See part 
1792, subpart C, of this chapter.)
    (2) The borrower shall provide evidence, satisfactory in form and 
substance to the Administrator, that each building will be designed and 
built in compliance with all Federal, State, and local requirements.
    (f) Communications and control. (1) This section covers microwave 
and

[[Page 246]]

powerline carrier communications systems, load control, and supervisory 
control and data acquisition (SCADA) systems.
    (2) The performance considerations for a new or replacement master 
system must be approved by RUS. A master system includes the main 
controller and related equipment at the main control point. Performance 
considerations include all major system features and their 
justification, including, but not limited to, the objectives of the 
system, the types of parameters to be controlled or monitored, the 
communication media, alternatives considered, and provisions for future 
needs.



Sec. 1724.52  Permitted deviations from RUS construction standards.

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) Structures for raptor protection. (1) RUS standard distribution 
line structures may not have the extra measure of protection needed in 
areas frequented by eagles and other large raptors to protect such birds 
from electric shock due to physical contact with energized wires. Where 
raptor protection in the design of overhead line structures is required 
by RUS; a Federal, State or local authority with permit or license 
authority over the proposed construction; or where the borrower 
voluntarily elects to comply with the recommendations of the U.S. Fish 
and Wildlife Service or State wildlife agency, borrowers are permitted 
to deviate from RUS construction standards, provided:
    (i) Structures are designed and constructed in accordance with 
``Suggested Practices for Raptor Protection on Powerlines: The State of 
the Art in 1996'' (Suggested Practices for Raptor Protection); and,
    (ii) Structures are in accordance with the NESC and applicable State 
and local regulations.
    (2) Any deviation from the RUS construction standards for the 
purpose of raptor protection, which is not in accordance with the 
Suggested Practices for Raptor Protection, must be approved by RUS prior 
to construction. ``Suggested Practices for Raptor Protection on 
Powerlines: The State of the Art in 1996,'' published by the Edison 
Electric Institute/Raptor Research Foundation, is hereby incorporated by 
reference. This incorporation by reference is approved by the Director 
of the Office of the Federal Register in accordance with 5 U.S.C. 552(a) 
and 1 CFR part 51. Copies of this publication may be obtained from the 
Raptor Research Foundation, Inc., c/o Jim Fitzpatrick, Treasurer, 
Carpenter Nature Center, 12805 St. Croix Trail South, Hastings, 
Minnesota 55033. It is also available for inspection during normal 
business hours at RUS, Electric Staff Division, 1400 Independence 
Avenue, SW., Washington, DC, Room 1246-S, and at the National Archives 
and Records Administration (NARA). For information on the availability 
of this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html.
    (b) Transformer neutral connections. Where it is necessary to 
separate the primary and secondary neutrals to provide the required 
electric service to a consumer, the RUS standard transformer secondary 
neutral connections may be modified in accordance with Rule 97D2 of the 
NESC.
    (c) Lowering of neutral conductor on overhead distribution lines. 
(1) It is permissible to lower the neutral attachment on standard 
construction pole-top assemblies an additional distance not exceeding 
two feet (0.6 m) for the purpose of economically meeting the clearance 
requirements of the NESC.
    (2) It is permissible to lower the transformer and associated 
neutral attachment up to two feet (0.6 m) to provide adequate clearance 
between the cutouts and single-phase, conventional distribution 
transformers.
    (3) It is permissible to lower the neutral attachment on standard 
construction pole-top assemblies an additional distance of up to six 
feet (2 m) for the purpose of performing construction and future line 
maintenance on these assemblies from bucket trucks designed for such 
work.

[63 FR 35314, June 29, 1998, as amended at 69 FR 18803, Apr. 9, 2004]

[[Page 247]]



Sec. 1724.53  Preparation of plans and specifications.

    The provisions of this section apply to all borrower electric system 
facilities regardless of the source of financing.
    (a) General. (1) The borrower (acting through the engineer, if 
applicable) shall prepare plans and specifications that adequately 
represent the construction to be performed.
    (2) Plans and specifications for distribution, transmission, or 
generating facilities must be based on a construction work plan (as 
amended, if applicable), engineering study or construction program which 
has been approved by RUS if financing for the facilities will at any 
time be requested from RUS.
    (b) Composition of plans and specifications package. (1) Whether 
built by force account or contract, each set of plans and specifications 
must include:
    (i) Distribution lines. Specifications and drawings, staking sheets, 
key map and appropriate detail maps;
    (ii) Transmission lines. Specifications and drawings, transmission 
line design data manual, vicinity maps of the project, a one-line 
diagram, and plan and profile sheets;
    (iii) Substations. Specifications and drawings, including a one-line 
diagram, plot and foundation plan, grounding plan, and plans and 
elevations of structure and equipment, as well as all other necessary 
construction drawings, in sufficient detail to show phase spacing and 
ground clearances of live parts;
    (iv) Headquarters. Specifications and drawings, including:
    (A) A plot plan showing the location of the proposed building plus 
paving and site development;
    (B) A one line drawing (floor plan and elevation view), to scale, of 
the proposed building with overall dimensions shown; and
    (C) An outline specification including materials to be used (type of 
frame, exterior finish, foundation, insulation, etc.); and
    (v) Other facilities (e.g., generation and communications and 
control facilities). Specifications and drawings, as necessary and in 
sufficient detail to accurately define the scope and quality of work 
required.
    (2) For contract work, the appropriate standard RUS construction 
contract form shall be used as required by part 1726 of this chapter.



Sec. 1724.54  Requirements for RUS approval of plans and specifications.

    The provisions of this section apply only to RUS financed electric 
system facilities.
    (a) For any contract subject to RUS approval in accordance with part 
1726 of this chapter, the borrower shall obtain RUS approval of the 
plans and specifications, as part of the proposed bid package, prior to 
requesting bids. RUS may require approval of other plans and 
specifications on a case by case basis.
    (b) Distribution lines. RUS approval of the plans and specifications 
for distribution line construction is not required if standard RUS 
drawings, specifications, RUS accepted material, and standard RUS 
contract forms (as required by part 1726 of this chapter) are used. 
Drawings, plans and specifications for nonstandard distribution 
construction must be submitted to RUS and receive approval prior to 
requesting bids on contracts or commencement of force account 
construction.
    (c) Transmission lines. (1) Plans and specifications for 
transmission construction projects which are not based on RUS approved 
line design data or do not use RUS standard structures must receive RUS 
approval prior to requesting bids on contracts or commencement of force 
account construction.
    (2) Unless RUS approval is required by paragraph (a) of this 
section, plans and specifications for transmission construction which 
use previously approved design data and standard structures do not 
require RUS approval. Plans and specifications for related work, such as 
right-of-way clearing, equipment, and materials, do not require RUS 
approval unless required by paragraph (a) of this section.
    (d) Substations. (1)(i) Plans and specifications for all new 
substations must receive RUS approval prior to requesting bids on 
contracts or commencement of force account construction, unless:
    (A) The substation design has been previously approved by RUS; and

[[Page 248]]

    (B) No significant NESC revisions have occurred.
    (ii) The borrower shall notify RUS in writing that a previously 
approved design will be used, including identification of the previously 
approved design.
    (2) Unless RUS approval is required by paragraph (a) of this 
section, plans and specifications for substation modifications and for 
substations using previously approved designs do not require RUS 
approval.
    (e) Generation facilities. (1) This paragraph (e) covers all 
portions of a generating plant including plant buildings, the generator 
step-up transformer, and the transmission switchyard at a generating 
plant. Warehouses and equipment service buildings not associated with 
generation plants are covered under paragraph (f) of this section.
    (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. 
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) Headquarters buildings. (1) This paragraph (f) covers office 
buildings, warehouses, and equipment service buildings. Generating plant 
buildings are covered under paragraph (e) of this section.
    (2) Unless RUS approval is required by paragraph (a) of this 
section, plans and specifications for headquarters buildings do not 
require RUS approval. The borrower shall submit two copies of RUS Form 
740g, Application for Headquarters Facilities. This form is available 
from Program Development and Regulatory Analysis, Rural Utilities 
Service, United States Department of Agriculture, Stop 1522, 1400 
Independence Ave., SW., Washington, DC 20250-1522. 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) Communications and control facilities. (1) This paragraph (g) 
covers microwave and powerline carrier communications systems, load 
control, and supervisory control and data acquisition (SCADA) 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. Unless 
RUS approval is required by paragraph (a) of this section, plans and 
specifications for communications and control facilities do not require 
RUS approval.
    (h) Terms and conditions include the RUS standard form of contract, 
general and special conditions, and any other non-technical provisions 
of the contract. Terms and conditions which have received RUS approval 
in connection with a previous contract for a particular borrower are 
considered approved by RUS for that borrower.

[63 FR 35314, June 29, 1998, as amended at 65 FR 63196, Oct. 23, 2000; 
77 FR 3071, Jan. 23, 2012]



Sec. 1724.55  Dam safety.

    (a) The provisions of this section apply only to RUS financed 
electric system facilities.
    (1)(i) Any borrower that owns or operates a RUS financed dam must 
utilize the``Federal Guidelines for Dam Safety,''(Guidelines), as 
applicable. A dam, as more fully defined in the Guidelines, is generally 
any artificial barrier which either:
    (A) Is 25 feet (8 m) or more in height; or
    (B) Has an impounding capacity at maximum water storage elevation of 
55 acre-feet (68,000 m\3\) or more.
    (ii) The``Federal Guidelines for Dam Safety,''FEMA 93, June, 1979, 
published

[[Page 249]]

by the Federal Emergency Management Agency (FEMA), is hereby 
incorporated by reference. This incorporation by reference is approved 
by the Director of the Office of the Federal Register in accordance with 
5 U.S.C. 552(a) and 1 CFR part 51. Copies of the``Federal Guidelines for 
Dam Safety''may be obtained from the Federal Emergency Management 
Agency, Mitigation Directorate, PO Box 2012, Jessup, MD 20794. It is 
also available for inspection during normal business hours at RUS, 
Electric Staff Division, 1400 Independence Avenue, SW., Washington, DC, 
Room 1246-S, and at the National Archives and Records Administration 
(NARA). For information on the availability of this material at NARA, 
call 202-741-6030, or go to: http://www.archives.gov/federal--register/
code--of--federal--regulations/ibr--locations.html.
    (2) The borrower shall evaluate the hazard potential of its dams in 
accordance with Appendix E of the U.S. Army Corps of Engineers 
Engineering and Design Dam Safety Assurance Program, ER 1110-2-1155, 
July 31, 1995. A summary of the hazard potential criteria is included 
for information as Appendix A to this subpart. The U.S. Army Corps of 
Engineers Engineering and Design Dam Safety Assurance Program, ER 1110-
2-1155, July 31, 1995, published by the United States Army Corps of 
Engineers, is hereby incorporated by reference. This incorporation by 
reference is approved by the Director of the Office of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of 
the U. S. Army Corps of Engineers Engineering and Design Dam Safety 
Assurance Program may be obtained from the U. S. Army Corps of 
Engineers, Publications Depot, 2803 52nd Ave., Hyattsville, MD 20781. It 
is also available for inspection during normal business hours at RUS, 
Electric Staff Division, 1400 Independence Avenue, SW., Washington, DC, 
Room 1246-S, and at the National Archives and Records Administration 
(NARA). For information on the availability of this material at NARA, 
call 202-741-6030, or go to: http://www.archives.gov/federal--register/
code--of--federal--regulations/ibr--locations.html.
    (3) For high hazard potential dams, the borrower must obtain an 
independent review of the design and critical features of construction. 
The reviewer must have demonstrated experience in the design and 
construction of dams of a similar size and nature. The reviewer must be 
a qualified engineer not involved in the original design of the dam or a 
Federal or State agency responsible for dam safety. The reviewer must be 
approved by RUS.
    (4) The independent review of design must include, but not 
necessarily be limited to, plans, specifications, design calculations, 
subsurface investigation reports, hydrology reports, and redesigns which 
result from encountering unanticipated or unusual conditions during 
construction.
    (5) The independent review of construction shall include:
    (i) Foundation preparation and treatment. When the foundation has 
been excavated and exposed, and before critical structures such as earth 
embankments or concrete structures are placed thereon, the borrower 
shall require the reviewer to conduct an independent examination of the 
foundation to ensure that suitable foundation material has been reached 
and that the measures proposed for treatment of the foundation are 
adequate. This examination must extend to the preparation and treatment 
of the foundation for the abutments.
    (ii) Fill placement. During initial placement of compacted fill 
materials, the borrower shall require the reviewer to conduct an 
independent examination to ensure that the materials being used in the 
various zones are suitable and that the placement and compaction 
procedures being used by the contractor will result in a properly 
constructed embankment.
    (6) If the reviewer disagrees with any aspect of the design or 
construction which could affect the safety of the dam, then the borrower 
must meet with the design engineer and the reviewer to resolve the 
disagreements.
    (7) Emergency action plan. For high hazard potential dams, the 
borrower must develop an emergency action plan incorporating preplanned 
emergency measures to be taken prior to and following a potential dam 
failure. The

[[Page 250]]

plan should be coordinated with local government and other authorities 
involved with the public safety and be approved by the borrower's board 
of directors.
    (b)(1) For more information and guidance, the following publications 
regarding dam safety are available from FEMA:
    (i)``Emergency Action Planning Guidelines for Dams,''FEMA 64.
    (ii)``Federal Guidelines for Earthquake Analysis and Design of 
Dams,''FEMA 65.
    (iii)``Federal Guidelines for Selecting and Accommodating Inflow 
Design Floods for Dams,''FEMA 94.
    (iv)``Dam Safety: An Owner's Guidance Manual,''FEMA 145, August, 
1987.
    (2) These publications may be obtained from the Federal Emergency 
Management Agency, Mitigation Directorate, PO Box 2012, Jessup, MD 
20794.

[63 FR 35314, June 29, 1998, as amended at 69 FR 18803, Apr. 9, 2004]



Secs. 1724.56-1724.69  [Reserved]



      Sec. Appendix A to Subpart E of Part 1724--Hazard Potential 
                 Classification for Civil Works Projects

    The source for this appendix is U.S. Army Corps of Engineers 
Engineering and Design Dam Safety Assurance Program, ER 1110-2-1155, 
Appendix E. Appendix E is available from the address listed in 
Sec. 1724.55(a)(2).

----------------------------------------------------------------------------------------------------------------
          Category \1\                      Low                    Significant                    High
----------------------------------------------------------------------------------------------------------------
Direct Loss of Life \2\........  None expected (due to      Uncertain (rural location  Certain (one or more
                                  rural location with no     with few residences and    extensive residential,
                                  permanent structures for   only transient or          commercial or industrial
                                  human habitation).         industrial development).   development).
Lifeline Losses \3\............  No disruption of           Disruption of essential    Disruption of critical
                                  services--repairs are      facilities and access.     facilities and access.
                                  cosmetic or rapidly
                                  repairable damage.
Property Losses \4\............  Private agricultural       Major public and private   Extensive public and
                                  lands, equipment and       facilities.                private facilities.
                                  isolated buildings.
Environmental Losses \5\.......  Minimal incremental        Major mitigation required  Extensive mitigation cost
                                  damage.                                               or impossible to
                                                                                        mitigate.
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Categories are based upon project performance and do not apply to individual structures within a project.
\2\ Loss of life potential based upon inundation mapping of area downstream of the project. Analysis of loss of
  life potential should take into account the extent of development and associated population at risk, time of
  flood wave travel and warning time.
\3\ Indirect threats to life caused by the interruption of lifeline services due to project failure, or
  operation, i.e., direct loss of (or access to) critical medical facilities or loss of water or power supply,
  communications, power supply, etc.
\4\ Direct economic impact of value of property damages to project facilities and down stream property and
  indirect economic impact due to loss of project services, i.e., impact on navigation industry of the loss of a
  dam and navigation pool, or impact upon a community of the loss of water or power supply.
\5\ Environmental impact downstream caused by the incremental flood wave produced by the project failure, beyond
  which would normally be expected for the magnitude flood event under a without project conditions.



                      Subpart F_RUS Contract Forms



Sec. 1724.70  Standard forms of contracts for borrowers.

    (a) General. The standard loan agreement between RUS and its 
borrowers provides that, in accordance with applicable RUS regulations 
in this chapter, the borrower shall use standard forms of contract 
promulgated by RUS for construction, procurement, engineering services, 
and architectural services financed by a loan made or guaranteed by RUS. 
(See section 5.16 of appendix A to subpart C of part 1718 of this 
chapter.) This subpart prescribes RUS procedures in promulgating 
electric program standard contract forms and identifies those forms that 
borrowers are required to use.
    (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. In addition, RUS promulgates standard contract forms

[[Page 251]]

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.

[63 FR 58284, Oct. 30, 1998]



Sec. 1724.71  Borrower contractual obligations.

    (a) Loan agreement. As a condition of a loan or loan guarantee under 
the RE Act, 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 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 called``listed contract forms'') identified in 
the List of Required Standard Contract Forms contained in 
Sec. 1724.74(c).
    (b) Compliance. 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. Exact electronic reproduction is 
acceptable. The approved RUS standard forms of contract shall not be 
retyped, changed, modified, or altered in any manner not specifically 
authorized in this part or approved by RUS in writing on a case-by-case 
basis. Any modifications approved by RUS on a case-by-case basis must be 
clearly shown so as to indicate the modification difference from the 
standard form of contract.
    (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.
    (d) Waiver. RUS may waive for good cause, on a case by case basis, 
the requirements imposed on a borrower pursuant to this part. Borrowers 
seeking a waiver by RUS must provide RUS with a written request 
explaining the need for the waiver.
    (e) Violations. A failure on the part of the borrower to use listed 
contracts as prescribed in this part is a violation of the terms of its 
loan agreement with RUS and RUS may exercise any and all remedies 
available under the terms of the agreement or otherwise.

[63 FR 58285, Oct. 30, 1998, as amended at 69 FR 7108, Feb. 13, 2004]



Sec. 1724.72  Notice and publication of listed contract forms.

    (a) Notice. Upon initially entering into a loan agreement with RUS, 
borrowers will be provided with all listed contract forms. Thereafter, 
new or revised listed contract forms promulgated by RUS, including RUS 
approved exceptions and alternatives, will be sent by regular or 
electronic mail to the address of the borrower as identified in its loan 
agreement with RUS.
    (b) Availability. Listed contract forms are published by RUS. 
Interested parties may obtain the forms from: Rural Utilities Service, 
Program Development and Regulatory Analysis, U.S. Department of 
Agriculture, Stop 1522, 1400 Independence Avenue, SW., Stop 1522, 
Washington, DC 20250-1522, telephone number (202) 720-8674. The list of 
contract forms can be found in Sec. 1724.74(c), List of Required 
Contract Forms.

[63 FR 58285, Oct. 30, 1998]



Sec. 1724.73  Promulgation of new or revised contract forms.

    RUS may, from time to time, undertake to promulgate new contract 
forms or revise or eliminate existing contract forms. In so doing, RUS 
shall publish notice of rulemaking in the Federal Register announcing, 
as appropriate, a revision in, or a proposal to amend Sec. 1724.74, List 
of Electric Program Standard Contract Forms. The amendment may change 
the existing identification of a listed contract form; for example, 
changing the issuance date of a listed contract form or by identifying a 
new required contract form. The notice of rulemaking will describe the 
new standard contract form or the substantive change in the listed 
contract

[[Page 252]]

form, as the case may be, and the issues involved. The standard contract 
form or relevant portions thereof may be appended to the supplementary 
information section of the notice of rulemaking. As appropriate, the 
notice of rulemaking shall provide an opportunity for interested persons 
to provide comments. A copy of each such Federal Register document shall 
be sent by regular or electronic mail to all borrowers.

[63 FR 58285, Oct. 30, 1998]



Sec. 1724.74  List of electric program standard contract forms.

    (a) General. The following is a list of RUS electric program 
standard contract forms for architectural and engineering services. 
Paragraph (c) of this section contains the list of required contract 
forms, i.e., those forms of contracts that borrowers are required to use 
by the terms of their RUS loan agreements as implemented by the 
provisions of this part. Paragraph (d) of this section contains the list 
of guidance contract forms, i.e., those forms of contracts provided as 
guidance to borrowers in the planning, design, and construction of their 
systems. All of these forms are available from RUS. See Sec. 1724.72(b) 
for availability of these forms.
    (b) Issuance date. Where required by this part to use a standard 
form of contract in connection with RUS financing, the borrower shall 
use that form identified by issuance date in the List of Required 
Contract Forms in paragraph (c) of this section, as most recently 
published as of the date the borrower executes the contract.
    (c) List of required contract forms. (1) RUS Form 211, Rev. 4-04, 
Engineering Service Contract for the Design and Construction of a 
Generating Plant. This form is used for engineering services for 
generating plant construction.
    (2) RUS Form 220, Rev. 6-98, Architectural Services Contract. This 
form is used for architectural services for building construction.
    (3) RUS Form 236, Rev. 6-98, Engineering Service Contract--Electric 
System Design and Construction. This form is used for engineering 
services for distribution, transmission, substation, and communications 
and control facilities.
    (d) List of guidance contract forms. (1) RUS Form 179, Rev. 9-66, 
Architects and Engineers Qualifications. This form is used to document 
architects and engineers qualifications.
    (2) RUS Form 215, Rev. 5-67, Engineering Service Contract--System 
Planning. This form is used for engineering services for system 
planning.
    (3) RUS Form 234, Rev. 3-57, Final Statement of Engineering Fee. 
This form is used for the closeout of engineering services contracts.
    (4) RUS Form 241, Rev. 3-56, Amendment of Engineering Service 
Contract. This form is used for amending engineering service contracts.
    (5) RUS Form 244, Rev. 12-55, Engineering Service Contract--Special 
Services. This form is used for miscellaneous engineering services.
    (6) RUS Form 258, Rev. 4-58, Amendment of Engineering Service 
Contract--Additional Project. This form is used for amending engineering 
service contracts to add an additional project.
    (7) RUS Form 284, Rev. 4-72, Final Statement of Cost for 
Architectural Service. This form is used for the closeout of 
architectural services contracts.
    (8) RUS Form 297, Rev. 12-55, Engineering Service Contract--Retainer 
for Consultation Service. This form is used for engineering services for 
consultation service on a retainer basis.
    (9) RUS Form 459, Rev. 9-58, Engineering Service Contract--Power 
Study. This form is used for engineering services for power studies.

[63 FR 58285, Oct. 30, 1998, as amended at 65 FR 63196, Oct. 23, 2000; 
69 FR 52595, Aug. 27, 2004]



Secs. 1724.75-1724.99  [Reserved]



PART 1726_ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES
-Table of Contents



                            Subpart A_General

Sec.
1726.1-1726.9  [Reserved]
1726.10  Introduction.
1726.11  Purpose.
1726.12  Applicability.
1726.13  Waivers.
1726.14  Definitions.

[[Page 253]]

1726.15  ``Buy American''.
1726.16  Debarment and suspension.
1726.17  Restrictions on lobbying.
1726.18  Preloan contracting.
1726.19  Use of competitive procurement.
1726.20  Standards and specifications.
1726.21  New materials.
1726.22  Methods of construction.
1726.23  Qualification of bidders.
1726.24  Standard forms of contracts for borrowers.
1726.25  Subcontracts.
1726.26  Interest on overdue accounts.
1726.27  Contractor's bonds.
1726.28-1726.34  [Reserved]
1726.35  Submission of documents to RUS.
1726.36  Documents subject to RUS approval.
1726.37  OMB control number.
1726.38-1726.49  [Reserved]

                    Subpart B_Distribution Facilities

1726.50  Distribution line materials and equipment.
1726.51  Distribution line construction.
1726.52-1726.74  [Reserved]

            Subpart C_Substation and Transmission Facilities

1726.75  General.
1726.76  Substation and transmission line materials and equipment.
1726.77  Substation and transmission line construction.
1726.78-1726.124  [Reserved]

                     Subpart D_Generation Facilities

1726.125  Generating plant facilities.
1726.126-1726.149  [Reserved]

                           Subpart E_Buildings

1726.150  Headquarters buildings.
1726.151-1726.174  [Reserved]

                         Subpart F_General Plant

1726.175  General plant materials.
1726.176  Communications and control facilities.
1726.177-1726.199  [Reserved]

                    Subpart G_Procurement Procedures

1726.200  General requirements.
1726.201  Formal competitive bidding.
1726.202  Informal competitive bidding.
1726.203  Multiparty negotiation.
1726.204  Multiparty unit price quotations.
1726.205  Multiparty lump sum quotations.
1726.206-1726.249  [Reserved]

         Subpart H_Modifications to RUS Standard Contract Forms

1726.250  General.
1726.251  Prior approved contract modification related to price 
          escalation on transmission equipment, generation equipment, 
          and generation construction contracts.
1726.252  Prior approved contract modification related to liability for 
          special and consequential damages.
1726.253  Prior approved contract modification related to alternative 
          bid provision for payment to contractor for bulk purchase of 
          materials.
1726.254  [Reserved]
1726.255  Prior approved contract modifications related to 
          indemnification.
1726.256-1726.299  [Reserved]

                      Subpart I_RUS Standard Forms

1726.300  Standard forms of contracts for borrowers.
1726.301  Borrower contractual obligations.
1726.302  Notice and publication of listed contract forms.
1726.303  Promulgation of new or revised contract forms.
1726.304  List of electric program standard contract forms.
1726.305-1726.399  [Reserved]

                       Subpart J_Contract Closeout

1726.400  Final contract amendment.
1726.401  Material contract closeout.
1726.402  Equipment contract closeout.
1726.403  Project construction contract closeout.
1726.404  Non-site specific construction contract closeout.
1726.405  Inventory of work orders (RUS Form 219).

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

    Source: 60 FR 10155, Feb. 23, 1995, unless otherwise noted.



                            Subpart A_General



Secs. 1726.1-1726.9  [Reserved]



Sec. 1726.10  Introduction.

    The policies, procedures and requirements included in this part are 
intended to implement provisions of the standard form of loan documents 
between the Rural Utilities Service (RUS) and its electric borrowers. 
Unless prior written approval is received from RUS, borrowers are 
required to comply with RUS policies and procedures as a condition to 
RUS providing

[[Page 254]]

loans, loan guarantees, or reimbursement of general funds for the 
construction and improvement of electric facilities. Requirements 
relating to RUS approval of plans and specifications, duties and 
responsibilities of the engineer and architect, and engineering and 
architectural services contracts, are contained in other RUS 
regulations. The terms ``RUS form'', ``RUS standard form'', ``RUS 
specification'', ``and RUS bulletin'' have the same meanings as the 
terms ``REA form'', ``REA standard form'', ``REA specification'', ``and 
REA bulletin'', respectively, unless otherwise noted.



Sec. 1726.11  Purpose.

    Each borrower is responsible for the planning, design, construction, 
operation and maintenance of its electric system. RUS, as a secured 
lender, has a legitimate interest in accomplishing RUS's programmatic 
objectives, and in assuring that the costs of construction, materials, 
and equipment are reasonable and economical and that the property 
securing the loans is constructed adequately to serve the purposes for 
which it is intended.



Sec. 1726.12  Applicability.

    The requirements of this part apply to the procurement of materials 
and equipment for use by electric borrowers in their electric systems 
and to the construction of their electric systems if such materials, 
equipment, and construction are financed, in whole or in part, with 
loans made or guaranteed by RUS, including reimbursable projects. In 
order for general fund expenditures for procurement or construction to 
be eligible for reimbursement from loan funds, the borrower must comply 
with the procedures required by this part. In the case of jointly owned 
projects, RUS will determine on a case by case basis the applicability 
of the requirements of this part.



Sec. 1726.13  Waivers.

    The Administrator may waive, for good cause on a case by case basis, 
certain requirements and procedures of this part. RUS reserves the 
right, as a condition of providing loans, loan guarantees, or other 
assistance, to require any borrower to make any specification, contract, 
or contract amendment subject to the approval of the Administrator.



Sec. 1726.14  Definitions.

    Terms used in this part have the meanings set forth in 7 CFR 1710.2. 
References to specific RUS forms and other RUS documents, and to 
specific sections or lines of such forms and documents, shall include 
the corresponding forms, documents, sections and lines in any subsequent 
revisions of these forms and documents. In addition to the terms defined 
in 7 CFR 1710.2, the following terms have the following meanings for the 
purposes of this part:
    Approval of proposed construction means RUS approval of a 
construction work plan or other appropriate engineering study and RUS 
approval, for purposes of system financing, of the completion of all 
appropriate requirements of part 1794 of this chapter.
    Architect means a registered or licensed person employed by the 
borrower to provide architectural services for a project and duly 
authorized assistants and representatives.
    Bona fide bid means a bid which is submitted by a contractor on the 
borrower's list of qualified bidders for the specific contract, prior to 
bid opening.
    ``Buy American'' certificate means a certification that the 
contractor has complied with the ``Buy American'' requirement (see 
Sec. 1726.15).
    Competitive procurement means procurement of goods or services based 
on lowest evaluated bid for similar products or services when three or 
more bids are received.
    Construction unit means a specifically defined portion of a 
construction project containing materials, labor, or both, for purposes 
of bidding and payment.
    Contracting committee means the committee consisting of three to 
five members representing the borrower's management and board of 
directors and the engineer. The contracting committee represents the 
borrower during contract clarifying discussions or negotiations under 
informal competitive bidding or multiparty negotiation, respectively.

[[Page 255]]

    Encumbrance means the process of approval for advance of loans funds 
by RUS.
    Engineer means a registered or licensed person, who may be a staff 
employee or an outside consultant, to provide engineering services and 
duly authorized assistants and representatives.
    Equipment means a major component of an electric system, e.g., a 
substation transformer, heat exchanger or a transmission structure.
    Force account construction means construction performed by the 
borrower's employees.
    Formal competitive bidding means the competitive procurement 
procedure wherein bidders submit sealed proposals for furnishing the 
goods or services stipulated in the specification. Bids are publicly 
opened and read at a predetermined time and place. If a contract is 
awarded, it must be to the lowest evaluated responsive bidder (see 
Sec. 1726.201).
    Goods or services means materials, equipment, or construction, or 
any combination thereof.
    Informal competitive bidding means the competitive procurement 
procedure which provides for private opening of bids and allows 
clarifying discussions between the contracting committee and the 
bidders. During the clarifying discussions any exceptions to the bid 
documents must be eliminated, or the bid rejected, so that the contract 
is awarded to the lowest evaluated responsive bidder (see 
Sec. 1726.202).
    Material means miscellaneous hardware which is combined with 
equipment to form an electric system, e.g., poles, insulators, or 
conductors.
    Minor modification or improvement means a project the cost of which 
is $150,000 or less, exclusive of the cost of owner furnished materials.
    Multiparty lump sum quotations means the procurement of goods or 
services on a lump sum basis, based on the lowest evaluated offering, 
when three or more offers are received. (See Sec. 1726.205).
    Multiparty negotiation means the procurement procedure where three 
or more bids are received and provides for negotiations between the 
contracting committee and each bidder to determine the bid which is in 
the borrower's best interest (see Sec. 1726.203).
    Multiparty unit price quotations means the procurement of goods or 
services on a unit price basis, based on the lowest evaluated offering, 
when three or more offers are received (See Sec. 1726.204).
    Net utility plant (NUP) means Part C, Line 5 of RUS Form 7 for 
distribution borrowers or Section B, Line 5 of RUS Form 12a for power 
supply borrowers for the immediately preceding calendar year.
    Procurement method means a procedure, including, but not limited to, 
those in subpart G of this part, that a borrower uses to obtain goods 
and services.
    Owner furnished materials means materials or equipment or both 
supplied by the borrower for installation by the contractor.
    Responsive bid means a bid with no exceptions or non-minor errors or 
irregularities on any technical requirement or in the contract terms and 
conditions.
    RUS approval means written approval by the Administrator or a 
representative with delegated authority. RUS approval must be in 
writing, except in emergency situations where RUS approval may be given 
over the telephone followed by a confirming letter.
    Unit prices means individual prices for specific construction units 
defined in accordance with RUS approved units specified in RUS standard 
contract forms.

[60 FR 10155, Feb. 23, 1995, as amended at 77 FR 3071, Jan. 23, 2012]



Sec. 1726.15  ``Buy American''.

    The borrower must ensure that all materials and equipment financed 
with loans made or guaranteed by RUS complies with the ``Buy American'' 
provisions of the Rural Electrification Act of 1938 (7 U.S.C. 903 note), 
as amended by the North American Free Trade Agreement Implementation Act 
(107 Stat 2129). When a ``Buy American'' certificate is required by this 
part, this must be on RUS Form 213.



Sec. 1726.16  Debarment and suspension.

    Borrowers are required to comply with certain requirements on 
debarment and suspension in connection

[[Page 256]]

with procurement activities as set forth in part 3017 of this title, 
particularly with respect to lower tier transactions, e.g., procurement 
contracts for goods or services.



Sec. 1726.17  Restrictions on lobbying.

    Borrowers are required to comply with certain restrictions and 
requirements in connection with procurement activities as set forth in 
part 3018 of this title.



Sec. 1726.18  Preloan contracting.

    Borrowers must consult with RUS prior to entering into any contract 
for material, equipment, or construction if a construction work plan, 
general funds, loan or loan guarantee for the proposed work has not been 
approved. While the RUS staff will work with the borrower in such 
circumstances, nothing contained in this part is to be construed as 
authorizing borrowers to enter into any contract before the availability 
of funds has been ascertained by the borrower and all the requirements 
of part 1794 of this chapter, Environmental Policies and Procedures for 
Electric and Telephone Borrowers, have been fulfilled.



Sec. 1726.19  Use of competitive procurement.

    RUS borrowers' procurement is not subject to the provisions of the 
Federal Acquisition Regulation (48 CFR chapter 1); however, since 
borrowers receive the benefit of Federal financial assistance borrowers 
must use competitive procurement to the greatest extent practical. The 
borrower must use competitive procurement for obtaining all goods or 
services when a RUS loan or loan guarantee is involved except:
    (a) As specifically provided for in subparts B through F of this 
part; or
    (b) A waiver is granted.



Sec. 1726.20  Standards and specifications.

    All materials, equipment, and construction must meet the minimum 
requirements of all applicable RUS standards and specifications. (See 
part 1728 of this chapter, Electric Standards and Specifications for 
Materials and Construction, which is applicable regardless of the source 
of funding.)

[69 FR 7109, Feb. 13, 2004]



Sec. 1726.21  New materials.

    The borrower shall purchase only new materials and equipment unless 
otherwise approved by RUS, on a case by case basis, prior to the 
purchase.



Sec. 1726.22  Methods of construction.

    The borrower is generally responsible for determining whether 
construction will be by contract or force account. If construction is by 
contract, the borrower must determine whether materials will be supplied 
by the contractor or will be furnished by the borrower. RUS reserves the 
right to require contract construction in lieu of force account 
construction on a case by case basis.



Sec. 1726.23  Qualification of bidders.

    (a) Qualified bidder list (QBL). The borrower shall (acting through 
its engineer, if applicable) review the qualifications of prospective 
bidders for contract construction and for material and equipment 
procurement, and select firms qualified for inclusion on the borrower's 
list of qualified bidders for each contract. (See also Sec. 1726.16 and 
Sec. 1726.17.) A bid may not be solicited from a prospective bidder or 
opened by the borrower unless that bidder has been determined to be a 
qualified bidder for the contract. When preparing the QBL, in addition 
to the actual experience of the borrower, if any, in dealing with a 
prospective bidder, the borrower may solicit information from that 
bidder or from other parties with firsthand experience regarding the 
firm's capabilities and experience. It is also important to consider the 
firm's performance record, safety record, and similar factors in 
determining whether to include that firm on the QBL, since the borrower 
may not evaluate these factors when evaluating a bid from a qualified 
and invited bidder.
    (b) Conflict of interest. If there is a relationship between the 
borrower or engineer and a prospective bidder which might cause the 
borrower or engineer to have or appear to have a conflict of interest, 
that prospective bidder shall

[[Page 257]]

not be included on the QBL unless the engineer discloses the nature of 
the relationship to the borrower. In the case of the borrower, if its 
employees or directors have a relationship with a prospective bidder, 
the prospective bidder shall not be included on the qualified bidders 
list unless the nature of the relationship is disclosed to the board of 
directors, and the board of directors specifically approves the 
inclusion of that bidder in light of the potential for a conflict of 
interest.



Sec. 1726.24  Standard forms of contracts for borrowers.

    (a) General. The standard loan agreement between RUS and the 
borrowers provides that, in accordance with applicable RUS regulations 
in this chapter, the borrower shall use standard forms of contracts 
promulgated by RUS for construction, procurement, engineering services, 
and architectural services financed by a loan made or guaranteed by RUS. 
This part implements these provisions of the RUS loan agreement. 
Subparts A through H and J of this part prescribe when and how borrowers 
are required to use RUS standard forms of contracts in procurement and 
construction. Subpart I of this part prescribes the procedures that RUS 
follows in promulgating standard contract forms and identifies those 
contract forms that borrowers are required to use for procurement and 
construction.
    (b) Amendments to contracts--(1) Contract forms. The borrower must 
use RUS Form 238, Construction or Equipment Contract Amendment, for any 
change or addition in any contract for construction or equipment.
    (2) Special considerations. Each time an amendment to a construction 
contract is executed, the borrower must ensure that contractor's bond is 
adequate, that all necessary licenses and permits have been obtained, 
and that any environmental requirements associated with the proposed 
construction have been met.
    (3) Amendment approval requirements. (i) If a RUS approved form of 
contract is required by this part, an amendment must not alter the terms 
and conditions of the RUS approved form of contract without prior RUS 
approval.
    (ii) The borrower must make a contract amendment subject to RUS 
approval if the underlying contract was made subject to RUS approval and 
the total amended contract price exceeds 120 percent of the original 
contract price (excluding any escalation provision contained in the 
contract).
    (iii) Contract amendments, except as provided in paragraph 
(b)(3)(ii) of this section, are not subject to RUS approval and need not 
be submitted to RUS unless specifically requested by RUS on a case by 
case basis.

[60 FR 10155, Feb. 23, 1995, as amended at 63 FR 58286, Oct. 30, 1998; 
69 FR 7109, Feb. 13, 2004]



Sec. 1726.25  Subcontracts.

    Subcontracts are not subject to RUS approval and need not be 
submitted to RUS unless specifically requested by RUS on a case by case 
basis.

[69 FR 7109, Feb. 13, 2004]



Sec. 1726.26  Interest on overdue accounts.

    Certain RUS contract forms contain a provision concerning payment of 
interest on overdue accounts. Prior to issuing the invitation to 
bidders, the borrower must insert an interest rate equal to the lowest 
``Prime Rate'' listed in the ``Money Rates'' section of the Wall Street 
Journal on the date such invitation to bid is issued. If no prime rate 
is published on that date, the last such rate published prior to that 
date must be used. The rate must not, however, exceed the maximum rate 
allowed by any applicable state law.

[63 FR 58286, Oct. 30, 1998]



Sec. 1726.27  Contractor's bonds.

    (a) RUS Form 168b, Contractor's Bond, shall be used when a 
contractor's bond is required by RUS Forms 200, 257, 786, 790, or 830 
unless the contractor's surety has accepted a Small Business 
Administration guarantee and the contract is for $1 million or less.
    (b) RUS Form 168c, Contractor's Bond, shall be used when a 
contractor's bond is required by RUS Forms 200, 257, 786, 790, or 830 
and the contractor's surety has accepted a Small Business Administration 
guarantee and the contract is for $1 million or less.

[[Page 258]]

    (c) Surety companies providing contractor's bonds shall be listed as 
acceptable sureties in the U.S. Department of the Treasury Circular No. 
570, Companies Holding Certificates of Authority as Acceptable Sureties 
on Federal Bonds and as Acceptable Reinsuring Companies. Copies of the 
circular and interim changes may be obtained directly from the 
Government Printing Office (202) 512-1800. Interim changes are published 
in the Federal Register as they occur. The list is also available 
through the Internet at http://www.fms.treas.gov/c570/index.html and on 
the Department of the Treasury's computerized public bulletin board at 
(202) 874-6887.

[63 FR 58286, Oct. 30, 1998, as amended at 69 FR 7109, Feb. 13, 2004]



Secs. 1726.28-1726.34  [Reserved]



Sec. 1726.35  Submission of documents to RUS.

    (a) Where to send documents. Documents required to be submitted to 
RUS under this part are to be sent to the office of the borrower's 
respective RUS Regional Director, the Power Supply Division Director, or 
such other office of RUS as designated by RUS (see part 1700 of this 
chapter.)
    (b) Borrower certification. When a borrower certification is 
required by this part, it must be made by the borrower's manager unless 
the board of directors specifically authorizes another person to make 
the required certification. In such case, a certified copy of the 
specific authorizing resolution must accompany the document or be on 
file with RUS.
    (c) Contracts requiring RUS approval. The borrower shall submit to 
RUS three copies of each contract that is subject to RUS approval under 
subparts B through F of this part. At least one copy of each contract 
must be an original signed in ink (i.e., no facsimile signature). Each 
contract submittal must be accompanied by:
    (1) A bid tabulation and evaluation and, if applicable, a written 
recommendation of the architect or engineer.
    (2) For awards made under the informal competitive bidding procedure 
or the multiparty negotiation procedure, a written recommendation of the 
contracting committee (See Secs. 1726.202 and 1726.203).
    (3) Three copies of an executed contractor's bond on RUS approved 
bond forms as required in the contract form (at least one copy of which 
must be an original signed in ink) and one copy of the bid bond or 
facsimile of the certified check.
    (4) A certification by the borrower or chairperson of the 
contracting committee, as applicable, that the appropriate bidding 
procedures were followed as required by this part.
    (5) A certified copy of the board resolution awarding the contract.
    (6) Evidence of clear title to the site for substations and 
headquarters construction contracts, if not previously submitted.
    (7) Documentation that all reasonable measures were taken to assure 
competition if fewer than three bids were received.
    (d) Contract amendments requiring RUS approval. The borrower must 
submit to RUS three copies of each contract amendment (at least one copy 
of which must be an original signed in ink) which is subject to RUS 
approval under Sec. 1726.24(b). Each contract amendment submittal to RUS 
must be accompanied by:
    (1) A certified copy of the board resolution approving the 
amendment; and
    (2) A bond extension, where necessary.
    (e) Encumbrance of loan or loan guarantee funds. (1) For contracts 
subject to RUS approval, the submittals required under paragraph (c) of 
this section will initiate RUS action to encumber loan or loan guarantee 
funds for such contracts.
    (2) For contracts not subject to RUS approval (except for generation 
projects), loan or loan guarantee funds will normally be encumbered 
using RUS Form 219, Inventory of Work Orders, after closeout of the 
contracts. In cases where the borrower can show good cause for a need 
for immediate cash, the borrower may request encumbrance of loan or loan 
guarantee funds based on submittal of a copy of the executed contract, 
provided it meets all applicable RUS requirements.

[[Page 259]]

    (3) For generation project contracts not subject to RUS approval, 
the borrower must submit to RUS the following documentation:
    (i) A brief description of the scope of the contract, including 
contract identification (name, number, etc.);
    (ii) Contract date;
    (iii) Contractor's name;
    (iv) Contract amount;
    (v) Bidding procedure used;
    (vi) Borrower certification that:
    (A) The board of directors approved the contract;
    (B) The bidding procedures and contract award for each contract were 
in conformance with the requirements of Part 1726, Electric System 
Construction Policies and Procedures;
    (C) If a RUS approved form of contract is required by this part, the 
terms and conditions of the RUS approved form of contract have not been 
altered;
    (D) If RUS has approved plans and specifications for the contract, 
the contract was awarded on the basis of those plans and specifications; 
and
    (E) No restriction has been placed on the borrower's right to assign 
the contract to RUS or its successors.
    (4) Contract amendments. (i) For amendments subject to RUS approval, 
the submittals required under paragraph (c) of this section will 
initiate RUS action to encumber loan or loan guarantee funds for 
contract amendments requiring RUS approval.
    (ii) For amendments not subject to RUS approval (except generation 
projects), loan or loan guarantee funds will normally be encumbered 
using RUS Form 219, Inventory of Work Orders, after closeout of the 
contracts. In cases where the borrower can justify a need for immediate 
cash, the borrower may request encumbrance of loan or loan guarantee 
funds based on submittal of a copy of the executed amendment, providing 
it meets all applicable RUS requirements.
    (iii) For each generation project contract amendment not subject to 
RUS approval, the borrower must submit to RUS the following information 
and documentation:
    (A) The contract name and number;
    (B) The amendment number;
    (C) The amendment date;
    (D) The dollar amount of the increase or the decrease of the 
amendment;
    (E) Borrower certification that:
    (1) The amendment was approved in accordance with the policy of the 
board of directors (the borrower must ensure that RUS has a certified 
copy of the board resolution establishing such policy);
    (2) If a RUS approved form of contract is required by this part, the 
terms and conditions of the RUS approved form of contract has not been 
altered; and
    (3) No restriction has been placed on the borrower's right to assign 
the contract to RUS or its successors.



Sec. 1726.36  Documents subject to RUS approval.

    Unless otherwise indicated, the borrower shall make all contracts 
and amendments that are subject to RUS approval effective only upon RUS 
approval.



Sec. 1726.37  OMB control number.

    The collection of information requirements in this part have been 
approved by the Office of Management and Budget and assigned OMB control 
number 0572-0107.



Secs. 1726.38-1726.49  [Reserved]



                    Subpart B_Distribution Facilities



Sec. 1726.50  Distribution line materials and equipment.

    (a) Contract forms. (1) The borrower shall use RUS Form 198, 
Equipment Contract, for purchases of equipment where the total cost of 
the contract is more than $1,000,000.
    (2) The borrower may, in its discretion, use RUS Form 198, Equipment 
Contract, or a written purchase order equal to $1,000,000 or less for 
purchases of equipment, and for all materials.
    (b) Standards and specifications. Distribution line materials and 
equipment must meet the minimum requirements of RUS standards as 
determined in accordance with the provisions of part 1728 of this 
chapter, Electric Standards and Specifications for Materials and 
Construction. The borrower must obtain RUS approval prior to purchasing 
any unlisted distribution line material

[[Page 260]]

or equipment of the types listed in accordance with the provisions of 
part 1728 of this chapter.
    (c) Procurement procedures. It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
for the purchase of material and equipment to be used in distribution 
line construction.
    (d) Contract approval. Contracts for purchases of distribution line 
materials and equipment are not subject to RUS approval and need not be 
submitted to RUS unless specifically requested by RUS on a case by case 
basis.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 
FR 3072, Jan. 23, 2012]



Sec. 1726.51  Distribution line construction.

    (a) Contract forms. The borrower must use RUS Form 790, or 830, as 
outlined in this paragraph (a), for distribution line construction, 
except for minor modifications or improvements.
    (1) The borrower may use RUS Form 790, Electric System Construction 
Contract--Non-Site Specific Construction, under the following 
circumstances:
    (i) For contracts for which the borrower supplies all materials and 
equipment; or
    (ii) For non-site specific construction contracts accounted for 
under the work order procedure; or
    (iii) If neither paragraph (a)(1)(i) or (a)(1)(ii) of this section 
are applicable, the borrower may use RUS Form 790 for contracts, up to a 
cumulative total of $500,000 or one percent of net utility plant (NUP), 
whichever is greater, per calendar year of distribution line 
construction, exclusive of the cost of owner furnished materials and 
equipment.
    (2) The borrower must use RUS Form 830, Electric System Construction 
Contract--Project Construction, for all other distribution line 
construction.
    (b) Procurement procedures. (1) It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
to award contracts in amounts of up to a cumulative total of $750,000 or 
one percent of NUP, whichever is greater, per calendar year of 
distribution line construction (including minor modifications or 
improvements), exclusive of the cost of owner furnished materials and 
equipment.
    (2) In addition to the cumulative total stipulated in paragraph 
(b)(1) of this section, a borrower may use Multiparty Unit Price 
Quotations to award contracts in amounts of up to a cumulative total of 
$1,000,000 or 1.5 percent of NUP, whichever is greater, per calendar 
year of distribution line construction (including minor modifications or 
improvements), exclusive of the cost of owner furnished materials and 
equipment.
    (3) The borrower shall use formal competitive bidding for all other 
distribution line contract construction. The amount of contracts bid 
using the formal competitive bidding procedure do not apply to the 
cumulative total stipulated in paragraph (b)(1) of this section.
    (4) An amendment which increases the scope of the contract by adding 
a project is not considered competitively bid, therefore, the amount of 
that amendment does apply to the cumulative total stipulated in 
paragraph (b)(1) of this section.
    (c) Contract approval. Contracts for distribution line construction 
are not subject to RUS approval and need not be submitted to RUS unless 
specifically requested by RUS on a case by case basis.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 
FR 3072, Jan. 23, 2012]



Secs. 1726.52-1726.74  [Reserved]



            Subpart C_Substation and Transmission Facilities



Sec. 1726.75  General.

    As used in this part, ``substations'' includes substations, 
switching stations, metering points, and similar facilities.



Sec. 1726.76  Substation and transmission line materials and equipment.

    (a) Contract forms. (1) The borrower shall use RUS Form 198, 
Equipment Contract, for purchases of equipment where the total cost of 
the contract is $1,000,000 or more.

[[Page 261]]

    (2) The borrower may, in its discretion, use RUS Form 198, Equipment 
Contract, or a written purchase order for purchases of equipment of less 
than $1,000,000 and for all materials.
    (b) Standards and specifications. Substation and transmission line 
materials and equipment must meet the minimum requirements of RUS 
standards as determined in accordance with the provisions of part 1728 
of this chapter, Electric Standards and Specifications for Materials and 
Construction. The borrower must obtain RUS approval prior to purchasing 
of any unlisted substation or transmission line material or equipment of 
the types listed in accordance with the provisions of part 1728 of this 
chapter.
    (c) Procurement procedures. It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
for purchase of material and equipment to be used in substation and 
transmission line construction.
    (d) Contract approval. Contracts for purchases of substation and 
transmission line materials and equipment are not subject to RUS 
approval and need not be submitted to RUS unless specifically requested 
by RUS on a case by case basis.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 
FR 3072, Jan. 23, 2012]



Sec. 1726.77  Substation and transmission line construction.

    (a) Contract forms. The borrower must use RUS Form 830, Electric 
System Construction Contract--Project Construction, for construction of 
substations, except for minor modifications or improvements.
    (b) Procurement procedures. (1) It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
to award contracts not requiring RUS approval in amounts of up to a 
cumulative total of $750,000 or one percent of NUP (not to exceed 
$5,000,000), whichever is greater, per calendar year of substation and 
transmission line construction (including minor modifications or 
improvements), exclusive of the cost of owner furnished materials and 
equipment.
    (2) The borrower shall use formal competitive bidding for all other 
contract construction, including all contracts requiring RUS approval. 
The amount of contracts bid using the formal competitive bidding 
procedure do not apply to the cumulative total stipulated in paragraph 
(b)(1) of this section.
    (3) An amendment which increases the scope of the contract by adding 
a project is not considered competitively bid, therefore, the amount of 
that amendment does apply to the cumulative total stipulated in 
paragraph (b)(1) of this section.
    (c) Contract approval. Individual contracts in the amount of 
$750,000 or more or one percent of NUP (not to exceed $1,500,000 for 
distribution borrowers or $4,500,000 for power supply borrowers), 
whichever is greater, exclusive of the cost of owner furnished materials 
and equipment, are subject to RUS approval.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 
FR 3072, Jan. 23, 2012]



Secs. 1726.78-1726.124  [Reserved]



                     Subpart D_Generation Facilities



Sec. 1726.125  Generating plant facilities.

    This section covers the construction of all portions of a generating 
plant, including plant buildings and the generator step-up transformer. 
Generally, the transmission switchyard will be covered under this 
section during initial construction of the plant. Subpart C of this part 
covers subsequent modifications to transmission switchyards. Warehouses 
and equipment service type buildings are covered under subpart E of this 
part.
    (a) Contract forms. (1) The borrower shall use RUS Form 198, 
Equipment Contract, for the purchase of generating plant equipment in 
the amount of $5,000,000 or more and for any generating plant equipment 
contract requiring RUS approval.
    (2) The borrower shall use RUS Form 200, Construction Contract--
Generating, for generating project construction contracts in the amount 
of

[[Page 262]]

$5,000,000 or more and for any generating project construction contract 
requiring RUS approval.
    (3) The borrower may, in its discretion, use other contract forms or 
written purchase order forms for those contracts in amounts of less than 
$5,000,000 and that do not require RUS approval.
    (b) Procurement procedures. (1) It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
to award contracts in amounts of less than $5,000,000 each.
    (2) If the amount of the contract is $5,000,000 or more or if the 
contract requires RUS approval, the borrower must use formal or informal 
competitive bidding to award the contract.
    (3) Where formal or informal competitive bidding is not applicable, 
or does not result in a responsive bid, multiparty negotiation may be 
used only after RUS approval is obtained.
    (c) Contract approval. During the early stages of generating plant 
design or project design, RUS will, in consultation with the borrower 
and its consulting engineer, identify the specific contracts which 
require RUS approval based on information supplied in the plant design 
manual. The following are typical contracts for each type of generating 
project which will require RUS approval. Although engineering services 
are not covered by this part, they are listed in this paragraph (d) to 
emphasize that RUS approval is required for all major generating station 
engineering service contracts in accordance with applicable RUS rules. 
For types of projects not shown, such as nuclear and alternate energy 
projects, RUS will identify the specific contracts which will require 
RUS approval on a case by case basis.
    (1) Fossil generating stations. Engineering services, steam 
generator, turbine generator, flue gas desulfurization system, 
particulate removal system, electric wiring and control systems, 
mechanical equipment installation (including turbine installation and 
plant piping), power plant building (foundation and superstructure), 
site preparation, coal unloading and handling facilities, main step-up 
substation, cooling towers, and dams or reservoirs.
    (2) Diesel and combustion turbine plants. Engineering services, 
prime mover and generator, building (foundation and superstructure), and 
electrical control systems.
    (3) Hydro installations. Engineering services, turbine/generator, 
civil works and powerhouse construction, electrical control system, and 
mechanical installation.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 
FR 3072, Jan. 23, 2012]



Secs. 1726.126-1726.149  [Reserved]



                           Subpart E_Buildings



Sec. 1726.150  Headquarters buildings.

    This section includes headquarters buildings such as warehouses and 
equipment service type buildings. Generating plant buildings are covered 
under subpart D of this part.
    (a) Contract forms. The borrower must use RUS Form 257, Contract to 
Construct Buildings, for all contracts for construction of new 
headquarters facilities, and additions to, or modifications of existing 
headquarters facilities (except for minor modifications or 
improvements).
    (b) Procurement procedures. A borrower may use Multiparty Lump Sum 
Quotations to award contracts in amounts of up to a cumulative total of 
$750,000 or one percent of NUP (not to exceed $5,000,000), whichever is 
greater, per calendar year of headquarters construction (including minor 
modifications or improvements). The borrower shall use formal 
competitive bidding for all other headquarters contract construction.
    (c) Contract approval. Contracts for headquarters construction are 
not subject to RUS approval and need not be submitted to RUS unless 
specifically requested by RUS on a case by case basis.

[60 FR 10155, Feb. 23, 1995, as amended at 77 FR 3072, Jan. 23, 2012]

[[Page 263]]



Secs. 1726.151-1726.174  [Reserved]



                         Subpart F_General Plant



Sec. 1726.175  General plant materials.

    This section covers items such as office furniture and equipment; 
transportation equipment and accessories, including mobile radio 
systems, stores and shop equipment, laboratory equipment, tools and test 
equipment.
    (a) Contract forms. The borrower may, in its discretion, use RUS 
Form 198, Equipment Contract, or a written purchase order.
    (b) Procurement procedures. It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
for purchase of general plant material and equipment.
    (c) Contract approval. Contracts for the purchase of general plant 
items are not subject to RUS approval and need not be submitted to RUS 
unless specifically requested by RUS on a case by case basis.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]



Sec. 1726.176  Communications and control facilities.

    This section covers the purchase of microwave and power line carrier 
communications systems, load control, and supervisory control and data 
acquisition (SCADA) systems. Mobile radio systems are covered as general 
plant materials in Sec. 1726.175.
    (a) Power line carrier systems. Power line carrier equipment will 
frequently be purchased as part of a substation and will be included in 
the complete substation plans and specifications. When purchased in this 
manner, the requirements of subpart C of this part, Substation and 
Transmission Facilities, will apply. If obtained under a contract for 
only a power line carrier system, the requirements of paragraph (b) of 
this section apply.
    (b) Load control systems, communications systems, and SCADA 
systems--(1) Contract forms. The borrower must use RUS Form 786, 
Electric System Communication and Control Equipment Contract. This form 
may be modified to be a ``purchase only'' contract form.
    (2) Procurement procedures. (i) It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
to award contracts not requiring RUS approval in amounts of up to a 
cumulative total of $750,000 or one percent of NUP (not to exceed 
$5,000,000), whichever is greater, per calendar year of communications 
and control facilities construction (including minor modifications or 
improvements), exclusive of the cost of owner furnished materials and 
equipment.
    (ii) The borrower must use multiparty negotiation for all other 
communications and control facilities contract construction, including 
all contracts requiring RUS approval. The amount of contracts bid using 
the multiparty negotiation procedure do not apply to the cumulative 
total stipulated in paragraph (b)(2)(i) of this section.
    (iii) An amendment which increases the scope by adding a project is 
not considered competitively bid, therefore, the amount of that 
amendment does apply to the cumulative total stipulated in paragraph 
(b)(2)(i) of this section.
    (3) Contract approval. Individual contracts in amounts of $750,000 
or more or one percent of NUP (not to exceed $1,500,000 for distribution 
borrowers or $4,500,000 for power supply borrowers), whichever is 
greater, exclusive of the cost of owner furnished materials and 
equipment, are subject to RUS approval.

[60 FR 10155, Feb. 23, 1995, as amended at 77 FR 3072, Jan. 23, 2012]



Secs. 1726.177-1726.199  [Reserved]



                    Subpart G_Procurement Procedures



Sec. 1726.200  General requirements.

    The borrower must use the procedures described in this subpart where 
such procedures are required under subparts B through F of this part. 
The borrower must ensure that arrangements prior to announcement of the 
award of the contract are such that all bidders are treated fairly and 
no bidder is given an unfair advantage over other bidders.

[[Page 264]]



Sec. 1726.201  Formal competitive bidding.

    Formal competitive bidding is used for distribution, transmission, 
and headquarters facilities, and may be used for generation facilities. 
The borrower must use the following procedure for formal competitive 
bidding:
    (a) Selection of qualified bidders. The borrower (acting through its 
engineer, if applicable) will compile a list of qualified bidders for 
each proposed contract. The borrower will send invitations to bid only 
to persons or organizations on its QBL for the specific project (see 
Sec. 1726.23).
    (b) Invitations to bid. The borrower (acting through its engineer, 
if applicable) is responsible for sending out invitations to prospective 
bidders, informing them of scheduled bid openings and taking any other 
action necessary to procure full, free and competitive bidding. The 
borrower should send out a sufficient number of invitations in order to 
assure adequate competition and so that at least three bids will be 
received. Subject to the foregoing criteria, the determination of how 
many and which bidders will be permitted to bid will be the 
responsibility of the borrower.
    (c) Evaluation basis. Any factors, other than lowest dollar amount 
of the bid, which are to be considered in evaluating the proposals of 
qualified bidders (e.g., power consumption, losses, etc.) must be stated 
in the ``Notice and Instructions to Bidders.'' The borrower will not 
evaluate a bidder's performance record, safety record, and similar 
factors when evaluating a bid from a qualified and invited bidder. Such 
factors are to be considered when determining whether to include a 
particular bidder on the qualified bidders list.
    (d) Handling of bids received. The borrower or the engineer, as 
applicable, will indicate, in writing, the date and time of receipt by 
the borrower or the engineer on the outside envelope of each bid and all 
letters and other transmittals amending or modifying the bids. Any bid 
received at the designated location after the time specified must be 
returned to the bidder unopened.
    (e) Bid openings. Bid openings are generally conducted by the 
engineer in the presence of bidders and a representative of the borrower 
and the borrower's attorney. Each bona fide bid must be opened publicly 
and reviewed for any irregularities, errors, or exceptions. It must be 
verified that any addendum or supplement to the specification has been 
acknowledged by the bidder. The adequacy of bid bonds or certified 
checks must be verified at this time.
    (f) Conditions affecting acceptability of bids. The borrower must 
take the following specified action if any of the following exist:
    (1) Fewer than three bona fide bids received. If fewer than three 
bona fide bids are received for the contract project, the borrower must 
determine that all reasonable measures have been taken to assure 
competition prior to awarding the contract. This determination must be 
documented and such documentation submitted to RUS where required by 
subpart A of this part. The borrower may, however, elect to reject all 
bids, make changes in the specification or the qualified bidders list or 
both and invite new bids.
    (2) Significant error or ambiguity in the specification. If a 
significant error or ambiguity in the specification is found which could 
result in the bidders having varying interpretations of the requirements 
of the bid, the borrower must either issue an addendum to each 
prospective bidder correcting the error or ambiguity before bids are 
received, or reject all bids and correct the specification. If a 
significant error or ambiguity in the specification is discovered after 
the bids are opened, the borrower must reject all bids, correct the 
specification and invite new bids.
    (3) Minor errors or omissions in the specification. If minor errors 
or omissions in the specification are found, the borrower must issue an 
addendum to each prospective bidder correcting the error or omission 
prior to opening any bids. After bid opening, the error or omission must 
be corrected in the executed contract.
    (4) Minor errors or irregularities in bid. The borrower may waive 
minor errors or irregularities in any bid, if the borrower determines 
that such minor errors or irregularities were made through inadvertence. 
Any such minor errors or irregularities so waived must

[[Page 265]]

be corrected on the bid in which they occur prior to the acceptance 
thereof by the borrower.
    (5) Non-minor error or irregularity in bid. If a bid contains a non-
minor error or irregularity, the bid must be rejected and the bid price 
must not be disclosed.
    (6) Unbalanced bid. If a bid contains disproportionate prices 
between labor and materials or between various construction units, the 
borrower may reject the bid.
    (7) No acceptable price quoted. If none of the bidders quote an 
acceptable price, the borrower may reject all bids.
    (g) Evaluating bids. The borrower (acting through the engineer, if 
applicable) must conduct the evaluation of bids on the basis of the 
criteria set out in the ``Notice and Instructions to Bidders.'' The 
contract, if awarded, must be awarded to the bidder with the lowest 
evaluated responsive bid.
    (h) Announcement of bids. If possible, the borrower will announce 
bids at the bid opening. However, where extensive evaluation is 
required, the borrower may elect to adjourn and make formal written 
announcement to all bidders at a later time. Any discrepancy in a 
rejected bid must be indicated in the bid announcement.
    (i) Award of contract. Upon completion of the bid evaluations and 
based upon the findings and recommendations of the borrower's management 
and engineer, the borrower's board of directors will either:
    (1) Resolve to award the contract to the lowest evaluated responsive 
bidder; or
    (2) Reject all bids.
    (j) Certification by the borrower and its engineer. The borrower 
shall certify and the engineer shall certify as follows: ``The 
procedures for formal competitive bidding, as described in 7 CFR 
1726.201, were followed in awarding this contract.'' The certification 
executed by and on behalf of the borrower and its engineer shall be 
submitted to RUS in writing where required by subpart A of this part.



Sec. 1726.202  Informal competitive bidding.

    Informal competitive bidding may be used for equipment purchases and 
generation construction. The borrower must use the following procedure 
for informal competitive bidding:
    (a) Selection of qualified bidders. The borrower (acting through its 
engineer, if applicable) will compile a list of qualified bidders for 
each proposed contract. The borrower will send invitations to bid only 
to persons or organizations on its qualified bidder list for the 
specific project (see Sec. 1726.23).
    (b) Invitations to bid. The borrower (acting through its engineer, 
if applicable) is responsible for sending out invitations to prospective 
bidders, informing them of scheduled bid openings and any other action 
necessary to procure full, free and competitive bidding. In any event, 
however, sufficient invitations need to be sent out to assure 
competition and that at least three bids will be received. Subject to 
the criteria in the preceding sentence, the determination of how many 
and which bidders will be permitted to bid will be the responsibility of 
the borrower.
    (c) Notice and instructions to bidders. The borrower must indicate 
in the ``Notice and Instructions to Bidders'' section of the bid 
documents that bids will be opened privately. The borrower may elect to 
conduct clarifying discussions with the bidders. If such clarifying 
discussions are held, at least the three apparent low evaluated bidders 
must be given an equal opportunity to resolve any questions related to 
the substance of the bidder's proposal and to arrive at a final price 
for a responsive bid.
    (d) Evaluation basis. Any factors, other than lowest dollar amount 
of the bid, which are to be considered in evaluating the proposals of 
qualified bidders (e.g., power consumption, losses, etc.) must be stated 
in the ``Notice and Instructions to Bidders.'' The borrower will not 
evaluate a bidder's performance record, safety record, and similar 
factors when evaluating a bid from a qualified and invited bidder. Such 
factors are to be considered when determining whether to include a 
particular bidder on the qualified bidders list.
    (e) Handling of bids received. The borrower or the engineer, as 
applicable, will indicate, in writing, the date and time of receipt by 
the borrower or the engineer on the outside envelope of

[[Page 266]]

each bid and all letters and other transmittals amending or modifying 
the bids. Any bid received at the designated location after the time 
specified must be returned to the bidder unopened.
    (f) Bid opening. The contracting committee will conduct the bid 
opening in private. The contracting committee will open each bona fide 
bid which has been received prior to the deadline, and review it for any 
irregularities, errors, or exceptions. It must be verified that any 
addendum to the specification has been acknowledged by each bidder. The 
adequacy of bid bonds or certified checks must also be verified.
    (g) Conditions affecting acceptability of bids. The borrower must 
take the following specified action if any of the following exist:
    (1) Fewer than three bona fide bids received. If fewer than three 
bona fide bids are received for the contract project, the borrower must 
determine that all reasonable measures have been taken to assure 
competition prior to awarding the contract. This determination must be 
documented and such documentation submitted to RUS where required by 
subpart A of this part. The borrower may, however, elect to reject all 
bids, make changes in the specification or the qualified bidders list or 
both and invite new bids.
    (2) Significant error or ambiguity in the specification. If a 
significant error or ambiguity in the specification is found which could 
result in the bidders having varying interpretations of the requirements 
of the bid, the borrower must either issue an addendum to each 
prospective bidder correcting the error or ambiguity before bids are 
received, or reject all bids and correct the specification. If a 
significant error or ambiguity in the specification is discovered after 
the bids are opened, the borrower must reject all bids, correct the 
specification and invite new bids.
    (h) Clarification of proposals. The contracting committee may elect 
not to hold any clarifying discussions and recommend awarding the 
contract to the low responsive bidder. Otherwise, the contracting 
committee must give at least each of the three apparent lowest evaluated 
bidders an equal opportunity to participate in discussions for the 
purpose of resolving questions regarding the specification and contract 
terms and to arrive at a final price. Neither prices of other bids nor 
relative ranking of any bidder are to be revealed under any 
circumstances. Such discussions may be held by telephone or similar 
means provided at least each of the three apparent lowest evaluated 
bidders have an equal opportunity to participate. Upon completion of the 
clarifying discussions, the contracting committee will determine the 
lowest evaluated responsive bid. If no bids are responsive after the 
contracting committee has completed clarifying discussions, no contract 
award can be made under the informal bidding procedure.
    (i) Award of the contract. Upon completion of the bid evaluations, 
the contracting committee will promptly report all findings and 
recommendations to the borrower's board of directors. The board will 
either:
    (1) Resolve to award the contract to the lowest evaluated responsive 
bidder; or
    (2) Reject all bids.
    (j) Certifications by the contracting committee. The chairperson of 
the contracting committee shall certify as follows: ``The procedures for 
informal competitive bidding as described in 7 CFR 1726.202 were 
followed in awarding this contract.'' The certification executed by the 
chairperson of the contracting committee shall be submitted to RUS in 
writing where required by subpart A of this part.



Sec. 1726.203  Multiparty negotiation.

    Multiparty negotiation may only be used where permitted under 
subpart F of this part or where prior RUS approval has been obtained. 
The borrower must use the following procedure for multiparty 
negotiation:
    (a) Selection of qualified bidders. The borrower (acting through its 
engineer, if applicable) will compile a list of qualified bidders for 
each proposed contract. The borrower will send invitations to bid only 
to persons or organizations on its qualified bidder list for the 
specific project (see Sec. 1726.23).

[[Page 267]]

    (b) Invitations to bid. The borrower (acting through its engineer, 
if applicable) is responsible for sending out invitations to prospective 
bidders, informing them of scheduled bid openings and any other action 
necessary to procure full, free and competitive bidding. In any event, 
however, sufficient invitations need to be sent out to assure 
competition and so that at least three bids will be received. Subject to 
the criteria in the preceding sentence, the determination of how many 
and which bidders will be permitted to bid will be the responsibility of 
the borrower.
    (c) Notice and instructions to bidders. The borrower must indicate 
in the ``Notice and Instructions to Bidders'' section of the bid 
documents that bids will be opened privately. The borrower may elect to 
conduct negotiations with the bidders. If such negotiations are held, at 
least the three apparent low evaluated bidders must be given an equal 
opportunity to resolve any questions related to the substance of the 
bidder's proposal and to arrive at a final price.
    (d) Evaluation basis. Any factors, other than lowest dollar amount 
of the bid, which are to be considered in evaluating the proposals of 
qualified bidders (e.g., power consumption, losses, etc.) must be stated 
in the ``Notice and Instructions to Bidders.'' The borrower will not 
evaluate a bidder's performance record, safety record, and similar 
factors when evaluating a bid from a qualified and invited bidder. Such 
factors are to be considered when determining whether to include a 
particular bidder on the qualified bidders list.
    (e) Handling of bids received. The borrower or the engineer, as 
applicable, will indicate, in writing, the date and time of receipt by 
the borrower or the engineer on the outside envelope of each bid and all 
letters and other transmittals amending or modifying the bids. Any bid 
received at the designated location after the time specified must be 
returned to the bidder unopened.
    (f) Bid opening. The contracting committee will conduct the bid 
opening in private. The contracting committee will open each bona fide 
bid which has been received prior to the deadline, and review it for any 
irregularities, errors, or exceptions. It must be verified that any 
addendum to the specification has been acknowledged by each bidder. The 
adequacy of bid bonds or certified checks must also be verified.
    (g) Conditions affecting acceptability of bids. The borrower must 
take the following specified action if any of the following exist:
    (1) Fewer than three bona fide bids received. If fewer than three 
bona fide bids are received for the contract project, the borrower must 
determine that all reasonable measures have been taken to assure 
competition prior to awarding the contract. This determination must be 
documented and such documentation submitted to RUS where required by 
subpart A of this part. The borrower may, however, elect to reject all 
bids, make changes in the specification or the qualified bidders list or 
both and invite new bids.
    (2) Significant error or ambiguity in the specification. If a 
significant error or ambiguity in the specification is found which could 
result in the bidders having varying interpretations of the requirements 
of the bid, the borrower must either issue an addendum to each 
prospective bidder correcting the error or ambiguity before bids are 
received, or reject all bids and correct the specification. If a 
significant error or ambiguity in the specification is discovered after 
the bids are opened, the borrower must reject all bids, correct the 
specification and invite new bids.
    (h) Negotiations. The contracting committee may elect not to hold 
any negotiations and recommend award of the contract. Otherwise, the 
contracting committee must give at least each of the three apparent 
lowest evaluated bidders an equal opportunity to participate in 
negotiations for the purpose of resolving questions regarding the 
specification and contract terms and to arrive at a final price. Neither 
prices of other bids nor relative ranking of any bidder are to be 
revealed under any circumstances. Such discussions may be held by 
telephone or similar means provided at least each of the three apparent 
lowest evaluated bidders have an equal opportunity to participate. Upon 
completion of the negotiations, the contracting committee

[[Page 268]]

will determine the bid that is in the borrower's best interest.
    (i) Award of the contract. Upon completion of the bid evaluations, 
the contracting committee will promptly report all findings and 
recommendations to the borrower's board of directors. The board will 
either:
    (1) Resolve to award the contract to the selected bidder; or
    (2) Reject all bids.
    (j) Certifications by the contracting committee. The chairperson of 
the contracting committee shall certify as follows: ``The procedures for 
multiparty negotiation as described in 7 CFR 1726.203 were followed in 
awarding this contract.'' The certification executed by the chairperson 
of the contracting committee shall be submitted to RUS in writing where 
required by subpart A of this part.



Sec. 1726.204  Multiparty unit price quotations.

    The borrower or its engineer must contact a sufficient number of 
suppliers or contractors to assure competition and so that at least 
three bids will be received. On the basis of written unit price 
quotations, the borrower will select the supplier or contractor based on 
the lowest evaluated cost.



Sec. 1726.205  Multiparty lump sum quotations.

    The borrower or its engineer must contact a sufficient number of 
suppliers or contractors to assure competition and so that at least 
three bids will be received. On the basis of written lump sum 
quotations, the borrower will select the supplier or contractor based on 
the lowest evaluated cost.



Secs. 1726.206-1726.249  [Reserved]



         Subpart H_Modifications to RUS Standard Contract Forms



Sec. 1726.250  General.

    RUS provides standard forms of contract for the procurement of 
materials, equipment, and construction and for contract amendments and 
various related forms for use by RUS borrowers. See Sec. 1726.304 for a 
listing of these forms and how to obtain them. The standard forms of 
contract shall be used by the borrowers in accordance with the 
provisions of this part. RUS will give prior approval to certain 
modifications to these forms without changing the applicable 
requirements for RUS approval. Such approved modifications are set forth 
in this subpart. These are the only modifications given prior RUS 
approval.

[69 FR 7109, Feb. 13, 2004]



Sec. 1726.251  Prior approved contract modification related to price
escalation on transmission equipment, generation equipment, and 
generation construction contracts.

    (a) General. Where the borrower encounters reluctance among 
manufacturers, suppliers, and contractors to bid a firm price on 
transmission equipment or generation equipment, materials or 
construction, modifications may be made in the RUS standard form of 
contracts. These modifications, if applicable, may include, as an 
alternative to the standard form, provisions for adjusting a base price 
either upward or downward as determined by changes in specified indexes 
between the time of the bid and the time the work is performed or 
materials are procured by the contractor for such work. A large number 
of labor and materials indexes are published monthly by the Bureau of 
Labor Statistics (BLS). The borrower (acting through its engineer, if 
applicable) will select the indexes for the particular item to be used 
in the price adjustment clause. Suppliers' corporate indexes may not be 
used. Labor and materials indexes are reported in the BLS's monthly 
publications entitled ``Employment and Earnings'' and ``Producer Prices 
and Price Indexes.'' These publications may be ordered through the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402, or any of the BLS regional offices.
    (b) Material and equipment contracts. The approved provisions needed 
to reflect the modifications to provide for price escalation in the 
material or equipment contract forms for generation facilities are as 
follows:
    (1) Insert new paragraphs in the Notice and Instructions to Bidders 
as follows:


[[Page 269]]


    ``Proposals are invited on the basis of firm prices (or prices with 
a stated maximum percentage escalation) or on the basis of nonfirm 
prices to be adjusted as provided for below or on both bases. The owner 
may award the contract on either basis.
    Nonfirm prices. The prices are subject to adjustment upward or 
downward based on change in the Bureau of Labor Statistics labor and 
material indexes.
    A proportion of ---- percent [the borrower will enter the 
appropriate percentage amount] of the contract price shall be deemed to 
represent labor cost and shall be adjusted based on changes in the 
Bureau of Labor Statistics, Average Hourly Earnings Rate---- [the 
borrower will enter the appropriate BLS index] from the month in which 
the bids are opened to the month in which the labor is incorporated in 
the equipment or materials. The adjustment for labor costs shall be 
obtained by applying the percentage of increase or decrease in such 
index, calculated to the nearest one-tenth of one percent, to the 
percentage of the contract prices deemed to represent labor costs. A 
portion of ---- percent [the borrower will enter the appropriate 
percentage amount] of the contract price shall be deemed to represent 
material costs and shall be adjusted based on changes in the Bureau of 
Labor Statistics, material index ---- [the borrower will enter the 
appropriate BLS index] for the period and in a manner similar to the 
labor cost adjustment.''

    (2) Insert the following in the contract documents under the 
``Proposal'' section:

``Firm Price $--------
Nonfirm Price $--------''

    (3) For equipment that uses a large quantity of insulating oil, the 
borrower may insert the following in the contract documents under the 
``Proposal'' section:

    ``The price for insulating oil shall be adjusted upward or downward 
based on the change in the Bureau of Labor Statistics Refined Petroleum 
Rate (057) from the month in which the bids are opened to the month in 
which the oil is purchased by the equipment supplier. Contracts shall be 
evaluated based on an estimated cost of ---- cents per gallon [the 
borrower will enter the appropriate cost] for oil. Such adjustment, if 
any, shall not change the contract amount for purpose of applying any 
other adjustments to the contract prices.''

    (c) Construction contracts. The approved provisions needed to 
reflect the modifications to provide for price escalation in the 
construction contract forms for generation facilities are as follows:
    (1) Insert new paragraphs in the ``Notice and Instructions'' to 
Bidders as follows:

    ``Proposals are invited on the basis of firm prices (or prices with 
a stated maximum percentage escalation) or on the basis of nonfirm 
prices to be adjusted as provided for below or on both bases. The owner 
may award the contract on either basis.
    Nonfirm Prices--The prices are subject to adjustment upward or 
downward based on changes in the Bureau of Labor Statistics labor and 
material indexes.
    A proportion of ---- percent [the borrower will enter the 
appropriate percentage amount] of the contract price shall be deemed to 
represent shop labor costs and shall be adjusted based on changes in the 
Bureau of Labor Statistics, Average Hourly Earnings Rate ---- [the 
borrower will enter the appropriate BLS index] from the month in which 
bids are opened to the month in which the work is accomplished. The 
adjustment for shop labor costs shall be obtained by applying the 
percentage increase or decrease in such index, to the percentage of each 
partial payment deemed to represent shop labor costs. A portion of ---- 
percent [the borrower will enter the appropriate percentage amount] of 
the contract prices shall be deemed to represent material costs and 
shall be adjusted based on changes in the Bureau of Labor Statistics, 
Producer Price Index, ---- [the borrower will enter the appropriate BLS 
index] for the period and in a manner similar to the shop labor costs 
adjustment. A portion of ---- percent [the borrower will enter the 
appropriate percentage amount] of the contract price shall be deemed to 
represent field labor costs and shall be adjusted based on changes in 
the Bureau of Labor Statistics, Average Hourly Earnings Rate ---- [the 
borrower will enter the appropriate BLS index], for the period and in a 
manner similar to the shop labor costs adjustment.''

    (2) Insert the following in the contract documents under the 
``Proposal'' section:

``Firm Price $--------
Nonfirm Price $--------''



Sec. 1726.252  Prior approved contract modification related to
liability for special and consequential damages.

    This section applies only to transmission equipment purchases and 
generation contracts. Where the borrower anticipates difficulty in 
obtaining responsive bids on RUS standard contract forms due to a lack 
of limitation

[[Page 270]]

with respect to special and consequential damages, and where the 
borrower believes that such a modification will encourage competition 
through the receipt of an alternative bid which limits the bidder's 
liability for special and consequential damages, the borrower may make 
the following approved phrase modifications in the RUS standard contract 
form on which the borrower solicits bids:
    (a) Insert new paragraphs in the ``Notice and Instructions to 
Bidders'' as follows:
    ``Proposals are invited on the basis of alternative Liability Clause 
Numbers 1 and 2. The Owner will determine on which Liability Clause 
basis the award will be made. Any other liability clauses in the 
proposal or any other modifications will be considered not responsive 
and unacceptable. These Liability Clauses are defined as follows:
    Liability Clause Number 1. This will include unmodified all of the 
standard terms and conditions of the form of contract furnished by the 
Owner and attached hereto.
    Liability Clause Number 2. This will include the following 
paragraph, in addition to all of the standard terms and conditions, 
otherwise unmodified, of the form of contract furnished by the Owner and 
attached hereto:

    ``Except for the Bidder's willful delay or refusal to perform the 
contract in accordance with its terms, the Bidder's liability to the 
Owner for special or consequential damages on account of breach of this 
contract shall not exceed in total an amount equal to ---- percent [the 
borrower will insert an appropriate percentage between 0 and 100 
percent, inclusive] of the contract price.''

    (b) Insert the following in the contract documents under the 
``Proposal'' section:

``Price $ (Based on Liability Clause 1)--------
Price $ (Based on Liability Clause 2)--------''

    (c) Insert the following in the acceptance section of the standard 
contract form:

    ``This contract is based on Liability Clause Number--------.''

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]



Sec. 1726.253  Prior approved contract modification related to
alternative bid provision for payment to contractor for bulk purchase
of materials.

    When construction is to be performed over an extended period of 
time, but large quantities of material are to be purchased by the 
contractor at the beginning of the project (e.g., cable for URD 
installations), the borrower may allow alternative bids providing for 
payment to the contractor of 90 percent of the cost of such materials 
within 30 days of delivery of those materials at the job site. The 
borrower will retain the right to award the contract with or without the 
alternative payment provision, however, the contract still must be 
awarded on the basis of the lowest evaluated responsive bid for the 
alternative accepted.



Sec. 1726.254  [Reserved]



Sec. 1726.255  Prior approved contract modifications related
to indemnification.

    (a) As an alternative to the indemnification provision required in 
RUS standard construction contract forms in those jurisdictions 
requiring specific language concerning the requirement that the 
indemnitor indemnify the indemnitee for the indemnitee's own negligence, 
the borrower may add the words ``otherwise this provision shall apply to 
any alleged negligence or condition caused by the Owner'' so that the 
first paragraph reads as follows:

    ``i. To the maximum extent permitted by law, Bidder shall defend, 
indemnify, and hold harmless Owner and Owner's directors, officers, and 
employees from all claims, causes of action, losses, liabilities, and 
expenses (including reasonable attorney's fees) for personal loss, 
injury, or death to persons (including but not limited to Bidder's 
employees) and loss, damage to or destruction of Owner's property or the 
property of any other person or entity (including but not limited to 
Bidder's property) in any manner arising out of or connected with the 
Contract, or the materials or equipment supplied or services performed 
by Bidder, its subcontractors and suppliers of any tier. But nothing 
herein shall be construed as making Bidder liable for any injury, death, 
loss, damage, or destruction caused by the sole

[[Page 271]]

negligence of Owner, otherwise this provision shall apply to any 
negligence or condition caused by the Owner.''

    (b) As an alternative to the indemnification provision required in 
RUS standard construction contract forms in those jurisdictions that 
have a legal prohibition against one party indemnifying another for the 
other's negligence, the borrower may replace the words ``defend, 
indemnify, and hold harmless'' with the words `` shall pay on behalf 
of'' so that the first paragraph reads as follows:

    ``i. To the maximum extent permitted by law, Bidder shall pay on 
behalf of Owner and Owner's directors, officers, and employees from all 
claims, causes of action, losses, liabilities, and expenses (including 
reasonable attorney's fees) for personal loss, injury, or death to 
persons (including but not limited to Bidder's employees) and loss, 
damage to or destruction of Owner's property or the property of any 
other person or entity (including but not limited to Bidder's property) 
in any manner arising out of or connected with the Contract, or the 
materials or equipment supplied or services performed by Bidder, its 
subcontractors and suppliers of any tier. But nothing herein shall be 
construed as making Bidder liable for any injury, death, loss, damage, 
or destruction caused by the sole negligence of Owner, otherwise this 
provision shall apply to any negligence or condition caused by the 
Owner.''

    (c) If the alternative indemnification provision in paragraph (a) or 
(b) of this section is chosen by the borrower, the language of paragraph 
(a) or (b) of this section would be inserted in lieu of paragraph (i) of 
the section indicated in the RUS standard construction contract forms as 
follows:
    (1) RUS Form 198, Equipment Contract, article IV, section 1(d).
    (2) RUS Form 200, Construction Contract--Generating, article IV, 
section 1(d).
    (3) RUS Form 257, Contract to Construct Buildings, article IV, 
section 1(d).
    (4) RUS Form 786, Electric System Communications and Control 
Equipment Contract, article IV, section 1(d).
    (5) RUS Form 790, Electric System Construction Contract--Non-Site 
Specific Construction, article IV, section 1(g).
    (6) RUS Form 830, Electric System Construction Contract--Project 
Construction, article IV, section 1(g).

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004]



Secs. 1726.256-1726.299  [Reserved]



                      Subpart I_RUS Standard Forms



Sec. 1726.300  Standard forms of contracts for borrowers.

    (a) General. The standard loan agreement between RUS and its 
borrowers provides that, in accordance with applicable RUS regulations 
in this chapter, the borrower shall use standard forms of contract 
promulgated by RUS for construction, procurement, engineering services, 
and architectural services financed by a loan made or guaranteed by RUS. 
(See section 5.16 of appendix A to subpart C of part 1718 of this 
chapter.) This subpart prescribes RUS procedures in promulgating 
standard contract forms and identifies those forms that borrowers are 
required to use.
    (b) Contract forms. RUS promulgates standard contract forms, 
identified in the List of Required Contract Forms, Sec. 1726.304(c), 
that borrowers are required to use in accordance with the provisions of 
this part. In addition, RUS promulgates standard contract forms 
contained in Sec. 1726.304(d) that the borrowers may but are not 
required to use in the construction of their electric systems. Borrowers 
are not required to use these guidance contract forms in the absence of 
an agreement to do so.

[63 FR 58286, Oct. 30, 1998]



Sec. 1726.301  Borrower contractual obligations.

    (a) Loan agreement. As a condition of a loan or loan guarantee under 
the Rural Electrification Act, 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 loan contract. To comply with the provisions of

[[Page 272]]

the loan agreements as implemented by this part, borrowers must use 
those forms of contract (hereinafter sometimes called ``listed contract 
forms'') identified in the List of Required Contract Forms, 
Sec. 1724.304(c).
    (b) Compliance. 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. Exact electronic reproduction is 
acceptable. The approved RUS standard forms of contract shall not be 
retyped, changed, modified, or altered in any manner not specifically 
authorized in this part or approved by RUS in writing on a case-by-case 
basis. Any modifications approved by RUS on a case-by-case basis must be 
clearly shown so as to indicate the modification difference from the 
standard form of contract.
    (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.
    (d) Waiver. RUS may waive for good cause, on a case by case basis, 
the requirements imposed on a borrower pursuant to this part. Borrowers 
seeking a waiver by RUS must provide RUS with a written request 
explaining the need for the waiver. Waiver requests should be made prior 
to issuing the bid package to bidders.
    (e) Violations. A failure on the part of the borrower to use listed 
contracts as prescribed in this part is a violation of the terms of its 
loan agreement with RUS and RUS may exercise any and all remedies 
available under the terms of the agreement or otherwise.

[63 FR 58286, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004]



Sec. 1726.302  Notice and publication of listed contract forms.

    (a) Notice. Upon initially entering into a loan agreement with RUS, 
borrowers will be provided with all listed contract forms. Thereafter, 
new or revised listed contract forms promulgated by RUS, including RUS 
approved exceptions and alternatives, will be sent by regular or 
electronic mail to the address of the borrower as identified in its loan 
agreement with RUS.
    (b) Availability. Listed standard forms of contract are available 
from: Rural Utilities Service, Program Development and Regulatory 
Analysis, U.S. Department of Agriculture, Stop 1522, 1400 Independence 
Avenue, SW., Washington DC 20250-1522, telephone number (202) 720-8674. 
The listed standard forms of contract are also available on the RUS Web 
site at: http://www.usda.gov/rus/electric/forms/index.htm. The listed 
standard forms of contract can be found in Sec. 1724.304(c), List of 
Required Contract Forms.

[63 FR 58287, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004]



Sec. 1726.303  Promulgation of new or revised contract forms.

    RUS may, from time to time, undertake to promulgate new contract 
forms or revise or eliminate existing contract forms. In so doing, RUS 
shall publish notice of rulemaking in the Federal Register announcing, 
as appropriate, a revision in, or a proposal to amend Sec. 1726.304, 
List of Electric Program Standard Contract Forms. The amendment may 
change the existing identification of a listed contract form; for 
example, changing the issuance date of a listed contract form or by 
identifying a new required contract form. The notice of rulemaking will 
describe the new standard contract form or the substantive change in the 
listed contract form, as the case may be, and the issues involved. The 
standard contract form or relevant portions thereof may be appended to 
the supplementary information section of the notice of rulemaking. As 
appropriate, the document shall provide an opportunity for interested 
persons to provide comments. A copy of each such Federal Register 
document will be sent by regular or electronic mail to all borrowers.

[63 FR 58287, Oct. 30, 1998]



Sec. 1726.304  List of electric program standard contract forms.

    (a) General. This section contains a list of RUS electric program 
standard contract forms. Paragraph (c) of this section contains the list 
of required

[[Page 273]]

contract forms, i.e., those forms of contracts that borrowers are 
required to use by the terms of their RUS loan agreements as implemented 
by the provisions of this part. Paragraph (d) of this section sets forth 
the list of guidance contract forms, i.e., those forms of contracts 
provided as guidance to borrowers in the construction of their systems. 
See Sec. 1726.302(b) for availability of these forms.
    (b) Issuance date. Where required by this part to use a standard 
form of contract in connection with RUS financing, the borrower shall 
use that form identified by issuance date in the List of Required 
Contract Forms in paragraph (c) of this section, as most recently 
published as of the date the borrower issues the bid package to bidders.
    (c) List of required contract forms.
    (1) RUS Form 168b, Rev. 2-04, Contractor's Bond. This form is used 
to obtain a surety bond and is used with RUS Forms 200, 257, 786, 790, 
and 830.
    (2) RUS Form 168c, Rev. 2-04, Contractor's Bond (less than $1 
million). This form is used in lieu of RUS Form 168b to obtain a surety 
bond when contractor's surety has accepted a Small Business 
Administration guarantee.
    (3) RUS Form 187, Rev. 2-04, Certificate of Completion, Contract 
Construction. This form is used for the closeout of RUS Forms 200, 257, 
786, and 830.
    (4) RUS Form 198, Rev. 4-04, Equipment Contract. This form is used 
for equipment purchases.
    (5) RUS Form 200, Rev. 2-04, Construction Contract--Generating. This 
form is used for generating plant construction or for the furnishing and 
installation of major items of equipment.
    (6) RUS Form 213, Rev. 2-04, Certificate (``Buy American''). This 
form is used to document compliance with the ``Buy American'' 
requirement.
    (7) RUS Form 224, Rev. 2-04, Waiver and Release of Lien. This form 
is used for the closeout of RUS Forms 198, 200, 257, 786, 790, and 830.
    (8) RUS Form 231, Rev. 2-04, Certificate of Contractor. This form is 
used for the closeout of RUS Forms 198, 200, 257, 786, 790, and 830.
    (9) RUS Form 238, Rev. 2-04, Construction or Equipment Contract 
Amendment. This form is used for amendments.
    (10) RUS Form 254, Rev. 2-04, Construction Inventory. This form is 
used for the closeout of RUS Form 830. Minor electronic modifications 
are acceptable for RUS Form 254.
    (11) RUS Form 257, Rev. 2-04, Contract to Construct Buildings. This 
form is used to construct headquarters buildings and other structure 
construction.
    (12) RUS Form 307, Rev. 2-04, Bid Bond. This form is used to obtain 
a bid bond.
    (13) RUS Form 786, Rev. 2-04, Electric System Communications and 
Control Equipment Contract (including installation). This form is used 
for delivery and installation of equipment for system communications.
    (14) RUS Form 790, Rev. 2-04, Electric System Construction 
Contract--Non-Site Specific Construction. This form is used for limited 
distribution construction accounted for under work order procedure.
    (15) RUS Form 792b, Rev. 2-04, Certificate of Construction and 
Indemnity Agreement. This form is used for the closeout of RUS Form 790.
    (16) RUS Form 830, Rev. 2-04, Electric System Construction 
Contract--Project Construction. This form is used for distribution and 
transmission line project construction.
    (d) List of guidance contract forms. RUS does not currently publish 
any guidance forms for electric borrowers.

[63 FR 58287, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004; 69 
FR 52595, Aug. 27, 2004]



Secs. 1726.305-1726.399  [Reserved]



                       Subpart J_Contract Closeout



Sec. 1726.400  Final contract amendment.

    As needed, a final contract amendment will be prepared and processed 
in accordance with Sec. 1726.24(b) prior to or in conjunction with the 
closeout of the contract.



Sec. 1726.401  Material contract closeout.

    (a) Delivery inspection. The borrower (acting through its engineer, 
if applicable) will verify that all materials are delivered in proper 
quantities, in good

[[Page 274]]

condition, and in compliance with applicable specifications.
    (b) Closeout documents. The borrower (acting through its engineer, 
if applicable) will obtain from the supplier a ``Buy American'' 
certificate, RUS Form 213, any manufacturer's guarantee(s) and, if 
applicable, a copy of RUS Form 224, Waiver and Release of Lien. Closeout 
documents for materials contracts need not be submitted to RUS unless 
specifically requested by RUS on a case by case basis.
    (c) Final payment. Upon completion of the actions required under 
paragraphs (a) and (b) of this section, the borrower shall make final 
payment to the supplier in accordance with the provisions of the 
material contract or written purchase order.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004]



Sec. 1726.402  Equipment contract closeout.

    This section is applicable to contracts executed on RUS Form 198.
    (a) Final inspection and testing of equipment. The borrower (acting 
through its engineer, if applicable) will perform the final inspection 
and testing of equipment as appropriate for the specific equipment. The 
borrower (acting through its engineer, if applicable) will schedule such 
inspection and testing at a time mutually agreeable to the borrower, 
engineer, and the supplier or manufacturer. Within thirty (30) days 
after completion of the inspection and testing, the borrower (acting 
through its engineer, if applicable) will prepare a report of the 
inspection and testing, obtain a copy of the report from the engineer, 
and submit a copy to the supplier or manufacturer. This report must 
include a detailed description of the methods of conducting the test(s), 
observed data, comparison of guaranteed and actual performance, and 
recommendations concerning acceptance. The borrower will obtain from the 
engineer a written certification stating that the equipment has been 
installed, placed in satisfactory operation and tested, and meets the 
contract requirements. Where more than one-hundred and eighty (180) days 
have elapsed since the delivery of the equipment and the equipment has 
not been installed or tested, the contract may be closed out upon 
certification by the engineer that the equipment has been inspected and 
appears to be in accordance with the contract requirements.
    (b) Closeout documents. (1) The borrower (acting through its 
engineer, if applicable) will obtain the following executed documents:
    (i) Certification by the project engineer in accordance with 
paragraph (a) of this section.
    (ii) All guarantees or warranties.
    (iii) A ``Buy American'' certificate, RUS Form 213, from the 
supplier or manufacturer.
    (2) Closeout documents for materials contracts need not be submitted 
to RUS unless specifically requested by RUS.
    (c) Final payment. Upon completion of the actions required under 
paragraphs (a) and (b) of this section, the borrower will make final 
payment to the supplier or manufacturer in accordance with the 
provisions of the equipment contract.



Sec. 1726.403  Project construction contract closeout.

    This section is applicable to contracts executed on RUS Forms 200, 
257, 786, and 830.
    (a) Final test of equipment supplied under a construction contract. 
If equipment is supplied under a construction contract, the borrower 
(acting through its architect or engineer, if applicable) will perform 
the final inspection and testing of equipment as appropriate for the 
specific equipment. The borrower (acting through its architect or 
engineer, if applicable) will schedule such inspection and testing at a 
time mutually agreeable to the borrower, architect or engineer, and the 
contractor. Within thirty (30) days after completion of the inspection 
and testing, the borrower (acting through its architect or engineer, if 
applicable) will prepare a report of the inspection and testing, obtain 
a copy of the report from its architect or engineer, and submit a copy 
to the contractor. This report must include a detailed description of 
the methods of conducting the test(s), observed data, comparison of 
guaranteed and actual performance, and recommendations concerning 
acceptance.

[[Page 275]]

The borrower will obtain from its architect or engineer a written 
certification stating that the equipment has been installed, placed in 
satisfactory operation and tested, and meets the contract requirements. 
Where more than one-hundred and eighty (180) days have elapsed since the 
delivery of the equipment and the equipment has not been installed or 
tested, the contract may be closed out upon certification by its 
architect or engineer that the equipment has been inspected and appears 
to be in accordance with the contract requirements.
    (b) Final inspection of construction. The borrower will require the 
contractor to notify the architect or engineer when construction is 
complete. The borrower (acting through the architect or engineer, if 
applicable) will schedule such final inspection at a time mutually 
agreeable to the borrower, architect or engineer, contractor, and the 
respective RUS General Field Representative (GFR), if the GFR has 
notified the borrower or its architect or engineer of a desire to 
observe the final inspection. The borrower (acting through its architect 
or engineer, if applicable) will perform a final inspection of the 
construction and notify the contractor of any required changes or 
corrections.
    (c) Closeout documents. (1) Upon satisfactory completion of 
construction (including all changes and corrections by the contractor), 
the borrower (acting through its architect or engineer, if applicable) 
will obtain executed copies of the following documents:
    (i) RUS Form 187, Certificate of Completion, Contract Construction.
    (ii) RUS Form 213, ``Buy American'' certificate.
    (iii) RUS Form 224, Waiver and Release of Lien, from each 
manufacturer, supplier, and contractor which has furnished material or 
services or both in connection with the construction.
    (iv) RUS Form 231, Certificate of Contractor.
    (v) RUS Form 254, Construction Inventory, including all supporting 
documents, such as RUS Forms 254a-c, construction change orders, and 
amendments for contracts executed on RUS Form 830.
    (vi) Certification by the project architect or engineer in 
accordance with Sec. 1726.403(a), if applicable.
    (vii) Final design documents, as outlined in part 1724 of this 
chapter.
    (2) Distribution of closeout documents. (i) The borrower will retain 
one copy of each of the documents identified in paragraph (c)(1) of this 
section in accordance with applicable RUS requirements regarding 
retention of records.
    (ii) For contracts subject to RUS approval, the borrower will submit 
the following closeout documents for RUS approval (through the GFR 
except for generation projects):
    (A) RUS Form 187, Certificate of Completion, Contract Construction.
    (B) RUS Form 231, Certificate of Contractor.
    (C) RUS Form 254, Construction Inventory, including all supporting 
documents, such as RUS Forms 254a-c and construction change orders, for 
contracts executed on RUS Form 830.
    (iii) For contracts not subject to RUS approval, the closeout is not 
subject to RUS approval. The borrower will send one copy of RUS Form 187 
to RUS for information prior to or in conjunction with the applicable 
RUS Form 219, Inventory of Work Orders. The remaining closeout documents 
need not be sent to RUS unless specifically requested by RUS.
    (d) Final payment. (1) The borrower will make final payment to the 
contractor upon completion of approval of all closeout documents by the 
parties to the contract, in accordance with the terms of the 
construction contract.
    (2)(i) Upon receipt of final payment by the contractor, the borrower 
will obtain from the contractor a certification of receipt of final 
payment in the following form:

    ``The undersigned acknowledges receipt of the final contract payment 
of $---- as satisfaction in full of all claims of the undersigned under 
the construction contract between the undersigned and ---- (borrower), 
dated as amended, and as complete performance by the latter of all 
obligations to be performed by it pursuant thereto. The total amount 
received under this contract is shown above.''

    (ii) The certification in paragraph (d)(2)(i) of this section is to 
be executed for the contractor by: the sole owner, a

[[Page 276]]

partner, or an officer of the corporation. Where this certification is 
executed for the corporation by a person other than the president, a 
certified copy of the authorization from the corporate board must be 
included with the certification. This certification is not a replacement 
for itemized invoices.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004]



Sec. 1726.404  Non-site specific construction contract closeout.

    This section is applicable to contracts executed on RUS Form 790.
    (a) Final test of equipment supplied under a construction contract. 
If equipment is supplied under a construction contract, the borrower 
(acting through its engineer, if applicable) will perform the final 
inspection and testing of equipment as appropriate for the specific 
equipment. The borrower (acting through its engineer, if applicable) 
will schedule such inspection and testing at a time mutually agreeable 
to the borrower, its engineer, and the contractor. Within thirty (30) 
days after completion of the inspection and testing, the borrower 
(acting through its engineer, if applicable) will prepare a report of 
the inspection and testing, obtain a copy of the report from its 
engineer, and submit a copy to the contractor. This report must include 
a detailed description of the methods of conducting the test(s), 
observed data, comparison of guaranteed and actual performance, and 
recommendations concerning acceptance. The borrower will obtain from the 
engineer a written certification stating that the equipment has been 
installed, placed in satisfactory operation and tested, and meets the 
contract requirements. Where more than one-hundred and eighty (180) days 
have elapsed since the delivery of the equipment and the equipment has 
not been installed or tested, the contract may be closed out upon 
certification by the engineer that the equipment has been inspected and 
appears to be in accordance with the contract requirements.
    (b) Final inspection of construction. The borrower will require the 
contractor to notify its engineer when construction of a section of the 
project is complete. The borrower (acting through its engineer, if 
applicable) will schedule such final inspection at a time mutually 
agreeable to the borrower, its engineer, contractor, and the respective 
GFR, if the GFR has notified the borrower or its engineer of a desire to 
observe the final inspection. The borrower (acting through its engineer, 
if applicable) will perform a final inspection of the construction of 
that section of the project and notify the contractor of any required 
changes or corrections.
    (c) Closeout documents. (1) Upon satisfactory completion of 
construction of a section of the project (including all changes and 
corrections by the contractor), the borrower (acting through its 
engineer, if applicable) will obtain executed copies of the following 
documents:
    (i) RUS Form 792b, Certificate of Contractor and Indemnity Agreement
    (ii) RUS Form 213, ``Buy American'' certificate.
    (iii) Certification by the project engineer in accordance with 
paragraph (a) of this section, if applicable.
    (iv) Final design documents, as outlined in part 1724 of this 
chapter.
    (2) Distribution of closeout documents. (i) The borrower will retain 
one copy of each of the documents identified in paragraph (c)(1) of this 
section in accordance with applicable RUS requirements regarding 
retention of records.
    (ii) For contracts not subject to RUS approval, the closeout is not 
subject to RUS approval and the closeout documents need not be sent to 
RUS unless specifically requested by RUS.

[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7111, Feb. 13, 2004]



Sec. 1726.405  Inventory of work orders (RUS Form 219).

    Upon completion of the contract closeout, the borrower shall 
complete RUS Form 219, Inventory of Work Orders, in accordance with part 
1717, Post-Loan Policies and Procedures Common to Insured and Guaranteed 
Electric Loans, of this chapter.

[[Page 277]]



PART 1728_ELECTRIC STANDARDS AND SPECIFICATIONS FOR MATERIALS AND
CONSTRUCTION--Table of Contents



Sec.
1728.10  General purpose and scope.
1728.20  Establishment of standards and specifications.
1728.30  Inclusion of an item for listing or technical acceptance.
1728.40  Procedure for submission of a proposal.
1728.50  Removal of an item from listing or technical acceptance.
1728.60  List of materials and equipment.
1728.70  Procurement of materials.
1728.97  Incorporation by reference of electric standards and 
          specifications.
1728.98  Electric standards and specifications.
1728.201  RUS Bulletin 1728H-701, RUS Specification for Wood Crossarms 
          (Solid and Laminated), Transmission Timbers and Pole Keys.
1728.202  RUS Bulletin 1728H-702, RUS Specification for Quality Control 
          and Inspection of Timber Products.
1728.203  [Reserved]
1728.204  Electric standards and specifications for materials and 
          construction.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.



Sec. 1728.10  General purpose and scope.

    (a) The requirements of this part are based on contractual 
provisions between RUS and the organizations which receive financial 
assistance from RUS.
    (b) RUS will establish certain specifications and standards for 
materials, equipment, and construction units that will be acceptable for 
RUS financial assistance for the electric program. Materials and 
equipment purchased by the electric borrowers or accepted as contractor-
furnished material must conform to RUS standards and specifications 
where they have been established and, if included in RUS Bulletin 43-5, 
``List of Materials Acceptable for Use on Systems of RUS Electrification 
Borrowers'' (List of Materials), must be selected from that list or must 
have received technical acceptance from RUS. RUS, through its Technical 
Standards Committees, will evaluate certain materials, equipment and 
construction units, and will determine acceptance.

[50 FR 47710, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1728.20  Establishment of standards and specifications.

    (a) National and other standards. RUS will utilize standards of 
national standardizing groups, such as the American National Standards 
Institute (ANSI), American Wood Preservers' Association (AWPA), the 
various national engineering societies and the National Electrical 
Safety Code (NESC), to the greatest extent practical. When there are no 
national standards or when RUS determines that the existing national 
standards are not adequate for rural electric systems, RUS will prepare 
standards for material and equipment to be used on systems of electric 
borrowers. RUS standards and specifications will be codified or listed 
in Sec. 1728.97, Incorporation by Reference of Electric Standards and 
Specifications. RUS will also prepare specifications for materials and 
equipment when it determines that such specifications will result in 
reduced costs, improved materials and equipment, or in the more 
effective use of engineering services.
    (b) Deviations from Standards. No member of the RUS staff will be 
permitted to authorize deviations from the standard specifications, or 
to establish or change the technical standards, or to authorize the use 
of items that have not received acceptance by the Technical Standards 
Committees, except as provided for under Sec. 1728.70, or by 
authorization and/or delegation of authority by the Administrator of 
RUS.
    (c) Category of Items. Items appearing in the List of Materials are 
listed by categories of generic items which are used in RUS construction 
standards incorporated by reference in Sec. 1728.97. RUS will establish 
and define these categories and will establish all criteria for 
acceptability within these categories.

[50 FR 47710, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990, as amended at 55 FR 53487, Dec. 31, 1990]



Sec. 1728.30  Inclusion of an item for listing or technical acceptance.

    (a) Scope. RUS, through its Technical Standards Committees ``A'' and 
``B'' will determine the acceptability of certain standards, standard 
specifications,

[[Page 278]]

standard drawings, and items of materials and equipment to be used in 
transmission, distribution and general plant (excluding office 
equipment, tools, and work equipment, and consumer-owned electric wiring 
facilities).
    (b) Addresses of Committees. The address of Technical Standards 
Committee ``A'' is: Chairman, Technical Standards Committee ``A'' 
(Electric), Rural Utilities Service, U.S. Department of Agriculture, 
Washington, DC 20250-1500. The address of Technical Standards Committee 
``B'' is: Chairman, Technical Standards Committee ``B'' (Electric), 
Rural Utilities Service, U.S. Department of Agriculture, Washington, DC 
20250-1500.
    (c) Review by Technical Standards Committee ``A''. All proposals for 
listing a product in the List of Materials must be addressed to 
Technical Standards Committee ``A.'' This committee will consider all 
proposals made by sponsors of specifications, drawings, materials, or 
equipment in categories for which RUS has established criteria for 
acceptability. A sponsor may be a manufacturer, supplier, contractor or 
any other person or organization which has made an application for 
listing or has requested an action by the committee. Committee ``A'' 
will consider all relevant information presented in determining whether 
an item should be accepted by Technical Standards Committee ``A.'' 
Formal rules of evidence and procedure shall not apply to proceedings 
before this committee.
    (d) Action by Technical Standards Committee ``A''. (1) Committee 
``A'' may take one of the following actions:
    (i) Accept an item for listing without conditions (domestic items 
only),
    (ii) Reject an item (domestic or nondomestic), \1\
---------------------------------------------------------------------------

    \1\ Nondomestic items are items which do not qualify as domestic 
products pursuant to RUS ``Buy American'' requirement.
---------------------------------------------------------------------------

    (iii) Accept an item for listing with conditions (domestic items 
only),
    (iv) Table an item for a time period sufficient to allow the sponsor 
to be notified and furnish additional information (domestic or 
nondomestic),
    (v) Grant technical acceptance with or without conditions for a 
period of one year from the date of notification by RUS (nondomestic 
items only).
    (2) All committee decisions regarding the actions listed above must 
be unanimous. If the vote is not unanimous, the item shall be referred 
to Technical Standards Committee ``B.'' Written notice of Technical 
Standards Committee ``A's'' decision, stating the basis for the 
decision, will be provided to the sponsor.
    (3) Items accepted without conditions by the Technical Standards 
Committees will be considered to be accepted on a general basis. No 
restrictions as to quantity or application will be placed on items which 
have received general acceptance. Items accepted subject to certain 
conditions, such as limited use to gain service experience, or limited 
use appropriate to certain areas and conditions, will be considered to 
be accepted on a conditional basis. The conditions will be cited as a 
part of the listing provided for in Sec. 1728.60, or as part of the 
technical acceptance for nondomestic items.
    (e) Appeal to Technical Standards Committee ``B''. A sponsor may 
request a review of an adverse decision by Technical Standards Committee 
``A'' within ten (10) days of notification of such decision by 
submitting a letter requesting such review to Technical Standards 
Committee ``B'' (Electric).
    (f) Action by Technical Standards Committee ``B''. Committee ``B'' 
may take any of the actions listed for Committee ``A'' in 
Sec. 1728.30(d). However, for a Committee ``B'' action to be effective 
it must be by majority vote. Failure to obtain a majority on one of the 
proposed actions shall mean that the product will not be listed or 
accepted. Committee ``B's'' determination shall be based on the record 
developed before Committee ``A'' and such additional information as 
Committee ``B'' may request. Formal rules of procedure and evidence 
shall not apply to proceedings before Committee ``B.'' Written notice of 
Committee ``B's'' decision, stating the basis of the decision, will be 
provided to the sponsor.
    (g) Appeal to the Administrator. In the event of an adverse decision 
by Committee ``B,'' the sponsor may, within ten (10) days of 
notification of such decision, request a review of this decision

[[Page 279]]

by submitting a letter to the Administrator requesting such a review.
    (h) Change in Design. RUS acceptance of an item will be conditioned 
on the understanding that no design changes (material or dimensions) 
affecting the quality, strength, or electrical characteristics of the 
item shall be made without prior concurrence of Technical Standards 
Committee ``A.''

[50 FR 47711, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1728.40  Procedure for submission of a proposal.

    (a) Written Request. Consideration of an item of material or 
equipment will be obtained by the sponsor through the submission of a 
written request in an original and five copies addressed to the 
Chairman, Technical Standards Committee ``A'' (Electric). The letter 
must include the catalog number or other identifying number or code as 
well as a description of the item. In the event that an item being 
submitted is also intended for consideration by Technical Standards 
Committee ``A'' (Telephone), a separate request must be made to the 
telephone committee. (See part 1755 of this chapter).
    (b) Technical and Performance Data. Six copies of the specification 
of manufacture, drawings and test data must be submitted to the 
committee. Six copies of the performance history shall also be submitted 
unless RUS determines that such performance history is not reasonably 
available.
    (c) Sample. One sample of the item must be submitted to the 
Chairman, Technical Standards Committee ``A,'' unless RUS waives the 
requirements of the sample. In case of large, bulky or extremely heavy 
samples, the sponsor should contact the Chairman, Technical Standards 
Committee ``A'' (Electric), at the above address, before any sample is 
shipped.
    (d) Action on Proposal. RUS will inform a sponsor of the action 
taken on the sponsor's proposal.

[50 FR 47711, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1728.50  Removal of an item from listing or technical acceptance.

    (a) Removal Actions. An item of material or equipment may be removed 
from the listing or technical acceptance in accordance with the 
following procedures upon determination that the item is unsatisfactory 
or has been misrepresented to the owner or RUS.
    (b) Notification by the Committee. The sponsor of an item of 
material or equipment will be notified in writing of a proposal to 
remove such item from the listing or technical acceptance.
    (c) Supplemental Information. Within ten (10) days of receipt of 
such notification, the sponsor may submit to Committee ``A'' a letter 
expressing the sponsor's intent to submit written supplemental technical 
information relevant to Committee ``A's'' determination. The sponsor 
must submit such information within twenty (20) days from the submission 
of its letter to Committee ``A.'' Committee ``A'' will have the 
discretion of making a decision following the expiration of the time 
periods provided in this paragraph.
    (d) Review by the Technical Standards Committee ``A''. Committee 
``A'' will consider all relevant information presented in determining 
whether an item should be removed from the listing or technical 
acceptance. Formal rules of evidence and procedure shall not apply to 
proceedings before Technical Standards Committee ``A.''
    (e) Action by the Technical Standards Committee ``A''. Committee 
``A'' may take one of the following actions:
    (1) Order the immediate removal of the item from the listing, or 
technical acceptance,
    (2) Condition the item's continued listing, or technical acceptance,
    (3) Recommend a basis of settlement which will adequately protect 
the interest of the Government, or
    (4) Delay the effectiveness of its decision for a time period 
sufficient to allow the sponsor to appeal to Technical Standards 
Committee ``B.''

All committee ``A'' decisions regarding the actions listed above must be 
by unanimous vote. If the vote is not unanimous, the item will be 
referred to Technical Standards Committee ``B.''

Written notice of Technical Standards Committee ``A's'' decision, 
stating the basis for the decision, will be provided to the sponsor.

[[Page 280]]

    (f) Additional Opportunity to Present Information. At the request of 
the sponsor, RUS may afford additional opportunity for consideration of 
relevant information. Such additional opportunity may include, without 
limitation, a meeting between RUS and the sponsor in such a forum that 
RUS may determine. In making this decision, RUS will consider, among 
other things, the best interests of RUS, its borrowers, and the sponsor, 
and the best manner to develop sufficient information relating to the 
proposed action.
    (g) Appeal to the Technical Standards Committee ``B''. Within ten 
(10) days of notification of Committee ``A's'' decision, a sponsor may 
appeal in writing to Technical Standards Committee ``B'' to review 
Committee ``A's'' decision, specifying the reasons for such a request. 
Committee ``B's'' determination, in response to such request, shall be 
based on the record developed before Committee ``A'' and such additional 
information as Committee ``B'' may request. Formal rules of procedure 
and evidence shall not apply to proceedings before Committee ``B.''
    (h) Action by Technical Standards Committee ``B''. Committee ``B,'' 
by majority vote, may take one of the following actions:
    (1) Order the immediate removal of the item from listing, or 
technical acceptance,
    (2) Condition the item's continued listing, or technical acceptance,
    (3) Recommend a basis of settlement which adequately protects the 
interests of the Government, or
    (4) Delay the effectiveness of its decision for a time period 
sufficient to allow the sponsor to appeal to the Administrator of RUS.

Failure to obtain a majority vote on any of the above actions shall mean 
that the product will continue to be listed or accepted.

Written notice of Committee ``B's'' decision stating the basis of the 
decision will be provided to the sponsor.
    (i) Appeal to the Administrator. Within ten (10) days of the receipt 
of Committee ``B's'' decision, a sponsor may appeal to the Administrator 
to review Committee ``B's'' decision. If an appeal is made, the sponsor 
shall submit a written request to the Administrator, Rural Utilities 
Service, Room 4053, South Building, U.S. Department of Agriculture, 
Washington, DC 20250-1500 specifying the reasons to request 
reconsideration. The Administrator will have the option to decline the 
request, in which case the decision of Committee ``B'' shall stand. If a 
review is granted, the determination by the Administrator or the 
Administrator's designee shall be based on the record developed before 
Committee ``A'' and Committee ``B'' and such additional information as 
the Administrator may request. Formal rules of procedure and evidence 
shall not apply to the actions of the Administrator.
    (j) Action by the Administrator. The Administrator may take one of 
the following actions:
    (1) Order the immediate removal of the item from the listing, or 
technical acceptance,
    (2) Condition its continued listing, or technical acceptance, or
    (3) Recommend a basis of settlement which adequately protects the 
interests of the Government.

Written notice of the Administrator's determination, stating the basis 
for the decision, will be provided to the sponsor.

The Administrator's actions are final.

[50 FR 47711, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1728.60  List of materials and equipment.

    (a) General. Those items of material or equipment accepted by 
Technical Standards Committee ``A'' or ``B,'' with the exception of 
technically accepted nondomestic items, will be listed in the List of 
Materials. Items which do not qualify as domestic products may be 
accepted on a technical basis only (technical acceptance) for a period 
of one year as provided in Sec. 1728.30(c)(1) and will not be included 
in the List of Materials.
    (b) Publishing and Revisions. RUS will reissue the List of Materials 
every year, dated July, and issue supplements, if needed, dated October, 
January, and April of every year. An RUS office copy, which is the 
official current copy, of the List of Materials, will be updated every 
time changes are

[[Page 281]]

made by the Technical Standards Committees.
    (c) Dual Listings. RUS, through its Technical Standards Committees, 
will accept for listing only one item of a particular type of material 
or equipment for each manufacturer. If a manufacturer submits an item to 
perform the identical function of a listed item, RUS, through its 
Technical Standards Committees, may accept that item and remove the one 
previously listed. RUS will list only new items of material and 
equipment in the List of Materials. Used items will not be considered 
for listing.

[50 FR 47712, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1728.70  Procurement of materials.

    (a) By Owner. When purchasing the type of materials included in the 
List of Materials, RUS borrowers shall purchase only materials listed in 
the List of Materials, or materials which have a current technical 
acceptance by RUS and meet the ``Buy American'' requirement.
    (b) By Contractor. When performing work for an RUS borrower, 
contractors shall supply only items from the general acceptance pages of 
the List of Materials, or obtain the borrower's concurrence prior to 
purchase and use of a technically nondomestic item or any item listed on 
a conditional basis.
    (c) Procurement of Unlisted Items. (1) The borrower shall request 
prior approval from RUS for use of an item that does not fall in 
categories established by RUS in the List of Materials for which 
acceptability has been established by the Technical Standards 
Committees.
    (2) RUS will also determine, on a case-by-case basis, whether to 
allow use of an unlisted item in emergency situations and for 
experimental use or to meet a specific need. For purposes of this part 
1728, an emergency shall mean a situation wherein the supply of listed 
material and equipment from the industry is not readily available, or 
the standard designs are not applicable to the borrower's specific 
problem under consideration.
    (3) RUS will make arrangements for test or experimental use of newly 
developed items requiring limited trial use. RUS, working with the 
borrower and the manufacturer, will establish test locations for the 
items to facilitate installation and observation.

[50 FR 47712, Nov. 20, 1985. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1728.97  Incorporation by reference of electric standards
and specifications.

    The materials listed below are incorporated by reference in the 
corresponding sections noted. The Director of the Federal Register 
approves the incorporations by reference in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. A notice of any change in these materials will 
be published in the Federal Register. Standards and specifications 
materials are available for purchase at the addresses in the 
corresponding sections noted below. The materials incorporated by 
reference may also be inspected at the Rural Utilities Service's Program 
Development and Regulatory Analysis, Stop 1520, Room 5820-S, Washington, 
DC 20250-1522, call (202) 720-8674. Bulletins are also available for 
inspection at the National Archives and Records Administration (NARA). 
For information on the availability of these materials at NARA, call 
(202) 741-6030, or go to: http://www.archives.gov or at the Office of 
the Federal Register, 800 North Capitol Street, NW., suite 700, 
Washington, DC, or go to: http://www.archives.gov/federal--register/
code--of--federal--regulations/ibr--locations.html.
    (a) The following RUS bulletins are available from the Rural 
Utilities Service, Room 1246-S, U.S. Department of Agriculture, 
Washington, DC 20250. For information on the availability of this 
material, call (202) 720-1900. The bulletins containing construction 
standards (50-4 and 1728F-803 to 1728F-811) may be obtained from the 
Superintendent of Documents, U.S. Government Printing Office (GPO) for 
Washington, DC 20402, Phone: 1-866-512-1800 (toll-free) 202-512-1800 (DC 
Area) or go to the GPO Web site at: http://www.gpoaccess.gov/about/
index.html.
    (1) Bulletin 50-4 (D-801), Specification and Drawings for 34.5/19.9 
kV Distribution Line Construction (11-86), incorporation approved for 
Sec. 1728.98.

[[Page 282]]

    (2) Bulletin 50-15 (DT-3), RUS Specifications for Pole Top Pins with 
1\3/8\[min] Diameter Lead Thread (1-51), incorporation approved for 
Sec. 1728.98.
    (3) Bulletin 50-16 (DT-4), RUS Specifications for Angle Suspension 
Brackets (3-52), incorporation approved for Sec. 1728.98.
    (4) Bulletin 50-19 (DT-7), RUS Specifications for Clevis Bolts (8-
53), incorporation approved for Sec. 1728.98.
    (5) Bulletin 50-23 (DT-18), RUS Specifications for 60[sec] Wood 
Crossarm Braces (2-71), incorporation approved for Sec. 1728.98.
    (6) Bulletin 50-31 (D-3), RUS Specifications for Pole Top Pins with 
1'' Diameter Lead Threads (2-79), incorporation approved for 
Sec. 1728.98.
    (7) Bulletin 50-32 (D-4), RUS Specifications for Steel Crossarm 
Mounted Pins with 1[sec] Diameter Lead Threads (10-50), incorporation 
approved for Sec. 1728.98.
    (8) Bulletin 50-33 (D-5), RUS Specifications for Single and Double 
Upset Spool Bolts (2-51), incorporation approved for Sec. 1728.98.
    (9) Bulletin 50-34 (D-6), RUS Specifications for Secondary Swinging 
Clevises (12-70), incorporation approved for Sec. 1728.98.
    (10) Bulletin 50-35 (D-7), RUS Specifications for Service Swinging 
Clevises (9-52), incorporation approved for Sec. 1728.98.
    (11) Bulletin 50-36 (D-8), RUS Specifications for Service Deadend 
Clevises (9-52), incorporation approved for Sec. 1728.98.
    (12) Bulletin 50-40 (D-14), RUS Specifications for Pole Top Brackets 
for Channel Type Pins (9-51), incorporation approved for Sec. 1728.98.
    (13) Bulletin 50-41 (D-15), RUS Specifications for Service 
Wireholders (11-51), incorporation approved for Sec. 1728.98.
    (14) Bulletin 50-55 (T-2), RUS Specifications for Overhead Ground 
Wire Support Brackets (5-53), incorporation approved for Sec. 1728.98.
    (15) Bulletin 50-56 (T-3), RUS Specifications for Steel Plate 
Anchors for Transmission Lines (12-53), incorporation approved for 
Sec. 1728.98.
    (16) Bulletin 50-60 (T-9), RUS Specification--Single Pole Steel 
Structures, Complete with Arms (12-71), incorporation approved for 
Sec. 1728.98.
    (17) Bulletin 50-72 (U-4), RUS Specification for Electrical 
Equipment Enclosures (5-35 kV) (10-79), incorporation approved for 
Sec. 1728.98.
    (18) Bulletin 50-73 (U-5), RUS Specifications for Pad-Mounted 
Transformers (Single and Three-Phase) (1-77), incorporation approved for 
Sec. 1728.98.
    (19) Bulletin 50-74 (U-6), RUS Specification for Secondary Pedestals 
(600 Volts and Below) (10-79), incorporation approved for Sec. 1728.98.
    (20) Bulletin 50-91 (S-3), RUS Specifications for Step-Down 
Distribution Substation Transformers (34.4-138 kV) (1-78), incorporation 
approved for Sec. 1728.98.
    (21) Bulletin 1728F-700, RUS Specification for Wood Poles, Stubs and 
Anchor Logs (3-2011), incorporation approved for Secs. 1728.98, 
1728.202.
    (22) Bulletin 1728F-803, Specifications and Drawings for 24.9/14.4 
kV Line Construction (10-98), incorporation approved for Sec. 1728.98.
    (23) Bulletin 1728F-804 (D-804), Specification and Drawings for 
12.47/7.2 kV Line Construction, October 2005, incorporation approved for 
Sec. 1728.98.
    (24) Bulletin 1728F-806 (D-806), Specifications and Drawings for 
Underground Electric Distribution, June 2000, incorporation approved for 
Sec. 1728.98.
    (25) Bulletin 1728F-810, Electric Transmission Specifications and 
Drawings, 34.5 kV to 69 kV (3-98), incorporation approved for 
Secs. 1728.98 and 1728.201.
    (26) Bulletin 1728F-811, Electric Transmission Specifications and 
Drawings, 115 kV to 230 kV (3-98), incorporation approved for 
Secs. 1728.98 and 1728.201.
    (b) The following material is available for purchase from American 
Institute of Timber Construction (AITC), 7012 S. Revere Park Way, 
Englewood, Colorado 80112, telephone (303) 792-9559, web address: 
https://www.aitc-glulam.org/index.asp.
    (1) AITC 200-2004, Manufacturing Quality Control Systems Manual For 
Structural Glued Laminated Timber, copyright 2004, (incorporation by 
reference approved for Secs. 1728.201 and 1728.202.
    (2) [Reserved]
    (c) The following standards are available for purchase from the 
American National Standards Institute (ANSI),

[[Page 283]]

25 West 43rd Street, New York, New York 10036, telephone (212) 642-4900, 
Web address: http://www.ansi.org/.
    (1) ANSI O5.2-2006, American National Standard for Wood Products, 
Structural Glued Laminated Timber for Utility Structures, approved 
December 5, 2006, incorporation by reference approved for Secs. , 
1728.201, 1728.202.
    (2) ANSI O5.3.2008, American National Standard for Wood Poles and 
Wood Products, Solid Sawn-Wood Crossarms & Braces--Specifications & 
Dimensions, approved July 15, 2008, incorporation by reference approved 
for Sec. 1728.201.
    (d) The American National Standards Institute/Insulated Cable 
Engineers Association, Inc. (ANSI/ICEA) makes the following material 
available for purchase from Global Engineering Documents for a fee at 
the following address: IHS Global Engineering Documents, 15 Inverness 
Way East, Englewood, CO 80112, Phone: (303) 397-7956; (800)-854-7179, 
Fax: (303) 397-2740, email: [email protected], Web site: http://
global.ihs.com.
    (1) ANSI/ICEA S-94-649-2004--Standard for Concentric Neutral Cables 
Rated 5 Through 46 KV (ANSI/ICEA S-94-649-2004), approved September 20, 
2005, incorporation by reference approved for Sec. 1728.204.
    (2) ANSI/ICEA T-31-610-2007--Test Method for Conducting Longitudinal 
Water Penetration Resistance Tests on Blocked Conductors (ANSI/ICEA T-
31-610-2007), approved October 31, 2007, incorporated by reference 
approved for Sec. 1728.204.
    (e) Copies of American Society for Testing and Materials (ASTM) 
publications referenced in this specification can be obtained from ASTM 
for a fee at the following address: ASTM, 100 Barr Harbor Drive, West 
Conshohocken, PA 19428-2959, Telephone: (610) 832-9585, Web site: http:/
/astm.org.
    (1) ASTM B 3-01 (Reapproved 2007)--Standard Specification for Soft 
or Annealed Copper Wire, (ASTM B 3-01) approved March 15, 2007, 
incorporated by reference approved for Sec. 1728.204.
    (2) ASTM B 8-04--Standard Specification for Concentric-Lay-Stranded 
Copper Conductors, Hard, Medium-Hard, or Soft (ASTM B 8-04), approved 
April 1, 2004, incorporated by reference approved for Sec. 1728.204.
    (3) ASTM B 230/B 230M-07--Standard Specification for Aluminum 1350-
H19 Wire for Electrical Purposes (ASTM B 230/B 230M-07), approved March 
15, 2007, incorporated by reference approved for Sec. 1728.204.
    (4) ASTM B 231/B 231M-04--Standard Specification for Concentric-Lay-
Stranded Aluminum 1350 Conductors (ASTM B 231/B 231M-04), approved April 
1, 2004, incorporated by reference approved for Sec. 1728.204.
    (5) ASTM B 400-08--Standard Specification for Compact Round 
Concentric-Lay-Stranded Aluminum 1350 Conductors (ASTM B 400-08), 
approved September 1, 2008, incorporated by reference approved for 
Sec. 1728.204.
    (6) ASTM B 496-04--Standard Specification for Compact Round 
Concentric-Lay-Stranded Copper Conductors (ASTM B 496-04), approved 
April 1, 2004, incorporated by reference approved for Sec. 1728.204.
    (7) ASTM B 609/B 609M-99--Standard Specification for Aluminum 1350 
Round Wire, Annealed and Intermediate Tempers, for Electrical Purposes 
(ASTM B 609/B 609M-99), approved April 1, 2004, incorporated by 
reference approved for Sec. 1728.204.
    (8) ASTM B 786-08--Standard Specification for 19 Wire Combination 
Unilay-Stranded Aluminum 1350 Conductors for Subsequent Insulation (ASTM 
B 786-08), approved September 1, 2008, incorporated by reference 
approved for Sec. 1728.204.
    (9) ASTM B 787/B 787M-04--Standard Specification for 19 Wire 
Combination Unilay-Stranded Copper Conductors for Subsequent Insulation 
(ASTM B 787/B 787M-04), approved September 1, 2004, incorporated by 
reference approved for Sec. 1728.204.
    (10) ASTM B 835-04--Standard Specification for Compact Round 
Stranded Copper Conductors Using Single Input Wire Construction (ASTM B 
835-04), approved September 1, 2004, incorporated by reference approved 
for Sec. 1728.204.
    (11) ASTM B902-04a--Standard Specification for Compressed Round 
Stranded Copper Conductors, Hard, Medium-Hard, or Soft Using Single 
Input Wire

[[Page 284]]

Construction (ASTM B902-04a), approved September 1, 2004, incorporated 
by reference approved for Sec. 1728.204.
    (12) ASTM D 1248-05--Standard Specification for Polyethylene 
Plastics Extrusion Materials for Wire and Cable (ASTM D 1248-05), 
approved March 1, 2005, incorporated by reference approved for 
Sec. 1728.204.
    (13) ASTM D 2275-01 (Reapproved 2008)--Standard Test Method for 
Voltage Endurance of Solid Electrical Insulating Materials Subjected to 
Partial Discharges (Corona) on the Surface (ASTM D 2275-01), approved 
May 1, 2008, incorporated by reference approved for Sec. 1728.204.
    (14) ASTM E 96/E 96M-05--Standard Test Methods for Water Vapor 
Transmission of Materials (ASTM E 96/E 96M-05), approved May 1, 2005, 
incorporated by reference approved for Sec. 1728.204.
    (f) The following standards from the American Wood Protection 
Association (AWPA), Book of Standards, 2008 edition, are available for 
purchase from AWPA, P.O. Box 361784, Birmingham, AL 35236-1784, 
telephone 205-733-4077, http://www.awpa.com/.
    (1) AWPA A1-06, Standard Methods for Analysis of Creosote and Oil-
Type Preservatives, amended in 2006, incorporation by reference approved 
for Secs. 1728.201 and 1728.202.
    (2) AWPA A2-08, Standard Methods for Analysis of Waterborne 
Preservatives and Fire-Retardant Formulations, 2008, incorporation by 
reference approved for Secs. 1728.201 and 1728.202.
    (3) AWPA A3-08, Standard Methods for Determining Penetration of 
Preservatives and Fire Retardants, revised in 2008, incorporation by 
reference approved for Secs. 1728.201and 1728.202.
    (4) AWPA A5-05, Standard Methods for Analysis of Oil-Borne 
Preservatives, 2008, incorporation by reference approved for 
Secs. 1728.201 and 1728.202.
    (5) AWPA A6-01, Method for the Determination of Oil-Type 
Preservatives and Water in Wood, amended in 2001, incorporation by 
reference approved for Sec. 1728.202.
    (6) AWPA A7-04, Standard for Wet Ashing Procedures for Preparing 
Wood for Chemical Analysis, amended in 2004, incorporation by reference 
approved for Sec. 1728.202.
    (7) AWPA A9-01, Standard Method for Analysis of Treated Wood and 
Treating Solutions By X-Ray Spectroscopy, amended in 2001, incorporation 
by reference approved for Secs. 1728.201 and 1728.202.
    (8) AWPA M2-07, Standard for Inspection of Wood Products Treated 
with Preservatives, reaffirmed in 2007, incorporation by reference 
approved for Sec. 1728.202.
    (9) AWPA M3-05, Standard Quality Control Procedures for Wood 
Preserving Plants, amended in 2005, incorporation by reference approved 
for Sec. 1728.202.
    (10) AWPA P1/P13-06, Standard for Creosote Preservative, reaffirmed 
in 2006, incorporation by reference approved for Secs. 1728.201 and 
1728.202.
    (11) AWPA P5-08, Standard for Waterborne Preservatives, revised in 
2008, incorporation by reference approved for Secs. 1728.201and 
1728.202.
    (12) AWPA P8-08, Standard for Oil-Borne Preservatives, revised in 
2008, incorporation by reference approved for Secs. 1728.201and 
1728.202.
    (13) AWPA P9-06, Standards for Solvents and Formulations for Organic 
Preservative Systems, copyright 2008, incorporation by reference 
approved for Secs. 1728.201 and 1728.202.
    (g) The following material is available from the Insulated Cable 
Engineers Association (ICEA) and may be purchased from Global 
Engineering Documents for a fee at the following address: IHS Global 
Engineering Documents, 15 Inverness Way East, Englewood, CO 80112, 
Phone: (303) 397-7956; (800)-854-7179, Fax: (303) 397-2740, email: 
[email protected], Web site: http://global.ihs.com.
    (1) ICEA T-32-645-93--Guide for Establishing Compatibility of Sealed 
Conductor Filler Compounds with Conducting Stress Control Materials 
(ICEA T-32-645-93), approved February 1993, incorporated by reference 
approved for Sec. 1728.204.
    (2) [Reserved]
    (h) The following material is available from Southern Pine 
Inspection Bureau Standards, 4709 Scenic Highway, Pensacola, Florida 
32504-9094, telephone (850) 434-2611. The web address for the Southern 
Pine Inspection Bureau is http://www.spib.org/.

[[Page 285]]

    (1) Special Product Rules for Structural, Industrial, and Railroad-
Freight Car Lumber, effective October 15, 1991, incorporation by 
reference approved for Sec. 1728.201.
    (2) [Reserved]
    (i) The following material is available for purchase from West Coast 
Lumber Inspection Bureau, P.O. Box 23145, Portland, Oregon 97281, 
telephone (503) 639-0651, fax (503) 684-8928. The web address for is 
http://www.wclib.org/.
    (1) Standard No. 17, Grading Rules for West Coast Lumber, Revised 
January 1, 2004, incorporation by reference approved for Sec. 1728.201.
    (2) [Reserved]

[76 FR 36963, June 24, 2011, as amended at 77 FR 19528, Apr. 2, 2012]



Sec. 1728.98  Electric standards and specifications.

    (a) To comply with this part, you must follow the requirements 
contained in the following REA/RUS bulletins. These bulletins are 
incorporated by reference in Sec. 1728.97 of this part.
    (1) Bulletin 50-4 (D-801), Specification and Drawings for 34.5/19.9 
kV Distribution Line Construction (11-86).
    (2) Bulletin 50-15 (DT-3), RUS Specifications for Pole Top Pins with 
1\3/8\[min] Diameter Lead Thread (1-51).
    (3) Bulletin 50-16 (DT-4), RUS Specifications for Angle Suspension 
Brackets (3-52).
    (4) Bulletin 50-19 (DT-7), RUS Specifications for Clevis Bolts (8-
53).
    (5) Bulletin 50-23 (DT-18), RUS Specifications for 60[sec] Wood 
Crossarm Braces (2-71).
    (6) Bulletin 50-31 (D-3), RUS Specifications for Pole Top Pins with 
1[sec] Diameter Lead Threads (2-79).
    (7) Bulletin 50-32 (D-4), RUS Specifications for Steel Crossarm 
Mounted Pins with 1[sec] Diameter Lead Threads (10-50).
    (8) Bulletin 50-33 (D-5), RUS Specifications for Single and Double 
Upset Spool Bolts (2-51).
    (9) Bulletin 50-34 (D-6), RUS Specifications for Secondary Swinging 
Clevises (12-70).
    (10) Bulletin 50-35 (D-7), RUS Specifications for Service Swinging 
Clevises (9-52).
    (11) Bulletin 50-36 (D-8), RUS Specifications for Service Deadend 
Clevises (9-52).
    (12) Bulletin 50-40 (D-14), RUS Specifications for Pole Top Brackets 
for Channel Type Pins (9-51).
    (13) Bulletin 50-41 (D-15), RUS Specifications for Service 
Wireholders (11-51).
    (14) Bulletin 50-55 (T-2), RUS Specifications for Overhead Ground 
Wire Support Brackets (5-53).
    (15) Bulletin 50-56 (T-3), RUS Specifications for Steel Plate 
Anchors for Transmission Lines (12-53).
    (16) Bulletin 50-60 (T-9), RUS Specification--Single Pole Steel 
Structures, Complete with Arms (12-71).
    (17) Bulletin 50-72 (U-4), RUS Specification for Electrical 
Equipment Enclosures (5-35 kV) (10-79).
    (18) Bulletin 50-73 (U-5), RUS Specifications for Pad-Mounted 
Transformers (Single and Three-Phase) (1-77).
    (19) Bulletin 50-74 (U-6), RUS Specification for Secondary Pedestals 
(600 Volts and Below) (10-79).
    (20) Bulletin 50-91 (S-3), RUS Specifications for Step-Down 
Distribution Substation Transformers (34.4-138 kV) (1-78).
    (21) Bulletin 1728F-700, RUS Specification for Wood Poles, Stubs and 
Anchor Logs (3-2011).
    (22) Bulletin 1728F-803, Specifications and Drawings for 24.9/14.4 
kV Line Construction (10-98).
    (23) Bulletin 1728F-804 (D-804), Specification and Drawings for 
12.47/7.2 kV Line Construction, October 2005.
    (24) Bulletin 1728F-806 (D-806), Specifications and Drawings for 
Underground Electric Distribution, June 2000.
    (25) Bulletin 1728F-810, Electric Transmission Specifications and 
Drawings, 34.5 kV to 69 kV (3-98).
    (26) Bulletin 1728F-811, Electric Transmission Specifications and 
Drawings, 115 kV to 230 kV (3-98).
    (b) The terms ``RUS form'', ``RUS standard form'', ``RUS 
specification'', and ``RUS bulletin'' have the same meanings as the 
terms ``REA form'', ``REA standard form'', ``REA specification'', and 
``REA bulletin'', respectively unless otherwise indicated.

[76 FR 36964, June 24, 2011]

[[Page 286]]



Sec. 1728.201  Bulletin 1728H-701, Specification for Wood Crossarms 
(Solid and Laminated), Transmission Timbers and Pole Keys.

    (a) General Provisions. (1) This section implements contractual 
provisions between Rural Utilities Service (RUS) and borrowers receiving 
financial assistance. The contractual agreement between RUS and its 
borrowers requires the borrower's system to be constructed in accordance 
with agency accepted plans and specifications. Each electric borrower 
must purchase only wood crossarms produced in accordance with the 
specification in this section.
    (2) Each electric borrower shall require each contractor to agree in 
writing to furnish only materials produced in accordance with the 
specifications in this section.
    (3) This specification describes the minimum acceptable quality of 
wood distribution crossarms and transmission crossarms (hereinafter 
called crossarms) that are purchased by or for borrowers. Where there is 
conflict between this specification and any other specification referred 
to in this section, this specification shall govern.
    (4) Various requirements relating to quality control and inspection 
are contained in Sec. 1728.202 of this part, Specification for Quality 
Control and Inspection of Timber Products. Section 1728.201 of this 
part, ANSI O5.2, (incorporated by reference in Sec. 1728.97), and ANSI 
O5.3, (incorporated by reference in Sec. 1728.97) shall be followed 
exactly and shall not be interpreted or subjected to judgment by the 
quality control person or an independent inspector.
    (5) The purchaser shall purchase from producers only material that 
meets the requirements of this specification. Each purchaser shall use a 
written purchase order to purchase material for use in financed systems 
in order to ensure compliance with the standards and specifications of 
this part. The written purchase order shall contain a provision that 
specifically requires the producer to comply with the provisions of this 
part. The purchase order shall contain a provision that specifically 
requires the producer to make the treating plant and storage areas 
available, during normal business hours, in order for representatives of 
either the purchaser or this agency to inspect such to determine 
compliance with the standards and specifications of this part.
    (6) The producer shall provide the inspectors with full information 
(drawings, etc.) relating to the requirements contained in the purchase 
order which is supplementary to this specification.
    (7) The producer shall maintain, or have access to, adequate 
laboratory facilities at or very near the treating plant, and all 
chemical tests, assays or analyses associated with the treatment shall 
be independently performed in this laboratory by both the quality 
control designee and the borrower's inspector. The producer may use a 
central laboratory as accepted on a case-by-case basis.
    (8) Inspection and treatment of all timber products produced under 
this specification shall be performed after receipt of the order from 
the purchaser, except as provided for reserve treated stock.
    (9) The testing and inspection of the lamination process shall be in 
accordance with AITC 200 (incorporated by reference in Sec. 1728.97).
    (10) With the exception of reserve treated stock, if requested by 
the borrower invoices for treated timber products shall be accompanied, 
in duplicate, by a copy of the producer's Certificate of Compliance and 
a copy of either the Independent Inspection Report or a Quality 
Assurance Plan Certificate. For reserve treated stock, inspection 
reports shall be available from the inspection agency. When shipped from 
reserve stock, the invoice shall bear an endorsement and a further 
certification by the producer that the material meets the requirements 
of this specification and any supplementary requirements cited in the 
purchase order under which it is purchased.
    (11) Crossarms shall be warranted to conform to this specification. 
If any crossarm is determined to be defective or does not conform to 
this specification within 1 year after delivery to the borrower, it 
shall be replaced as promptly as possible by the producer. In the event 
of failure to do so, the purchaser may make such replacement

[[Page 287]]

and the cost of the crossarm, at destination, shall be recoverable from 
the producer.
    (12) Crossarm producers shall take out and maintain liability 
insurance for not less than $1 million. Upon request, evidence of 
compliance shall be provided. The evidence shall be in the form of a 
certificate of insurance signed by a representative of the insurance 
company and include a provision that no changes in, or cancellation of, 
will be made without the prior written notice to the Director, Electric 
Staff Division, Rural Utilities Service.
    (b) Definitions.
    Agency refers to Rural Utilities Service (RUS), United States 
Department of Agriculture.
    Arm refers to structural wood member used to support electrical 
conductors and equipment. Arm is used interchangeably with crossarm.
    Certificate of compliance is a written certification by an 
authorized employee of the producer that the material shipped meets the 
requirements of this specification and any supplementary requirements 
specified in a purchase order from a borrower or the borrower's 
contractor.
    Crossarm refers to a structural wood member used to support 
electrical conductors and equipment and is a term used interchangeably 
with arm.
    Independent inspection relates to examination of material by an 
independent inspector employed by a commercial inspection agency.
    Inspection means an examination of material in sufficient detail to 
ensure conformity to all phases of the specification under which it was 
purchased.
    Lot is a quantity of crossarms of like size, conditioning, and 
fabrication, usually making up one treating charge.
    Producer is used to describe the party who manufactures and/or 
treats crossarms.
    Purchaser refers to either the borrower or contractors acting as the 
borrower's agent, except where a part of the specification specifically 
refers to only the borrower or the contractor.
    Quality control designee refers to an individual designated by the 
producer to oversee proper operation of the manufacturer's internal 
quality control system.
    Reserve treated stock consists of timber products treated in 
accordance with this specification, prior to and in anticipation of the 
receipt of specific orders, and held in storage ready for immediate 
shipment.
    Supplier is a term used interchangeably with producer, or in some 
cases, may be the distributor selling crossarms to the borrower.
    Treating plant is the organization that applies the preservative 
treatment to the crossarms.
    (c) Independent Inspection Plan. This plan or a Quality Assurance 
Plan, as described in paragraph (e) of this section, is acceptable for 
supplying crossarms. All crossarms purchased under the Independent 
Inspection Plan, for use on an agency financed system shall be inspected 
by a qualified independent inspector in accordance with Sec. 1728.202 of 
this part.
    (1) The borrower has the prerogative to contract directly with the 
inspection agency for service. The borrower should, where practical, 
select the inspection agency so that continual employment is dependent 
only on performance acceptable to the borrower and in accordance with 
this specification. The selected inspection agency shall not be allowed 
to subcontract the service to any other inspection agency.
    (2) The producer shall not be permitted to be a party to the 
selection of the inspection agency by the borrower and shall not 
interfere with the work of the inspector, except to provide notification 
of the readiness of material for inspection. To obtain inspection 
services for reserve stock, the producer may deal directly with the 
inspection agency. The producer shall not be permitted to treat material 
before it has been properly inspected and hammered with the appropriate 
inspection/quality assurance mark.
    (3) The methods of inspection described in this section and in 
Sec. 1728.202 of this part shall be used no matter which plan crossarms 
are produced under, i.e., Independent Inspection Plan, or Quality 
Assurance Plans, as described in this section

[[Page 288]]

    (d) Quality Assurance Plans. The producer shall furnish crossarms 
conforming to this specification as monitored by an acceptable Quality 
Assurance Plan. Borrower groups or agents for borrower groups 
endeavoring to operate Quality Assurance Plans shall submit their plan 
for assuring quality control to the Chairman, Technical Standards 
Committee ``A'', Electric Staff Division, Rural Utilities Service, Stop 
1569, Washington, DC 20250-1569.
    (e) Material Requirements. (1) Material and Grade. All crossarms 
furnished under this specification shall be free of brashy wood, decay, 
and insect holes larger than \3/32\ of an inch and shall meet additional 
requirements as shown on specific drawings. Crossarms shall be made of 
one of the following:
    (i) Douglas-fir which conforms to the applicable crossarm provisions 
of paragraphs 170 and 170a, or the applicable transmission arm 
provisions of paragraphs 169 and 169a of the Standard No. 17 Grading 
Rules for West Coast Lumber (incorporated by reference in Sec. 1728.97). 
Only coastal origin Douglas-fir shall be used for Douglas-fir crossarms 
manufactured under this specification;
    (ii) Southern Yellow Pine which conforms to the provisions of Dense 
Industrial Crossarm 65, as described in paragraph 31.2 in the 2001 
Southern Pine Inspection Bureau's Special Product Rules for Structural, 
Industrial, and Railroad-Freight Car Lumber, (incorporated by reference 
at Sec. 1728.97); or
    (iii) Laminated wood crossarms shall conform to ANSI O5.2 
(incorporated by reference at Sec. 1728.97) and have at least the same 
load carrying capacity as the solid sawn arm it replaces. The load 
carrying capacity of the laminated arms shall be determined by one of 
the procedures outlined in ANSI O5.2.
    (2) Borrowers may use alternative crossarms that are listed in 
Informational Publication 202-1, List of Materials Acceptable for Use on 
Systems of USDA Rural Utilities Service Borrowers. For information on 
the availability of this material, call RUS at (202) 720-1900, or go to: 
http://www.rurdev.usda.gov/UEP--Engineering--LOM.html.
    (3) Knots. Sound, firm, and tight knots, if well spaced, are 
allowed.
    (i) Slightly decayed knots are permitted, except on the top face, 
provided the decay extends no more than \3/4\ of an inch into the knot 
and provided the cavities will drain water when the arm is installed. 
For knots to be considered well spaced, the sum of the sizes of all 
knots in any 6 inches of length of a piece shall not exceed twice the 
size of the largest knot permitted. More than one knot of maximum 
permissible size shall not be in the same 6 inches of length. Slightly 
decayed, firm, or sound ``pin knots'' (\3/8\ of an inch or less) are not 
considered in size, spacing, or zone considerations.
    (ii) Knots are subject to limits on size and location as detailed in 
Tables I and II.

                      Table I--Knot Limits for Distribution Arms (See Figure 1, Appendix A)
                                           [All dimensions in inches]
----------------------------------------------------------------------------------------------------------------
                                                                      Maximum                        Diameter
                   Class of knot and location                    ----------------      Knot      ---------------
                                                                    Close grain                     Dense grain
----------------------------------------------------------------------------------------------------------------
Round Knots
    Single Knot: Maximum Diameter Center Section*
        Upper Half..............................................           \3/4\  ..............               1
        Lower Half..............................................               1  ..............          1\1/4\
    Elsewhere...................................................          1\1/4\  ..............          1\1/2\
Sum of Diameters in a 6-Inch Length: Maximum:
    Center Section
        Upper Half..............................................          1\1/2\  ..............               2
        Lower Half..............................................               2  ..............          2\1/2\
    Elsewhere...................................................          2\1/2\  ..............               3
----------------------------------------------------------------------------------------------------------------
* No knot shall be closer than its diameter to the pole mounting hole.


[[Page 289]]


 Table II--Knot Limits for Transmission Arms (See Figure 2, Appendix A)
                       [All dimensions in inches]
------------------------------------------------------------------------
      Pole mounting hole zone *        Maximum diameter for Single Knot
------------------------------------------------------------------------
UPPER HALF (inner zone).............  \3/4\.
UPPER HALF (outer zone).............  1 for close grain.
                                      1\1/4\ dense grain.
------------------------------------------------------------------------


 
                                                                                       Wide face (two sides)
                                                                                 -------------------------------
            Other locations transmission arm size **                Narrow face                        Along
                                                                                       Edge         centerline
----------------------------------------------------------------------------------------------------------------
4\5/8\ x 5\5/8\ or less.........................................               1          1\1/4\          1\1/4\
5\5/8\ x 7\3/8\.................................................          1\1/4\          1\3/8\          1\7/8\
3\5/8\ x 9\3/8\.................................................           \3/4\          1\3/4\          2\1/4\
----------------------------------------------------------------------------------------------------------------
* No knot shall be closer than its diameter to the pole mounting hole.
** For cross sections not shown, refer to grading rules.

    (iii) Knot clusters shall be prohibited unless the entire cluster, 
measured on the worst face, is equal to or less than the round knot 
allowed at the specific location.
    (iv) Spike knots shall be prohibited in deadend arms. Any spike knot 
across the top face shall be limited to the equivalent displacement of a 
knot \3/8\ of an inch deep on one face and the maximum round knot for 
its particular location on the worst face, with a maximum width of 1 
inch measured at the midpoint of the spiked section. Elsewhere across 
the bottom or side faces, spike knots shall not exceed \1/2\ the 
equivalent displacement of a round knot permitted at that location, 
provided that the depth of the knot on the worst face shall not exceed 
the maximum round knot allowed at that location.
    (v) Loose knots and knot holes shall be such that they can drain 
water when the arm is installed in its normal position. In the center 
section, upper half, loose knots shall not be greater than \1/2\ the 
dimensions of round knots. Elsewhere, loose knots shall not be greater 
than the round knot dimension. Loose knots shall be prohibited in 
deadend arms.
    (vi) All knots except those ``spike'' knots intersecting a corner 
shall be measured on the least diameter of the knot.
    (vii) A knot shall be considered to occupy a specific zone or 
section if the center of the knot (i.e., pith of knot) is within the 
zone or on the zone's boundary.
    (viii) If a round or oval knot appears on two faces and is in two 
zones, each face shall be judged independently. When this does not 
occur, average the least dimension showing on both faces. Knots which 
occur on only one face of a free of heart center (FOHC) arm shall be 
permitted to be 25 percent larger than the stated size.
    (ix) Two or more knots opposite each other on any face shall be 
limited by a sum not to exceed the size of a maximum single knot 
permitted for the location. On all four faces, all knots shall be well 
spaced.
    (x) Knots which have a maximum of \5/8\ inch diameter may intersect 
pin holes in the center section. One inch diameter knots may intersect 
insulator pin holes elsewhere.
    (4) Miscellaneous characteristics, features, and requirements. (i) 
The top face of distribution crossarms shall not have more than four 
medium pitch and bark pockets in 8-foot arms, and not more than five 
pitch and bark pockets in 10-foot arms. Elsewhere a maximum of six 
medium pockets in 8-foot arms and eight in 10-foot arms shall be 
permitted. Equivalent smaller pockets shall be permissible. An 
occasional large pocket is permissible.
    (ii) Shakes shall be prohibited.
    (iii) Prior to treatment on properly seasoned arms, single face 
checks shall not exceed an average penetration of \1/4\ the depth from 
any face and shall be limited to 10 inches long on the top face, and \1/
3\ the arm length on the

[[Page 290]]

other faces. Checks shall not be repeated in the same line of grain in 
adjacent pin holes. The sum of the average depths of checks occurring in 
the same plane on opposite faces shall be limited to \1/4\ the face 
depth.
    (iv) Compression wood shall be prohibited on any face. Compression 
wood is permitted if wholly enclosed in the arm, more than six annual 
rings from the surface, and not over \3/8\ of an inch in width.
    (v) Insect holes \3/32\ of an inch and larger shall be prohibited. 
Insect pin holes (i.e. holes not over \1/16\ of an inch diameter) shall 
be allowed if scattered and not exceeding 10 percent of the arm girth.
    (vi) Wane shall be allowed on one edge, limited to approximately 1 
inch measured across the corner. Outside of the top center section, an 
aggregate length not to exceed 2 feet may have wane up to 1\1/2\ inches 
on an occasional piece on one or both edges. Bark shall be removed.
    (vii) Prior to and after preservative treatment, crook, bow, or 
twist shall not exceed \1/2\ of an inch in 8 foot arms and \5/8\ of an 
inch in 10 foot arms.
    (f) Manufacturing. (1) All dimensions and tolerances shall conform 
to those shown on the drawings in this section or drawings supplied with 
the purchase order. Drawings supplied shall meet or exceed minimum 
dimensions and tolerances shown on the drawings in this section. Cross-
sectional dimensions shall be measured and judged at about \1/4\ the arm 
length, except when the defects of ``skip dressing'' or ``machine bite 
or offset'' are involved.
    (2) Lamination techniques shall comply with ANSI O5.2 (incorporated 
by reference at Sec. 1728.97).
    (3) Pin and bolt holes shall be smoothly bored without undue 
splintering where drill bits break through the surface. The center of 
any hole shall be within \1/8\ of an inch of the center-line locations 
on the face in which it appears. Holes shall be perpendicular to the 
starting and finishing faces.
    (4) Shape. The shape of the arms at any cross section, except for 
permissible wane, shall be as shown on the respective drawings in this 
section or supplied with the order. The two top edges may be either 
chamfered or rounded \3/8\ of an inch radius. The two bottom edges shall 
be slightly eased \1/8\ of an inch radius for the entire length.
    (5) Incising. The lengthwise surfaces of Douglas-fir crossarms shall 
be incised approximately \1/4\ of an inch deep. The incision shall be 
reasonably clean cut with a spacing pattern that ensures uniform 
penetration of preservative.
    (6) Quality of work. All crossarms shall be of the highest quality 
production. Crossarms shall be dressed on four sides, although ``hit and 
miss skips'' may occur on two adjacent faces on occasional pieces.
    (g) Conditioning prior to treatment. (1) All solid sawn crossarms 
shall be made of lumber which has been kiln-dried. Douglas-fir arms 
shall have an average moisture content of 19 percent or less, with a 
maximum not to exceed 22 percent in a single arm. Southern Yellow Pine 
arms shall have an average moisture content of 22 percent or less, with 
a maximum not to exceed 30 percent in a single arm.
    (2) Moisture content levels shall be measured at about \1/4\ the 
length and at a depth of about \1/5\ the crossarm's thickness. 
Additionally, the moisture content gradient between the shell (i.e. \1/
4\ of an inch deep) and the core (i.e. about 1 inch deep) shall not 
exceed 5 percentage points.
    (3) A minimum of at least 20 solid sawn crossarms per treating 
charge shall be measured to verify moisture content and shall be duly 
recorded by the quality control designee.
    (4) The moisture content of lumber used in laminating shall, at the 
time of gluing, be within the range of 8 to 12 percent, inclusive.
    (h) Preservatives. (1) The preservatives shall be:
    (i) Creosote which conforms to the requirements of AWPA P1/13-06 
(incorporated by reference at Sec. 1728.97), when analyzed in accordance 
with the methods in AWPA A1-06 (incorporated by reference at 
Sec. 1728.97), sections 2, 3, 4, either 5 or 9, and 6;
    (ii) Pentachlorophenol which contains not less than 95 percent 
chlorinated phenols and conforms to AWPA P8-08 (incorporated by 
reference at Sec. 1728.97) when analyzed in accordance with AWPA A5-05 
(incorporated by reference at Sec. 1728.97) or AWPA A9-01

[[Page 291]]

(incorporated by reference at Sec. 1728.97). The hydrocarbon solvents 
for introducing the preservative into the wood shall meet the 
requirements of AWPA P9-06 (incorporated by reference at Sec. 1728.97) 
Type A;
    (2) Waterborne Preservatives shall be any of the following:
    (i) Ammoniacal Copper Arsenates (ACA) and Ammoniacal Copper Zinc 
Arsenate (ACZA) which shall meet the requirements of AWPA P5-08 
(incorporated by reference at Sec. 1728.97), when analyzed in accordance 
with methods in AWPA A2-08 (incorporated by reference at Sec. 1728.97) 
or AWPA A9-01 (incorporated by reference at Sec. 1728.97); and
    (ii) Chromated Copper Arsenates (CCA) which shall meet the 
requirements of one of the formulations given in AWPA P5-08 
(incorporated by reference at Sec. 1728.97) sections 4, 5 or 6, and 10. 
Tests to establish conformity shall be made in accordance with AWPA A2-
08 (incorporated by reference at Sec. 1728.97) or A9-01 (incorporated by 
reference at Sec. 1728.97).
    (A) The pH of treating solutions of the waterborne preservatives 
shown in AWPA P5-08 (incorporated by reference at Sec. 1728.97) section 
10, shall be determined in accordance with AWPA A2-08, (incorporated by 
reference at Sec. 1728.97) section 8.
    (B) The oxide formulations of waterborne preservatives shall be 
supplied.
    (C) Douglas-fir crossarms shall not be treated with CCA 
preservatives.
    (D) Materials treated with waterborne preservatives shall be free of 
visible surface deposits.
    (iii) Copper Naphthenate (CuN) concentrate used to prepare wood 
preserving solutions shall contain not less than 6 percent nor more than 
8 percent copper in the form of CuN and shall conform to AWPA P8-08 
(incorporated by reference at Sec. 1728.97) when analyzed in accordance 
with AWPA A5-05 (incorporated by reference at Sec. 1728.97). The 
hydrocarbon solvents for introducing the preservative into the wood 
shall meet the requirements of AWPA P9-06 (incorporated by reference at 
Sec. 1728.97) Type A.
    (i) Preservative treatment. (1) All timber products treated under 
this specification shall be treated by either a pressure or a thermal 
(non-pressure) process.
    (2) These materials may be further conditioned by steaming, or by 
heating in hot oil (Douglas-fir), within the following limits:

------------------------------------------------------------------------
                                   Time hours (max.)      Temperature
------------------------------------------------------------------------
Steam...........................  3.................  220  deg.F
Heating in Preservation.........  3.................  210  deg.F
------------------------------------------------------------------------

    (3) A final steam or hot oil bath may be used only to meet 
cleanliness requirements of paragraph (k) of this section. Total 
duration of the final steam bath shall not exceed 2 hours and the 
temperature shall not exceed 240 degrees Fahrenheit.
    (j) Results of treatments. (1) The quality control designee shall 
test or supervise the testing of each treated charge for penetration and 
retention.
    (2) Method of sampling. When testing penetration and retention, a 
borer core shall be taken from not less than 20 crossarms in each 
treating charge. The borings shall be taken from any face except the top 
face at a point as close to the end as possible, being at least 3 inches 
from the end of the arm and no closer than 3 inches from the edge of the 
holes. The bored holes shall be plugged with preservative-treated plugs 
driven into the arm. Borings from laminated arms shall not be taken from 
the same laminate unless there is an end joint separation.
    (3) As determined in accordance with AWPA A3-08 (incorporated by 
reference at Sec. 1728.97) all sapwood present in Douglas-fir or 
Southern Yellow Pine crossarms shall be completely penetrated with 
preservative. In the heartwood of Douglas-fir crossarms, the penetration 
shall be not less than 3 inches longitudinally from the edge of holes 
and ends, and at least \3/16\ inch from the surface of any face.
    (4) Retention of preservative in the outer \6/10\ of an inch for 
Douglas-fir and one inch for Southern Yellow Pine assay zones at the 
treating plant shall be not less than:

[[Page 292]]



------------------------------------------------------------------------
                                                    AWPA analysis method
          Preservation            Retention (pcf)            **
------------------------------------------------------------------------
Creosote.......................               8     A6.
Pentachlorophenol..............             * 0.4   A5.
ACA, ACZA, or CCA..............               0.4   A2, A7, or A9.
Copper Naphthenate.............               0.04  A5, or A9.
------------------------------------------------------------------------
* The pentachlorophenol retention is for the lime ignition method. The
  copper pyridine method, retention 0.36 pcf is required when timbers
  may have been in contact with salt water, and for all species native
  to the Pacific coast region. It is not required when it specifically
  states on the rough sawn material invoice that this material has not
  been in contact with salt water or is shown by analysis to have no
  additional chlorides present in the wood before treating.
** All the AWPA Analysis Methods are incorporated by reference at Sec.
  1728.97.

    (5) Cleanliness of lengthwise surfaces of all crossarms shall be 
free from tarry, greasy, or sticky material, and from oil exudation and 
pentachlorophenol crystallization (blooming).
    (6) Re-treatment of materials which do not meet the penetration and 
retention requirements of this specification may be done only twice. 
Initial treatment steaming time plus re-treatment steaming time, 
combined, shall not exceed time allowed in paragraph (i) of this 
section.
    (k) Marks and brands. (1) All crossarms shall be legibly branded 
(hot brand) or die-stamped and to a depth of approximately \1/16\ of an 
inch before treatment.
    (2) The letters and figures shall be not less than \1/2\ of an inch 
in height. The top of the brand shall be oriented to the top of the arm.
    (3) The brand or die-stamp shall include:
    (i) The manufacturer's identification symbol;
    (ii) Month and year of manufacture;
    (iii) Species of timber such as DF for Douglas-fir and SP for 
Southern Yellow Pine; and
    (iv) The preservative notated with a C for creosote, P for penta, S 
for waterbornes, or N for Copper Naphthenate.
    (4) An example is:
    M-6-06 Manufacturer--Month--Year
    DF-P Douglas-fir--penta treated
    (5) The brand or stamp shall be placed on either of the wide 
surfaces of the arms, oriented with letters right side up towards the 
top of the arm and preferably about 1 foot from the midpoint of the arm.
    (6) Each producer should mark each type of arm in approximately the 
same location on the arm.
    (7) Brands, inspection marks, or quality assurance marks shall be 
removed from arms that do not meet these specifications.
    (l) Storage. (1) Producers may treat crossarms for reserve stock 
under any of the agency approved plans.
    (2) Crossarms treated with oil-borne preservatives which have been 
held in storage for more than 1 year before shipment to the borrower, 
shall be re-assayed before shipment and shall be re-treated if found 
nonconforming for retention on orders placed in accordance with this 
section.
    (3) Crossarms shall meet the assay after re-treatment in accordance 
with paragraph (k) of this section.
    (4) Crossarms which are held in storage after final acceptance shall 
be stacked in piles or on skids in such a manner as to assure good 
ventilation. The stacks shall be covered or stored indoors for 
protection from the sun and weather to reduce checking, bending, and 
loss of preservative.
    (m) Drawings. (1) The drawings of Appendix B of this section, 
Crossarm Drilling Guide, have a type number and show in detail the hole 
size, shape, and pattern desired for crossarms ordered under this 
specification.
    (2) Purchase orders shall indicate the type crossarm required.
    (3) Crossarms shall be furnished in accordance with the details of 
these drawings or in accordance with drawings attached to the purchase 
order.
    (4) Appropriate drawings for transmission arms are to be specified 
and included with purchase orders. Technical drawings for transmission 
crossarms are published in Bulletin 1728F-811, ``Electric Transmission 
Specifications and Drawings, 115kV through 230kV'' (incorporated by 
reference at Sec. 1728.97), and Bulletin 1728F-810, ``Electric

[[Page 293]]

Transmission Specification and Drawings, 34.5kV through 69kV'' 
(incorporated by reference at Sec. 1728.97).
    (n) Destination inspection. All crossarms shall meet or exceed their 
minimum dimensions for at least 1 year after date of delivery to the 
borrower.
[GRAPHIC] [TIFF OMITTED] TR24JN11.013


[[Page 294]]


[GRAPHIC] [TIFF OMITTED] TR24JN11.014


         Appendix C to Sec.1728.201--Metric Conversion Factors
------------------------------------------------------------------------
          To convert from                    To             Multiply by
------------------------------------------------------------------------
Foot (ft).........................  Meter (m)...........          0.3048
Inch (in).........................  Centimeter..........            2.54

[[Page 295]]

 
Pound per cubic foot (pcf) (lb/ft   Kilogram per cubic          16.01846
 \3\).                               meter (kg/m \3\).
Pound per square inch (psi) (lb/in  Kilogram per square         703.0696
 \2\).                               meter (kg/m \2\).
Degrees Fahrenheit ( deg.F).......  Degrees Celsius (     5/9(F deg.-32)
                                     deg.C).
------------------------------------------------------------------------



Sec. 1728.202  Bulletin 1728H-702, Specification for Quality Control
and Inspection of Timber Products.

    (a) Scope. This specification describes in more detail the 
responsibilities and procedures pertaining to quality control for 
crossarms, as specified in Sec. 1728.201 of this part, and poles, 
covered in Bulletin 1728F-700, ``Specification for Wood Poles, Stubs and 
Anchor Logs,'' incorporated by reference in Sec. 1728.97 of this part 
and in Sec. 1755.97 of 7 CFR part 1755.
    (b) General stipulations. (1) Conformance of poles and crossarms to 
agency specifications for the most part is the responsibility of the 
producer's management.
    A member of the producer's staff shall be designated quality control 
designee and charged with the responsibility for the exercise of proper 
quality control procedures.
    (2) The requirements of AWPA M3-05 (incorporated by reference at 
Sec. 1728.97), covering records, adequate laboratory, plant gauges, and 
other plant facilities including proper storage, shall be followed.
    (3) The methods of inspection described in this section shall be 
used no matter which plan timber products are purchased under, i.e., 
Insured Warranty Plan, Independent Inspection Plan, or Quality Assurance 
Plans, as described in Sec. 1728.201 of this part or Bulletin 1728F-700 
(incorporated by reference at Sec. 1728.97). The number of poles and 
crossarms actually inspected by monitors for quality control under a 
Quality Assurance Plan or the Insured Warranty Plan may vary from the 
number of poles and crossarms inspected under the Independent Inspection 
Plan. Under the Independent Inspection Plan, each pole and a sample 
number of crossarms shall be inspected.
    (4) Under the Independent Inspection Plan, the borrower should 
designate in the purchase order which inspection agency it has selected. 
Unless the borrower contracts for inspection as a separate transaction, 
the treating company shall obtain the services of the borrower's 
designated inspection agency. For reserve treated stock for purchase 
under the Independent Inspection Plan, the treating company shall obtain 
the services of an inspection agency.
    (5) Individual inspectors in the employ of Independent Inspection 
Agencies shall be experienced and competent. The inspector shall perform 
all phases of the inspection personally and in the proper sequence. The 
primary responsibility of the inspector is to determine, for the 
borrower, by careful inspection and verification, that the timber 
products, preservative, and treatment meet the requirements of Bulletins 
1728F-700 (incorporated by reference at Sec. 1728.97) and Sec. 1728.201 
of this part (Bulletin 1728H-701) and that the methods, storage 
facilities, and production equipment conform to applicable 
specifications. For details of the inspector's qualifications see 
Appendix A of this section.
    (6) Independent inspection agencies and inspectors shall maintain 
their impartiality. To do so, inspection agencies, inspectors, producers 
and brokers must maintain the greatest degree of separation and 
eliminate even the appearance of a conflict of interest. Inspection 
agencies shall not receive gratuities from or enter into financial 
agreements, other than for inspection services, with suppliers for which 
they perform inspection. Inspection agencies shall not provide 
gratuities or free services to suppliers. Inspection agencies shall not 
offer product warranties on inspected material.
    (7) Failure of an individual inspector to follow proper procedures 
or failure of an inspection agency to properly train and supervise 
inspectors or follow the appropriate RUS specifications

[[Page 296]]

constitutes grounds for RUS debarment of said company from future 
inspection of RUS financed material
    (8) Inspection agencies shall have and maintain liability insurance 
in the amount of $500,000 and a surety bond or miscellaneous errors and 
omission insurance for consequential damages for not less than $250,000. 
Upon request, evidence of compliance to this requirement shall be 
forwarded to the agency. The evidence shall be in the form of a 
certificate of insurance or a Bond signed by a representative of the 
insurance or Surety Bonding company and include a provision that no 
change in, or cancellation of, will be made without the prior written 
notice to Chairman, Technical Standards Committee ``A'' (Electric).
    (9) Inspection agencies shall maintain their own laboratory that is 
properly equipped, and capable of completely analyzing the respective 
preservatives and retentions, and at a minimum able to run referee 
methods. This laboratory shall be independent from any treating plant 
laboratory. Independent Inspection Agencies may use one central 
laboratory.
    (10) Laminated materials manufactured for use on borrower systems 
shall comply with manufacturing and quality control requirements 
specified in ANSI O5.2 (incorporated by reference in Sec. 1728.97). The 
product shall be marked and certified.
    (i) Laminated material shall be inspected in accordance with ANSI 
O5.2, (incorporated by reference in Sec. 1728.97).
    (ii) Quality control of material shall be performed to determine 
conformance with Sec. 1728.201 of this part and AITC 200, (incorporated 
by reference in Sec. 1728.97).
    (c) Quality control and inspection procedures for product 
acceptance. It is the responsibility of the plant quality control 
designee to perform the following procedures to ensure that a particular 
lot of material conforms to the requirements of the applicable Agency 
specification prior to treatment. After the plant quality control 
designee has performed these procedures, a particular lot of material 
shall be released to the inspector for verification of conformance.
    (1) Poles can be purchased under any of the three purchase plans. 
These plans are Insured Warranty Plan, Independent Inspection Plan, or a 
Quality Assurance Plan. Under all of these plans, all poles in a lot 
shall be inspected by the plant quality control designee.
    Under the Insured Warranty Plan and a Quality Assurance Plan, the 
number of poles inspected by a third party inspector may be less than 
every pole, depending on the terms of the plans.
    (i) Ample space and assistance shall be provided by the treating 
plant for handling and turning to ensure that the surfaces of all items 
can be adequately inspected.
    (ii) Under the Independent Inspection Plan, all poles shall be 
inspected by the Independent Inspector for conformance to the 
requirements of Bulletin 1728F-700 (incorporated by reference at 
Sec. 1728.97). If a pole is rejected and the cause of rejection is 
corrected, the rejected pole may be offered again for inspection as new 
material.
    (iii) Dimensions, length, and circumference shall be measured by a 
standard steel tape to determine that they are in agreement with the 
details for class and length in the brand and butt stamp. If it is 
obvious by visual comparison with a measured pole that the brand 
information is correct, individual poles need not be measured. Pole 
circumference dimensions made prior to treatment shall govern 
acceptance. Reduction in dimension due to treatment and shipping shall 
be not more than 2 percent below the minimum for the pole class.
    (iv) If 5 percent of the poles in a lot offered for inspection are 
defective, the inspector shall terminate the inspection. Re-examination 
of an entire lot by plant quality control shall be required when the 
number of rejected poles equals or exceeds 5 percent of the lot 
inspected. All defective or nonconforming poles either shall be removed 
from the lot or have their brands marked out.
    (v) Poles in a lot shall be inspected for decay and all poles shall 
be of the same seasoning condition. If the plant quality control 
designee suspects that decay is present, a slice from both ends shall be 
cut for closer examination. If 3

[[Page 297]]

percent of the inspected poles in a lot show evidence of decay, the 
entire lot shall be unconditionally rejected without further sorting.
    (vi) Moisture content, when limited by the purchaser, as stated on 
the purchaser's purchase order, shall be measured by calibrated 
electronic moisture meter. Calibration of the meter shall include not 
only the zero settings for the X and Y readings, but also two resistance 
standards for 12 and 22 percent moisture content.
    (vii) Material failing to conform for moisture content may be 
retested upon request after a recalibration of the instrument. The 
results of the second test shall govern disposition of the lot.
    (viii) Re-examination for any mechanical damage or deterioration and 
for original acceptance shall be conducted on timber products not 
treated within 10 days after original inspection.
    (2) Crossarms can be purchased only under either of two purchase 
plans. These plans are the Independent Inspection Plan or Quality 
Assurance Plans. Under the Independent Inspection Plan, crossarms are to 
be inspected prior to manufacture, during manufacture, and after 
treatment. Under a Quality Assurance Plan, crossarms are inspected 
according to the terms of the quality assurance program acceptable to 
Rural Utilities Service.
    (i) Inspection prior to treatment shall include:
    (A) Surface inspection of all ends of all arms. This is usually done 
on the stacks of arms prior to manufacture. Particular attention shall 
be paid to defects commonly found in the ends, such as compression wood, 
red heart and other forms of decay, shakes, splits, through checks, 
scantiness, honeycomb, and low density, determined by rings per inch and 
percent of summerwood. All non-conforming arms shall be rejected. 
Whenever the number of nonconforming arms is found to exceed 0.5 percent 
of the lot or one arm, whichever is greater, the entire lot shall be 
rejected for excess number of defective ends. After the producer has 
removed or marked out the defective material, the arms may be 
resubmitted for inspection.
    (B) Surface inspection of the lengthwise sides performed on a random 
representative sample. The sample size shall equal 20 percent of a lot 
size or 200 arms, whichever is smaller. The inspector shall examine side 
surfaces as they are slowly rotated. When necessary, the rotation may be 
stopped for closer inspection. All non-conforming arms shall be 
rejected. Whenever the number of nonconforming arms is found to exceed 2 
percent of the sample size, the entire lot shall be rejected. After the 
producer has removed or marked out the defective material, the arms may 
be resubmitted for inspection.
    (C) Check of moisture content of the random sample by a calibrated 
moisture meter.
    (D) Check of crossarm dimensions of the random sample measured after 
surfacing.
    (ii) Inspection during manufacture shall consist of:
    (A) Checking bolt and insulator pin holes for squareness and 
excessive splintering;
    (B) Checking brands for completeness, location, and legibility; and
    (C) Checking arms for conformance.
    (iii) Under the Independent Inspection Plan, there shall be a final 
inspection after treatment for preservative retention and penetration 
and for damage.
    (3) Structural glued laminated timber shall be tested and inspected 
in accordance with AITC 200 (incorporated by reference in Sec. 1728.97). 
Grade of lumber shall be inspected by a qualified grader for specified 
quality, so marked. Adhesives used for all structural arms shall meet 
requirements of ANSI O5.2 (incorporated by reference at Sec. 1728.97) 
paragraph 5.2. Melamine urea adhesives shall not be used. End joint 
spacing and limitations shall be in accordance with ANSI O5.2.
    (d) Preservatives. (1) Creosote shall conform to the requirements of 
AWPA P1/P13-06 (incorporated by reference in Sec. 1728.97) when analyzed 
by AWPA A-06, (incorporated by reference in Sec. 1728.97) sections 2, 3, 
4, either 5 or 9, and 6, as follows:
    (i) Each occasional charge; and

[[Page 298]]

    (ii) The first charge and one of every five charges randomly 
selected in consecutive charges shall be analyzed.
    (2) Solutions of waterborne preservatives shall be analyzed for 
components in accordance with AWPA A2-08 (incorporated by reference in 
Sec. 1728.97)) or AWPA A9-01 (incorporated by reference in Sec. 1728.97) 
and shall meet the requirements of AWPA P5-08 (incorporated by reference 
in Sec. 1728.97) for composition. AWPA A2-08 shall be used as a referee 
method.
    (3) Pentachlorophenol shall contain not less than 95 percent 
chlorinated phenols and should conform to AWPA P8-08 (incorporated by 
reference in Sec. 1728.297), in hydrocarbon solvent AWPA P9-06, Type A 
(incorporated by reference in Sec. 1728.97).
    (4) Copper Naphthenate in hydrocarbon solvent AWPA P9-06 Type A 
(incorporated by reference in Sec. 1728.97), shall contain not less than 
6 percent nor more than 8 percent copper in the form of Copper 
Naphthenate and shall conform to AWPA P8-08 (incorporated by reference 
in Sec. 1728.97), when analyzed in accordance with AWPA A5-05 
(incorporated by reference in Sec. 1728.97).
    (e) Plant facilities and inspection during treatment. (1) 
Manufacturing and treating plant facilities shall conform to paragraph 
3, AWPA M3-05 (incorporated by reference in Sec. 1728.97), Pressure 
plants shall be equipped with recording instruments to register time, 
pressure, temperature and vacuum during each cycle of treatment. 
Pressure plants shall also be equipped with indicating thermometers and 
pressure and vacuum gauges to check the accuracy of the recorders. Work 
tanks shall be equipped with a thermometer. Thermal treating vats shall 
be equipped with a time and temperature recorder and with an indicating 
thermometer. Temperature recording devices are not mandatory for plants 
treating exclusively with waterborne preservatives.
    (2) Temperature and humidity readings throughout the kiln shall be 
recorded on a recording chart and verified by observation of direct 
reading equipment. Gauges and recording equipment shall be calibrated 
annually.
    (3) Recording instruments shall be checked with calibrated 
indicating gauges and thermometers, per AWPA M3-05 (incorporated by 
reference in Sec. 1728.97). Inaccuracies shall be referred to the 
treating plant for prompt correction. If an inaccuracy which indicates 
error resulting in non-compliance with this specification indicating 
possible damage to the material, the inspector shall reject the charge.
    (f) Results of treatment. (1) Poles shall be tested for retention 
and penetration by means of a calibrated increment borer 0.2 inches 
0.02 inches in diameter in accordance with procedures in AWPA M2-07 
(incorporated by reference in Sec. 1728.97). Under the Independent 
Inspection Plan, all treating charges shall be tested for retention and 
penetration. Plant quality control and independent inspection shall do 
their analyses separately. Under the Insured Warranty Plan and Quality 
Assurance Plans, the frequency of testing retention and penetration may 
vary according to the agency approved plan.
    (i) Unless otherwise specified, borings shall be taken approximately 
1 foot above the face brand to 1 foot below the face brand. For pressure 
treated Western Red Cedar and all butt treated poles, borings shall be 
taken approximately 1 foot below groundline.
    (ii) Penetration compliance shall be determined in accordance with 
AWPA A3-08 (incorporated by reference in Sec. 1728.97). Chrome Azurol S 
and Penta-Check shall be used to determine penetration of copper 
containing preservatives and penta, respectively.
    (2) Retention sampling shall be when there are 20 or more poles in 
the treating charge, the retention sample for creosote shall consist of 
20 assay zones from southern pine and Douglas-fir poles. All poles in 
charges with fewer than 20 poles shall be bored once. Charges with less 
than 15 poles shall be bored once and bored again on a random basis to 
obtain a minimum of 15 assay zones.
    (i) Retention samples shall be taken from 20 poles in charges of 20 
or more poles.
    (ii) Retention samples for Alaska yellow, western red, and northern 
white cedars shall consist of a minimum of 30 assay zones for creosote 
and waterborne preservatives. For penta charges of fewer than 30 poles, 
the sample shall

[[Page 299]]

contain the assay zone from each pole in the lot.
    (iii) Retention samples shall consist of borings, representative of 
pole volumes for each class and length in the charge. Further selection 
and marking of poles of mixed seasoning, volume, and location on the 
tram shall be made as illustrated in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                    Vol. in cu.     % of total       Number of
                 Number of poles                   Class/length         ft.           volume          borings
----------------------------------------------------------------------------------------------------------------
27..............................................            7/30             232              15               3
26..............................................            4/35             447              29               6
11..............................................            5/35             163              10               2
55 *............................................            6/35             704              46               9
                                                                 ----------------
    Total.......................................  ..............           1,526  ..............
----------------------------------------------------------------------------------------------------------------
* If a portion of these poles were green and some partially seasoned, then the number of borings should reflect
  the approximate percentage of each.

    (iv) When material in a lot consists of fewer pieces than the 
designated minimum number of samples for assay, additional borings shall 
be taken so as to make up at least the minimum sample, and in such 
manner that the sample is representative of the lot of material with 
respect to any variations in size, seasoning condition, or other 
features that might affect the results of treatment.
    (v) Analyses for preservative retention shall be performed as 
follows:
    (A) Creosote retention shall be analyzed by AWPA A6-01 (incorporated 
by reference in Sec. 1728.97);
    (B) Penta retention shall be analyzed by AWPA A5-05 (incorporated by 
reference in Sec. 1728.97) or AWPA A9-01 (incorporated by reference at 
Sec. 1728.97). Copper pyridine method is required when timber may have 
been in contact with salt water and for all species native to the 
Pacific coast region, unless the raw material invoice specifically 
states that the material either has not been in contact with salt water 
or has been shown by analysis to have contained no additional chlorides 
before treating;
    (C) Copper Naphthenate retention shall be analyzed by tests in 
accordance with AWPA A5-05 (incorporated by reference in Sec. 1728.97) 
or AWPA A9-01 (incorporated by reference in Sec. 1728.97);
    (D) Waterborne preservatives retention shall be analyzed by tests in 
accordance with AWPA A2-08 (incorporated by reference in Sec. 1728.97), 
AWPA A7-04 (incorporated by reference in Sec. 1728.97); or AWPA A9-01 
(incorporated by reference in Sec. 1728.97); and,
    (E) Prior to unloading a tram, the inspectors may take their own 
samples and analyze them concurrently with the quality control designee, 
but each shall work independently, and quality control data shall be 
presented before acceptance of the charge.
    (3) The penetration sampling of poles shall conform as follows:
    (i) Group A poles consist of poles with a circumference of 37.5 
inches or less at 6 feet from butt.
    (A) Bore 20 Group A poles or 20 percent of the poles, whichever is 
greater. Accept if 100 percent of the sample conform; otherwise, bore 
all poles.
    (B) Re-treat the charge if more than 15 percent of the borings are 
found to be nonconforming.
    (C) Re-treat all nonconforming poles if 15 percent or fewer fail the 
requirement.
    (ii) Group B poles consist of poles with circumference greater than 
37.5 inches at 6 feet from the butt.
    (A) For Group B poles 45 feet and shorter, bore each pole and re-
treat only those found to be nonconforming, unless more than 15 percent 
fail; in that case, re-treat the entire lot.
    (B) For Group B 50 feet and longer, bore each pole twice at 90 
degrees apart around the pole and accept only those poles conforming to 
the penetration requirement in both borings. All nonconforming poles may 
be re-treated only twice.
    (iii) All bored holes (nominal 0.2 of an inch diam. bit) shall be 
promptly filled with treated, tight-fitting wood plugs.
    (4) Under the Independent Inspection Plan, all treated charges of 
crossarms

[[Page 300]]

shall be tested for retention and penetration. Plant quality control 
inspectors and independent inspectors shall do their analyses 
independently. Under the Quality Assurance Plans, the frequency of 
testing retention and penetration may vary according to the plan.
    (i) The penetration and retention sample shall consist of 20 (48 for 
creosote) outer \6/10\ of an inch for Douglas-fir and 1 inch for 
Southern Yellow Pine zones from borings taken from any face except the 
top face at a location as close to the end as possible being at least 3 
inches from the end of the arm and no closer than 3 inches from the edge 
of any holes. For laminated material, borings shall be taken from 
laminates on a random basis.
    (ii) Preservative penetration shall be tested by taking not less 
than 20 borings from 20 crossarms in each charge, determined in 
accordance with AWPA A3-08 (incorporated by reference in Sec. 1728.97). 
Chrome Azurol S and Penta-Check shall be used to determine penetration 
of copper containing preservatives and penta, respectively.
    (5) Laminated material shall be checked for any evidence of 
delamination due to treatment and for the identifying quality stamp of 
AITC or American Plywood Association (APA).
    (6) If used for analysis, x-ray fluorescence instruments (XRF) shall 
be accurate and reliable, and they shall generate reproducible results. 
Instruments shall have thorough instructions which should include 
recommendations on drying techniques, equipment, and density 
calculations. These drying recommendations shall be followed when using 
XRF instruments.
    (7) To check the precision and accuracy of the in-plant x-ray 
fluorescence units (XRF) being used by producers, at least once monthly 
the independent inspector shall take a retention sample previously 
analyzed in the producer's laboratory and rerun it in the inspection 
agency's own laboratory. This sample shall be run utilizing either the 
XRF or recognized referee method for the given preservative. If the 
analytical results are within 5% of retention value that was previously 
obtained on the sample using the plant's XRF unit, the plant instrument 
needs no further calibration. All XRF units maintained by independent 
agencies as part of their required laboratories shall be calibrated at 
least quarterly either by the referee method for each preservative 
treatment being analyzed by said agency or by comparison with a set of 
graduated treated wood standards.
    (8) Each independent inspector and plant quality control personnel 
that use XRF instruments, shall be properly trained in the analysis of 
treated wood and preservatives under the supervision of a competent 
instructor. Proof of training shall be kept on file.
    (g) Product acceptance. Under the Independent Inspection Plan, the 
inspector shall signify acceptance by marking each piece of accepted 
material with a clear, legible hammer stamp in one end prior to 
treatment and in the other end after treatment. The inspector shall 
personally mark each piece, and shall not delegate this responsibility 
to another person.
    (1) Charge Inspection Reports.
    (2) Inspection Reports shall include the following:
    (i) Total pieces offered by the producer, number of pieces rejected 
and cause of rejection;
    (ii) Conditioning details of the material prior to treatment;
    (iii) Copy of preservative analysis by preservative supplier;
    (iv) The details of treatment; and
    (v) The results of treatment. Results shall include the following:
    (A) The depth of penetration for each sample and a summary of all 
poles rejected for insufficient penetration;
    (B) Separate worksheets for retention analyses, prepared by quality 
control designee and independent inspector.
    (3) On each inspection report the independent inspector and the 
plant quality control designee shall certify, in writing, that the 
material listed on the report has been inspected before and after 
treatment, and that the preservative used was analyzed in accordance 
with the requirements of this section.
    (4) Each inspector or inspection agency shall permanently retain for 
a period of 1 year a copy or transcript of each report of inspection, 
together

[[Page 301]]

with laboratory worksheets covering retention by assay and preservative 
analyses for the purchaser, and on request shall furnish a copy or 
transcript of any of these reports to the Chairman, Technical Standards 
Committee ``A'', Electric Staff Division, Rural Utilities Service, 
Washington, DC 20250-1569.
    (h) Charge numbers on re-treat poles. (1) The letter ``R'' shall be 
added to the original charge number in the butts of all poles that are 
re-treated for insufficient penetration or retention of preservative.
    (2) All poles that fail to meet treatment requirements after two re-
treatments shall be permanently rejected.
    (i) Safety provisions. Poles intended for agency borrowers shall not 
be inspected when, in the opinion of the inspector, unsafe conditions 
are present.

         Appendix A to Sec. 1728.202--Inspector's Qualifications

    Inspection agencies should see that inspectors assigned to the 
inspection of timber products and treatment for borrowers are competent 
and experienced. In general, any of the following examples are 
considered as minimum qualifying experience before a new inspector may 
be permitted to inspect timber products for borrowers:
    (a) Three years' experience as an inspector of timber and the 
preservative treatment of timber; or
    (b) Three years' experience in timber treating plant quality control 
work; or
    (c) Under the direct, on site, supervision of an experience, well-
qualified inspector, the prospective inspector shall have performed the 
following:
    (1) Inspected at least 10,000 poles and/or crossarms ``in the 
white.''
    (2) Checked preservative penetration results on at least 10,000 
poles and crossarms;
    (3) Made at least 100 wood assays for preservative retention;
    (4) Made at lease 25 analyses of each type preservative used on 
material the person is assigned to inspect; and
    (d) In both (a) and (b) of this Appendix A, the experience should be 
not less than that required in (c).
    (e) Inspectors experienced in the inspections of one product, such 
as poles, should not be qualified to inspect another product, such as 
crossarms, until the above experience is gained for each respective 
product.
    (f) The inspector should be especially well informed in wood 
preservation and the operation of a timber treating plant, and be 
competent in preservative analysis and other laboratory work.
    (g) In all cases, an inspector should be thoroughly instructed in 
the application of the specifications and the standards pertaining 
thereto before being permitted to independently inspect timber products 
and the treatments applied to them. Knowledge of these specifications 
and standards, as well as the inspector's proficiency, may be checked 
routinely by members of the agency staff.

[76 FR 36965, June 24, 2011, as amended at 77 FR 29537, May 18, 2012]



Sec. 1728.203  [Reserved]



Sec. 1728.204  Electric standards and specifications for materials
and construction.

    (a) General specifications. This section details requirements for 15 
and 25 kV single phase, V-phase, and three-phase power cables for use on 
12.5/7.2 kV (15 kV rated) and 24.9/14.4 kV (25 kV rated) underground 
distribution systems with solidly multi-grounded neutral. Cable 
complying with this specification shall consist of solid or strand-
filled conductors which are insulated with tree-retardant cross-linked 
polyethylene (TR-XLPE) or ethylene propylene rubber (EPR), with 
concentrically wound copper neutral conductors covered by a 
nonconducting or semiconducting jacket. 35 kV rated cables may be used 
in 24.9/14.4 kV application where additional insulation is desired.
    (1) The cable may be used in single-phase, two (V)-phase, or three-
phase circuits.
    (2) Acceptable conductor sizes are: No. 2 AWG (33.6 mm\2\) through 
1000 kcmil (507 mm\2\) for 15 kV cable, No. 1 AWG (42.4 mm\2\) through 
1000 kcmil (507 mm\2\) for 25 kV, and 1/0 (53.5 mm\2\) through 1000 
kcmil (507 mm\2\) for 35 kV cable.
    (3) Except where provisions therein conflict with the requirements 
of this specification, the cable shall meet all applicable provisions of 
ANSI/ICEA S-94-649-2004 (incorporated by reference in Sec. 1728.97). 
Where provisions of the ANSI/ICEA specification conflict with this 
section, Sec. 1728.204 shall apply.
    (b) Definitions. As used in this section:
    Agency refers to the Rural Utilities Service (RUS), an agency of the 
United States Department of Agriculture's

[[Page 302]]

(USDA), hereinafter referred to as the Agency.
    EPR Insulating Compound is a mixture of ethylene propylene base 
resin and selected ingredients.
    TR-XLPE Insulating Compound is a tree retardant crosslinked 
polyethylene (TR-XLPE) insulation compound containing an additive, a 
polymer modification filler, which helps to retard the growth of 
electrical trees in the compound.
    (c) Phase conductors. (1) Central phase conductors shall be copper 
or aluminum as specified by the borrower within the limit of 
Sec. 1728.204(a)(2).
    (2) Central copper phase conductors shall be annealed copper in 
accordance with ASTM B 3-01 (incorporated by reference in Sec. 1728.97). 
Concentric-lay-stranded phase conductors shall conform to ASTM B 8-04 
(incorporated by reference in Sec. 1728.97) for Class B stranding. 
Compact round concentric-lay-stranded phase conductors shall conform to 
ASTM B 496-04 (incorporated by reference in Sec. 1728.97). Combination 
unilay stranded phase conductors shall conform to ASTM B 787/B 787M-04 
(incorporated by reference in Sec. 1728.97). Compact round atranded 
copper conductors using single input wire construction shall conform to 
ASTM B835-04 (incorporated by reference in Sec. 1728.97). Compressed 
round stranded copper conductors, hard, medium-hard, or soft using 
single input wire construction shall conform to ASTM B902-04a 
(incorporated by reference in Sec. 1728.97). If not specified, stranded 
phase conductors shall be Class B stranded.
    (3) Central aluminum phase conductors shall be one of the following:
    (i) Solid: Aluminum 1350 H12 or H22, H14 or H24, H16 or H26, in 
accordance with ASTM B 609/B 609M-99 (incorporated by reference in 
Sec. 1728.97).
    (ii) Stranded: Aluminum 1350 H14 or H24, H142 or H242, H16, or H26, 
in accordance with ASTM B 609/B 609M-99 (incorporated by reference in 
Sec. 1728.97) or Aluminum 1350-H19 in accordance with ASTM B 230/B 230M-
07 (incorporated by reference in Sec. 1728.97). Concentric-lay-stranded 
(includes compacted and compressed) phase conductors shall conform to 
ASTM B 231/B 231M-04 (incorporated by reference in Sec. 1728.97) for 
Class B stranding. Compact round concentric-lay-stranded phase 
conductors shall conform to ASTM B 400-08 (incorporated by reference in 
Sec. 1728.97). Combination unilay stranded aluminum phase conductors 
shall conform to ASTM B 786-08 (incorporated by reference in 
Sec. 1728.97). If not specified, stranded phase conductors shall be 
class B stranded.
    (4) The interstices between the strands of stranded conductors shall 
be filled with a material designed to fill the interstices and to 
prevent the longitudinal migration of water that might enter the 
conductor. This material shall be compatible with the conductor and 
conductor shield materials. The surfaces of the strands that form the 
outer surface of the stranded conductor shall be free of the strand fill 
material. Compatibility of the strand fill material with the conductor 
shield shall be tested and shall be in compliance with ICEA T-32-645-93 
(incorporated by reference in Sec. 1728.97). Water penetration shall be 
tested and shall be in compliance with ANSI/ICEA T-31-610-2007 
(incorporated by reference in Sec. 1728.97).
    (5) The center strand of stranded conductors shall be indented with 
the manufacturer's name and year of manufacture at regular intervals 
with no more than 12 inches (0.3 m) between repetitions.
    (d) Conductor shield (stress control layer). A non-conducting (for 
discharge resistant EPR) or semi-conducting shield (stress control 
layer) meeting the applicable requirements of ANSI/ICEA S-94-649-2004 
(incorporated by reference in Sec. 1728.97) shall be extruded around the 
central conductor. The minimum thickness at any point shall be in 
accordance with ANSI/ICEA S-94-649-2004. The void and protrusion limits 
on the conductor shield shall be in compliance with ANSI/ICEA S-94-649-
2004. The shield shall have a nominal operating temperature equal to, or 
higher than, that of the insulation.
    (e) Insulation. (1) The insulation shall conform to the requirements 
of ANSI/ICEA S-94-649-2004 (incorporated by reference in Sec. 1728.97) 
and may either be tree retardant cross-linked polyethylene (TR-XLPE) or 
ethylene propylene rubber (EPR), as specified by

[[Page 303]]

the borrower. The void and protrusion limits on the insulation shall be 
in compliance with ANSI/ICEA S-94-649-2004.
    (2) The thickness of insulation shall be as follows:

 
----------------------------------------------------------------------------------------------------------------
        Cable rated voltage           Nominal thickness      Minimum thickness           Maximum thickness
----------------------------------------------------------------------------------------------------------------
15 kV.............................  220 mils (5.59 mm)...  210 mils (5.33 mm)...  250 mils (6.35 mm).
25 kV.............................  260 mils (6.60 mm)...  245 mils (6.22 mm)...  290 mils (7.37 mm).
35 kV.............................  345 mils (8.76 mm)...  330 mils (8.38 mm)...  375 mils (9.53 mm).
----------------------------------------------------------------------------------------------------------------

    (f) Insulation shield. (1) A semi-conducting thermosetting polymeric 
layer meeting the requirements of ANSI/ICEA S-94-649-2004 (incorporated 
by reference in Sec. 1728.97) shall be extruded tightly over the 
insulation to serve as an electrostatic shield and protective covering. 
The shield compound shall be compatible with, but not necessarily the 
same material composition as, that of the insulation (e.g., cross-linked 
polyethylene shield may be used with EPR insulation). The void and 
protrusion limits on the semi-conducting shields shall be in compliance 
with the ANSI/ICEA S-94-649-2004.
    (2) The thickness of the extruded insulation shield shall be in 
accordance with ANSI/ICEA S-94-649-2004 (incorporated by reference in 
Sec. 1728.97).
    (3) The shield shall be applied such that all conducting material 
can be easily removed without the need for externally applied heat. 
Stripping tension values shall be 3 through 18 pounds (1.36 through 8.16 
kg) for TR-XLPE and EPR discharge free cables. Discharge resistant 
cables shall have strip tension of 0 through 18 pounds (0 through 8.16 
kg).
    (4) The insulation shield shall meet all applicable tests of ANSI/
ICEA S-94-649-2004 (incorporated by reference in Sec. 1728.97).
    (g) Concentric neutral conductor. (1) Concentric neutral conductor 
shall consist of annealed round, uncoated copper wires in accordance 
with ASTM B 3-01 (incorporated by reference in Sec. 1728.97) and shall 
be spirally wound over the shielding with uniform and equal spacing 
between wires. The concentric neutral wires shall remain in continuous 
intimate contact with the extruded insulation shield. Full neutral is 
required for single phase and \1/3\ neutral for three phase applications 
unless otherwise specified. The minimum wire size for the concentric 
neutral is 16 AWG (1.32 mm\2\).
    (2) When a strap neutral is specified by the borrower, the neutral 
shall consist of uncoated copper straps applied concentrically over the 
insulation shield with uniform and equal spacing between straps and 
shall remain in intimate contact with the underlying extruded insulation 
shield. The straps shall not have sharp edges. The thickness of the flat 
straps shall be not less than 20 mils (0.5 mm).
    (h) Overall outer jacket. (1) An electrically nonconducting 
(insulating) or semi-conducting outer jacket shall be applied directly 
over the concentric neutral conductors.
    (2) The jacket material shall fill the interstice area between 
conductors, leaving no voids. The jacket shall be free stripping. The 
jacket shall have three red stripes longitudinally extruded into the 
jacket surface 120 deg. apart.
    (3) Nonconducting jackets shall consist of low density, linear low 
density, medium density, or high density HMW black polyethylene (LDPE, 
LLDPE, MDPE, HDPE) compound meeting the requirements of ANSI/ICEA S-94-
649-2004 (incorporated by reference in Sec. 1728.97) and ASTM D 1248-05 
(incorporated by reference in Sec. 1728.97) for Type I, Class C, 
Category 4 or 5, Grade J3 before application to the cable. Polyvinyl 
chloride (PVC) and chlorinated polyethylene (CPE) jackets are not 
acceptable.
    (4) Semi-conducting jackets shall have a maximum radial resistivity 
of 100 ohm-meter and a maximum moisture vapor transmission rate of 1.5 
g/m\2\/24 hours at 38  deg.C (100  deg.F) and 90 percent relative 
humidity in accordance

[[Page 304]]

with ASTM E 96/E96M-05 (incorporated by reference in Sec. 1728.97).
    (5) The minimum thickness of the jacket over metallic neutral wires 
or straps shall comply with the thickness specified in ANSI/ICEA S-94-
649-2004 (incorporated by reference in Sec. 1728.97).
    (i) Tests. (1) As part of a request for Agency consideration for 
acceptance and listing, the manufacturer shall submit certified test 
data results to the Agency that detail full compliance with ANSI/ICEA S-
94-649-2004 (incorporated by reference in Sec. 1728.97) for each cable 
design.
    (i) Test results shall confirm compliance with each of the material 
tests, production sampling tests, tests on completed cable, and 
qualification tests included in ANSI/ICEA S-94-649-2004 (incorporated by 
reference in Sec. 1728.97).
    (ii) The testing procedure and frequency of each test shall be in 
accordance with ANSI/ICEA S-94-649-2004 (incorporated by reference in 
Sec. 1728.97).
    (iii) Certified test data results shall be submitted to the Agency 
for any test, which is designated by ANSI/ICEA S-94-649-2004 
(incorporated by reference in Sec. 1728.97) as being ``for Engineering 
Information Only,'' or any similar designation.
    (2) Partial discharge tests. Manufacturers shall demonstrate that 
their cable is not adversely affected by excessive partial discharge. 
This demonstration shall be made by completing the procedures described 
in paragraphs (i)(2)(i) and (i)(2)(ii) of this section.
    (i) Each shipping length of completed cable shall be tested and have 
certified test data results available indicating compliance with the 
partial discharge test requirements in ANSI/ICEA S-94-649-2004 
(incorporated by reference in Sec. 1728.97).
    (ii) Manufacturers shall test production samples and have available 
certified test data results indicating compliance with ASTM D 2275-01 
(incorporated by reference in Sec. 1728.97) for discharge resistance as 
specified in the ANSI/ICEA S-94-649-2004 (incorporated by reference in 
Sec. 1728.97). Samples of insulated cable shall be prepared by either 
removing the overlying extruded insulation shield material, or using 
insulated cable before the extruded insulation shield material is 
applied. The sample shall be mounted as described in ASTM D 2275-01 and 
shall be subjected to a voltage stress of 250 volts per mil of nominal 
insulation thickness. The sample shall support this voltage stress, and 
not show evidence of degradation on the surface of the insulation for a 
minimum of 100 hours. The test shall be performed at least once on each 
50,000 feet (15,240 m) of cable produced, or major fractions thereof, or 
at least once per insulation extruder run.
    (3) Jacket tests. Tests described in paragraph (i)(3)(i) of this 
section shall be performed on cable jackets from the same production 
sample as in paragraphs (i)(2)(i) and (i)(2)(ii) of this section.
    (i) A Spark Test shall be performed on nonconducting jacketed cable 
in accordance with ANSI/ICEA S-94-649-2004 (incorporated by reference in 
Sec. 1728.97) on 100 percent of the completed cable prior to its being 
wound on shipping reels. The test voltage shall be 4.5 kV AC for cable 
diameters <1.5 inches and 7.0 kV for cable diameters 1.5 
inches, and shall be applied between an electrode at the outer surface 
of the nonconducting (insulating) jacket and the concentric neutral for 
not less than 0.15 second.
    (ii) [Reserved]
    (4) Frequency of sample tests shall be in accordance with ANSI/ICEA 
S-94-649-2004 (incorporated by reference in Sec. 1728.97).
    (5) If requested by the borrower, a certified copy of the results of 
all tests performed in accordance with this section shall be furnished 
by the manufacturer on all orders.
    (j) Miscellaneous. (1) All cable provided under this specification 
shall have suitable markings on the outer surface of the jacket at 
sequential intervals not exceeding 2 feet (0.61 m). The label shall 
indicate the name of the manufacturer, conductor size, type and 
thickness of insulation, center conductor material, voltage rating, year 
of manufacture, and jacket type. There shall be no more than 6 inches 
(0.15 m) of unmarked spacing between texts label sequence. The jacket 
shall be marked with the symbol required by Rule 350G of the National 
Electrical

[[Page 305]]

Safety Code and the borrower shall specify any markings required by 
local safety codes. This is in addition to extruded red stripes required 
in this section.
    (2) Watertight seals shall be applied to all cable ends to prevent 
the entrance of moisture during transit or storage. Each end of the 
cable shall be firmly and properly secured to the reel.
    (3) Cable shall be placed on shipping reels suitable for protecting 
it from damage during shipment and handling. Reels shall be covered with 
a suitable covering to help provide physical protection to the cable.
    (4) A durable label shall be securely attached to each reel of 
cable. The label shall indicate the purchaser's name and address, 
purchase order number, cable description, reel number, feet of cable on 
the reel, tare and gross weight of the reel, and beginning and ending 
sequential footage numbers.

[77 FR 19529, Apr. 2, 2012]



PART 1730_ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE--Table of Contents



                            Subpart A_General

Sec.
1730.1  Introduction.
1730.2  RUS policy.
1730.3  RUS addresses.
1730.4  Definitions.
1730.5-1730.19  [Reserved]

            Subpart B_Operations and Maintenance Requirements

1730.20  General.
1730.21  Inspections and tests.
1730.22  Borrower analysis.
1730.23  Review rating summary, RUS Form 300.
1730.24  RUS review and evaluation.
1730.25  Corrective action.
1730.26  Certification.
1730.27  Vulnerability and Risk Assessment (VRA).
1730.28  Emergency Restoration Plan (ERP).
1730.29  Grants and Grantees.
1730.30-1730.59  [Reserved]

Appendix A to Subpart B--Review Rating Summary, RUS Form 300

           Subpart C_Interconnection of Distributed Resources

1730.60  General.
1730.61  RUS policy.
1730.62  Definitions.
1730.63  IDR policy criteria.
1730.64  Power purchase agreements.
1730.65  Effective dates.
1730.66  Administrative waiver.
1730.67-99  [Reserved]
1730.100  OMB Control Number.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

    Source: 63 FR 3450, Jan. 23, 1998, unless otherwise noted.



                            Subpart A_General



Sec. 1730.1  Introduction.

    (a) This part contains the policies and procedures of the Rural 
Utilities Service (RUS) related to electric borrowers' operation and 
maintenance practices and RUS' review and evaluation of such practices.
    (b) The policies and procedures included in this part apply to all 
electric borrowers (both distribution borrowers and power supply 
borrowers) and are intended to clarify and implement certain provisions 
of the security instrument and loan contract between RUS and electric 
borrowers regarding operations and maintenance. This part is not 
intended to waive or supersede any provisions of the security instrument 
and loan contract between RUS and electric borrowers.
    (c) The Administrator may waive, for good cause, on a case by case 
basis, certain requirements and procedures of this part.



Sec. 1730.2  RUS policy.

    It is RUS policy to require that all property of a borrower be 
operated and maintained properly in accordance with the requirements of 
each borrower's loan documents. It is also RUS policy to provide 
financial assistance only to borrowers whose operations and maintenance 
practices and records are satisfactory or to those who are taking 
corrective actions expected to make their operations and maintenance 
practices and records satisfactory to RUS.



Sec. 1730.3  RUS addresses.

    (a) Persons wishing to obtain forms referred to in this part should 
contact:

[[Page 306]]

Program Support and Regulatory Analysis, Rural Utilities Service, U.S. 
Department of Agriculture, Stop 1522, 1400 Independence Ave., SW., 
Washington, DC 20250-1522, telephone (202) 720-8674. Borrowers or others 
may reproduce any of these forms in any number required.
    (b) Documents required to be submitted to RUS under this part are to 
be sent to the office of the borrower's assigned RUS General Field 
Representative (GFR) or such other office as designated by RUS.



Sec. 1730.4  Definitions.

    Terms used in this part have the meanings set forth in 7 CFR Part 
1710.2. References to specific RUS forms and other RUS documents, and to 
specific sections or lines of such forms and documents, shall include 
the corresponding forms, documents, sections and lines in any subsequent 
revisions of these forms and documents. In addition to the terms defined 
in 7 CFR Part 1710.2, the term Prudent Utility Practice has the meaning 
set forth in Article 1, Section 1.01 of Appendix A to Subpart B of 7 CFR 
Part 1718--Model Form of Mortgage for Electric Distribution Borrowers, 
for the purposes of this Part.



Secs. 1730.5-1730.19  [Reserved]



            Subpart B_Operations and Maintenance Requirements



Sec. 1730.20  General.

    Each electric program distribution, transmission and generation 
borrower (as defined in Sec. 1710.2) shall operate and maintain its 
system in compliance with prudent utility practice, in compliance with 
its loan documents, and in compliance with all applicable laws, 
regulations and orders, shall maintain its systems in good repair, 
working order and condition, and shall make all needed repairs, 
renewals, replacements, alterations, additions, betterments and 
improvements, in accordance with applicable provisions of the borrower's 
security instrument. Each borrower is responsible for on-going 
operations and maintenance programs, individually or regionally 
performing a system security Vulnerability and Risk Assessment (VRA), 
establishing and maintaining an Emergency Restoration Plan (ERP), 
maintaining records of the physical, cyber and electrical condition and 
security of its electric system and for the quality of services provided 
to its customers. The borrower is also responsible for all necessary 
inspections and tests of the component parts of its system, and for 
maintaining records of such inspections and tests. Each borrower shall 
budget sufficient resources to operate and maintain its system and 
annually exercise its ERP in accordance with the requirements of this 
part. An actual manmade or natural event on the borrowers system in 
which a borrower utilizes a significant portion of its ERP shall count 
as an annual exercise for that calendar year, provided that after 
conclusion of the event, the borrower verifies accuracy of the emergency 
points-of-contact (POC) and the associated contact numbers as listed in 
their ERP. For portions of the borrower's system that are not operated 
by the borrower, if any, the borrower is responsible for ensuring that 
the operator is operating and maintaining the system properly in 
accordance with the operating agreement.

[69 FR 60540, Oct. 12, 2004]



Sec. 1730.21  Inspections and tests.

    (a) Each borrower shall conduct all necessary inspections and tests 
of the component parts of its electric system, annually exercise its 
ERP, and maintain records of such inspections and tests. For the purpose 
of this part, ``Exercise'' means a borrower's Tabletop execution of, or 
actual implementation of, the ERP to verify the operability of the ERP. 
Such Exercise may be performed singly by an individual borrower, or as 
an active participant in a multi-party (to include utilities, government 
agencies and other participants or combination thereof) Tabletop 
execution or actual full implementation of the ERP. For the purpose of 
this part, ``Tabletop'' means a hypothetical emergency response scenario 
in which participants will identify the policy, communication, 
resources, data, coordination, and organizational elements associated 
with an emergency response.

[[Page 307]]

    (b) The frequency of inspection and testing will be determined by 
the borrower in conformance with applicable laws, regulations, national 
standards, and Prudent Utility Practice. The frequency of inspection and 
testing will be determined giving due consideration to the type of 
facilities or equipment, manufacturer's recommendations, age, operating 
environment and hazards to which the facilities are exposed, 
consequences of failure, and results of previous inspections and tests. 
The records of such inspections and tests will be retained in accordance 
with applicable regulatory requirements and Prudent Utility Practice. 
The retention period should be of a sufficient time period to identify 
long-term trends. Records must be retained at least until the applicable 
inspections or tests are repeated.
    (c) Inspections of facilities must include a determination of 
whether the facility complies with the National Electrical Safety Code, 
National Electrical Code (as applicable), and applicable State or local 
regulations and whether additional security measures are considered 
necessary to reduce the vulnerability of those facilities which, if 
damaged or destroyed, would severely impact the reliability and security 
of the electric power grid, cause significant risk to the safety and 
health of the public and/or impact the ability to provide service to 
consumers over an extended period of time. The electric power grid, also 
known as the transmission grid, consists of a network of electrical 
lines and related facilities, including certain substations, used to 
connect distribution facilities to generation facilities, and includes 
bulk transmission and subtransmission facilities as defined in 
Sec. 1710.2 of this title. Any serious or life-threatening deficiencies 
shall be promptly repaired, disconnected, or isolated in accordance with 
applicable codes or regulations. Any other deficiencies found as a 
result of such inspections and tests are to be recorded and those 
records are to be maintained until such deficiencies are corrected or 
for the retention period required by paragraph (b) of this section, 
whichever is longer.

[63 FR 3450, Jan. 23, 1998, as amended at 69 FR 60540, Oct. 12, 2004]



Sec. 1730.22  Borrower analysis.

    (a) Each borrower shall periodically analyze and document its 
security, operations and maintenance policies, practices, and procedures 
to determine if they are appropriate and if they are being followed. The 
records of inspections and tests are also to be reviewed and analyzed to 
identify any trends which could indicate deterioration in the physical 
or cyber condition or the operational effectiveness of the system or 
suggest a need for changes in security, operations or maintenance 
policies, practices and procedures. For portions of the borrower's 
system that are not operated by the borrower, if any, the borrower's 
written analysis would also include a review of the operator's 
performance under the operating agreement.
    (b) When a borrower's security, operations and maintenance policies, 
practices, and procedures are to be reviewed and evaluated by RUS, the 
borrower shall:
    (1) Conduct the analysis required by paragraph (a) of this section 
not more than 90 days prior to the scheduled RUS review;
    (2) Complete RUS Form 300, Review Rating Summary, and other related 
forms, prior to RUS' review and evaluation; and
    (3) Make available to RUS the borrower's completed RUS Form 300 
(including a written explanation of the basis for each rating) and 
records related to the operations and maintenance of the borrower's 
system.
    (c) For those facilities not included on the RUS Form 300 (e.g., 
generating plants), the borrower shall prepare and complete an 
appropriate supplemental form for such facilities.

[63 FR 3450, Jan. 23, 1998, as amended at 69 FR 60541, Oct. 12, 2004]



Sec. 1730.23  Review rating summary, RUS Form 300.

    RUS Form 300 in Appendix A shall be used when required by this part.



Sec. 1730.24  RUS review and evaluation.

    RUS will initiate and conduct a periodic review and evaluation of 
the operations and maintenance practices of

[[Page 308]]

each borrower for the purpose of assessing loan security and determining 
borrower compliance with RUS policy as outlined in this part. This 
review will normally be done at least once every three years. The 
borrower will make available to RUS the borrower's policies, procedures, 
and records related to the operations and maintenance of its complete 
system. Reports made by other inspectors (e.g., other Federal agencies, 
State inspectors, etc.) will also be made available, as applicable. RUS 
will not duplicate these other reviews but will use their reports to 
supplement its own review. RUS may inspect facilities, as well as 
records, and may also observe construction and maintenance work in the 
field. Key borrower personnel responsible for the facilities being 
inspected are to accompany RUS during such inspections, unless otherwise 
determined by RUS. RUS personnel may prepare an independent summary of 
the operations and maintenance practices of the borrower. The borrower's 
management will discuss this review and evaluation with its Board of 
Directors.



Sec. 1730.25  Corrective action.

    (a) For any items on the RUS Form 300 rated unsatisfactory (i.e., 0 
or 1) by the borrower or by RUS, the borrower shall prepare a corrective 
action plan (CAP) outlining the steps (both short term and long term) 
the borrower will take to improve existing conditions and to maintain an 
acceptable rating. The CAP must include a time schedule and cost 
estimate for corrective actions, and must be approved by the borrower's 
Board of Directors. The CAP must be submitted to RUS for approval within 
90 days after the completion of RUS' evaluation noted in Sec. 1730.24.
    (b) The borrower must periodically report to RUS in writing progress 
under the CAP. This report must be submitted to RUS every six months 
until all unsatisfactory items are corrected unless RUS prescribes a 
different reporting schedule.



Sec. 1730.26  Certification.

    (a) Engineer's certification. Where provided for in the borrower's 
loan documents, RUS may require the borrower to provide an ``Engineer's 
Certification'' as to the condition of the borrower's system (including, 
but not limited to, all mortgaged property.) Such certification shall be 
in form and substance satisfactory to RUS and shall be prepared by a 
professional engineer satisfactory to RUS. If RUS determines that the 
Engineer's Certification discloses a need for improvements to the 
condition of its system or any other operations of the borrower, the 
borrower shall, upon notification by RUS, promptly undertake to 
accomplish such improvements.
    (b) Emergency Restoration Plan certification. The borrower's Manager 
or Chief Executive Officer shall provide written certification to RUS 
stating that a VRA has been satisfactorily completed that meets the 
criteria of Sec. 1730.27 (a), (b), (c), or (d), as applicable and 
Sec. 1730.27(e)(1) through (e)(8), and that the borrower has an ERP that 
meets the criteria of Sec. 1730.28 (a), (b), (c), or (d), as applicable, 
and Sec. 1730.28 (e), (f), and (g). The written certification shall be 
in letter form. Applicants for new RUS electric loans, loan guarantees 
or grants shall include the written certification in the application 
package submitted to RUS. If the self-certification of an ERP and VRA 
are not received as set forth in this section, approval of the loan, 
loan guarantees or grants will not be considered until the 
certifications are received by RUS.

[63 FR 3450, Jan. 23, 1998, as amended at 69 FR 60541, Oct. 12, 2004]



Sec. 1730.27  Vulnerability and Risk Assessment (VRA).

    (a) Each borrower with an approved RUS electric program loan as of 
October 12, 2004 shall perform an initial VRA of its electric system no 
later than July 12, 2005. Additional or periodic VRA's may be necessary 
if significant changes occur in the borrower's system, and records of 
such additional assessments shall be maintained by the borrower.
    (b) Each applicant that has submitted an application for an RUS 
electric program loan or grant prior to October 12, 2004, but whose 
application has not been approved by RUS by such date, shall perform an 
initial VRA of

[[Page 309]]

its electric system in accordance with Sec. 1730.27(a).
    (c) Each applicant that submits an application for an RUS electric 
program loan or grant between October 12, 2004 and July 12, 2005 shall 
perform an initial VRA of its electric system in accordance with 
Sec. 1730.27(a).
    (d) Each applicant that submits an application for an RUS electric 
program loan or grant on or after July 12, 2005 shall include with its 
application package a letter certification that such applicant has 
performed an initial VRA of its electric system. Additional or periodic 
VRA's may be necessary if significant changes occur in the borrower's 
system, and records of such additional assessments shall be maintained 
by the borrower.
    (e) The VRA shall include identifying:
    (1) Critical assets or facilities considered necessary for the 
reliability and security of the electric power grid as described in 
Sec. 1730.21(c);
    (2) Facilities that if damaged or destroyed would cause significant 
risk to the safety and health of the public;
    (3) Critical assets or infrastructure owned or served by the 
borrower's electric system that are determined, identified and 
communicated as elements of national security by the consumer, State or 
Federal government;
    (4) External system impacts (interdependency) with loss of 
identified system components;
    (5) Threats to facilities and assets identified in paragraphs 
(e)(1), (e)(2), (e)(3), and (e)(4) of this section;
    (6) Criticality and risk level of the borrower's system;
    (7) Critical asset components and elements unique to the RUS 
borrower's system; and
    (8) Other threats, if any, identified by an individual borrower.

[69 FR 60541, Oct. 12, 2004]



Sec. 1730.28  Emergency Restoration Plan (ERP).

    (a) Each borrower with an approved RUS electric program loan as of 
October 12, 2004 shall have a written ERP no later than January 12, 
2006. The ERP should be developed by the borrower individually or in 
conjunction with other electric utilities (not all having to be RUS 
borrowers) through the borrower's unique knowledge of its system, 
prudent utility practices (which includes development of an ERP) and the 
borrower's completed VRA. If a joint electric utility ERP is developed, 
each RUS borrower shall prepare an addendum to meet the requirements of 
paragraphs (e), (f), and (g) of this section as it relates to its 
system.
    (b) Each applicant that has submitted an application for an RUS 
electric program loan or grant prior to October 12, 2004, but whose 
application has not been approved by RUS by such date, shall have a 
written ERP in accordance with Sec. 1730.28(a).
    (c) Each applicant that submits an application for an RUS electric 
program loan or grant between October 12, 2004 and January 12, 2006, 
shall have a written ERP in accordance with Sec. 1730.28(a).
    (d) Each applicant that submits an application for an RUS electric 
program loan or grant on or after January 12, 2006 shall include with 
its application package a letter certification that such applicant has a 
written ERP.
    (e) The ERP shall include:
    (1) A list of key contact emergency telephone numbers (emergency 
agencies, borrower management and other key personnel, contractors and 
equipment suppliers, other utilities, and others that might need to be 
reached in an emergency);
    (2) A list of key utility management and other personnel and 
identification of a chain of command and delegation of authority and 
responsibility during an emergency;
    (3) Procedures for recovery from loss of power to the headquarters, 
key offices, and/or operation center facilities;
    (4) A Business Continuity Section describing a plan to maintain or 
re-establish business operations following an event which disrupts 
business systems (computer, financial, and other business systems);
    (5) A section describing a plan to comply with the eligibility 
requirements to qualify for the FEMA Public Assistance Grant Program; 
and
    (6) Other items, if any, identified by the borrower as essential for 
inclusion in the ERP.

[[Page 310]]

    (f) The ERP must be approved and signed by the borrower's Manager or 
Chief Executive Officer, and approved by the borrower's Board of 
Directors.
    (g) Copies of the most recent approved ERP must be made readily 
available to key personnel at all times.
    (h) The ERP shall be Exercised at least annually to ensure 
operability and employee familiarity. Completion of the first exercise 
of the ERP must occur on or before January 12, 2007.
    (i) If modifications are made to an existing ERP:
    (1) The modified ERP must be prepared in compliance with the 
provisions of paragraphs (e), (f), and (g) of this section; and
    (2) Additional Exercises may be necessary to maintain employee 
operability and familiarity.
    (j) Each borrower shall maintain records of such Exercises.

[69 FR 60541, Oct. 12, 2004, as amended at 76 FR 47056, Aug. 4, 2011]



Sec. 1730.29  Grants and Grantees.

    For the purposes of this part, the terms ``borrower'' shall include 
recipients of RUS electric program grants, and ``applicant'' shall 
include applicants for such grants. References to ``security documents'' 
shall, with respect to recipients of RUS electric program grants, 
include grant agreements and other grant-related documents.

[69 FR 60541, Oct. 12, 2004]



Secs. 1730.30-1730.59  [Reserved]



           Subpart C_Interconnection of Distributed Resources

    Source: 74 FR 32409, July 8, 2009, unless otherwise noted.



Sec. 1730.60  General.

    Each electric program distribution borrower (as defined in 
Sec. 1710.2) is responsible for establishing and maintaining a written 
standard policy relating to the Interconnection of Distributed Resources 
(IDR) having an installed capacity of not more than 10 megavolt amperes 
(MVA) at the point of common coupling.



Sec. 1730.61  RUS policy.

    The Distributed Resource facility must not cause significant 
degradation of the safety, power quality, or reliability on the 
borrower's electric power system or other electric power systems 
interconnected to the borrower's electric power system. The Agency 
encourages borrowers to consider model policy templates developed by 
knowledgeable and expert institutions, such as, but not limited to the 
National Association of Regulatory Utility Commissioners, the Federal 
Energy Regulatory Commission and the National Rural Electric Cooperative 
Association. The Agency encourages all related electric borrowers to 
cooperate in the development of a common Distributed Resource policy.



Sec. 1730.62  Definitions.

    ``Distributed resources'' as used in this subpart means sources of 
electric power that are not directly connected to a bulk power 
transmission system, having an installed capacity of not more than 10 
MVA, connected to the borrower's electric power system through a point 
of common coupling. Distributed resources include both generators and 
energy storage technologies.
    ``Responsible party'' as used in this subpart means the owner, 
operator or any other person or entity that is accountable to the 
borrower under the borrower's interconnection policy for Distributed 
Resources.



Sec. 1730.63  IDR policy criteria.

    (a) General. (1) The borrower's IDR policy and procedures shall be 
readily available to the public and include, but not limited to, a 
standard application, application process, application fees, and 
agreement.
    (2) All costs to be recovered from the applicant regarding the 
application process or the actual interconnection and the process to 
determine the costs are to be clearly explained to the applicant and 
authorized by the applicant prior to the borrower incurring these costs. 
The borrower may require separate non-refundable deposits sufficient to 
insure serious intent by the applicant prior to proceeding either with

[[Page 311]]

the application or actual interconnection process.
    (3) IDR policies must be approved by the borrower's Board of 
Directors.
    (4) The borrower may establish a new rate classification for 
customers with Distributed Resources.
    (5) IDR policies must provide for reconsideration and updates every 
five years or more frequently as circumstances warrant.
    (b) Technical requirements. (1) IDR policies must be consistent with 
prudent electric utility practice.
    (2) IDR policies must incorporate the Institute of Electrical and 
Electronic Engineers (IEEE): IEEE 1547TM--Standard for 
Interconnecting Distributed Resources with Electric Power Systems, 
approved June 12, 2003, and IEEE 1547.1TM--Standard 
Conformance Test Procedures for Equipment Interconnecting Distributed 
Resources with Electric Power Systems, approved June 9, 2005. Copies of 
the IEEE Standards 1547TM and 1547.1TM may be 
obtained from the IEEE Operations Center, 445 Hoes Lane, Piscataway, NJ 
08854-4141, telephone 1-800-678-4333 or online at http://
www.standards.ieee.org. Copies of the material are available for 
inspection during normal business hours at RUS, Room 1265, U.S. 
Department of Agriculture, Washington, DC 20250. Telephone (202) 720-
3720, e-mail [email protected], or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to:http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html.
    (3) IDR policies must provide for appropriate electric power system 
disconnect facilities, as determined by the borrower, which shall 
include a lockable disconnect and a visible open, that are readily 
accessible to and operable by authorized personnel at all times.
    (4) IDR policies must provide for borrower access to the Distributed 
Resources facility during normal business hours and all emergency 
situations.
    (c) Responsible Party obligations. IDR policies must provide for 
appropriate Responsible Parties to assume the following risks and 
responsibilities:
    (1) A Responsible Party must agree to maintain appropriate liability 
insurance as outlined in the borrower's interconnection policy.
    (2) A Responsible Party must be responsible for the Distributed 
Resources compliance with all national, State, local government 
requirements and electric utility standards for the safety of the public 
and personnel responsible for utility electric power system operations, 
maintenance and repair.
    (3) A Responsible Party must be responsible for the safe and 
effective operation and maintenance of the facility.
    (4) Only Responsible Parties may apply for interconnection and the 
Responsible Party must demonstrate that the facility will be capably 
developed, constructed and operated, maintained, and repaired.



Sec. 1730.64  Power purchase agreements.

    Nothing in this subpart requires the borrower to enter into purchase 
power arrangements with the owner of the Distributed Resources.



Sec. 1730.65  Effective dates.

    (a) All electric program borrowers with an approved electric program 
loan as of July 8, 2009 shall have an IDR policy board approved and in 
effect no later than July 8, 2011.
    (b) All other electric program borrowers that have pending 
applications or submit an application to the Agency for financial 
assistance on or after July 8, 2009 shall provide a letter of 
certification executed by the General Manager that the borrower meets 
the requirements of this subpart before such loan may be approved.



Sec. 1730.66  Administrative waiver.

    The Administrator may waive in all or part, for good cause, the 
requirements and procedures of this subpart.



Secs. 1730.67-1730.99  [Reserved]



Sec. 1730.100  OMB Control Number.

    The Information collection requirements in this part are approved by 
the Office of Management and Budget and assigned OMB control number 
0572-0141.

[[Page 312]]



 Sec. Appendix A to Subpart B of Part 1730--Review Rating Summary, RUS 
                                Form 300

Borrower Designation --------
Date Prepared --------

    Ratings on form are:

0: Unsatisfactory--no records
    1: Unsatisfactory--corrective action needed
    2: Acceptable, but should be improved--see attached recommendations
    3: Satisfactory--no additional action required at this time
    N/A: Not applicable

            PART I--TRANSMISSION and DISTRIBUTION FACILITIES

1. Substations (Transmission and Distribution)
    a. Safety, Clearance, Code Compliance--Rating: --------
    b. Physical Condition: Structure, Major Equipment, Appearance--
    Rating: --------
    c. Inspection Records Each Substation--Rating: --------
    d. Oil Spill Prevention--Rating: --------
2. Transmission Lines
    a. Right-of-Way: Clearing, Erosion, Appearance, Intrusions--
    Rating: --------
    b. Physical Condition: Structure, Conductor, Guying--Rating: ------
--
    c. Inspection Program and Records--Rating: --------
3. Distribution Lines--Overhead
    a. Inspection Program and Records--Rating: --------
    b. Compliance with Safety Codes: Clearances--Rating: --------
    Compliance with Safety Codes: Foreign Structures--Rating: --------
    Compliance with Safety Codes: Attachments--Rating: --------
    c. Observed Physical Condition from Field Checking: Right-of-Way--
Rating: --------
    Observed Physical Condition from Field Checking: Other--Rating: ----
----
4. Distribution--Underground Cable
    a. Grounding and Corrosion Control--Rating: --------
    b. Surface Grading, Appearance--
    Rating: --------
    c. Riser Poles: Hazards, Guying, Condition--Rating: --------
5. Distribution Line Equipment: Conditions and Records
    a. Voltage Regulators--Rating: --------
    b. Sectionalizing Equipment--
    Rating: --------
    c. Distribution Transformers--
    Rating: --------
    d. Pad Mounted Equipment--Safety: Locking, Dead Front, Barriers--
Rating: --------
    Pad Mounted Equipment--Appearance: Settlement, Condition--Rating: --
------
    e. Kilowatt-hour and Demand Meter Reading and Testing--Rating: ----
----

                   PART II--OPERATION AND MAINTENANCE

6. Line Maintenance and Work Order Procedures
    a. Work Planning and Scheduling--
    Rating: --------
    b. Work Backlogs: Right-of-Way Maintenance--Rating: --------
    Work Backlogs: Poles--Rating: --------
    Work Backlogs: Retirement of Idle Services--Rating: --------
    Work Backlogs: Other--Rating: --------
7. Service Interruptions
    a. Average Annual Hours/Consumer by Cause (Complete for each of the 
previous 5 years)
1. Power Supplier --------
2. Major Storm --------
3. Scheduled --------
4. All Other --------
5. Total --------
    Rating: --------
    b. Emergency Restoration Plan--Rating:--------
8. Power Quality
    General Freedom from Complaints--Rating:--------
9. Loading and Load Balance
    a. Distribution Transformer Loading--Rating:--------
    b. Load Control Apparatus--Rating:--------
    c. Substation and Feeder Loading--Rating:--------
10. Maps and Plant Records
    a. Operating Maps: Accurate and Up-to-Date--Rating:--------
    b. Circuit Diagrams--Rating:--------
    c. Staking Sheets--Rating:--------

                          PART III--ENGINEERING

11. System Load Conditions and Losses
    a. Annual System Loses, --------%--Rating:--------
    b. Annual Load Factor, --------%--Rating:--------
    c. Power Factor at Monthly Peak, --------%--Rating:--------
    d. Ratio of Individual Substation Peak kW to kVA, ----------
Rating:--------
12. Voltage Conditions
    a. Voltage Surveys--Rating:--------
    b. Substation Transformer Output Voltage Spread--Rating:--------
13. Load Studies and Planning
    a. Long Range Engineering Plan--Rating:--------
    b. Construction Work Plan--Rating:--------
    c. Sectionalizing Study--Rating:--------
    d. Load Data for Engineering Studies--Rating:--------

[[Page 313]]

    e. Load Forecasting Data--Rating:--------

               PART IV--OPERATION AND MAINTENANCE BUDGETS

    For Previous 2 Years:

Normal Operation--Actual $--------
Normal Maintenance--Actual $--------
Total--Actual $--------

    For Present Year:

Normal Operation--Budget $--------
Normal Maintenance--Budget $--------
Total--Budget $--------

    For Future 3 Years:

Normal Operation--Budget $--------
Normal Maintenance--Budget $--------
Additional (Deferred) Maintenance--Budget $--------
Total--Budget $--------

    14. Budgeting:
Adequacy of Budgets For Needed Work--Rating:--------
    15. Date Discussed with Board of Directors --------
Remarks: --------

                            EXPLANATORY NOTES

Item No. -------- Comments --------
Rated by -------- -------- Title -------- Date --------
Reviewed by -------- Manager -------- Date --------
Reviewed by -------- RUS GFR -------- Date --------

    Effective Date Note: At 78 FR 73371, Dec. 5, 2013, appendix A to 
subpart B of part 1730 was amended by adding paragraph 13.f., effective 
Feb. 3, 2014. For the convenience of the user, the added text is set 
forth as follows:



 Sec. Appendix A to Subpart B of Part 1730--Review Rating Summary, RUS 
                                Form 300

                                * * * * *

    13. * * *
    f. Energy Efficiency and Conservation Program quality assurance 
compliance--

Rating:------

                                * * * * *



PART 1735_GENERAL POLICIES, TYPES OF LOANS, LOAN
REQUIREMENTS_TELECOMMUNICATIONS PROGRAM--Table of Contents



                            Subpart A_General

Sec.
1735.1  General statement.
1735.2  Definitions.
1735.3  Availability of forms.
1735.4-1735.9  [Reserved]

               Subpart B_Loan Purposes and Basic Policies

1735.10  General.
1735.11  Area coverage.
1735.12  Nonduplication.
1735.13  Location of facilities and service for nonrural subscribers.
1735.14  Borrower eligibility.
1735.15  Civil rights.
1735.16  Minimum loan amount.
1735.17  Facilities financed.
1735.18  Additional equity.
1735.19  Mergers and consolidations.
1735.20  Acquisitions.
1735.21  Refinancing loans.
1735.22  Loan security.
1735.23-1735.29  [Reserved]

                        Subpart C_Types of Loans

1735.30  Hardship loans.
1735.31  RUS cost-of-money and RTB loans.
1735.32  Guaranteed loans.
1735.33  Variable interest rate loans.
1735.34-1735.39  [Reserved]

                        Subpart D_Terms of Loans

1735.40  General.
1735.41  Notes.
1735.42  [Reserved]
1735.43  Payments on loans.
1735.44  Prepayment premiums.
1735.45  Extension of payments.
1735.46  Loan security documents.
1735.47  Rescissions of loans.
1735.48-1735.49  [Reserved]

             Subpart E_Basic Requirements for Loan Approval

1735.50  Administrative findings.
1735.51  Required findings.
1735.52  Findings required for particular loan purposes.
1735.53-1735.59  [Reserved]

         Subpart F_Mortgage Controls on Acquisitions and Mergers

1735.60  Specific provisions.
1735.61  Approval criteria.
1735.62  Approval of acquisitions and mergers.
1735.63-1735.69  [Reserved]

               Subpart G_Acquisitions Involving Loan Funds

1735.70  Use of loan funds.
1735.71  Nonrural areas.
1735.72  Acquisition agreements.
1735.73  Loan design.
1735.74  Submission of data.

[[Page 314]]

1735.75  Interim financing.
1735.76  Acquisition of affiliates.
1735.77  Release of loan funds, requisitions, advances.
1735.78-1735.79  [Reserved]

  Subpart H_Acquisitions or Mergers Not Involving Additional Loan Funds

1735.80  Submission of data.
1735.81-1735.89  [Reserved]

         Subpart I_Requirements for All Acquisitions and Mergers

1735.90  Preliminary approvals.
1735.91  Location of facilities.
1735.92  Accounting considerations.
1735.93  Notes.
1735.94  Final approval and closing procedure.
1735.95  Unadvanced loan funds.
1735.96-1735.99  [Reserved]

                    Subpart J_Toll Line Acquisitions

1735.100  Use of loan funds.
1735.101  With nonloan funds.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.



                            Subpart A_General



Sec. 1735.1  General statement.

    (a) Subparts A through E of this part set forth the general 
policies, types of loans and loan requirements under the Telephone loan 
program.
    (b) The standard RUS security documents (see 7 CFR 1744 subpart D or 
RUS Bulletins 320-4, 320-22, 321-2, 322-2, 323-1, 326-1) contain 
provisions regarding acquisitions, mergers, and consolidations. Subparts 
F through J of this part implement those provisions by setting forth the 
policies, procedures, and requirements for telephone borrowers planning 
to acquire existing telephone lines, facilities, or systems with RUS 
loan or other funds, or planning to merge or consolidate with another 
system. This part supersedes all RUS Bulletins that are in conflict with 
it.
    (c) Subparts F through J of this part also detail RUS's requirements 
with respect to mergers and acquisitions involving RUS loan funds.

[55 FR 39395, Sept. 27, 1990; 55 FR 41170, Oct. 9, 1990]



Sec. 1735.2  Definitions.

    As used in this part:
    Access line means a transmission path between user terminal 
equipment and a switching center that is used for local exchange 
service. For multiparty service, the number of access lines equals the 
number of lines/paths terminating on the mainframe of the switching 
center.
    Acquisition means the purchase of another telephone system, lines, 
or facilities whether by acquiring telephone plant in service or 
majority stock interest of one or more organizations.
    Acquisition agreement means the agreement, including a sales 
agreement, between the seller and purchaser outlining the terms and 
conditions of the acquisition. Acquisition agreements also include any 
other agreements, such as options and subsidiary agreements relating to 
terms of the transaction.
    Administrator means the Administrator of RUS.
    Advance of funds means the transferring of funds by RUS to the 
borrower's construction fund.
    Appropriated means funds appropriated based on subsidy.
    Affiliate means an organization that directly, or indirectly through 
one or more intermediaries, controls or is controlled by, or is under 
common control with, the borrower.
    Borrower means any organization which has an outstanding loan made 
or guaranteed by RUS, or which is seeking such financing.
    Cash distribution means investments, guarantees, extensions of 
credit, advances, loans, non-affiliated company joint ventures, 
affiliated company investments, and dividend and capital credit 
distributions. Not included in this definition are qualified investments 
(see 7 CFR part 1744, subpart D).
    Composite economic life as applied to facilities financed by loan 
funds means the weighted (by dollar amount of each class of facility in 
the loan) average economic life of all classes of facilities in the 
loan.
    Consolidation means the combination of two or more borrower or 
nonborrower organizations, pursuant to state law, into a new successor 
organization

[[Page 315]]

that takes over the assets and assumes the liabilities of those 
organizations.
    Construction fund means the RUS Construction Account required by 
Sec. 2.4 of the standard loan contract into which all RUS loan funds are 
advanced.
    Depreciation means the loss not restored by current maintenance, 
incurred in connection with the consumption or prospective retirement of 
telecommunications plant in the course of service from causes which are 
known to be in current operation, against which the company is not 
protected by insurance, and the effect of which can be forecast to a 
reasonable approach to accuracy.
    Economic life as applied to facilities financed by loan funds, means 
the number of years resulting from dividing 100 percent by the 
depreciation rate (expressed as a percent) approved by the regulatory 
body with jurisdiction over the telephone service provided by the 
borrower for the class of facility involved or, if no approved rate 
exists, by the median depreciation rate expressed as a percent as 
published by RUS in its Statistical Report, Rural Telephone Borrowers 
for all RUS and RTB borrowers for that class of facility.
    Exchange access means the offering of access to telephone exchange 
services or facilities for the purpose of the origination or termination 
of telephone toll services.
    Feasibility study means the pro forma financial analysis performed 
by RUS to determine the economic feasibility of a loan. See 7 CFR part 
1737.
    Forecast period means the time period beginning on the date (base 
date) of the borrower's balance sheet used in preparing the feasibility 
study and ending on a date equal to the base date plus the number of 
years estimated in the feasibility study for completion of the project. 
Feasibility projections are usually for 5 years, see Sec. 1737.70(a) of 
this chapter. For example, the forecast period for a loan based on a 
December 31, 1990 balance sheet and having a 5-year estimated project 
completion time is the period from December 31, 1990 to December 31, 
1995.
    Funded reserve means a separate asset account, approved by RUS, 
consisting of any or all of the following:
    (1) Federal government securities purchased in the name of the 
borrower;
    (2) Other securities issued by an institution whose senior unsecured 
debt obligations are rated in any of the top three categories by a 
nationally recognized rating organization; or
    (3) Cash.
    GFR means the RUS general field representative.
    Guaranteed loan means a loan guaranteed by RUS under section 306 of 
the RE Act bearing interest at a rate agreed to by the borrower and the 
lender.
    Hardship loan means a loan made by RUS under section 305(d)(1) of 
the RE Act bearing interest at a rate of 5 percent per year.
    Interim financing means funding for a project which RUS has 
acknowledged could be included in a loan, should said loan be approved, 
but for which RUS funds have not yet been made available. See 7 CFR part 
1737, subpart E.
    Loan means any loan made or guaranteed by RUS.
    Loan contract means the loan agreement between RUS and the borrower, 
including all amendments thereto.
    Loan funds means funds provided by RUS through direct or guaranteed 
loans.
    Local exchange carrier (LEC) means an organization that is engaged 
in the provision of telephone exchange service or exchange access.
    Majority noteholders means the holder or holders of a majority in 
principal amount of the notes outstanding at a particular time.
    Merger means the combining, pursuant to state law, of one or more 
borrower or nonborrower organizations into an existing survivor 
organization that takes over the assets and assumes the liabilities of 
the merged organizations. While the terms merger and consolidation have 
different meanings, for the purpose of this part, ``mergers'' also 
include consolidations as defined above. Furthermore, ``mergers'' also 
include acquisitions where the acquired systems, lines, or facilities 
and the acquiring system are operated as one system.
    Mobile telecommunications service means radio communication voice 
service between mobile and land or

[[Page 316]]

fixed stations, or between mobile stations.
    Modernization Plan (State Telecommunications Modernization Plan) 
means a State plan, which has been approved by RUS, for improving the 
telecommunications network of those telecommunications providers covered 
by the plan. A Modernization Plan must conform to the provisions of 7 
CFR 1751, subpart B.
    Mortgage means the security agreement between RUS and the borrower, 
including any amendments and supplements thereto.
    Net worth means the sum of the balances of the following accounts of 
the borrower:

------------------------------------------------------------------------
                        Account names                            Number
------------------------------------------------------------------------
(1) Capital stock............................................       4510
(2) Additional paid-in capital...............................       4520
(3) Treasury stock...........................................       4530
(4) Other capital............................................       4540
(5) Retained earnings........................................       4550
------------------------------------------------------------------------
Note: For nonprofit organizations, owners' equity is shown in
  subaccounts of 4540 and 4550. All references regarding account numbers
  are to the Uniform System of Accounts (47 CFR part 32).

    Public switched network means any common carrier switched network, 
whether by wire or radio, including local exchange carriers, 
interexchange carriers, and mobile telecommunications service providers, 
that use the North American Numbering Plan in connection with the 
provision of switched services.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture, successor to the Rural Electrification 
Administration.
    RUS cost-of-money loan means a loan made under section 305(d)(2) of 
the RE Act bearing an interest rate as determined under Sec. 1735.31(c). 
RUS cost-of-money loans are made concurrently with RTB loans.
    RTB loan means a loan made by the Rural Telephone Bank (RTB) under 
section 408 of the RE Act bearing an interest rate as determined under 7 
CFR 1610.10. RTB loans are made concurrently with RUS cost-of-money 
loans.
    Rural area means any area of the United States, its territories and 
insular possessions (including any area within the Federated States of 
Micronesia, the Republic of the Marshall Islands, and the Republic of 
Palau) not included within the boundaries of any incorporated or 
unincorporated city, village or borough having a population exceeding 
5,000 inhabitants. The population figure is obtained from the most 
recent data available, such as from the Bureau of the Census and Rand 
McNally and Company. For purposes of the ``rural area'' definition, the 
character of an area is determined as of a time the initial loan for the 
system is made.
    Specialized telecommunications service means any telephone service 
other than telephone exchange service, exchange access, or mobile 
telecommunications service.
    Subscriber means the same as access line.
    Survivor means (1) the successor corporation formed by the 
consolidation of one or more borrowers, (2) the corporation remaining 
after completion of a merger involving one or more borrowers, and (3) a 
corporation assuming all or a portion of an RUS loan in connection with 
an acquisition.
    Telecommunications means the transmission or reception of voice, 
data, sounds, signals, pictures, writings, or signs of all kinds, by 
wire, fiber, radio, light, or other visual or electromagnetic means.
    Telephone exchange service means: (1) Service provided primarily to 
fixed locations within a telephone exchange, or within a connected 
system of telephone exchanges within the same exchange area operated to 
furnish to subscribers intercommunicating service of the character 
ordinarily furnished by a single exchange, and which is covered by the 
exchange service charge; or
    (2) Comparable service provided through a system of switches, 
transmission equipment, or other facilities (or combination thereof) by 
which a subscriber can originate and terminate a telecommunications 
service.
    Telephone service means any communication service for the 
transmission or reception of voice, data, sounds, signals, pictures, 
writing, or signs of all kinds by wire, fiber, radio, light, or other 
visual or electromagnetic means

[[Page 317]]

and includes all telephone lines, facilities and systems to render such 
service. It does not mean:
    (1) Message telegram service;
    (2) Community antenna television system services or facilities other 
than those intended exclusively for educational purposes; or
    (3) Radio broadcasting services or facilities within the meaning of 
section 3(o) of the Communications Act of 1934, as amended.
    Times Interest Earned Ratio (TIER) means the ratio of a borrower's 
net income (after taxes) plus interest expense, all divided by interest 
expense. For the purpose of this calculation, all amounts will be annual 
figures and interest expense will include only interest on debt with a 
maturity greater than one year.
    Total assets means the sum of the balances of the following accounts 
of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Current assets........................  1100s through 1300s.
(2) Noncurrent Assets.....................  1400s through 1500s.
(3) Total telecommunications plant........  2001 through 2007.
(4) Less: Accumulated depreciation........  3100 through 3300s.
(5) Less: Accumulated amortization........  3400 through 3600s.
------------------------------------------------------------------------
Note: All references regarding account numbers are to the Uniform System
  of Accounts (47 CFR part 32).


[54 FR 13351, Apr. 3, 1989; 54 FR 16194, Apr. 21, 1989. Redesignated at 
55 FR 39395, Sept. 27, 1990, as amended at 56 FR 26596, June 10, 1991; 
58 FR 66253, Dec. 20, 1993; 62 FR 46869, Sept. 5, 1997; 65 FR 42619, 
July 11, 2000; 65 FR 54402, Sept. 8, 2000]



Sec. 1735.3  Availability of forms.

    Single copies of RUS forms and publications cited in this part are 
available from Program Support Regulatory Analysis, Rural Utilities 
Service, STOP 1522, 1400 Independence Ave., SW., Washington, DC 20250-
1522. These RUS forms and publications may be reproduced. The terms 
``RUS form'', ``RUS standard form'', and ``RUS specification'' have the 
same meanings as the terms ``REA form'' ``REA standard form'', and ``REA 
specification'', respectively, unless otherwise indicated.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 59 FR 66441, Dec. 27, 1994; 62 FR 46870, Sept. 5, 1997]



Secs. 1735.4-1735.9  [Reserved]



               Subpart B_Loan Purposes and Basic Policies

    Source: 54 FR 13351, Apr. 3, 1989, unless otherwise noted. 
Redesignated at 55 FR 39395, Sept. 27, 1990.



Sec. 1735.10  General.

    (a) Loans made or guaranteed by the Administrator of RUS will be 
made in conformance with the Rural Electrification Act of 1936 (RE Act), 
as amended (7 U.S.C. 901 et seq.), and 7 CFR chapter XVII. RUS provides 
borrowers with specialized and technical accounting, engineering, and 
other managerial assistance in the construction and operation of their 
facilities when necessary to aid in the development of rural telephone 
service and to protect loan security. The Rural Utilities Service (RUS) 
makes loans to:
    (1) Furnish and improve telephone service in rural areas; and
    (2) To finance facilities and equipment which expand, improve or 
provide:
    (i) 911 access;
    (ii) Integrated interoperable emergency communications, including 
multiuse networks that provide commercial or transportation information 
services in addition to emergency communications services;
    (iii) Homeland security communications;
    (iv) Transportation safety communications; or
    (v) Location technologies used outside an urbanized area.
    (b) RUS will not make hardship loans, RUS cost-of-money loans, or 
RTB loans for any wireline local exchange service or similar fixed-
station voice service that, in RUS' opinion, is inconsistent with the 
borrower achieving the requirements stated in the State's 
telecommunication modernization plan within the time frame stated in the 
plan (see 7 CFR part 1751, subpart B), unless RUS has determined that 
achieving the requirements as stated in such plan is not technically or 
economically feasible.
    (c) A borrower receiving a loan to provide mobile telecommunications 
services or special telecommunications

[[Page 318]]

services shall be considered to be participating in the state 
telecommunications plan (TMP) with respect to the particular loan so 
long as the loan funds are not used in a manner that, in RUS' opinion, 
is inconsistent with the borrower achieving the goals set forth in the 
plan, except that a borrower must comply with any portion of a TMP made 
applicable to the borrower by a state commission with jurisdiction.
    (d) RUS will not deny or reduce a loan or an advance of loan funds 
based on a borrower's level of general funds.
    (e) No fees or charges are assessed for any type of loan or 
guarantee provided by RUS or the Rural Telephone Bank (RTB).
    (f) The Administrator may use consultants funded by the borrower for 
financial, legal, engineering, and other technical advice in connection 
with the review of a borrower's loan application.
    (g) For the purpose of paragraph (a)(2) of this section, rural areas 
means any area, as confirmed by the latest decennial census of the 
Bureau of the Census, which is not located within:
    (1) A city, town, or incorporated area that has a population of 
greater than 20,000 inhabitants; or
    (2) An urbanized area contiguous and adjacent to a city or town that 
has a population of greater than 50,000 inhabitants, for the purpose of 
the definition of rural areas in this section, an urbanized area means a 
densely populated territory as defined in the latest decennial census of 
the U.S. Census Bureau.

[58 FR 66253, Dec. 20, 1993, as amended at 59 FR 17464, Apr. 13, 1994; 
65 FR 42619, July 11, 2000; 65 FR 54403, Sept. 8, 2000; 76 FR 56093, 
Sept. 12, 2011]



Sec. 1735.11  Area coverage.

    Borrowers must make adequate telephone service available to the 
widest practical number of rural subscribers during the life of the 
loan. Both the nature of the service area and the cost per subscriber 
must be fully considered. The borrower must seek to provide service to 
all interested potential subscribers in the service area. Borrowers are 
not required to extend service in situations where the costs would be 
exorbitant. The loan contract shall contain appropriate provisions to 
effect this requirement. See 7 CFR 1737.11(a), Preapplication 
Determinations: Area to be Served.



Sec. 1735.12  Nonduplication.

    (a) In states having a state regulatory body with authority to 
regulate telephone service and to require certificates of convenience 
and necessity, the borrower must obtain such a certificate before RUS 
will make a loan. Facilities or services not specifically covered by 
such certificate will be subject to the provisions of Sec. 1735.12(b).
    (b) In states where there is no such regulatory body, a loan will 
not be made unless the Administrator determines that no duplication of 
lines, facilities, or systems already providing reasonably adequate 
services shall result from such a loan.
    (c) RUS shall consider the following criteria for any wireline local 
exchange service or similar fixed-station voice service provided by a 
local exchange carrier (LEC) in determining whether such service is 
reasonably adequate:
    (1) The LEC is providing area coverage as described in Sec. 1735.11.
    (2) The LEC is providing all one-party service or, if the State 
commission has mandated a lower grade of service, the LEC is eliminating 
that service in accordance with the requirements of the 
Telecommunications Act of 1996, 47 U.S.C. 151 et seq.
    (3) The LEC's network is capable of providing transmission and 
reception of data at a rate of at least 1,000,000 bits per second (1 
Mbps) with reasonable modification to any subscriber who requests it.
    (4) The LEC makes available custom calling features (at a minimum, 
call waiting, call forwarding, abbreviated dialing, and three-way 
calling).
    (5) The LEC is able to provide E911 service to all subscribers, when 
requested by the government entity responsible for this service.
    (6) The LEC is able to offer local service with blocked toll access 
to those subscribers who request it.
    (7) The LEC's network is capable of accommodating Internet access at 
speeds of at least 28,800 bits per second (28.8 Kbps) via modem dial-up 
from any subscriber location.

[[Page 319]]

    (8) There is an absence of frequent service interruptions.
    (9) The LEC is interconnected with the public switched network.
    (10) No Federal or State regulatory commission having jurisdiction 
has determined that the quality, availability, or reliability of the 
service provided is inadequate.
    (11) Services are provided at reasonably affordable rates.
    (12) Any other criteria the Administrator determines to be 
applicable to the particular case.
    (d) RUS shall consider the following criteria for any of mobile 
telecommunications service in determining whether such service is 
reasonably adequate:
    (1) The extent to which area coverage is being provided as described 
in 7 CFR 1735.11.
    (2) Clear and reliable call transmission is provided with sufficient 
channel availability.
    (3) The mobile telecommunications service signal strength is at 
least -85dBm (decibels expressed in miliwatts).
    (4) The mobile telecommunications service is interconnected with the 
public switched network.
    (5) Mobile 911 service is available to all subscribers, when 
requested by the local government entity responsible for this service.
    (6) No Federal or State regulatory commission having jurisdiction 
has determined that the quality, availability, or reliability of the 
service provided is inadequate.
    (7) Mobile telecommunications service is not provided at rates which 
render the service unaffordable to a significant number of rural 
persons.
    (8) Any other criteria the Administrator determines to be applicable 
to the particular case.
    (e) RUS does not consider mobile telecommunications service a 
duplication of existing wireline local exchange service or similar 
fixed-station voice service. RUS may finance mobile telecommunications 
systems designed to provide eligible services in rural areas under the 
Rural Electrification Act even though the services provided by the 
system may incidentally overlap services of existing mobile 
telecommunications providers.
    (f) RUS shall consider the following criteria for any provider of a 
specialized telecommunications service in determining whether such 
service is reasonably adequate:
    (1) The provider of a specialized telecommunications service is 
providing area coverage as described in Sec. 1735.11.
    (2) An adequate signal strength is provided throughout the largest 
practical portion of the service area.
    (3) There is an absence of frequent service interruptions.
    (4) The quality and variety of service provided is comparable to 
that provided in nonrural areas.
    (5) The service provided complies with industry standards.
    (6) No Federal, State, or local regulatory commission having 
jurisdiction has determined that the quality, availability, or 
reliability of the service provided is inadequate.
    (7) Services are provided at reasonably affordable rates.
    (8) Any other criteria the Administrator determines to be applicable 
to the particular case.
    (g) RUS shall consider the following criteria for loans made for the 
purposes described in Sec. 1735.10(a)(2):
    (1) In making a preliminary assessment and a credit decision, the 
RUS will take into consideration the extent to which the emergency 
communications capability or emergency communications benefits already 
exist in the affected area and the need expressed by the proposed user 
of the emergency communications technology.
    (2) The RUS will not consider an application to finance an upgrade 
of 911 capabilities or other emergency communications capability by 
different providers serving the same geographic area to be automatically 
duplicative. For example, RUS will generally not consider an application 
from two competing wireless carriers to upgrade their E911 capabilities 
in overlapping geographic territories to be duplicative, however the 
carrier's competitive situation will be a relevant consideration in 
evaluating the ability of a service provider to repay their loan.
    (3) Duplication considerations will be reviewed on the basis of the 
emergency

[[Page 320]]

communications benefit; the Agency encourages applicants to fully 
embrace interoperability to maximize the impact of RUS financed 
investments. In the case of dual or multi-use technologies, the extent 
to which the proposed non-emergency communications benefits are 
available from other providers within the proposed service area will be 
considered in determining loan feasibility.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 65 FR 42619, July 11, 2000; 65 FR 54403, Sept. 8, 2000; 76 
FR 56093, Sept. 12, 2011]



Sec. 1735.13  Location of facilities and service for nonrural subscribers.

    (a) When it is determined by the Administrator to be necessary in 
order to furnish or improve telephone service in rural areas, loans may 
be made for the improvement, expansion, construction, acquisition, and 
operation of telephone lines, facilities, or systems without regard to 
their geographical location.
    (b) To the greatest extent practical, loans are limited to providing 
telephone facilities that serve subscribers in rural areas. In order to 
furnish and improve service to rural subscribers it may at times be 
necessary to provide loan funds to finance telephone facilities which 
(1) will also serve nonrural subscribers, or (2) are located in nonrural 
areas. Loans may be approved to finance such facilities if the 
Administrator determines, on a case-by-case basis, that (i) the primary 
purpose of the loan is to provide service to rural areas and (ii) the 
financing of facilities for nonrural subscribers is necessary and 
incidental to furnishing or improving telephone service in rural areas.
    (c) Loan funds may be approved for facilities to serve nonrural 
subscribers only if (1) the principal purpose of the loan is to furnish 
and improve rural service and (2) the use of loan funds to serve 
nonrural subscribers is necessary and incidental to the principal 
purpose of the loan. The following are examples of purposes for which 
such loans may be made (such loans are not limited to these examples):
    (1) In the case of construction of a new system, if the loan would 
not be economically feasible and self-liquidating unless the nonrural as 
well as the rural portions of the telephone service area are included in 
the proposed system, the loan may include funds for both portions.
    (2) Where the acquisition of an existing system located in and 
serving a nonrural area is necessary to serve as the nucleus of an 
expanded system to furnish area coverage service in rural areas, the 
loan may include funds to finance the acquisition.
    (3) When a system is being converted to modern service for rural 
subscribers, the loan may include funds for the conversion of the 
nonrural facilities, if the rural service will be improved as a result 
of such nonrural improvements and it is impractical to finance and serve 
the nonrural and rural areas separately.
    (4) A loan may include funds to serve nonrural subscribers located 
in community centers frequently called by the rural subscribers if the 
construction to serve such nonrural subscribers will be incidental to, 
and contribute substantially to, the provision of adequate service for 
the rural subscribers.
    (d) RUS may also approve financing for facilities to serve nonrural 
areas if, at the time financing was first approved by RUS:
    (1) The nonrural area had a population of 1,500 or less when first 
financed by RUS and that financing was approved prior to November 1, 
1993; or
    (2) The nonrural area had a population of 5,000 or less when first 
financed by RUS and that financing was approved on or after November 1, 
1993.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 58 FR 66253, Dec. 20, 1993]



Sec. 1735.14  Borrower eligibility.

    (a) RUS makes loans to:
    (1) Entities providing, or who may hereafter provide, telephone 
service in rural areas;
    (2) Public bodies providing telephone service in rural areas as of 
October 28, 1949; and
    (3) Cooperative, nonprofit, limited dividend or mutual associations.
    (4) For purposes of Sec. 1735.10(a)(2):
    (i) Any entity eligible to borrow from the RUS;
    (ii) State or local governments;

[[Page 321]]

    (iii) Indian Tribes (as defined in Sec. 4 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b); or
    (iv) An emergency communications equipment provider that in the sole 
discretion of RUS offers adequate security for a loan where the State or 
local government that has jurisdiction over the proposed project is 
prohibited by law from acquiring debt.
    (b) RUS does not make loans to individuals.
    (c) RUS gives preference to those borrowers (including initial loan 
applicants) already providing telephone service in rural areas, and to 
cooperative, nonprofit, limited dividend, or mutual associations. To be 
eligible for a loan, a borrower:
    (1) Must have sufficient authority to carryout the purposes of the 
RE Act; and
    (2) Must be incorporated or a limited liability company.

[58 FR 66253, Dec. 20, 1993, as amended at 64 FR 50429, Sept. 17, 1999; 
65 FR 42619, July 11, 2000; 76 FR 56094, Sept. 13, 2011]



Sec. 1735.15  Civil rights.

    Borrowers are required to comply with certain regulations on 
nondiscrimination and equal employment opportunity. See RUS Bulletin 
320-19 and RUS Bulletin 320-15, respectively.



Sec. 1735.16  Minimum loan amount.

    Recognizing plant costs, the borrower's cost of system design, and 
RUS's administrative costs, RUS will not consider applications for loans 
of less than $50,000.



Sec. 1735.17  Facilities financed.

    (a) RUS makes hardship and guaranteed loans to finance the 
improvement, expansion, construction, acquisition, and operation of 
systems or facilities (including station apparatus owned by the 
borrower, headquarters facilities, and vehicles not used primarily in 
construction) to furnish and improve telephone service in rural areas, 
except as noted under paragraph (c) of this section.
    (b) RUS makes concurrent RUS cost-of-money and RTB loans to finance 
the improvement, expansion, construction, and acquisition of systems or 
facilities (excluding station apparatus owned by the borrower, 
headquarters facilities, and vehicles not used primarily in 
construction) to furnish and improve telephone service in rural areas, 
except as noted under paragraph (c) of this section.
    (c) RUS will not make any type of loan to finance the following 
items:
    (1) Station apparatus (including PBX and key systems) not owned by 
the borrower and any associated inside wiring;
    (2) Certain duplicative facilities, see Sec. 1735.12;
    (3) Facilities to provide service other than 1-party; and
    (4) System designs or facilities to provide service that cannot 
withstand or are not designed to minimize damage caused by storms and 
other natural catastrophes, including, but not limited to hurricanes, 
floods, tornadoes, mudslides, lightning, windstorms, hail, fire, and 
smoke, unless an alternate design or facility for modern 
telecommunications is more economically or technically feasible. 
Economic and technical feasibility will be determined using total long 
range economic costs and risk analysis.
    (d) Generally, RUS will not make a loan to another entity to provide 
the same telecommunications service in an area served by an incumbent 
RUS telecommunications borrower providing such service. RUS may, 
however, consider an application for a loan to provide the same type of 
service being provided by an incumbent RUS borrower if the Administrator 
determines that the incumbent borrower is unable to meet its obligations 
to the government, including the obligation to provide service set forth 
in its loan documents and to repay its loans.
    (e) If an unadvanced loan, or portion thereof, is rescinded, a new 
loan shall not be made for the same purposes as in the rescinded loan, 
except as provided in Sec. 1735.47.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 58 FR 66253, Dec. 20, 1993; 62 FR 46870, Sept. 5, 1997; 65 
FR 42619, July 11, 2000]

[[Page 322]]



Sec. 1735.18  Additional equity.

    If determined by the Administrator to be necessary for loan 
security, a borrower applying for an initial loan shall increase its net 
worth as a percentage of assets to the highest level recorded, not to 
exceed 40 percent, at the end of any calendar quarter in the period 
beginning 2 years prior to the receipt by RUS of the borrower's loan 
application form (RUS Form 490). This restoration to the higher level of 
net worth shall take place before RUS will determine the feasibility of 
the proposed loan.



Sec. 1735.19  Mergers and consolidations.

    RUS does not make loans for the sole purpose of merging or 
consolidating telephone organizations. After a merger or consolidation, 
RUS will consider making loans to the telephone system to finance the 
improvement or extension of telephone service in rural areas. See RUS 
Bulletins 320-4, 321-2, 325-1, and 326-1.



Sec. 1735.20  Acquisitions.

    (a) RUS finances the acquisition by a borrower of another system, 
lines, or facilities only when the acquisition is necessary and 
incidental to furnishing or improving rural telephone service. See 7 CFR 
1735.13.
    (b) RUS determines the amount it will lend for each acquisition. If 
the acquisition price exceeds this amount, the borrower shall provide 
the remainder.
    (c) For additional policies on acquisitions, see subpart F through J 
of this part.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 58 FR 66253, Dec. 20, 1993]



Sec. 1735.21  Refinancing loans.

    (a) Hardship loans and guaranteed loans may include funds to 
refinance outstanding indebtedness of corporations furnishing telephone 
service when such refinancing is necessary and incidental to furnishing 
or improving telephone service in rural areas. Refinancing may not 
constitute more than 40 percent of the loan.
    (b) Loans for refinancing are not made solely to enable borrowers to 
obtain a lower interest rate or a longer amortization period. RUS 
requires borrowers, to the greatest extent possible, to liquidate 
outstanding indebtedness through the use of nonloan funds.
    (c) If deemed necessary by RUS to provide itself with adequate 
security, RUS will consider loans for refinancing outstanding 
indebtedness secured by a lien on property offered as security for the 
loan, if the property covered by the lien is integral to the operation 
of the system.
    (d) RUS will consider loans for refinancing when the borrower would 
otherwise be unable to meet payments on both the outstanding 
indebtedness and the loan as they become due.
    (e) RUS may consider loans for refinancing in other situations.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 58 FR 66254, Dec. 20, 1993]



Sec. 1735.22  Loan security.

    (a) RUS makes loans only if, in the judgment of the Administrator, 
the security therefor is reasonably adequate and the loan will be repaid 
within the time agreed. See 7 CFR 1735.18 and 7 CFR 1735.51.
    (b) RUS generally requires that borrowers provide it with a first 
lien on all of the borrower's property. See 7 CFR 1735.46.
    (c) The RUS will consider Government-imposed fees related to 
emergency communications (including State or local 911 fees) which are 
pledged to the repayment of a loan as security.
    (d) In the case of loans that include the financing of telephone 
facilities that do not constitute self-contained operating systems or 
units (such as lines switched by other systems), the borrower shall, in 
addition to the mortgage lien on all of the borrower's telephone 
facilities, furnish adequate assurance, in the form of contractual or 
other security arrangements, that continuous and efficient telephone 
service will be rendered.
    (e) The borrower shall provide RUS with a satisfactory Area Coverage 
Survey. See 7 CFR 1737.30 and 1737.31.

[[Page 323]]

    (f) RUS makes loans only if the borrower's entire system, including 
the facilities to be constructed with the proceeds of the loan, is 
economically feasible, as determined by RUS. In addition, RUS considers 
a system to be feasible only if the system, in addition to being 
feasible in all other respects, is year 2000 compliant or if the 
borrower provides RUS with a certification, satisfactory to RUS, that 
the system will be year 2000 compliant at a reasonable time before 
December 31, 1999. Year 2000 compliant means that product performance 
and function are not affected by dates before, during, and after the 
year 2000.
    (g) For purposes of determining compliance with TIER requirements, 
unless a borrower whose existing mortgage contains TIER maintenance 
requirements notifies RUS in writing differently, RUS will apply the 
requirements described in paragraph (g) of this section to the borrower 
regardless of the provisions of the borrower's existing mortgage.
    (h) For Loans approved after December 22, 2008, the borrower shall 
be required to maintain a TIER, at the end of the Forecast Period, at 
least equal to the projected TIER determined by the feasibility study 
prepared in connection with the loan, which shall be at least 1.0 and 
not greater than 1.5.
    (i) Nothing in this section shall affect any rights of supplemental 
lenders under the RUS mortgage, or other creditors of the borrower, to 
limit a borrower's TIER requirement to a level above that established in 
paragraph (g) of this section.
    (j) A borrower will not be required to raise its TIER as a condition 
for receiving a loan. Additional financial, investment, and managerial 
controls appear in the loan contract and mortgage required by RUS.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 56 FR 26597, June 10, 1991; 58 FR 66254, Dec. 20, 1993; 62 
FR 46870, Sept. 5, 1997; 63 FR 45678, Aug. 27, 1998; 73 FR 65726, Nov. 
5, 2008; 76 FR 56094, Sept. 13, 2011]



Secs. 1735.23-1735.29  [Reserved]



                        Subpart C_Types of Loans



Sec. 1735.30  Hardship loans.

    (a) RUS makes hardship loans under section 305(d)(1) of the RE Act. 
These loans bear interest at a rate of 5 percent per year. To qualify 
for a hardship loan on or after November 1, 1993, a borrower must meet 
each of the following requirements:
    (1) The average number of proposed subscribers per mile of line in 
the service area of the borrower is not more than 4;
    (2) The borrower has a projected TIER (including the proposed loan 
or loans) of at least 1.0, but not greater than 3.0, as determined by 
the feasibility study prepared in connection with the loan, see 7 CFR 
part 1737, subpart H; and
    (3) The Administrator has approved and the borrower is participating 
in a telecommunications modernization plan for the state, see 7 CFR part 
1751, subpart B.
    (b)(1) Hardship loan funds shall not be used to finance facilities 
located in any exchange of the borrower that has:
    (i) More than 1,000 existing subscribers; and
    (ii) An average number of proposed subscribers per mile of line 
greater than 17.
    (2) Those facilities may, however, be financed with concurrent RUS 
cost-of-money and RTB loans or a guaranteed loan if the borrower is 
eligible for such financing.
    (c) The Administrator may waive the TIER requirement in paragraph 
(a)(2) of this section in any case in which the Administrator 
determines, and sets forth the reasons therefor in writing, that the 
requirement would prevent emergency restoration of the telephone system 
of the borrower or result in severe hardship to the borrower.
    (d) In order to fairly and equitably approve hardship loans to 
ensure that borrowers most in need receive hardship financing first, RUS 
will prioritize for approval all applications qualifying for hardship 
loans. The criteria in this paragraph will be used by the Administrator 
to rank, from high to low, applications that have been determined to

[[Page 324]]

qualify for hardship financing. Subject to the availability of funds, 
applications receiving the highest number of points will be selected for 
loan approval each fiscal year quarter (the application with the most 
points will be approved first, the second highest next, etc.) The 
following ranking methodology and loan approval conditions apply:
    (1) Ranking criteria.Borrowers will receive points based on each of 
the following criteria applicable to the proposed loan:
    (i) Forecasted Average Number of Subscribers Per Mile of Line 
(Density). The number of points assigned to a borrower will be the value 
4 less the value of the borrower's forecasted density as determined by 
the Feasibility Study prepared in connection with the loan (i.e., if a 
borrower's forecasted system density is 2.75, the borrower would receive 
4 less 2.75 points, or 1.25 points).
    (ii) Forecasted TIER. The number of points assigned to a borrower 
will be the value 3 less the value of the borrower's forecasted TIER as 
determined by the Feasibility Study prepared in connection with the loan 
(i.e., if a borrower's forecasted TIER is 1.75, the borrower would 
receive 3 less 1.75 points, or 1.25 points).
    (iii) Unserved Territories. Borrowers will receive points for loan 
funds included in the application to provide telephone service in areas 
previously unserved because it was considered cost prohibitive (for 
example, high costs resulting from the terrain, remoteness, or system 
design). In particular, borrowers will receive one tenth of a point, up 
to a maximum of 2 points, for each subscriber added (in connection with 
the loan) that currently resides in an unserved area.
    (iv) Plant Modernization. Borrowers will receive 1 point for loan 
funds included in the application for at least one of the following 
basic plant modernizations or system improvements:
    (A) Providing digital switching capabilities where those 
capabilities did not previously exist; and/or
    (B) Upgrading to equal access; and/or
    (C) Conversion of service to 1-party making an entire exchange all 
1-party service.
    (v) Distance Learning and Medical Link Facilities. Borrowers will 
receive 2 points for loan funds included in the application for the 
purpose of providing distance learning or medical link transmission 
facilities. If loan funds are included for both distance learning and 
medical link transmission facilities, borrowers will receive 3 points. 
(See 7 CFR part 1703 for definitions of distance learning and medical 
link.)
    (vi) Time Factor. If a borrower's application has been ranked but 
cannot be approved due to the lack of funds available for loans in that 
quarter, the borrower will receive .25 points for each quarter in which 
its loan is pending but not approved.
    (2) Ranking and approval of loans. Eligible loan applications 
(satisfying the requirements of 7 CFR 1737.21) will be ranked during the 
quarter in which the application is received. If an application is 
received in which insufficient time remains in that quarter to process 
and rank the application, it will be ranked in the next quarter. At the 
beginning of the quarter and as soon as practical, RUS will approve all 
eligible hardship loans ranked in the previous quarter to the extent 
loan funds are available, beginning with the borrowers that received the 
highest number of points and working downwards. Any qualified 
application that is not approved due to the lack of funds will be 
carried forward to the next quarter and ranked with all other eligible 
hardship loan applications in that quarter. Upon completion of the 
ranking and approval of loans, all borrowers will be informed in writing 
of the status of their loan applications.
    (e) Optimal use of funds. RUS retains the right to limit the size of 
hardship loans made to individual borrowers in order to more equitably 
distribute the amount of hardship funds appropriated among the greatest 
number of qualified borrowers. Generally, no more than 10 percent of the 
funds appropriated in any fiscal year may be loaned to a single 
borrower. In addition, RUS retains the right to approve loans to 
borrowers that are ranked lower in the priority system, or without 
regard to when the application was received and ranked, if it is 
necessary to:

[[Page 325]]

    (1) Expedite restoration of service outages due to natural 
disasters; or
    (2) Maximize the use of all available hardship funds appropriated 
for loans in that fiscal year.
    (f) On request of any borrower who is eligible for a hardship loan 
for which funds are not available, the borrower shall be considered to 
have applied for concurrent RUS cost-of-money and RTB loans under 
sections 305 and 408, respectively, of the RE Act.
    (g) Hardship loans may be made simultaneously with concurrent RUS 
cost-of-money and RTB loans or guaranteed loans.

[58 FR 66254, Dec. 20, 1993]



Sec. 1735.31  RUS cost-of-money and RTB loans.

    (a) RUS makes cost-of-money loans, under section 305(d)(2) of the RE 
Act, concurrently with RTB loans made under section 408 of the RE Act. 
To qualify for concurrent RUS cost-of-money and RTB loans on or after 
November 1, 1993, a borrower must meet each of the following 
requirements:
    (1) The average number of proposed subscribers per mile of line in 
the service area of the borrower is not more than 15, or the borrower 
has a projected TIER (including the proposed loans) of at least 1.0, but 
not greater than 5.0, as determined by the feasibility study prepared in 
connection with the loans, see 7 CFR part 1737, subpart H; and
    (2) The Administrator has approved and the borrower is participating 
in a telecommunications modernization plan for the state, see 7 CFR part 
1751, subpart B.
    (b) The loan amounts from each program (RUS cost-of-money and RTB, 
including amounts for class B stock) will be proportionate to the total 
amount of funds appropriated for the fiscal year for RUS cost-of-money 
loans and RTB loans. To determine the RUS cost-of-money portion, the 
total loan amount will be multiplied by the ratio of RUS cost-of-money 
funds appropriated for the fiscal year to the sum of RUS cost-of-money 
and RTB funds appropriated for the fiscal year in which the loan is 
approved. The same method would be used to calculate the RTB portion 
(see 7 CFR 1610.6(b)). If during the fiscal year the amount of funds 
appropriated changes, the ratio will be adjusted accordingly and applied 
only to those loans approved afterwards.
    (c) The RUS cost-of-money loan shall bear interest as described in 
paragraphs (c)(1) and (c)(2) of this section (the actual rate of 
interest on the RTB loan shall be determined as provided in 7 CFR 
1610.10):
    (1) Each advance of funds included in RUS cost-of-money loans shall 
bear interest at a rate (the ``Cost of Money Interest Rate'') equal to 
the current cost of money to the Federal Government for loans of a 
similar maturity. The Cost of Money Rate is determined when the funds 
are advanced to the borrower but cannot exceed 7 percent per year.
    (2) RUS shall use the Federal Treasury Statistical Release (the 
``Statistical Release'') issued by the United States Treasury to 
determine the interest rate for each advance of RUS cost-of-money loan 
funds. Generally, the Statistical Release is issued each Monday to cover 
the preceding week. RUS shall determine the Cost of Money Interest Rate 
as follows:
    (i) Each advance shall bear the interest rate stated in the 
applicable Statistical Release for Treasury constant maturities with a 
maturity similar to that of the advance.
    (ii) RUS shall determine the interest rate for an advance bearing a 
maturity other than those stated in the applicable Statistical Release 
by straight-line interpolation between the next higher and next lower 
stated maturities.
    (iii) The first Statistical Release published after the date of an 
advance shall apply to that advance.
    (iv) If the interest rate determined under paragraph (c)(2)(i) or 
(c)(2)(ii) of this section is higher than 7 percent, then the advance 
shall bear interest at the rate of 7 percent per year.
    (v) Advances with maturities greater than 30 years shall bear 
interest at the rate stated in the applicable Statistical Release for 
30-year maturities.
    (vi) RUS may use an alternative method to determine the Cost of 
Money Interest Rate if the Treasury ceases to issue the Statistical 
Release or changes its format or frequency of issue so that it is no 
longer appropriate for use in the manner described in paragraph (c)(2) 
of this section. In this

[[Page 326]]

eventuality, RUS shall immediately notify all borrowers with unadvanced 
RUS cost-of-money loan funds. RUS may, with the borrower's consent, 
determine the Cost of Money Interest Rate on a case-by-case basis for 
subsequent advances of RUS cost-of-money loan funds but may also decide, 
in its discretion, that it is unable to continue advancing funds until 
an alternative method is in effect.
    (vii) Refer to Sec. 1735.43(a) for additional information on 
maturities of RUS loans.
    (viii) RUS shall provide borrowers with prompt written confirmation 
of the Cost of Money Interest Rate borne by each advance of funds 
included in a RUS cost-of-money loan.
    (d) Generally, no more than 10 percent of lending authority from 
appropriations in any fiscal year for RUS cost-of-money and RTB loans 
may be loaned to a single borrower. RUS will publish by notice in the 
Federal Register the dollar limit that may be loaned to a single 
borrower in that particular fiscal year based on approved RUS and RTB 
lending authority.
    (e) On request of any borrower who is eligible for concurrent RUS 
cost-of-money and RTB loans for which funds are not available, the 
borrower shall be considered to have applied for a loan guarantee under 
section 306 of the RE Act.
    (f) Concurrent RUS cost-of-money and RTB loans may be made 
simultaneously with hardship loans or guaranteed loans.

[58 FR 66255, Dec. 20, 1993, as amended at 62 FR 46870, Sept. 5, 1997]



Sec. 1735.32  Guaranteed loans.

    (a) General. Loan guarantees under this section will be considered 
for only those borrowers specifically requesting a guarantee. Borrowers 
may also specify that the loan to be guaranteed shall be made by the 
Federal Financing Bank (FFB). RUS provides loan guarantees pursuant to 
section 306 of the RE Act. Guaranteed loans may be made simultaneously 
with hardship loans or concurrent RUS cost-of-money and RTB loans. No 
fees or charges are assessed for any guarantee of a loan provided by 
RUS. In view of the Government's guarantee, RUS generally obtains a 
first lien on all assets of the borrower (see Sec. 1735.46).
    (b) Requirements. To qualify for a guaranteed loan, a borrower must 
have a projected TIER (including the proposed loan or loans) of at least 
1.2 as determined by the feasibility study prepared in connection with 
the loan. In addition, a borrower must meet all requirements set forth 
in the regulations applicable to a loan made by RUS with the exception 
that it is not required to participate in a state telecommunications 
modernization plan and is not subject to a subscriber per mile 
eligibility requirement, as provided in Sec. 1735.31(a).
    (c) Net worth requirements. RUS generally requires that borrowers 
seeking guaranteed loans have a net worth in excess of 20 percent of 
assets. RUS will, however, consider loan guarantees for borrowers with a 
net worth less than 20 percent.
    (d) Full amount guaranteed. Loans are guaranteed in the full amount 
of principal and interest. Because of the Government's full faith and 
credit 100 percent guarantee of these loans, only RUS obtains a mortgage 
on the borrower's assets.
    (e) Federal Register notice. After RUS has reviewed an application 
and determined that it shall consider guaranteeing a loan for the 
proposed project and if the borrower has not specified that the loan be 
made from the FFB, RUS shall publish a notice in the Federal Register. 
The Notice will include a description of the proposed project, the 
estimated total cost, the estimated amount of the guaranteed loan, a 
statement that the Federal Financing Bank (FFB) has a standing loan 
commitment agreement with RUS, and the name and address of the borrower 
to which financing proposals may be submitted.
    (f) Qualified lenders. RUS considers loan guarantees on a case by 
case basis for loans made by the FFB and any other legally organized 
lending agency or by a combination of lenders that the Administrator 
determines to be qualified to make, hold and service the loan. ``Legally 
organized lending agency'' and ``lender'' include commercial banks, 
trust companies, mortgage banking firms, insurance companies,

[[Page 327]]

and any other institutional investor authorized by law to loan money. 
The borrower is responsible for evaluating all proposals received from 
lenders other than FFB. The borrower furnishes RUS with a report on the 
evaluations and its choice of proposals. However, at the request of the 
borrower, the guaranteed loan shall be made by the FFB.
    (g) Interest rate. Guaranteed loans shall bear interest at the rate 
agreed upon by the borrower and lender. Guaranteed FFB loans shall be at 
a rate of interest that is not more than the rate of interest applicable 
to other similar loans then being made or purchased by FFB.
    (h) Condition of guarantee. RUS will not guarantee a loan if the 
income from the loan or the income from obligations issued by the holder 
of the loan, when the obligations are created by the loan, is excluded 
from gross income for the purpose of chapter I of the Internal Revenue 
Code of 1954.
    (i) Contract of guarantee. If RUS is satisfied with the engineering 
and economic feasibility of the project and approves the borrower's 
choice of proposal, subject to the submission of satisfactory financing 
documents and to the satisfaction of other pertinent terms and 
conditions, RUS will prepare a contract of guarantee to be executed by 
the borrower, the lender, and RUS within a specified time. The lender, 
or its representative, shall have the right to examine the borrower's 
application and supporting data submitted to RUS in support of its 
request for financial assistance.
    (j) Loan servicing. The contract of guarantee will require that 
arrangements satisfactory to RUS be made to service the loan. Required 
servicing by the lender will include:
    (1) Determining that all prerequisites to each advance of loan funds 
by the lender under the terms of the contract of guarantee, all 
financing documents, and all related security instruments have been 
fulfilled. Such determinations may be met by obtaining RUS approval of 
each advance.
    (2) Billing and collecting loan payments from the borrower.
    (3) Notifying the Administrator promptly of any default in the 
payment of principal and interest on the loan and submitting a report, 
as soon as possible thereafter, setting forth its views as to the 
reasons for the default, how long it expects the borrower will be in 
default, and what corrective actions the borrower states it is taking to 
achieve a current debt service position.
    (4) Notifying the Administrator of any known violations or defaults 
by the borrower under the lending agreement, contract of guarantee, or 
related security instruments, or conditions of which the lender is aware 
which might lead to nonpayment, violation, or other default.
    (k) Payments under the contract of guarantee. Upon receipt of the 
notification required in Sec. 1735.32(j)(3) of this section, RUS will 
pay the lender the amount in default with interest to the date of 
payment. When RUS has made a payment under a contract of guarantee, it 
will establish in its accounts the amount of the payment as due and 
payable from the borrower, with interest at the rate of interest 
specified in the lending agreement. RUS will work with the borrower and 
the lender in an effort to eliminate the borrower's default as soon as 
possible. RUS may also proceed with other remedies available under its 
security instruments.
    (l) Pledging of contract of guarantee. Subject to applicable law, 
RUS will consider, on a case by case basis, permitting pledging of the 
contract of guarantee in order to facilitate the obtaining of funds by 
the lending agency to make the guaranteed loan.

[54 FR 13351, Apr. 3, 1989; 54 FR 16194, Apr. 21, 1989. Redesignated at 
55 FR 39395, Sept. 27, 1990, as amended at 56 FR 26597, June 10, 1991; 
58 FR 66255, Dec. 20, 1993; 62 FR 46870, Sept. 5, 1997]



Sec. 1735.33  Variable interest rate loans.

    After June 10, 1991, and prior to November 1, 1993, RUS made certain 
variable rate loans at interest rates less than 5 percent but not less 
than 2 percent. For those borrowers that received variable rate loans, 
this section describes the method by which interest rates are adjusted. 
The interest rate used in determining feasibility is the rate charged to 
the borrower until the end of the Forecast Period for that

[[Page 328]]

loan. At the end of the Forecast Period, the interest rate for the loan 
may be annually adjusted by the Administrator upward to a rate not 
greater than 5 percent, or downward to a rate not less than the rate 
determined in the feasibility study on which the loan was based, based 
on the borrower's ability to pay debt service and maintain a minimum 
TIER of 1.0. Downward and upward adjustments will be rounded down to the 
nearest one-half or whole percent. To make this adjustment, projections 
set forth in the loan feasibility study will be revised annually by RUS 
(beginning within four months after the end of the Forecast Period) to 
reflect updated revenue and expense factors based on the borrower's 
current operating condition. Any such adjustment will be effective on 
July 1 of the year in which the adjustment was determined. If the 
Administrator determines that the borrower is capable of meeting the 
minimum TIER requirements of Sec. 1735.22(f) at a loan interest rate of 
5 percent on a loan made as described in this section, then the loan 
interest rate shall be fixed, for the remainder of the loan repayment 
period, at the standard interest rate of 5 percent.

[62 FR 46870, Sept. 5, 1997]



Secs. 1735.34-1735.39  [Reserved]



                        Subpart D_Terms of Loans

    Source: 54 FR 13351, Apr. 3, 1989, unless otherwise noted. 
Redesignated at 55 FR 39395, Sept. 27, 1990.



Sec. 1735.40  General.

    Terms and conditions of loans are set forth in a mortgage, note, and 
loan contract. Provisions of the mortgage and loan contract are 
implemented by provisions in RUS Bulletins and Regulations. Forms of the 
mortgage, note, and loan contract can be obtained from RUS.



Sec. 1735.41  Notes.

    Loans are represented by one or more notes. Interest accrues only on 
funds advanced. There are no loan commitment fees or charges. See RUS 
Bulletin 320-12 for additional information. This CFR part supersedes 
those portions of RUS Bulletin 320-12 ``Loan Payments and Statements'' 
with which it is in conflict.



Sec. 1735.42  [Reserved]



Sec. 1735.43  Payments on loans.

    (a) Except as described in this paragraph (a), RUS loans approved 
after October 6, 1997 must be repaid with interest within a period that, 
rounded to the nearest whole year, equals the expected composite 
economic life of the facilities to be financed, as calculated by RUS; 
expected composite economic life means the depreciated life plus three 
years. The expected composite economic life shall be based on the 
depreciation rates for the facilities financed by the loan. In states 
where the borrower must obtain state regulatory commission approval of 
depreciation rates, the depreciation rates used shall be the rates 
currently approved by the state commission or rates for which the 
borrower has received state commission approval. In cases where a state 
regulatory commission does not approve depreciation rates, the expected 
composite economic life shall be based on the most recent median 
depreciation rates published by RUS for all borrowers (see 7 CFR 
1737.70). Borrowers may request a repayment period that is longer or 
shorter than the expected composite economic life of the facilities 
financed. If the Administrator determines that a repayment period based 
on the expected composite economic life of the facilities financed is 
likely to cause the borrower to experience hardship, the Administrator 
may agree to approve a period longer than requested. A shorter period 
may be approved as long as the Administrator determines that the loan 
remains feasible.
    (b) Borrowers with RTB loans approved after October 6, 1997 with a 
maturity that exceeds the expected composite economic life of the 
facilities to be financed by the loan by a period of more than three 
years, release of funds included in the loan shall be conditioned upon 
the borrower establishing and maintaining, pursuant to a plan approved 
by RUS, a funded reserve in such an amount that the balance of the 
reserve plus the value of the facilities

[[Page 329]]

less depreciation shall at all times be at least equal to the remaining 
principal payments on the loan. Funding of the reserve must begin within 
one year of approval of release of funds and must continue regularly 
over the expected composite economic life of the facilities financed.
    (c) Borrowers that have demonstrated to the satisfaction of the 
Administrator an inability to maintain the funded reserve or net plant 
to secured debt ratio requirements, if any, contained in their mortgage, 
may elect to replace notes with an original maturity that exceeded the 
composite economic life of the facilities financed with notes bearing a 
shorter maturity approximating the expected composite economic life of 
the facilities financed, if this will result in a shorter maturity for 
the loan. The principal balance of the notes (hereinafter in this 
section called the ``refunding notes'') issued to refund and substitute 
for the original notes would be the unpaid principal balance of the 
original notes. The refunding notes would mature at a date no later than 
the remaining economic life of the facilities financed by the loan, plus 
three years, as determined by the original feasibility study prepared in 
connection with the loan. Interest on the original note must continue to 
be paid through the closing date. All other payment terms, including the 
rate of interest on the refunding notes, would remain unchanged. 
Disposition of funds in the funded reserve will be determined by RUS at 
the closing date. RUS will notify the borrower in writing of the 
amendment of loan payment requirements and the terms and conditions 
thereof.
    (d) A borrower qualifying under paragraph (c) of this section shall 
not be required to pay a prepayment premium on such portion of the 
payments under its new notes as exceeds the payments required under the 
notes being replaced.
    (e) To apply for refunding notes, borrowers must send to the Area 
Office the following:
    (1) A certified copy of a board resolution requesting an amendment 
of loan payment requirements and that certain notes be replaced;
    (2) If applicable, evidence of approval by the regulatory body with 
jurisdiction over the telecommunications service provided by the 
borrower to issue refunding notes; and
    (3) Such other documents as may be required by the RUS.
    (f) Principal and interest will be repaid in accordance with the 
terms of the notes. Generally, interest is payable each month as it 
accrues. Principal payments on each note generally are scheduled to 
begin 2 years after the date of the note. After this deferral period, 
interest and principal payments on all funds advanced during this 2-year 
period are scheduled in equal monthly installments. Principal payments 
on funds advanced 2 years or more after the date of the note will begin 
with the first billing after the advance. The interest and principal 
payments on each of these advances will be scheduled in equal monthly 
installments. This CFR part supersedes those portions of RUS Bulletin 
320-12, ``Loan Payments and Statements'' with which it is in conflict.

[56 FR 26598, June 10, 1991, as amended at 62 FR 46871, Sept. 5, 1997]



Sec. 1735.44  Prepayment premiums.

    The loan documents normally provide that RUS insured loans may be 
repaid in full at any time without prepayment premiums. Depending upon 
the lender, there may be prepayment premiums on loans guaranteed by RUS. 
See 7 CFR part 1610 for prepayment premiums on RTB loans. See RUS 
Bulletin 320-12 for additional information. This CFR part supersedes 
those portions of RUS Bulletin 320-12, ``Loan Payments and Statements'', 
with which it is in conflict.



Sec. 1735.45  Extension of payments.

    RUS may extend the time of payment of principal or interest on a 
loan. Under section 12 of the Rural Electrification Act, as amended, 
this extension may be up to 5 years after such payment is due. Under 
section 236 of the Disaster Relief Act of 1970 (Pub. L. 91-606) payment 
may be deferred by the Secretary of Agriculture as long as necessary in 
disaster situations so long as the final maturity date is not later than 
40 years after the date of the loan.

[[Page 330]]

See RUS Bulletin 320-2 for additional information.



Sec. 1735.46  Loan security documents.

    (a) Loans are to be repaid according to their terms. RUS generally 
obtains a first lien on all assets of the borrower. This lien shall be 
in the form of a mortgage by the borrower to the Government or a deed of 
trust made by and between the borrower and a trustee, satisfactory to 
the Administrator, together with such security agreements, financing 
statements, or other security documents as RUS may deem necessary in a 
particular case. Where a borrower is unable by reason of pre-existing 
encumbrances, or otherwise, to furnish a first mortgage lien on its 
entire system the Administrator may, if he determines such security to 
be reasonably adequate and the form and nature thereof otherwise 
appropriate, accept other forms of security. See RUS Bulletins 320-4, 
320-22, 321-2, 322-2, 323-1, and 326-1 for details. See 7 CFR part 1744, 
subpart B for information on lien accommodations and subordinations.
    (b) Loan security documents of borrowers with loans approved after 
October 6, 1997 will provide limits on allowable cash distributions in 
any calendar year as follows:
    (1) No more than 25 percent of the prior calendar year's net 
earnings or margins if the borrower's net worth is at least 1 percent of 
its total assets after the distribution is made;
    (2) No more than 50 percent of the prior calendar year's net 
earnings or margins if the borrower's net worth is at least 20 percent 
of its total assets after the distribution is made;
    (3) No more than 75 percent of the prior calendar year's net 
earnings or margins if the borrower's net worth is at least 30 percent 
of its total assets after the distribution is made; or
    (4) No limit on distributions if the borrower's net worth is at 
least 40 percent of its total assets after the distribution is made.
    (c) Borrowers that have not received a loan after October 6, 1997 
may request the Administrator to apply these requirements to them. 
Borrowers may request in writing that RUS substitute the new 
requirements described in paragraphs (b)(1) through (b)(4) of this 
section. Upon request by the borrower, the provisions of the borrower's 
loan documents restricting cash distributions or investments shall not 
be enforced to the extent that such provisions are inconsistent with 
this section.
    (d) Rural development investments meeting the criteria set forth in 
7 CFR part 1744, subpart D, will not be counted against a borrower's 
allowable cash distributions in any calendar year (7 U.S.C. 926).
    (e) References to a borrower's mortgage in this section include 
deeds of trust and any other loan document applying the same 
requirements to a borrower.
    (f) This section does not limit the rights of any parties to the 
mortgage other than RUS or RTB.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 59 FR 29537, June 8, 1994; 62 FR 46871, Sept. 5, 1997]



Sec. 1735.47  Rescissions of loans.

    (a) Rescission of a loan may be requested by a borrower at any time. 
To rescind a loan, the borrower must demonstrate to RUS that:
    (1) The purposes of the loan being rescinded have been completed;
    (2) Sufficient funds are available from sources other than RUS, RTB 
or FFB to complete the purposes of the loan being rescinded; or
    (3) The purposes of the loan are no longer required to extend or 
improve telephone service in rural areas.
    (b) Borrowers submitting loan applications containing purposes 
previously covered by a loan that has been rescinded shall include in 
the application an explanation, satisfactory to RUS, of the change of 
conditions since the rescission that re-establishes the need for those 
purposes.
    (c) RUS shall not initiate the rescission of a loan unless all of 
the purposes for which telephone loans have been made to the borrower 
under the Act have been accomplished with funds provided under the Act.

[56 FR 26598, June 10, 1991]

[[Page 331]]



Secs. 1735.48-1735.49  [Reserved]



             Subpart E_Basic Requirements For Loan Approval

    Source: 54 FR 13351, Apr. 3, 1989, unless otherwise noted. 
Redesignated at 55 FR 39395, Sept. 27, 1990.



Sec. 1735.50  Administrative findings.

    The RE Act requires that the Administrator make certain findings to 
approve a telephone loan or loan guarantee. The borrower shall provide 
the evidence determined by the Administrator to be necessary to make 
these findings. Details on the information required to support these 
findings are included in 7 CFR part 1737.



Sec. 1735.51  Required findings.

    (a) Feasibility of and security for the Loan. The borrower shall 
provide RUS with satisfactory evidence to enable the Administrator to 
determine that the security for the loan is reasonably adequate and the 
loan will be repaid on time. This finding is based on the following 
factors:
    (1) Self-liquidation of the loan within the loan amortization 
period; this requires that there be sufficient revenues from the 
borrower's system, in excess of operating expenditures (including 
maintenance and replacement), to repay the loan with interest.
    (2) Reasonable assurance of achieving the telephone market 
projections upon which the loan is based.
    (3) Economic feasibility (based on projected revenues, expenses, net 
income, maximum debt service, and rate of return on investment) for the 
proposed system using local service rate schedules appropriate for the 
area served.
    (4) Impact of the proposed loan and construction on the ratio of the 
borrower's secured debt to assets.
    (5) Projected growth in the borrower's equity.
    (6) Satisfactory experience and reputation of the system's principal 
owners and manager.
    (7) A first lien on the borrower's total system or other adequate 
security.
    (8) Fair market value of the borrower's assets as represented in its 
financial reports to RUS.
    (9) Appropriate financial and managerial controls included in the 
loan documents.
    (10) Other factors determined to be relevant by RUS.
    (b) Area coverage. The borrower shall provide RUS with satisfactory 
evidence to enable the Administrator to determine that adequate 
telephone service will be made available to the widest practical number 
of rural users during the life of the loan.
    (c) Nonduplication or certificate requirement. The borrower shall 
provide RUS with satisfactory evidence to enable the Administrator to 
determine that no duplication of service shall result from a particular 
loan for those borrowers not required by the state regulatory commission 
to have a certificate of convenience and necessity (or its equivalent). 
For borrowers required to have a certificate of convenience and 
necessity, all portions of the existing and proposed system must be 
covered by the certificate.

[54 FR 13351, Apr. 3, 1989. Redesignated at 55 FR 39395, Sept. 27, 1990, 
as amended at 56 FR 26598, June 10, 1991]



Sec. 1735.52  Findings required for particular loan purposes.

    (a) Refinancing. For loans that include funds to refinance 
outstanding indebtedness of the borrower, the borrower shall provide RUS 
with satisfactory evidence to enable the Administrator to determine that 
the inclusion in the loan of such funds shall be necessary and 
incidental to furnishing or improving telephone service in rural areas. 
See 7 CFR 1735.21.
    (b) Facilities for nonrural areas. Whenever a borrower proposes to 
use loan funds for the improvement, expansion, construction, or 
acquisition of telephone facilities within or for nonrural areas, the 
borrower shall provide RUS with satisfactory evidence to enable the 
Administrator to determine that such funds shall be necessary and 
incidental to furnishing or improving telephone service in rural areas.

[[Page 332]]



Secs. 1735.53-1735.59  [Reserved]



         Subpart F_Mortgage Controls on Acquisitions and Mergers

    Source: 54 FR 14626, Apr. 12, 1989, unless otherwise noted. 
Redesignated at 55 FR 39395, Sept. 27, 1990.



Sec. 1735.60  Specific provisions.

    (a) The standard form of RUS mortgage contains certain provisions 
concerning mergers and acquisitions:
    (1) Article II, section 4(a) requires the borrower to obtain the 
written approval of the majority noteholders before taking any action to 
reorganize, or to consolidate with or merge into any other corporation.
    (2) Article II, section 4(b), if made applicable, provides certain 
exceptions to the requirements of section 4(a).
    (b) Similar provisions are contained in other forms of documents 
executed by borrowers that have not entered into the standard form of 
mortgage.
    (c) Mortgages and loan contracts may contain other provisions 
concerning mergers and acquisitions.

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990, as amended at 62 FR 46871, Sept. 5, 1997]



Sec. 1735.61  Approval criteria.

    (a) If a borrower is required by the terms of its mortgage or loan 
contract to obtain RUS approval of a merger or acquisition, the borrower 
shall request RUS approval and shall provide RUS with such data as RUS 
may request.
    (b) If loan funds are requested, the borrower shall comply with 
subpart G of this part. If no additional loan funds are involved, the 
borrower shall comply with subpart H of this part.
    (c) In considering whether to approve the request, RUS will take 
into account, among other matters:
    (1) Whether the operation, management, and the economic and loan-
repayment feasibility characteristics of the proposed system are 
satisfactory;
    (2) Whether the merger or acquisition may result in any 
relinquishment, impairment, or waiver of a right or power of the 
Government;
    (3) Whether the proposed merger or acquisition is in the best 
interests of the Government as note holder; and
    (4) Whether the proposed purchase price and terms of an acquisition 
are reasonable, regardless of the source of funds used to pay for the 
purchase. RUS will consider the purchase price unreasonable if, in RUS's 
opinion, it will endanger financial feasibility.



Sec. 1735.62  Approval of acquisitions and mergers.

    (a) If a proposal is unsatisfactory to RUS, then RUS shall inform 
the borrower in writing of those features it considers objectionable 
and, as appropriate, recommend corrective action.
    (b) If a proposal is satisfactory to RUS, then RUS shall inform the 
borrower in writing of its approval and any conditions of such approval. 
Among the conditions of approval are the following:
    (1) RUS shall require a compensating benefit in return for any 
relinquishment, impairment, or waiver of its rights or powers.
    (2) If the survivor is an affiliate of another company, RUS shall 
require any investments in, advances to, accounts receivable from, and 
accounts payable to the affiliated company contrary to mortgage 
provisions shall be eliminated in a manner satisfactory to the 
Administrator.
    (3) RUS requires that the borrower agree not to extend credit to, 
perform services for, or receive services from any affiliated company 
unless specifically authorized in writing by the Administrator or 
pursuant to contracts satisfactory in form and substance to the 
Administrator.
    (4) RUS may require the borrower to execute additional mortgages, 
loan agreements, and associated documentation.



Secs. 1735.63-1735.69  [Reserved]



               Subpart G_Acquisitions Involving Loan Funds

    Source: 54 FR 14626, Apr. 12, 1989, unless otherwise noted. 
Redesignated at 55 FR 39395, Sept. 27, 1990.

[[Page 333]]



Sec. 1735.70  Use of loan funds.

    (a) See 7 CFR part 1735 and 1737 for RUS's general loan policies and 
requirements.
    (b) RUS will finance an acquisition by a borrower only when the 
acquisition is necessary and incidental to furnishing or improving rural 
telephone service and the service area is eligible for RUS assistance.
    (c) RUS does not make loans for the sole purpose of merging or 
consolidating telephone organizations. After a merger or consolidation, 
RUS will consider making loans to the telephone system to finance the 
improvement or extension of telephone service in rural areas.
    (d) Generally, RUS will not make a loan for the acquisition of an 
existing borrower unless, in addition to all other requirements, such 
acquisition will improve the likelihood of repayment of an outstanding 
RUS loan and all outstanding balances of the previous RUS loans are paid 
in full.
    (e) In determining the amount it will lend for each acquisition, RUS 
shall place a valuation on all telephone facilities that are to be 
acquired with loan funds. RUS may consider fair market value, the 
original cost less depreciation of the facilities, income generating 
potential, any improvement in the financial strength of the borrower as 
a result of the acquisition, and any other factors deemed relevant by 
RUS to determine the reasonableness of the acquisition price and the 
amount of loan funds RUS will provide for an acquisition. RUS shall not 
consider the acquisition price reasonable or approve a loan if, in the 
Administrator's opinion, the acquisition price will endanger financial 
feasibility. If the acquisition price exceeds the amount RUS will lend, 
the borrower provides the remainder.
    (f) When a borrower intends to request RUS loan funds for an 
acquisition, it shall present a proposal in writing to the Area Office 
as soon as possible. The borrower must either obtain RUS approval prior 
to making any binding commitments with the seller or make the 
commitments subject to RUS's approval. Failure to comply with these 
requirements will disqualify the borrower from obtaining an RUS loan for 
the acquisition unless the Administrator determines there were 
extenuating circumstances.



Sec. 1735.71  Nonrural areas.

    Loan funds may be approved for the acquisition and improvement of 
facilities to serve nonrural subscribers only if the principal purpose 
of the loan is to furnish and improve rural service and only if the use 
of loan funds to serve nonrural subscribers is necessary and incidental 
to the principal purpose of the loan. For example, when the acquisition 
of an existing system located in and serving a nonrural area is 
necessary to serve as the nucleus of an expanded system to furnish area 
coverage service in rural areas, the loan may include funds to finance 
the acquisition. Approval for the use of loan funds in these 
circumstances shall be made only on a case by case basis by the 
Administrator.



Sec. 1735.72  Acquisition agreements.

    When borrowers are seeking RUS financing, acquisition agreements 
between the borrower and the seller must be in form and substance 
satisfactory to RUS and shall be expressly conditioned on approval of 
the agreement by RUS and on obtaining an RUS loan. Normally, the 
acquisition agreement will not be approved by RUS until the loan has 
been approved.



Sec. 1735.73  Loan design.

    When loan funds are requested for an acquisition, details of the 
proposed acquisition shall be included in the Loan Design. See 7 CFR 
part 1737.



Sec. 1735.74  Submission of data.

    (a) RUS will not approve any acquisition, other than of toll 
facilities (see subpart J of this part), financed in whole or in part 
with loan funds until the borrower submits the following data to the 
GFR:
    (1) For any nonborrowers involved, their most recent balance sheets, 
operating statements, detail of plant accounts, reports to the state 
commission, and audits, if available.
    (2) Completed RUS Form 507, ``Report on Telephone Acquisition,'' 
which provides system data, including the type

[[Page 334]]

of purchase and purchase price, a system description, and data by 
exchange. See Sec. 1735.3 for information on obtaining copies of this 
form.
    (3) A map (such as a road map) showing county lines, the boundaries 
of the proposed acquisition and the borrower's existing service 
territory, and the names of other telephone companies serving adjoining 
areas.
    (4) A brief statement of the plans for incorporating the acquired 
facilities into the borrower's existing system.
    (5) The number of subscribers currently receiving service in the 
area to be acquired and the number of new subscribers that will be 
served over the next 5 years as a result of the acquisition.
    (6) The proposed purchase price.
    (7) Two copies of any options, bills of sale, or deeds, and four 
copies of any acquisition agreements. All of these documents are subject 
to RUS approval. If the acquisition agreement is approved by RUS, two 
copies of it shall be returned to the borrower.
    (8) An appraisal by the borrower's consulting engineer or other 
qualified person of the physical plant to be acquired. The appraisal 
shall include the following:
    (i) Inspection of each central office, noting the age and condition 
of the switch and associated equipment, and the extent and quality of 
maintenance of the equipment and premises.
    (ii) Inspection of the outside plant, noting the general age and 
condition of cable and wire, poles and related hardware, pedestals, and 
subscriber drops. Any joint use or ownership shall be explained.
    (iii) Inspection of miscellaneous items such as commercial office 
facilities, vehicles, furniture, tools and work equipment, and materials 
and supplies in stock, noting age and condition.
    (iv) Inspection of all buildings and other structures (such as radio 
towers), noting age and condition.
    (v) Detailed description of all real estate including the present 
market value that local real estate dealers, bankers, insurance agents, 
etc., place on the property.
    (vi) Any widely accepted method, approved by RUS, may be used to 
estimate the condition of the facilities in paragraphs (a)(8)(i) through 
(a)(8)(iv) of this section. The ``percent condition'' method is 
recommended, but is not required.
    (9) Copies of deeds to real estate to be acquired, with an 
explanation of the proposed use of the land.
    (10) Copies of leases to be acquired.
    (11) Copies of any existing mortgages with parties other than RUS, 
indentures, deeds of trust, or other security documents or financing 
agreements relating to the property to be acquired and any contracts or 
other rights or obligations to be assumed as part of the acquisition.
    (12) A list of all counties in which the proposed system will have 
facilities.
    (13) If the borrower is a cooperative-type organization, a 
description of its plans for taking subscribers in as members, 
membership fees, equity payments required because of the acquisition, 
and extent of membership support.
    (14) A certification, signed by the president of the borrower, that 
the borrower is participating in the State's telecommunications 
modernization plan (for information concerning the plan, see 7 CFR part 
1751, subpart B). This certification is not required if the borrower is 
seeking a guaranteed loan.
    (15) Any other data deemed necessary by the Administrator for an 
evaluation of the acquisition.
    (b) For stock acquisitions, the borrower shall submit the following 
in addition to the items listed in (a) of this section:
    (1) A list of all stockholders of the company to be acquired and the 
number of shares each owns.
    (2) Guarantees and indemnifications to be obtained from the sellers 
of the stock.

(Approved by the Office of Management and Budget under control number 
0572-0084)

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990; 58 FR 66256, Dec. 20, 1993]



Sec. 1735.75  Interim financing.

    (a) A borrower may submit a written request for RUS approval of 
interim financing if it is necessary to close an acquisition before the 
loan to finance the acquisition is approved. Loan funds

[[Page 335]]

shall not be used to reimburse acquisition costs unless RUS has granted 
approval of interim financing prior to the closing of the acquisition.
    (b) RUS will approve interim financing of acquisitions only in cases 
where loan funds cannot be made available in time for the closing.
    (c) RUS will not approve interim financing unless the following 
information is acceptable:
    (1) A written request for approval of interim financing, including a 
brief description of the acquisition, an explanation of the urgency of 
proceeding with the acquisition, and the source of funds to be used.
    (2) A completed RUS Form 490, ``Application for Telephone Loan or 
Loan Guarantee.'' See 7 CFR part 1737.
    (3) The portions of the Loan Design that cover the proposed 
acquisition, including cost estimates and information on any investments 
in nonrural areas. See 7 CFR 1737.
    (4) The information required in Sec. 1735.74 (a)(1) through (a)(8), 
(a)(14) and (b)(1).
    (5) Any other data deemed necessary by the Administrator to approve 
the interim financing of the acquisition.
    (d) Furthermore, RUS will not approve interim financing if, in RUS's 
judgment, the proposed acquisition will not qualify for RUS financing or 
the proposed interim financing presents unacceptable loan security risks 
to RUS.
    (e) Because RUS approval of interim financing is not a commitment to 
make a loan, RUS will not approve interim financing unless the borrower 
is prepared to assume responsibility for financing all obligations 
incurred.
    (f) If the borrower plans to proceed with the closing after 
receiving RUS approval of interim financing, it must first receive 
preliminary approval from RUS. See Sec. 1735.90
    (g) See 7 CFR part 1737 for regulations on interim financing for 
construction.
    (h) See 7 CFR part 1744, subpart B for conditions under which RUS 
will provide shared first lien and/or a lien accommodation for non-RUS 
lenders.



Sec. 1735.76  Acquisition of affiliates.

    A borrower shall not use RUS loan funds to acquire any stock or any 
telephone plant of an affiliate.

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990, as amended at 62 FR 46871, Sept. 5, 1997]



Sec. 1735.77  Release of loan funds, requisitions, advances.

    (a) RUS will not approve the advance of loan funds until the 
borrower has fulfilled all loan contract provisions to the extent deemed 
necessary by RUS.
    (b) The first advance of loan funds pursuant to the loan contract 
normally shall provide funds needed for the acquisition. Unless the 
borrower has received approval of interim financing, it must submit the 
requisition in time for the advance to be made by the closing date.
    (c) After the borrower has closed the acquisition, it shall furnish 
RUS all documents necessary to demonstrate to RUS's satisfaction that 
the transaction has been closed.
    (d) Advances for improvements or expansion of the acquired 
facilities will not be approved until RUS has determined that the 
transaction has been closed and the borrower has obtained satisfactory 
title to the acquired facilities.
    (e) See 7 CFR part 1737 (or RUS Bulletin 320-4) for additional 
requirements for releases of loan funds and 7 CFR part 1744, subpart C 
for additional requirements for requisitions and advances.



Secs. 1735.78-1735.79  [Reserved]



  Subpart H_Acquisitions or Mergers Not Involving Additional Loan Funds



Sec. 1735.80  Submission of data.

    When a borrower is not requesting loan funds for an acquisition or 
merger, the borrower shall first notify RUS and submit for review by RUS 
the documents and information listed in (a) through (l) of this section 
required by RUS.

[[Page 336]]

    (a) For any nonborrowers involved, their most recent balance sheets, 
operating statements, detail of plant accounts, reports to the state 
commission, and audits, if available.
    (b) Completed RUS Form 507, ``Report on Telephone Acquisition.''
    (c) A map (such as a road map) showing county lines, the boundaries 
of the proposed acquisition and the borrower's existing service 
territory, and the names of other telephone companies serving adjoining 
areas.
    (d) A brief statement of the plans for incorporating the acquired 
facilities into the borrower's existing system.
    (e) The number of subscribers currently receiving service in the 
areas involved in the acquisition or merger and the number of new 
subscribers that will be served over the next 5 years as a result of the 
acquisition or merger.
    (f) Copies of deeds of real estate to be acquired, with an 
explanation of the proposed use of the land.
    (g) Copies of security documents of any other lenders involved and 
any contracts or other rights of obligations to be assumed by the 
survivor.
    (h) A list of all counties in which the proposed system will have 
facilities.
    (i) If Article II, section 4(b) of the standard mortgage has not 
been made applicable, plans for operating the unified system.
    (j) In the case of a merger, the proposed articles of merger that 
are to be used.
    (k) In the case of an acquisition, the proposed purchase price, plus 
two copies of any options, bills of sale, or deeds, and two copies of 
any acquisition agreements. All of these documents are subject to RUS 
approval. If the acquisition agreement is approved by RUS, two copies of 
it shall be returned to the borrower.
    (l) Any other data deemed necessary by the Administrator for an 
evaluation of the acquisition or merger.

(Approved by the Office of Management and Budget under control number 
0572-0084)

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Secs. 1735.81-1735.89  [Reserved]



         Subpart I_Requirements for All Acquisitions and Mergers

    Source: 54 FR 14626, Apr. 12, 1989, unless otherwise noted. 
Redesignated at 55 FR 39395, Sept. 27, 1990.



Sec. 1735.90  Preliminary approvals.

    (a) In cases where the borrower's schedule for completion of the 
proposed action leaves insufficient time for RUS to prepare and process 
the required documentation, including new mortgages and replacement 
notes, the borrower may request RUS to give preliminary approval to the 
acquisition or merger. However, the borrower may not obtain additional 
loan funds until the documentation is completed to RUS's satisfaction.
    (b) Consideration of preliminary approvals generally will not be 
practicable in cases in which compensating benefits are required.
    (c) RUS will not give preliminary approval when the lien of the 
mortgage on after-acquired property may be affected.
    (d) Before RUS will grant preliminary approval, the borrower shall 
submit:
    (1) Merger or acquisition documents required by state law;
    (2) Acquisition agreements covering the transaction;
    (3) Any required franchises, licenses, and permits;
    (4) All required regulatory body approvals;
    (5) All required corporate actions;
    (6) Leases, contracts, and evidence of titles to be assigned to the 
purchaser; and
    (7) The latest audited financial statements for any nonborrowers 
involved.
    (e) If the information in (d) of this section is acceptable to RUS, 
the borrower may proceed with the closing.

(Approved by the Office of Management and Budget under control number 
0572-0084)



Sec. 1735.91  Location of facilities.

    Telephone facilities to be acquired must be located so that they can 
be efficiently operated by the borrower and

[[Page 337]]

provide adequate security for the RUS loan.



Sec. 1735.92  Accounting considerations.

    (a) Proper accounting shall be applied to all acquisitions and 
mergers, as required by the regulatory commission having jurisdiction, 
or in the absence of such a commission, as required by RUS based on 
Generally Accepted Accounting Principles or other accounting conventions 
as deemed necessary by RUS.
    (b) If RUS determines that the plant accounts are not properly 
depreciated, the borrower should adjust its depreciation rates. 
Depending upon the characteristics of the case, commission jurisdiction 
and requirements, and similar factors, one of the following actions 
shall be taken:
    (1) In states where commission approval of depreciation rates is 
required, a covenant shall be included in the loan contract that 
requires the borrower to:
    (i) Have the consulting engineer make an original cost less 
depreciation inventory and appraisal of retained plant as part of the 
final inventory, and
    (ii) Request commission approval of adjustments to its records on 
the basis of this inventory.
    (2) In states where commission approval is not required, informal 
discussions between RUS and the borrower may be undertaken to reach 
satisfactory voluntary adjustments. If this does not resolve the 
situation to RUS's satisfaction, a covenant similar to that in paragraph 
(b)(1)(i) of this section shall be included in the loan contract and the 
borrower shall agree to submit evidence satisfactory to the 
Administrator that it has adjusted its records on the basis of the 
inventory.



Sec. 1735.93  Notes.

    Substitute notes may be required in the case of an acquisition or 
merger, regardless of the source of funds.



Sec. 1735.94  Final approval and closing procedure.

    (a) Legal documents relating to the acquisition or merger, including 
copies of required franchises, commission orders, permits, licenses, 
leases, title evidence, corporate proceedings, and contracts to be 
assigned to the purchaser shall be forwarded to the Area Office prior to 
closing.
    (b) The Administrator will not give final approval to any 
acquisition or merger until all RUS requirements relating to the 
transactions are satisfied.
    (c) Following the Administrator's final approval of the proposal, 
the Area Office shall inform the borrower in writing of the necessary 
legal and other actions required for the advance of loan funds to 
finance the acquisition, including the submission, in form and substance 
satisfactory to the Administrator, of (1) all information and documents 
necessary to demonstrate that the transaction has been completed, and 
(2) all loan contracts, notes, mortgages, and related documents and 
materials required by RUS.
    (d) Deeds reflecting the change in ownership, executed bills of 
sale, and opinions of counsel shall be forwarded to the Area Office 
following closing.
    (e) RUS will not advance loan funds to furnish or improve service in 
the acquired or merged areas until the Administrator has given final 
approval and the transaction has been closed. RUS may, however, advance 
funds if it determines that loan security will not be jeopardized.
    (f) At the discretion of RUS, a GFR may be present at the closing to 
assist the borrower and protect the interests of RUS. Under certain 
circumstances the closing may take place prior to RUS granting final 
approval for the transaction and the execution of amended loan security 
documents.



Sec. 1735.95  Unadvanced loan funds.

    (a) The unadvanced loan funds of a borrower that will not be a 
survivor of an acquisition or merger shall be advanced only to the 
survivor and only under the following circumstances.
    (1) If the funds are to be used for purposes approved in prior 
loans, the funds shall be advanced after the effective date of the 
proposed action only when all loan contract prerequisites have been met 
and documents have been submitted in form and substance satisfactory to 
the Administrator.

[[Page 338]]

    (2) If the funds are to be used for new purposes, then in addition 
to the requirements in (a)(1) of this section, RUS must also approve the 
change in purpose.
    (b) No loan or other money in the construction fund shall be used to 
finance facilities outside areas to be served by projects approved by 
RUS.



Secs. 1735.96-1735.99  [Reserved]



                    Subpart J_Toll Line Acquisitions



Sec. 1735.100  Use of loan funds.

    An acquisition of toll line facilities financed with loan funds must 
be necessary and incidental, as determined by the Administrator, to 
furnishing or improving telephone service in rural areas. The borrower 
shall submit to RUS the acquisition agreement, the original cost less 
depreciation of the facilities, any concurrences with the connecting 
companies involved, and a detailed inventory of the facilities to be 
purchased. The borrower must submit to RUS evidence, satisfactory to the 
Administrator, of the borrower's ownership of the toll line facilities 
before loan funds for improvement of those facilities will be advanced.

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990]



Sec. 1735.101  With nonloan funds.

    When an acquisition is limited to toll line facilities and loan 
funds are not involved, RUS approval of the acquisition is not required. 
The borrower, however, shall submit to RUS for its approval all 
concurrences with the connecting companies involved and any other proof 
of ownership of the toll facilities required by RUS.

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990]



PART 1737_PRE-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND
GUARANTEED TELECOMMUNICATIONS LOANS--Table of Contents



                            Subpart A_General

Sec.
1737.1  General statement.
1737.2  Definitions.
1737.3  Availability of RUS forms.
1737.4-1737.9  [Reserved]

                     Subpart B_Preapplication Stage

1737.10  Initial contact.
1737.11  Preapplication determinations.
1737.12-1737.19  [Reserved]

                     Subpart C_The Loan Application

1737.20  [Reserved]
1737.21  The completed loan application.
1737.22  Supplementary information.
1737.23-1737.29  [Reserved]

     Subpart D_Preloan Studies_Area Coverage Survey and Loan Design

1737.30  General.
1737.31  Area Coverage Survey (ACS).
1737.32  Loan Design (LD).
1737.33-1737.39  [Reserved]

   Subpart E_Interim Financing of Construction of Telephone Facilities

1737.40  General.
1737.41  Procedure for obtaining approval.
1737.42  Procedure for construction.
1737.43-1737.49  [Reserved]

               Subpart F_Review of Application Procedures

1737.50  Review of completed loan application.
1737.51  Approval of loan design.
1737.52-1737.59  [Reserved]

              Subpart G_Project Cost Estimation Procedures

1737.60  Telephone loan budget.
1737.61  Cost allocation for rural and nonrural areas.
1737.62-1737.69  [Reserved]

             Subpart H_Feasibility Determination Procedures

1737.70  Description of feasibility study.
1737.71  Interest rate to be considered for the purpose of assessing 
          feasibility for loans.
1737.72-1737.79  [Reserved]

                    Subpart I_Characteristics Letter

1737.80  Description of characteristics letter.
1737.81-1737.89  [Reserved]

                Subpart J_Final Loan Approval Procedures

1737.90  Loan approval requirements.
1737.91  Approval.
1737.92  Loan documents.
1737.93-1737.99  [Reserved]

[[Page 339]]

                  Subpart K_Release of Funds Procedure

1737.100  Prerequisites to the release and advance of funds.
1737.101  Amounts spent for preloan activities.
1737.102-1737.109  [Reserved]

    Authority: 7 U.S.C. 901 et seq., 1921 et seq.; Pub. L. 103-354, 108 
Stat. 3178 (7 U.S.C. 6941 et. seq.).

    Source: 54 FR 13356, Apr. 3, 1989, unless otherwise noted. 
Redesignated at 55 FR 39396, Sept. 27, 1990.



                            Subpart A_General



Sec. 1737.1  General statement.

    (a) This part prescribes policies, procedures and responsibilities 
relating to applications for RUS loans to finance the improvement and 
extension of telephone service in rural areas. Requirements for both 
initial and subsequent loans are discussed, with differences pointed 
out.
    (b) This part sets forth the policies, procedures, and requirements 
of RUS during the period from the receipt of a completed loan 
application until the advance of funds. This part sets forth the factors 
RUS considers in determining the characteristics of a loan, such as the 
amount of the loan, and conditions to the advance of funds. Involved in 
this determination are:
    A loan budget, feasibility study, characteristics letter, loan 
recommendation, and release of funds. This CFR part supersedes all RUS 
Bulletins that are in conflict with it.
    (c) See 7 CFR part 1735 on general loan policies, 7 CFR part 1737 
for details on submitting a loan application, and 7 CFR part 1744 on the 
advance of funds.



Sec. 1737.2  Definitions.

    As used in this part:
    Access line means a transmission path between user terminal 
equipment and a switching center that is used for local exchange 
service. For multiparty service, the number of access lines equals the 
number of lines/paths terminating on the mainframe of the switching 
center.
    Acquisition means the purchase of another telephone system, lines, 
or facilities whether by acquiring telephone plant in service or 
majority stock interest of one or more organizations.
    Administrator means the Administrator of RUS.
    Area Coverage means the provision of adequate telephone service to 
the widest practical number of rural users during the life of the loan.
    Advance of funds means the transferring of funds by RUS to the 
borrower's construction fund.
    Borrower means any organization which has an outstanding loan made 
or guaranteed by RUS, on which is seeking such financing.
    Characteristics letter means the letter informing the borrower of 
the characteristics of the proposed loan before the loan is recommended.
    Feasibility study means the pro forma financial analysis performed 
by RUS to determine the economic feasibility of a loan.
    Forecast period means the time period beginning on the date (base 
date) of the borrower's balance sheet used in preparing the feasibility 
study and ending on a date equal to the base date plus the number of 
years estimated in the feasibility study for the completion of the 
project. Feasibility projections are usually for 5 years, see 
Sec. 1737.70(a). For example, the forecast period for a loan based on a 
December 31, 1990 balance sheet and having a 5-year estimated project 
completion time is the period from December 31, 1990 to December 31, 
1995.
    Guaranteed loan means a loan guaranteed by RUS under section 306 of 
the RE Act bearing interest at a rate agreed to by the borrower and the 
lender.
    Hardship loan means a loan made by RUS under section 305(d)(1) of 
the RE Act bearing interest at a rate of 5 percent per year.
    Initial loan means the first loan made to a borrower.
    Interim construction means the purchase of equipment or the conduct 
of construction under an RUS-approved plan of interim financing.
    Interim financing means funding for a project which RUS has 
acknowledged will be included in a loan, should said loan be approved, 
but for which RUS loan funds have not yet been made available.

[[Page 340]]

    Loan means any loan made or guaranteed by RUS.
    Project means the improvements and telephone facilities financed by 
a particular RUS loan.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    RUS cost-of-money loan means a loan made under section 305(d)(2) of 
the RE Act bearing an interest rate as determined under 7 CFR 
1735.31(c). RUS cost-of-money loans are made concurrently with RTB 
loans.
    Release of funds means determination by RUS that a borrower has 
complied with all of the conditions prerequisite to the advances as set 
forth in the loan contract to the extent deemed necessary by RUS for 
approval of the use of loan funds and any required equity or other 
nonloan funds.
    Reserves means loan or nonloan funds that have not been encumbered. 
Funds are encumbered when they have been set aside for by RUS for a 
particular loan purpose.
    RTB loan means a loan made by the Rural Telephone Bank (RTB) under 
section 408 of the RE Act bearing an interest rate as determined under 7 
CFR 1610.10. RTB loans are made concurrently with RUS cost-of-money 
loans.
    Rural area means any area of the United States, its territories and 
possessions (including any area within the Federated States of 
Micronesia, the Republic of the Marshall Islands, and the Republic of 
Palau) not included within the boundaries of any incorporated or 
unincorporated city, village or borough having a population exceeding 
5,000 inhabitants. The population figure is obtained from the most 
recent data available, such as from the Bureau of the Census and Rand 
McNally and Company. For purposes of the ``rural area'' definition, the 
character of an area is determined as of a time the initial loan for the 
system is made.
    Special project means facilities involving investment in excess of 
$100,000 for any single subscriber.
    Subscriber means the same as access line.
    Subsequent Loan means any loan to a borrower which has already 
received a loan.
    Telephone service means any communication service for the 
transmission or reception of voice, data, sounds, signals, pictures, 
writing, or signs of all kinds by wire, fiber, radio, light, or other 
visual or electromagnetic means and includes all telephone lines, 
facilities and systems to render such service. It does not mean:
    (1) Message telegram service;
    (2) Community antenna television system services or facilities other 
than those intended exclusively for educational purposes; or
    (3) Radio broadcasting services or facilities within the meaning of 
section 3(o) of the Communications Act of 1934, as amended.
    Times Interest Earned Ratio (TIER) means the ratio of a borrower's 
net income (after taxes) plus interest expense, all divided by interest 
expense. For the purpose of this calculation, all amounts will be annual 
figures and interest expense will include only interest on debt with a 
maturity greater than one year.

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26598, June 10, 1991; 58 FR 66256, Dec. 20, 1993]



Sec. 1737.3  Availability of RUS forms.

    Single copies of RUS forms and publications cited in this part are 
available from Administrative Services Division, Rural Utilities 
Service, United States Department of Agriculture, Washington, DC 20250. 
These RUS forms and publications may be reproduced. The terms ``RUS 
form'', ``RUS standard form'', and ``RUS specification'' have the same 
meanings as the terms ``REA form'' ``REA standard form'', and ``REA 
specification'', respectively, unless otherwise indicated.

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 59 FR 66441, Dec. 27, 1994]



Secs. 1737.4-1737.9  [Reserved]



                     Subpart B_Preapplication Stage



Sec. 1737.10  Initial contact.

    Initial loan applicants seeking assistance should write the Rural 
Utilities Service, United States Department of Agriculture, Washington, 
DC 20250. A field representative will be assigned by

[[Page 341]]

RUS to visit the applicant and discuss its financial needs and 
eligibility. Existing borrowers initiate the contact directly with their 
assigned field representative. Borrowers consult with RUS field 
representatives and headquarters staff, as necessary.



Sec. 1737.11  Preapplication determinations.

    Before submitting an application to RUS, the borrower should 
consider the following:
    (a) Area to be served. The proposed service area should neither 
include subscribers already receiving adequate service from another 
telephone system nor leave out unserved pockets of potential subscribers 
who have indicated an interest in service and are located between the 
proposed system and neighboring systems. See 7 CFR 1735.11 on Area 
Coverage and 7 CFR 1735.12 on Nonduplication. In establishing service 
area boundaries, borrowers should consider the location of adjoining 
systems, natural boundaries such as rivers and mountains, and economic 
and cultural features such as trading and community centers.
    (b) Number of subscribers. The borrower must estimate the number of 
subscribers that will request service from the proposed system.
    (c) Acquisitions. A borrower considering an acquisition should refer 
to 7 CFR 1735.20 and RUS Bulletins 320-4, 321-2, 325-1, and 326-1.
    (d) Mergers and consolidations. A borrower considering a merger or 
consolidation should refer to 7 CFR 1735.19.
    (e) Refinancing. Restrictions on the use of loan funds for 
refinancing are contained in 7 CFR 1735.21.
    (f) Service for nonrural subscribers. In some situations, RUS loan 
funds may be used to finance facilities to serve nonrural subscribers. 
See 7 CFR 1735.13.
    (g) Loan amount. The initial loan request is based on the borrower's 
best estimate of financing needs. RUS requires detailed studies by the 
borrower to complete the application and the initial estimate is subject 
to revision.
    (h) Loans for a portion of a system. If it is impractical to finance 
facilities to provide adequate service throughout the borrower's entire 
telephone service area, RUS will consider a loan application to finance 
improvements to a portion of a borrower's system.
    (i) Telecommunications modernization plan. A borrower applying for 
hardship or concurrent RUS cost-of-money and RTB loans should refer to 7 
CFR part 1751, subpart B.

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990, as amended at 58 FR 66256, Dec. 20, 1993]



Secs. 1737.12-1737.19  [Reserved]



                     Subpart C_The Loan Application



Sec. 1737.20  [Reserved]



Sec. 1737.21  The completed loan application.

    (a) The completed loan application consists of four parts:
    (1) A completed RUS Form 490.
    (2) A market survey called the Area Coverage Survey (ACS).
    (3) The plan and associated costs for the proposed construction, 
called the Loan Design (LD).
    (4) Various supplementary information specified in 7 CFR 1737.22.
    (b) The RUS field representative assists the borrower in assembling 
this information. Certain information is required from initial loan 
applicants but usually not from borrowers seeking subsequent loans. 
Borrowers are to submit all information in paragraph (a) of this section 
to their RUS field representatives, who will review and then forward the 
packages to RUS headquarters.
    (c) RUS will make a determination of completeness of the application 
package and will notify the borrower of this determination within 10 
working days of receipt of the information at RUS headquarters. If the 
application package is not complete, RUS will notify the borrower of 
what information is needed in order to complete the application package. 
If the information required to complete the application package is not 
received by RUS within 90 working days from the date the borrower was 
notified of the information needed, RUS may return the application 
package to the borrower. Returned applications are without prejudice and

[[Page 342]]

borrowers may resubmit the completed application.

(Approved by the Office of Management and Budget under control number 
0572-0079)

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26598, June 10, 1991]



Sec. 1737.22  Supplementary information.

    RUS requires additional information in support of the loan 
application form. The information listed in paragraphs (a), (b), and (c) 
of this section must be submitted as part of the loan application as 
specified in 7 CFR 1737.21.
    (a) The following must be submitted by all initial loan applicants. 
Borrowers seeking subsequent loans must submit any changes in these 
items since they were last submitted.
    (1) Name of attorney and manager, and certified copies of board 
resolutions selecting them.
    (2) Certified copy of articles of incorporation showing evidence of 
filing with the Secretary of State and in county records.
    (3) Certified copies of bylaws and board minutes showing their 
adoption.
    (4) Certified sample stock certificates.
    (5) Amounts of common and preferred stock issued and outstanding.
    (6) Names, addresses, business affiliations, and stockholdings of 
the manager, officers, directors, and other principal stockholders 
(those owning at least 20 percent of borrower's voting stock).
    (7) Certified copies of real estate deeds showing all recording 
information.
    (8) Service agreements, such as for management or system 
maintenance.
    (9) Certified copies of existing leases, except those for vehicles, 
furniture and office equipment, and computer equipment.
    (10) Certified copies of existing franchises.
    (11) Information on any franchises required as a result of the 
proposed loan project.
    (12) Federal Communications Commission (FCC) authorizations.
    (13) Certified copy of a certificate of convenience and necessity 
(or its equivalent), or information demonstrating the nonduplication of 
reasonably adequate facilities, for all areas in the loan project.
    (14) For toll, operator office, traffic, and EAS agreements, the 
names of all parties to the agreement, the type of agreement, and the 
effective and termination dates of the agreement and annexes, and the 
exchanges involved.
    (15) Copies of rate schedules. (A copy of the tariff must be 
available for review by the RUS field representative.)
    (16) Executed copy of RUS Form 291, ``Certification of Nonsegregated 
Facilities''.
    (17) A sketch or map showing the existing and proposed service 
areas.
    (18) Executed assurance that the borrower will comply with the 
Uniform Relocation Assistance and Real Property Acquisitions Policies 
Act of 1970, as amended (see 49 CFR 24.4).
    (19) A certification (which is included on RUS Form 490, 
``Application for Telephone Loan or Guarantee'') that the borrower has 
been informed of the collection options listed below that the Federal 
government may use to collect delinquent debt. RUS and other government 
agencies are authorized to take any or all of the following actions in 
the event that a borrower's loan payments become delinquent or the 
borrower defaults (OMB Circular A-129 defines ``delinquency'' for direct 
or guaranteed loans as debt more than 31 days past due on a scheduled 
payment):
    (i) Report the borrower's delinquent account to a credit bureau.
    (ii) Assess additional interest and penalty charges for the period 
of time that payment is not made.
    (iii) Assess charges to cover additional administrative costs 
incurred by the Government to service the borrower's account.
    (iv) Offset amounts owed to the borrower under other Federal 
programs.
    (v) Refer the borrower's debt to the Internal Revenue Service for 
offset against any amount owed to the borrower as an income tax refund.
    (vi) Refer the borrower's account to a private collection agency to 
collect the amount due.
    (vii) Refer the borrower's account to the Department of Justice for 
litigation in the courts.

[[Page 343]]

    (20) A certification, signed by the president of the borrower, that 
the borrower is participating in the State's telecommunications 
modernization plan (for additional information concerning the plan, see 
7 CFR part 1751, subpart B). This certification is not required if the 
borrower is seeking a guaranteed loan.

All of the actions in paragraph (a)(19) of this section can and will be 
used to recover any debts owed when it is determined to be in the 
interest of the Government to do so. The notification and the required 
form of certification in paragraph (a)(19) of this section are included 
on RUS Form 490, Application for Telephone Loan or Guarantee.
    (b) The following must be submitted by all initial loan applicants 
and borrowers seeking subsequent loans:
    (1) Certified financial statements for the last 3 years.
    (2) Toll settlement statements and related data.
    (3) Present exchange rates and any pending changes.
    (4) Borrower's Environmental Report (BER)--See 7 CFR part 1794.
    (5) A ``Certification Regarding Lobbying'' for loans, or a 
``Statement for Loan Guarantees and Loan Insurance'' for loan 
guarantees, and when required, an executed Standard Form LLL, 
``Disclosure of Lobbying Activities,'' (see section 319, Public Law 101-
121 (31 U.S.C. 1352)).
    (6) Executed copy of Form AD-1047, ``Certification Regarding 
Debarment, Suspension, and Other Responsibility Matters--Primary Covered 
Transactions'' (see appendix A to 7 CFR part 3017).
    (7) Borrower's determination of loan maturity, including information 
noted in Sec. 1735.43(a) of this chapter as required.
    (8) Approved depreciation rates for items under regulatory authority 
jurisdiction.
    (9) A statement that the borrower is or is not delinquent on any 
Federal debt, such as income tax obligations or a loan or loan guarantee 
from another Federal agency. If delinquent, the reasons for the 
delinquency must be explained and RUS will take such explanation into 
consideration in deciding whether to approve the loan. RUS Form 490, 
``Application for Telephone Loan or Guarantee,'' contains a section for 
providing the required statement and any appropriate explanation.
    (10) Any other supporting data required by the Administrator.
    (c) The following must be submitted for all borrowers requesting 
funds for refinancing:
    (1) Copies of all bonds, notes, mortgages, and contracts covering 
outstanding indebtedness proposed to be refinanced.
    (2) For each note or bond, the name of the creditor, original amount 
of debt and amount as of last year-end, purpose of debt, dates incurred 
and due, interest rates, and repayment terms.
    (3) Justification for refinancing and evidence that the use of loan 
funds is necessary and incidental to furnishing or improving rural 
telephone service. See 7 CFR 1735.21.
    (d) Borrowers requesting loan funds for acquisitions should refer to 
RUS bulletins 320-4, 321-2, 325-1, and 326-1 for requirements.

(Approved by the Office of Management and Budget under control number 
0572-0079)

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26599, June 10, 1991, 58 FR 66256, Dec. 20, 1993]



Secs. 1737.23-1737.29  [Reserved]



     Subpart D_Preloan Studies_Area Coverage Survey and Loan Design



Sec. 1737.30  General.

    In support of a loan application, the borrower shall prepare and 
submit to RUS: (a) A market forecast to determine service requirements 
(the Area Coverage Survey) and (b) engineering studies to determine the 
system design that provides service most efficiently (the Loan Design). 
The RUS field representative confers with the borrower and its engineer 
to schedule the completion and submission of these studies.

(Approved by the Office of Management and Budget under control number 
0572-0079)

[[Page 344]]



Sec. 1737.31  Area Coverage Survey (ACS).

    (a) The Area Coverage Survey (ACS) is a market forecast of service 
requirements of subscribers in a proposed service area.
    (b) The objective of the ACS is to determine the location, number 
and telephone service requirements of subscribers in a service area. RUS 
will use the ACS to appraise the proposed plan for area coverage and to 
determine the largest practical number of rural subscribers which can be 
served on an economically feasible basis. Preparation of the ACS 
requires:
    (1) A field survey of the service area to locate and identify on 
maps all business and residential establishments, whether currently 
served or not. The location and identification of future establishments 
are also recorded on the maps.
    (2) A forecast of the number of telephone subscribers, in the entire 
service area, by exchange, grade and class of service, projected for the 
end of the 5-year study period.
    (c) The results of the survey and forecast shall be:
    (1) Shown on maps (maps for those service areas previously financed 
by RUS do not have to be included in the ACS provided that the 
borrower's records contain sufficient information as to subscriber 
development to enable cost estimates for the proposed facilities to be 
prepared);
    (2) Tabulated on RUS Form 569 ``Area Coverage Survey Report,'' or 
its equivalent; and
    (3) Supported by a narrative (see Sec. 1737.32(f)(1)(ii)) containing 
information on the bases for the service requirement forecasts in each 
exchange.
    (d) Guidelines on preparing an ACS are provided in RUS 
Telecommunications Engineering and Construction Manual section 205.
    (e) The RUS field representative reviews and approves the borrower's 
ACS. The borrower should make sure this is done before proceeding with 
the Loan Design in order to prevent unnecessary expense should the ACS 
not be approved. The borrower's engineer must use the RUS-approved ACS 
in preparing the Loan Design.

(Approved by the Office of Management and Budget under control number 
0572-0079)



Sec. 1737.32  Loan Design (LD).

    (a) A loan application requires supporting data collectively called 
a ``Loan Design.'' The LD contains a forecast of service requirements 
and a narrative with supporting exhibits. Most of the items included in 
the LD are similar for all loan applications. However, as noted below, 
there are certain additional requirements for initial loans and for any 
exchange areas not previously financed by RUS, and other additional 
requirements for subsequent loans for areas previously financed by RUS. 
The LD must conform to the borrower's state telecommunications 
modernization plan unless the borrower is seeking a guaranteed loan (for 
additional information concerning the plan, see 7 CFR part 1751, subpart 
B).
    (b) Because of the importance and complexity of the engineering 
studies necessary for the LD, it should be prepared by a competent 
experienced telecommunications engineer. While the LD is subject to RUS 
approval, the borrower's selection of an engineer to perform preloan 
work is not. Note: The borrower's selection of an engineer to perform 
postloan work is subject to RUS approval. This should be considered when 
selecting a preloan engineer, if the same individual or company is to 
perform both services. See 7 CFR 1753.17.
    (c) An LD for initial loans or for any exchange areas not previously 
financed by RUS requires an Outside Plant Design that provides:
    (1) The most economical and practical design for a telephone system 
that meets immediate service demands; and
    (2) The basis for orderly expansion of the system to serve the 
widest practical number of rural establishments.
    (d) The LD for a subsequent loan (which only includes areas 
previously financed by RUS) does not require a detailed Outside Plant 
Design. The detailed Outside Plant Design for these subsequent loans may 
be completed for RUS review and approval after loan approval, but before 
staking is started

[[Page 345]]

and plans and specifications are prepared. By scheduling preparation of 
the outside plant design closer to preparation for construction, the 
need for redesign resulting from changing conditions and its attendant 
costs are reduced.
    (e) Guidelines on preparing an LD are provided in RUS 
Telecommunications Engineering and Construction Manual section 205.
    (f) The LD shall include a narrative, several exhibits, and a 
certification, as explained below:
    (1) Narrative. This section discusses the following topics, as 
appropriate.
    (i) General. The purposes and amount of the proposed construction 
and both immediate and long range plans must be covered. The source and 
amount of any nonloan funds to be used for this construction must be 
discussed.
    (ii) Subscriber data. The basis for the subscriber forecast, 
including any unusual factors expected to influence growth, must be 
discussed. Reasons for growth projections which vary from historic 
trends must be explained.
    (iii) Proposed construction. All proposed construction must be 
described fully. Reference to the BER must be made here.
    (iv) Service area. For subsequent loans only, proposed construction 
which is not within the boundaries of prior loan projects must be 
discussed. New areas to be served (even if from existing exchanges) must 
be shown on maps submitted with the proposal.
    (v) Toll and EAS. Proposed new toll or extended area service (EAS) 
facilities, including any changes from the existing trunking 
arrangements, must be described fully. Minutes of meetings and 
correspondence with connecting companies, and connecting company 
concurrences, if any, must be included.
    (vi) Radio telephone service. Proposed radio telephone service must 
be discussed. Results of studies demonstrating demand and/or need most 
be included as an exhibit.
    (vii) Special projects. Facilities involving investment in excess of 
$100,000 for any single subscriber must be discussed fully. Contractual 
arrangements with the subscriber, including a termination agreement 
providing for (A) the full recovery by the borrower of its capital costs 
of the facilities no later than the maturity date of the note 
representing the loan, (B) the immediate repayment of all remaining 
capital costs, if terminated, and (C) repayment to RUS of the 
outstanding amount of the special note shall be submitted. Usually a 
separate short-term note is prepared for loans to finance Special 
Projects.
    (viii) Investment in nonrural areas.(A) For initial loans, or loans 
for areas not previously financed by RUS, the borrower must fully 
discuss proposed improvements or expansions in an exchange serving a 
community over 5,000 population. The name of the community, the number 
of existing and projected new subscribers by grades of service within 
the community, detailed cost estimates of the facilities involved, and 
information sufficient to establish the necessity for the use of loan 
funds must be provided.
    (B) For subsequent loans, the borrower must fully discuss as 
specified in paragraph (f)(1)(viii)(A) of this section proposed 
improvements or expansions in an exchange serving a community over 5,000 
population which had a population of more than 5,000 at the time the 
facilities to serve the community were first financed by RUS. The 
population determination is based on the corporate limits or boundaries 
of unincorporated areas in existence at the time the facilities to serve 
the community were first financed by RUS.
    (C) For subsequent loans, the borrower shall state whether the 
population of a community, which is currently more than 5,000, was 
considered rural at the time RUS first financed the facilities to serve 
the community. Detailed cost estimates are not required if the 
population was considered rural at the time RUS first financed 
facilities to serve the community, see 7 CFR 1735.13(d).
    (ix) Prior loan project. For subsequent loans only, the reason for 
and amount of additional loan funds needed to complete construction in 
progress which was part of a prior loan project in central office areas 
not included in the current LD must be discussed fully.
    (x) Route miles. Route miles of outside plant in central office 
areas not shown on RUS Form 495 must be provided.

[[Page 346]]

    (xi) Future plans. Where the loan application is to finance part of 
a system-wide upgrading plan, plans for those remaining exchanges not 
included in the current loan proposal must be discussed.
    (2) Exhibits. (i) An RUS Form 569, ``Area Coverage Survey Report,'' 
or its equivalent shall be included for the total system and for each 
exchange in which system improvements or additions are proposed.
    (ii) An RUS Form 495, ``Construction Cost Estimates,'' or its 
equivalent shall be prepared for each exchange in which system 
improvements or additions are proposed. An explanation of the method 
used in developing these cost estimates must be included.
    (iii) RUS Form 494, ``Loan Design Summary,'' or its equivalent shall 
be prepared for each loan. This must show all expected 5-year 
construction costs, loan and nonloan.
    (iv) A schematic trunking diagram shall be included showing the 
number and type, length, ownership and makeup of existing and proposed 
toll and EAS trunks, plus transmission and traffic data for each trunk 
group.
    (v) Detailed outside plant design maps must be submitted for all 
central office areas of initial loan applicants and for areas not 
previously served by existing borrowers or financed by RUS. These design 
maps must be in sufficient detail to substantiate the construction cost 
estimates.
    (vi) For subsequent loans only, if a change in system boundaries is 
proposed, a map must be furnished showing present and proposed 
boundaries, and existing establishments and subscribers in the new 
areas.
    (vii) Any other special exhibits needed to support particular items 
in the loan proposal must be included.
    (3) Certification. The following certification shall be signed by a 
principal of the engineering firm and the borrower:

    We, the undersigned, certify that the data in this Loan Design are 
correct to the best of our knowledge and belief and reasonably reflect 
the cost to serve the subscribers as proposed on the Forms 569, ``Area 
Coverage Survey Report,'' which are integral parts hereof, and that this 
Loan Design adheres to RUS engineering and construction standards and 
practices.

    (g) The RUS field representative shall review and make a 
recommendation on each LD.
    (1) After completion of the LD, the borrower arranges a meeting with 
its engineer and RUS's field representative to review:
    (i) Design and cost estimates.
    (ii) Reserves available from prior loans, if any, or internally 
generated funds which may be applied against the requirements of the 
current application.
    (2) One copy of RUS Form 567, ``Checklist for Review of Loan 
Design,'' completed and signed by the borrower's engineer must be 
attached to the LD submitted to the RUS field representative.
    (3) The RUS field representative recommends acceptance of the LD as 
the basis for RUS financing.
    (4) Three copies of the final LD with the RUS field representative's 
recommendation are then sent to the relevant Area Office in RUS. A 
fourth copy is retained by the RUS field representative.
    (5) A transmittal letter from the borrower must accompany the LDs, 
requesting that the application previously submitted be amended so as to 
be consistent with the approved LD.
    (6) Final approval of the LD is given by the relevant Area Office in 
RUS. To be approved, the LD must be cost effective, include appropriate 
technology, and provide area coverage.
    (7) Upon receipt of the LD and any other required information, RUS 
makes a preliminary analysis of the loan proposal. Before final 
consideration of the loan, RUS reviews the results of its preliminary 
analysis with the borrower.

(Approved by the Office of Management and Budget under control number 
0572-0079)

[54 FR 13356, Apr. 3, 1989; 54 FR 16194, Apr. 21, 1989. Redesignated at 
55 FR 39396, Sept. 27, 1990, as amended at 58 FR 66256, Dec. 20, 1993]

[[Page 347]]



Secs. 1737.33-1737.39  [Reserved]



   Subpart E_Interim Financing of Construction of Telephone Facilities



Sec. 1737.40  General.

    (a) Under special circumstances a borrower may request that RUS 
approve interim financing for interim construction. This subpart 
describes the circumstances in which RUS will consider approving interim 
financing of construction, the information to be submitted to RUS to 
support the borrower's request, RUS's requirements relating to interim 
construction, and related matters.
    (b) For a borrower to preserve the option of obtaining loan funds 
for reimbursement of interim financing, it must obtain prior RUS 
approval of its interim financing plan and follow the procedures in 7 
CFR 1737.41 and 7 CFR 1737.42.
    (c) RUS will approve interim financing only for projects which must 
be performed immediately.
    (d) RUS approval of interim financing is not a commitment that RUS 
will make loan funds available.
    (e) Equal employment opportunity requirements apply to interim 
construction. See RUS Bulletin 320-15.



Sec. 1737.41  Procedure for obtaining approval.

    (a) The borrower shall submit to the RUS Area Office a written 
request for approval of interim financing. This request shall include:
    (1) A description of the construction proposed under interim 
financing.
    (2) An explanation of the urgency of proceeding with the proposed 
construction.
    (3) An estimate of the cost.
    (4) The source of funds to be used for interim financing.
    (b) RUS will not approve interim financing until it has reviewed and 
found acceptable:
    (1) All of the information required under Sec. 1737.21; or
    (2) The following documents:
    (i) The loan application (RUS Form 490) clearly marked ``in support 
of interim financing request.''
    (ii) The Loan Design (LD), or the portion thereof that covers the 
proposed construction if the completed LD is not available. See 7 CFR 
1737.32.
    (iii) Evidence that the borrower has satisfied the requirements of 7 
CFR part 1794 applying to the proposed interim construction.
    (iv) A statement that the borrower is or is not delinquent on any 
Federal debt, such as income tax obligations or a loan guarantee from 
another Federal agency. If delinquent, the reasons for the delinquency 
must be explained and RUS will take such explanation into consideration 
in deciding whether to approve the interim financing, see 7 CFR 
1737.22(b)(9).
    (v) A ``Certification Regarding Lobbying'' for loans, or a 
``Statement for Loan Guarantees and Loan Insurance'' for loan 
guarantees, and when required, an executed Standard Form LLL, 
``Disclosure of Lobbying Activities,'' (see section 319, Pub. L. 101-121 
(31 U.S.C. 1352)).
    (vi) Executed copy of Form AD-1047, ``Certification Regarding 
Debarment, Suspension, and Other Responsibility Matters--Primary Covered 
Transactions'' (see appendix A to 7 CFR part 3017).
    (vii) Any other supporting data required by the Administrator.
    (c) RUS will not approve a borrower's request for approval of 
interim financing if, in RUS's judgment:
    (1) The proposed interim financing does not comply with the 
requirements of this subpart.
    (2) The proposed interim construction will not qualify for RUS 
financing.
    (3) The proposed interim financing presents unacceptable loan 
security risks to RUS, or otherwise is not in the best interests of RUS.

(Approved by the Office of Management and Budget under control number 
0572-0079)

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26599, June 10, 1991; 59 FR 54381, Oct. 31, 1994]



Sec. 1737.42  Procedure for construction.

    (a) If RUS approves the interim financing, interim construction 
shall be conducted in accordance with 7 CFR part 1753, 7 CFR part 1788, 
RUS Bulletin 320-15, and RUS Bulletins 381-1, 381-2, 381-4, 381-7, 381-
8, 381-9, 381-10,

[[Page 348]]

381-11, 381-13, 382-1, 382-2, 382-3, 383-1, 383-4, 384-1, 384-2, 384-3, 
385-1, 385-2, 385-3, 385-4, 385-5, 385-6, 387-1, 387-2, 387-3, 387-4, 
and 387-5) except for the following:
    (1) All sellers and contractors invited to bid must be informed that 
funds from sources other than RUS will be used to pay for construction.
    (2) Contracts involving the interim construction must contain a 
provision, in form and substance satisfactory to RUS, stating that RUS 
is not committed to lend or advance funds to finance the project.
    (3) Contracts will not be approved by RUS until the borrower 
demonstrates to RUS's satisfaction that funds from sources other than 
RUS will be available when needed to pay invoices submitted in 
accordance with contract payment terms.
    (4) The borrower shall not begin interim construction until all 
necessary licenses, permits, and other governmental approvals have been 
obtained.
    (b) After RUS loan funds are released, the borrower can obtain 
reimbursement for interim financing by submitting a Financial 
Requirement Statement. See 7 CFR part 1744, subpart C (or RUS Bulletin 
327-1).
    (1) The first advance of loan funds to a borrower that has received 
interim financing approval generally will be limited to funds to repay 
any interim financing indebtedness and such additional amounts as RUS 
deems necessary. RUS will make no further advances of loan funds until 
the borrower has submitted evidence, in form and substance satisfactory 
to the Administrator, that (i) any indebtedness created by the interim 
financing and any liens associated therewith have been fully discharged 
of record and (ii) the borrower has satisfied all other conditions on 
the advance of additional loan funds.
    (2) If the source of funds for interim financing is the borrower's 
internally generated funds, the borrower may request reimbursement of 
those funds along with advances for other purposes on the first 
Financial Requirement Statement.

[54 FR 13356, Apr. 3, 1989; 54 FR 16194, Apr. 21, 1989. Redesignated at 
55 FR 39396, Sept. 27, 1990]



Secs. 1737.43-1737.49  [Reserved]



               Subpart F_Review of Application Procedures



Sec. 1737.50  Review of completed loan application.

    (a) The completed loan application consists of:
    (1) A completed RUS Form 490, ``Application for Telephone Loan or 
Loan Guarantee;''
    (2) A completed certification Form AD-1047, ``Certification 
Regarding Debarment, Suspension, and Other Responsibility Matters--
Primary Covered Transactions,'' (see appendix A to 7 CFR part 3017);
    (3) A market survey called the Area Coverage Survey (ACS);
    (4) The plan and associated costs for the proposed construction, 
called the Loan Design (LD);
    (5) Evidence that the borrower is participating in a 
telecommunications modernization plan in the state where the proposed 
construction will occur, unless the borrower is seeking a guaranteed 
loan; and
    (6) Various supplementary information.

See 7 CFR part 1737 for additional information.
    (b) RUS shall review the completed loan application, particularly 
noting subscriber data, grades of service, extended area service (EAS), 
connecting company commitments, commercial facilities, system and 
exchange boundaries, and proposed acquisitions. RUS shall review the LD 
to determine that the system design is acceptable to RUS, that the 
design is technically correct, that the cost estimates are reasonable, 
and that the design provides for area coverage service. RUS shall also 
review the population and incorporation status of all communities served 
or to be served by the borrower to determine if any nonrural areas are 
served and if municipal franchises are required. Any RUS lending for 
nonrural areas must be in accordance with 7 CFR part 1735. RUS shall 
also check the ``List of Parties Excluded from Federal Procurement of 
Nonprocurement Programs'', compiled, maintained and distributed by 
General Services Administration, to determine

[[Page 349]]

whether the borrower is debarred, suspended, ineligible, or voluntarily 
excluded (see 7 CFR 3017.505).
    (c) RUS will notify the borrower if RUS recommends major changes in 
subscriber projections, design, cost estimates, or other significant 
matters. RUS will not continue loan processing until RUS and the 
borrower agree on all major changes.

[54 FR 13356, Apr. 3, 1989; 54 FR 16194, Apr. 21, 1989. Redesignated at 
55 FR 39396, Sept. 27, 1990, as amended at 58 FR 66256, Dec. 20, 1993]



Sec. 1737.51  Approval of loan design.

    RUS shall notify the borrower when the preloan data concerning the 
system design and costs and subscriber projections have been approved. 
If found acceptable, RUS will approve the LD with any required changes. 
A copy of the approved LD, with any significant changes, as determined 
by RUS, will be returned to the borrower.



Secs. 1737.52-1737.59  [Reserved]



              Subpart G_Project Cost Estimation Procedures



Sec. 1737.60  Telephone loan budget.

    (a) RUS shall prepare a ``Telephone Loan Budget'' (RUS Form 493) 
showing all costs for the proposed project and the amount of loan and 
nonloan funds to be used. The budget shall show, as applicable, amounts 
for central offices, outside plant and station equipment, right-of-way 
procurement, land, buildings, removal costs, special projects, 
engineering, vehicles and work equipment, office equipment, operating 
funds, refinancing with loan funds, debt retirement with nonloan funds, 
acquisitions, and contingencies. The amounts budgeted, exclusive of 
prior loan reserves, generally shall be rounded to the nearest $1,000.
    (1) If the loan is to be made by the Rural Telephone Bank (RTB) or 
concurrently with RTB, the budget shall include the amount required for 
the purchase of RTB Class B stock. This is 5 percent of the amount to be 
borrowed from RTB for all purposes other than the purchase of RTB Class 
B stock. The borrower may elect to use nonloan funds for all or part of 
this requirement.
    (2) The amount of funds included in any loan shall be limited for 
certain items:
    (i) Operating funds for working capital or current operating 
deficiencies shall be included only in cases of financial hardship as 
determined by the Administrator.
    (ii) Contingencies shall not exceed 3 percent of the total amount of 
loan funds to be used for construction, engineering, operating equipment 
and operating funds.
    (b) RUS shall prepare the cost estimates based on the data in RUS 
Form 494, ``Loan Design Summary,'' and RUS Form 495, ``Construction Cost 
Estimates,'' or their equivalents, and other parts of the LD submitted 
by the borrower, and on other pertinent information. See subpart D of 
this part. The amounts included in the proposed budget shall be the 
estimated costs, less the value of materials and supplies on hand or 
acquired that can be used in the proposed construction. The cost 
estimates in the LD may be adjusted by RUS in consultation with the 
borrower. See Sec. 1737.50(c).
    (c) Generally, the new loan shall be reduced by any required equity 
funds and funds available in reserves no longer needed for prior loan 
purposes to determine the proposed loan requirement.
    (d) When amounts are available in reserves no longer needed for 
prior loan purposes, RUS may, at its option, deny further advances of 
these funds if they will be used to finance projects in the proposed 
loan.
    (e) The budget shall also show, if applicable, the reserves for each 
budget item as of the date of the latest RUS Form 481, ``Financial 
Requirement Statement,'' submitted by the borrower. To ensure that 
sufficient funds are included in the budget to finance all proposed 
construction, RUS includes in the budget any funds deposited by the 
borrower for approved interim financing.



Sec. 1737.61  Cost allocation for rural and nonrural areas.

    (a) Pursuant to the requirements in 7 CFR part 1735, if loan funds 
are proposed for facilities to serve subscribers in nonrural areas, RUS 
shall allocate

[[Page 350]]

costs between rural and nonrural areas. This allocation will be used to 
determine whether the use of loan funds in nonrural areas is necessary 
and incidental to furnishing and improving telephone service in rural 
areas. Cost estimates shall be provided by the borrower in the LD. See 
subpart D of this part. RUS will use the following method to review the 
cost breakdowns and to determine their appropriateness:
    (1) The costs of facilities associated directly with particular 
subscribers shall be allocated to those subscribers.
    (2) The costs of facilities that serve both rural and nonrural 
subscribers shall be allocated based on the relative number of rural and 
nonrural subscribers receiving service from those facilities.
    (3) When a borrower's exchange that includes a nonrural community 
will have an extended area of service (EAS) with other exchanges of the 
borrower, the breakdown of subscribers and funds in the allocation for 
rural and nonrural areas included in the proposed loan shall show the 
number of rural and nonrural subscribers and the costs to serve each 
group, as determined per paragraphs (a)(1) and (a)(2) of this section, 
in the subject exchange and in all exchanges connected by EAS.
    (b) If RUS determines that costs cannot be adequately allocated 
using the procedures in paragraphs (a)(1) through (a)(3) of this 
section, RUS shall, on a case by case basis, allocate costs between the 
rural and nonrural subscribers using whatever methodology it deems 
reasonable. All allocations in paragraphs (a) and (b) of this section 
shall be documented.



Secs. 1737.62-1737.69  [Reserved]



             Subpart H_Feasibility Determination Procedures



Sec. 1737.70  Description of feasibility study.

    (a) In connection with each loan RUS shall prepare a feasibility 
study that includes sections on consolidated loan estimates, operating 
statistics, projected telecommunications, plant, projected retirement 
computations, and projected revenue and expense estimates (including 
detailed estimates of depreciation and amortization expense, scheduled 
debt service payments, toll and access charge revenues, and local 
service revenues). Normally, projections will be for a 5-year period and 
used to determine the ability of the borrower to repay its loans in 
accordance with the terms thereof. RUS will not require borrowers to 
raise local service rates. Local service revenue projections will be 
based on the borrower's existing local service rates or regulatory body 
approved rates not yet in effect but to be implemented within the 
Forecast period. In the latter case, if a borrower is not required to 
obtain regulatory body approval for the implementation of such rates, 
RUS will require a resolution of the board of directors indicating when 
those rates will be in effect.
    (b) RUS makes loans only to rural telephone systems that are 
financially feasible. RUS shall consider the factors discussed in 
paragraphs (c) through (j) of this section in determining feasibility.
    (c) The revenue and expense estimates for the feasibility study 
generally will be based on the borrower's operating experience provided 
that:
    (1) Adjustments are made for any nonrecurring revenues and expenses 
that are not representative of the borrower's past operations and would 
thus make the borrower's experience data inappropriate for the forecast; 
and
    (2) Adjustments are made for any special or new characteristics or 
other considerations deemed necessary by the Administrator.
    (d) [Reserved]
    (e) Depreciation expense will be determined using depreciation rates 
appropriate to the normal operation of the borrower, based on:
    (1) The borrowers regulatory body approved depreciation rates; and
    (2) Where such rates as described in paragraph (e)(1) of this 
section do not exist for items which the borrower is seeking financing, 
the most recent median depreciation rates published by RUS for all 
borrowers. RUS will publish such depreciation rates annually in RUS's 
``Statistical Report, Rural Telephone Borrowers.''
    (f) Projected scheduled debt service payments will generally be 
based on all

[[Page 351]]

of the borrower's outstanding and proposed loans from RUS and all other 
lenders as of the end of the feasibility Forecast period (i.e. for a 5-
year Forecast period, the amount of debt outstanding in year 5).
    (g) The financial and statistical data are derived from RUS Form 
479, ``Financial and Statistical Data for Telephone Borrowers,'' or for 
initial loans, the data may be obtained from the borrower's financial 
statements and other reports, and from other information supplied with 
the completed loan applications (see 7 CFR 1737.21 and 1737.22).
    (h) When, in RUS's opinion, the borrower's operating experience is 
not adequate or the borrower's current operations are not 
representative, the estimates in the feasibility study normally will be 
developed from state and regional standards based on the experience of 
RUS borrowers. These standards are included in the Borrower's 
Statistical Profile (BSP), which is revised annually by RUS. If the 
borrower's operating experience is not the basis for one or more per-
subscriber estimates used in the feasibility study, the estimates 
generally may not vary from the standard by more than 20 percent to 
reflect the particular characteristics of the loan applicant. Any 
variation from the standard shall be documented.
    (i) In cases where these per-subscriber standards do not represent a 
reasonable forecast of a particular borrower's operations (for example, 
when a variation greater than 20 percent is necessary), estimates based 
upon a special analysis of the borrower's projected operations shall be 
used. The special analysis will accompany the feasibility study.
    (j) When it is reasonably expected that a subscriber, classified as 
a special project, may discontinue service, a second feasibility study 
will be prepared, for comparison purposes, omitting revenues and 
expenses from this subscriber.
    (k) RUS may obtain and review commercially available credit reports 
on applicants for a loan or loan guarantee to verify income, assets, and 
credit history, and to determine whether there are any outstanding 
delinquent Federal or other debts. Such reports will also be reviewed 
for parties that are or propose to be joint owners of a project with a 
borrower.
    (l) If it is determined that loan feasibility cannot be proven as 
described in this section, the loan application will be returned to the 
borrower with an explanation. A borrower whose application has been 
returned will have 90 working days, from the date the application was 
returned, to revise and resubmit its application. If a revised 
application is not received by RUS within the 90-day period described 
above, the application will be canceled and a new application will need 
to be submitted if the borrower wishes further consideration.

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26599, June 10, 1991; 58 FR 66256, Dec. 20, 1993; 62 
FR 46872, Sept. 5, 1997]



Sec. 1737.71  Interest rate to be considered for the purpose of
assessing feasibility for loans.

    (a) For purposes of determining the creditworthiness of a borrower 
for concurrent RUS cost-of-money and RTB loans, the Administrator shall 
assume that the loans, if made, would bear interest at the Treasury rate 
on the date of determination as described in paragraph (b) of this 
section. If the Treasury rate exceeds 7 percent, the interest rate used 
to determine eligibility for the RUS cost-of-money loan will be 7 
percent.
    (b) The 30-year Treasury rate will be used in all feasibility 
studies for loans with a final maturity of at least 30 years. A 
straight-line interpolation between other Treasury rates will be used to 
determine the rate used in feasibility studies for loans with final 
maturities of less than 30 years.
    (c) The Treasury rate will be obtained each Tuesday, or as soon as 
possible thereafter, from the Federal Reserve. The rate for the current 
week, from the column labeled ``This week'' in the Federal Reserve 
statistical release, will be used from that Wednesday through the 
following Tuesday.
    (d) As used in this section, the ``date of determination'' means the 
date of the feasibility study used in support of the loan 
recommendation.

[58 FR 66257, Dec. 20, 1993]

[[Page 352]]



Secs. 1737.72-1737.79  [Reserved]



                    Subpart I_Characteristics Letter



Sec. 1737.80  Description of characteristics letter.

    (a) After all of the studies and exhibits for the proposed loan have 
been prepared, but before the loan is recommended, RUS shall inform the 
borrower, in writing, of the characteristics of the proposed loan. The 
purpose of the characteristics letter is to inform the borrower and 
obtain its concurrence, before further consideration by RUS of the loan 
approval and the preparation of legal documents relating to the loan, in 
such matters as the amount of the proposed loan, its purposes, rate of 
interest, loan security requirements, and other prerequisites to the 
advance of loan funds. The letter, whether or not concurred in by the 
borrower, does not commit RUS to approve the loan on these or any other 
terms.
    (b) The Forecast of Revenues and Expenses and a copy of RUS Form 
493, ``Telephone Loan Budget,'' shall be enclosed with the 
characteristics letter. This copy of the budget shall be subject to 
change by RUS with the borrower's agreement.

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26600, June 10, 1991]



Secs. 1737.81-1737.89  [Reserved]



                Subpart J_Final Loan Approval Procedures



Sec. 1737.90  Loan approval requirements.

    (a) In addition to requirements set forth in 7 CFR part 1735, 7 CFR 
part 1737 and other applicable parts of 7 CFR chapter XVII, the 
following are certain additional requirements that must be met before 
RUS will approve a loan:
    (1) If the borrower had 100 or more employees as of the prior 
December 31, it must submit the current annual Employer Information 
Report EEO-1, Standard Form 100, as required by the Department of Labor; 
see 29 CFR 1602.7 through 1602.14.
    (2) The borrower must be in compliance with regulations on 
nondiscrimination. See 7 CFR part 1790 (or RUS Bulletin 320-19).
    (3) For subsequent loans, RUS must determine whether the borrower's 
accounting records are adequate. If the records are not adequate, as 
determined by RUS based on Generally Accepted Accounting Principles or 
other accounting conventions as deemed necessary by RUS, a provision 
will be included in the loan contract requiring the borrower to improve 
its records to an adequate level.
    (4) The borrower must not have any receivables, loans, guarantees, 
investments, or other obligations that are contrary to the mortgage 
provisions or any RUS regulations including, but not limited to, 7 CFR 
part 1758 (or RUS Bulletins 320-4, 320-22, 321-2, 322-2, 323-1, or 326-
1). If the borrower has any of these items, the loan contract shall 
contain a provision requiring that they be eliminated prior to the 
release of funds. See 7 CFR part 1744 for conditions under which RUS 
will provide a shared first lien and/or a lien accommodation for non-RUS 
lenders.
    (5) RUS must make a determination on flood insurance requirements. 
In accordance with the National Flood Insurance Act of 1968, as amended 
by the Flood Disaster Protection Act of 1973, as amended (the ``Flood 
Insurance Act''), RUS shall not approve financial assistance for the 
acquisition, construction, repair or improvement of any building or any 
machinery, equipment, fixtures or furnishings contained or to be 
contained in any such building located in an area which has been 
identified by the Director of the Federal Emergency Management Agency 
(the ``Director of FEMA'') pursuant to the Flood Insurance Act as an 
area having special flood hazards unless:
    (i) Flood insurance has been made available, pursuant to the Flood 
Insurance Act, in the area in which the acquisition, construction, 
repair or improvement is proposed to occur; and
    (ii) The borrower has obtained flood insurance coverage with respect 
to such building, machinery, equipment, fixtures or furnishings as may 
be required pursuant to the Flood Insurance Act.

[[Page 353]]


Accordingly, a finding shall be made on whether loan funds will be used 
to finance buildings, machinery, fixtures or furnishings located in an 
identified special flood hazard area. If loan funds are to be used in 
such a special flood hazard area, a provision will be included in the 
loan contract restricting the release of funds until all the 
requirements of the Flood Insurance Act have been satisfied.
    (6) All environmental requirements must be met (see 7 CFR part 
1794).
    (b) [Reserved]

[54 FR 13356, Apr. 3, 1989. Redesignated at 55 FR 39396, Sept. 27, 1990, 
as amended at 56 FR 26600, June 10, 1991]



Sec. 1737.91  Approval.

    (a) A loan is approved when the Administrator, or whoever is 
delegated authority, signs the administrative findings and the letter to 
the borrower announcing the loan.
    (b) If the loan is not approved, RUS shall notify the borrower, in 
writing, of the reasons.



Sec. 1737.92  Loan documents.

    Following approval of the loan, RUS shall forward the necessary loan 
documents to the borrower for execution, delivery, recording, and 
filing, as directed by RUS. See 7 CFR part 1758 for details (or RUS 
Bulletins 320-4, 320-22, 321-2, 322-2, 323-1, or 326-1).



Secs. 1737.93-1737.99  [Reserved]



                  Subpart K_Release of Funds Procedure



Sec. 1737.100  Prerequisites to the release and advance of funds.

    (a) Standard prerequisites to the advance of funds, generally 
applied to all loans, are set forth in Article II of the form of loan 
contract attached as appendix A to 7 CFR part 1758. Additional 
prerequisites may be added on a case by case basis to the loan contract.
    (b) Before any loan funds can be advanced, RUS must approve a 
release of funds.
    (c) RUS approves the release of funds only after it determines that 
all prerequisites to the advance of loan funds have been met or funds 
should be advanced even though certain loan contract prerequisites 
remain unsatisfied.
    (d) Following release approval, loan funds and related nonloan funds 
may be advanced in accordance with 7 CFR part 1744.
    (e) The borrower may be required to discharge indebtedness and/or to 
close acquisitions before advances are made for construction purposes. 
In such cases, the borrower shall submit evidence that these actions 
have been completed. If the evidence is satisfactory to RUS, RUS shall 
allow the remaining loan funds to be advanced in accordance with 7 CFR 
part 1744.

(Approved by the Office of Management and Budget under control number 
0572-0085)



Sec. 1737.101  Amounts spent for preloan activities.

    If the borrower desires to credit amounts spent for preloan 
activities against any equity or general funds required by the loan 
contract, it shall submit an itemized statement of such expenditures to 
the Area Office. These expenditures will be accounted for on RUS Form 
503, ``Release of Telephone Loan Funds,'' if RUS determines that the 
amounts spent are reasonable based on normal industry practice and that 
the procedures set forth in 7 CFR part 1737, subpart D, have been 
complied with. Statements of preloan expenditures will be verified as to 
accuracy by loan fund audits.

(Approved by the Office of Management and Budget under control number 
0572-0085)



Secs. 1737.102-1737.109  [Reserved]



PART 1738_RURAL BROADBAND ACCESS LOANS AND LOAN GUARANTEES--Table of Contents



                            Subpart A_General

Sec.
1738.1  Overview.
1738.2  Definitions.
1738.3  Substantially underserved trust areas.
1738.4-1738.50  [Reserved]

             Subpart B_Eligible and Ineligible Loan Purposes

1738.51  Eligible loan purposes.
1738.52  Ineligible loan purposes.

[[Page 354]]

1738.53-1738.100  [Reserved]

                   Subpart C_Eligibility Requirements

1738.101  Eligible applicants.
1738.102  Eligible service area.
1738.103  Eligible service area exceptions for broadband facility 
          upgrades.
1738.104  Preliminary assessment of service area eligibility.
1738.105-1738.150  [Reserved]

                       Subpart D_Direct Loan Terms

1738.151  General.
1738.152  Interest rates.
1738.153  Loan terms and conditions.
1738.154  Loan security.
1738.155  Special terms and conditions.
1738.156  Other Federal requirements.
1738.157-1738.200  [Reserved]

              Subpart E_Application Review and Underwriting

1738.201  Application submission.
1738.202  Elements of a complete application.
1738.203  Priority for processing loan applications.
1738.204  Public notice.
1738.205  Notification of completeness.
1738.206  Evaluation for feasibility.
1738.207  Equity requirement.
1738.208  Additional cash requirements.
1738.209  Market survey.
1738.210  Competitive analysis.
1738.211  Financial information.
1738.212  Network design.
1738.213  Loan determination.
1738.214-1738.250  [Reserved]

               Subpart F_Closing, Servicing, and Reporting

1738.251  Loan offer and loan closing.
1738.252  Construction.
1738.253  Servicing.
1738.254  Accounting, reporting, and monitoring requirements.
1738.255-1738.300  [Reserved]

                        Subpart G_Loan Guarantee

1738.301  General.
1738.302  Eligible guaranteed lenders.
1738.303  Requirements for the loan guarantee.
1738.304  Terms for guarantee.
1738.305  Obligations of guaranteed lender.
1738.306  Agency rights and remedies.
1738.307  Additional policies.
1738.308  Full faith and credit of the United States.
1738.309-1738.349  [Reserved]
1738.350  OMB control number.

    Authority: Pub. L. 107-171, 7 U.S.C. 901 et seq.

    Source: 76 FR 13785, Mar. 14, 2011, unless otherwise noted.



                            Subpart A_General



Sec. 1738.1  Overview.

    (a) The Rural Broadband Access Loan and Loan Guarantee Program 
furnishes loans and loan guarantees to provide funds for the costs of 
construction, improvement, or acquisition of facilities and equipment 
needed to provide service at the broadband lending speed in eligible 
rural areas. This part sets forth the general policies, eligibility 
requirements, types and terms of loans and loan guarantees, and program 
requirements under Public Law 107-171 and 7 U.S.C. 901 et seq.
    (b) Additional information and application materials regarding the 
Rural Broadband Access Loan and Loan Guarantee Program can be found on 
the Rural Development Web site.



Sec. 1738.2  Definitions.

    (a) The following definitions apply to part 1738:
    Acquisition means the purchase of assets by acquiring facilities, 
equipment, operations, licenses, or majority stock interest of one or 
more organizations. Stock acquisitions must be arms-length transactions.
    Administrator means the Administrator of the Rural Utilities Service 
(RUS), or the Administrator's designee.
    Advance means the transfer of loan funds from the Agency to the 
borrower.
    Affiliate or affiliated company of any specified person or entity 
means any other person or entity directly or indirectly controlling of, 
controlled by, under direct or indirect common control with, or related 
to, such specified entity, or which exists for the sole purpose of 
providing any service to one company or exclusively to companies which 
otherwise meet the definition of affiliate. This definition includes 
Variable Interest Entities as described in Financial Accounting 
Standards Board Interpretation (FIN) No. 46(R), Consolidation of 
Variable Interest Entities. For the purpose of this definition, 
``control'' means the possession directly or indirectly, of the power to 
direct or cause the direction of the management and policies of a 
company, whether

[[Page 355]]

such power is exercised through one or more intermediary companies, or 
alone, or in conjunction with or pursuant to an agreement with, one or 
more other companies, and whether such power is established through a 
majority or minority ownership voting of securities, common directors, 
officers, or stockholders, voting trust, or holding trusts (other than 
money exchanged) for property or services.
    Agency means the Rural Utilities Service, which administers the 
United States Department of Agriculture's (USDA's) Rural Development 
Utilities Programs, including the Rural Broadband Access Loan and Loan 
Guarantee Program.
    Applicant means an entity requesting approval of a loan or loan 
guarantee under this part.
    Arm's-length transaction means a transaction between two related or 
affiliated parties that is conducted as if they were unrelated, so that 
there is no question of conflict of interest, or a transaction between 
two otherwise unrelated or unaffiliated parties.
    Borrower means any organization that has an outstanding broadband or 
telecommunications loan made or guaranteed by the Agency.
    Broadband borrower means any organization that has an outstanding 
broadband loan made or guaranteed by the Agency.
    Broadband grant means a Community Connect or Broadband Initiatives 
Program grant approved by the Agency.
    Broadband lending speed means the minimum bandwidth requirement, as 
published by the Agency in its latest notice in the Federal Register 
that an applicant must propose to deliver to every customer in the 
proposed funded service area in order for the Agency to approve a 
broadband loan and may be different for fixed and mobile broadband 
service. Broadband lending speed may be different from the minimum rate 
of data transmission required to determine the availability of broadband 
service when qualifying a service area. If a new broadband lending speed 
is published in the Federal Register while an application is pending, 
the pending application may be returned unless the proposed broadband 
system can provide service at the new broadband lending speed. Returned 
applications will lose their place in the processing queue.
    Broadband loan means any loan approved under Title VI of the Rural 
Electrification Act of 1936 (RE Act).
    Broadband service means any technology identified by the 
Administrator as having the capacity to provide transmission facilities 
that enable the subscriber to the service to originate and receive high-
quality voice, data, graphics, and video. The Agency will publish the 
minimum rate of data transmission that will qualify as broadband service 
in a notice in the Federal Register and this rate may be different for 
fixed and mobile broadband service. The minimum rate of data 
transmission that defines broadband service may be different than the 
broadband lending speed. If a new minimum rate of data transmission is 
published in the Federal Register while an application is pending, 
broadband service for the purpose of reviewing the application will be 
defined by the minimum rate of data transmission that was required at 
the time the application was received by the Agency.
    Build-out means the construction, improvement, or acquisition of 
facilities and equipment.
    Competitive analysis means a study that identifies service providers 
and products in the service area that will compete with the applicant's 
proposed project.
    Composite economic life means the weighted (by dollar amount of each 
class of facility in the loan) average economic life as determined by 
the Agency of all classes of facilities financed by the loan.
    Cost share means equity, as defined by generally accepted accounting 
principles (GAAP).
    Customer premises equipment (CPE), in the context of network 
services, means any network-related equipment (e.g. routers, switches, 
modems, etc.) used by a customer to connect to a service provider's 
network.
    Derivative means any right, interest, instrument or security issued 
or traded on the credit of the guaranteed loan or any guaranteed loan 
portion, including but not limited to any participation

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share of, or undivided ownership or other equity interest in, the 
guaranteed loan or any guaranteed loan portion; any note, bond or other 
debt instrument or obligation which is collateralized or otherwise 
secured by a pledge of, or security interest in, the guaranteed loan or 
any guaranteed loan portion; or any such interest in such an interest or 
any such instrument secured by such an instrument.
    Economic life means the estimated useful service life of an asset 
financed by the loan, as determined by the Agency.
    Equity means total assets minus total liabilities, as determined by 
GAAP and as classified according to the Agency's system of accounts and 
as used in this Part for purposes of section 306F of the RE Act includes 
the requirements of credit support and cost share in Title VI of the RE 
Act.
    Feasibility study means the evaluation of the pro forma financial 
analysis prepared by the Agency, based on the financial projections 
supplied by the applicant and as found acceptable by the Agency, to 
determine the financial feasibility of a loan request. Financial 
feasibility will be based on the entire operation of the applicant and 
not limited to the funded project.
    Financial feasibility means the applicant's ability to generate 
sufficient revenues to cover its expenses, sufficient cash flow to 
service its debts and obligations as they come due, and meet the minimum 
Times Interest Earned Ratio (TIER) requirement of 1.25 (see 
Sec. 1738.211(b)(2)(ii)) by the end of the forecast period, as evaluated 
by the Agency.
    Fiscal year refers to the applicant or borrower's fiscal year, 
unless otherwise indicated.
    Forecast period means the time period used in the feasibility study 
to determine if an application is financially feasible. Financial 
feasibility of a loan application is based on five-year projections.
    Funded service area means the geographic area within which an 
applicant proposes to offer service at the broadband lending speed using 
loan funds. (See also ``service area.'')
    GAAP means generally accepted accounting principles.
    Guaranteed-amount debt derivative means any note, bond, or other 
debt instrument or obligation which is collateralized or otherwise 
secured by a pledge of, or security interest in, the guaranteed loan 
note or any guaranteed loan portion note or any derivative, as the case 
may be, which has an exclusive or preferred claim to the guaranteed loan 
amount or the respective guaranteed loan portion amount or the 
respective guaranteed-amount equivalent, as the case may be.
    Guaranteed-amount equity derivative means any participation share 
of, or undivided ownership or other equity interest in, the guaranteed 
loan or any guaranteed loan portion or any derivative, as the case may 
be, which has an exclusive or preferred claim to the guaranteed loan 
amount or the respective guaranteed loan portion amount or the 
respective guaranteed-amount equivalent, as the case may be.
    Guaranteed-amount equivalent means, with respect to any derivative 
which is equal in principal amount to the guaranteed loan or any 
guaranteed loan portion, that amount of payment on account of such 
derivative which is equal to the guaranteed loan amount or the 
respective guaranteed loan portion amount, as the case may be; or with 
respect to any derivative which in the aggregate are equal in principal 
amount to the guaranteed loan or any guaranteed loan portion, that 
amount of payment on account of such derivatives which is equal to the 
guaranteed loan amount or the respective guaranteed loan portion amount, 
as the case may be.
    Guaranteed loan amount means the amount of the loan which is 
guaranteed by the Agency.
    Guaranteed loan note means, collectively, the note or notes executed 
and delivered by the borrower to evidence the guaranteed loan.
    Guaranteed loan portion means any portion of the guaranteed loan.
    Guaranteed loan portion amount means that amount of payment on 
account of any guaranteed loan portion which is guaranteed under the 
terms of the guarantee.
    Guaranteed loan portion note means any note executed and delivered 
by the

[[Page 357]]

borrower to evidence a guaranteed loan portion.
    Grantee means any organization that has an outstanding broadband 
grant made by the Agency.
    Incumbent service provider (i) Means a service provider that:
    (A) Offers terrestrial broadband service in the proposed funded 
service area;
    (B) Has not less than five percent of the households in an 
applicant's proposed funded service area subscribing to their broadband 
service at the time of application submission; and
    (C) Provides this information to the Agency through a timely 
response to the public notice described in Sec. 1738.204.
    (ii) Resellers are not considered incumbent service providers. If an 
applicant proposes an acquisition, the applicant will be considered a 
service provider for that area.
    Indefeasible right to use agreement (IRU) means the effective long-
term lease of the capacity, or a portion thereof, of a cable, specified 
in terms of a certain number of channels of a given bandwidth.
    Interim financing means funds used for eligible loan purposes after 
the applicant is notified by the Agency that the application is 
complete. Such funds may be eligible for reimbursement from loan funds 
if a loan is made.
    Loan means any loan made or guaranteed under this part by the 
Agency, unless otherwise noted.
    Loan contract means the loan agreement between the Agency and the 
borrower, including all amendments thereto.
    Loan documents means the loan agreement, note(s), and security 
instrument between the borrower and the Agency and any associated 
documents pertaining to the broadband loan.
    Loan guarantee means a loan made by another lender, some portion of 
which is guaranteed by the Agency.
    Loan guarantee documents means the guarantee agreement between RUS 
and the lender, the loan and security agreement(s) between the 
guaranteed lender and the borrower, the loan note guarantee made by RUS, 
the guaranteed loan note, and other security documents.
    Loan funds means funds provided pursuant to a broadband loan made or 
guaranteed under this part by the Agency.
    Market survey means the collection of information on the supply, 
demand, usage, and rates for proposed services to be offered by an 
applicant within each service area. It supports the applicant's 
financial projections.
    Pre-loan expense means any expense associated with the preparation 
of a loan application. Pre-loan expenses may be reimbursed with loan 
funds, as approved by RUS.
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    Reject means that the Agency returns the application to the 
applicant and discontinues processing of the loan application because 
the application failed to meet the requirements set forth herein. If an 
application is rejected, the loan application loses its place in the 
application processing queue.
    Reseller means, in the context of network services, a company that 
purchases network services from network service providers in bulk and 
resells them to commercial businesses and residential households. 
Resellers are not considered incumbent service providers.
    Rural area means any area, as confirmed by the latest decennial 
census of the Bureau of the Census, which is not located within:
    (i) A city, town, or incorporated area that has a population of 
greater than 20,000 inhabitants; or
    (ii) An urbanized area contiguous and adjacent to a city or town 
that has a population of greater than 50,000 inhabitants. For purposes 
of the definition of rural area, an urbanized area means a densely 
populated territory as defined in the latest decennial census of the 
U.S. Census Bureau.
    Security documents means any mortgage, deed of trust, security 
agreement, financing statement, or other document which grants to the 
Agency or perfects a security interest, including any amendments and 
supplements thereto.
    Service area means the geographic area within which a service 
provider offers telecommunications service.
    Service level objectives (SLOs) means the characteristics of the 
service to be

[[Page 358]]

delivered to the customer, for example the speed with which new service 
will be established, service availability, and response time for reports 
of system failure at a residence.
    Service provider means an entity providing telecommunications 
service.
    Service territory means ``service area.''
    Start-up means a new business venture without operations or service 
delivery available.
    System of accounts means the Agency's system of accounts for 
maintaining financial records as described in RUS Bulletin 1770B-1.
    Telecommunications means electronic transmission and reception of 
voice, data, video, and graphical information using wireline and 
wireless transmission media.
    Telecommunications loan means any telecommunication loan made or 
guaranteed under Title II, III, or IV of the RE Act.
    TIER means times interest earned ratio. TIER is the ratio of an 
applicant's net income (after taxes) plus (adding back) interest 
expense, all divided by interest expense (existing and that required in 
the proposed loan), and with all financial terms defined by GAAP.
    Underserved household or Underserved area means a household or an 
area that is not offered broadband service, or that is offered broadband 
service by only one incumbent service provider.
    Unguaranteed amount equivalent means all amounts of payment on 
account of any derivative other than the respective guaranteed-amount 
equivalent.
    Unguaranteed loan amount means all amounts of payment on account of 
the guaranteed loan other than the guaranteed amount.
    Unguaranteed loan portion amount means all amounts of payment on 
account of any guaranteed loan portion other than the respective 
guaranteed loan portion amount.
    (b) Accounting terms not otherwise defined in this part shall have 
the definition ascribed to them under GAAP and shall be recorded using 
the Agency's system of accounts.



Sec. 1738.3  Substantially underserved trust areas.

    (a) If the Administrator determines that a community in ``trust 
land'' (as defined in section 3765 of title 38, United States Code) has 
a high need for the benefits of the Broadband Loan Program, he/she may 
designate the community as a ``substantially underserved trust area'' 
(as defined in section 306F of the RE Act).
    (b) In order to improve the availability of the Broadband Loan 
Program in communities in substantially underserved trust areas, the 
Administrator retains the discretion to
    (1) Make available to qualified utilities or applicants, financing 
with an interest rate as low as 2 percent, and with extended repayment 
terms;
    (2) Waive nonduplication restrictions, matching fund and equity 
requirements, or credit support requirements; and
    (3) Give the highest funding priority to designated projects in 
substantially underserved trust areas.
    (c) The Administrator will only make loans and loan guarantees that 
RUS finds are financially feasible and that provide eligible program 
benefits to substantially underserved trust areas.
    (d) Applicants should notify the National Office before preparing 
their applications that they are planning to seek waivers or adjustments 
based on this section (see Sec. 1738.201).



Secs. 1738.4-1738.50  [Reserved]



             Subpart B_Eligible and Ineligible Loan Purposes



Sec. 1738.51  Eligible loan purposes.

    Loan funds may be used to pay for the following expenses:
    (a) To fund the construction, improvement, or acquisition of all 
facilities required to provide service at the broadband lending speed to 
rural areas, including facilities required for providing other services 
over the same facilities.
    (b) To fund the cost of leasing facilities required to provide 
service at the broadband lending speed if such lease qualifies as a 
capital lease under GAAP. Notwithstanding, loan funds can only be used 
to fund the cost of the

[[Page 359]]

capital lease for no more than the first three years of the loan 
amortization period.
    (c) To fund an acquisition, provided that:
    (1) The acquisition is necessary for furnishing or improving service 
at the broadband lending speed;
    (2) The acquired service area, if any, meets the eligibility 
requirements set forth in Sec. 1738.102;
    (3) The acquisition cost does not exceed 50 percent of the broadband 
loan amount; and
    (4) For the acquisition of another entity, the purchase provides the 
applicant with a controlling majority interest in the entity acquired.
    (d) To refinance an outstanding telecommunications loan made under 
the RE Act if refinancing the loan supports the construction, 
improvement, or acquisition of facilities and equipment for the 
provision of service at the broadband lending speed in rural areas 
provided that:
    (1) No more than 40 percent of the broadband loan amount is used to 
refinance the outstanding telecommunications loan;
    (2) The applicant is current with its payments on the 
telecommunication loan(s) to be refinanced; and
    (3) The amortization period for that portion of the broadband loan 
that will be needed for refinancing will not exceed the remaining 
amortization period for the telecommunications loan(s) to be refinanced. 
If multiple notes are being refinanced, an average remaining 
amortization period will be calculated based on the weighted dollar 
average of the notes being refinanced.
    (e) To fund pre-loan expenses in an amount not to exceed five 
percent of the broadband loan excluding amounts requested to refinance 
outstanding telecommunication loans. Pre-loan expenses may be reimbursed 
only if they are incurred prior to the date on which notification of a 
complete application is issued (see Sec. 1738.205).



Sec. 1738.52  Ineligible loan purposes.

    Loan funds must not be used for any of the following purposes:
    (a) To fund operating expenses of the applicant;
    (b) To fund costs incurred prior to the date on which notification 
of a complete application is issued (see Sec. 1738.205), with the 
exception of eligible pre-loan expenses (see 1738.51(e)).
    (c) To fund the acquisition of the stock of an affiliate.
    (d) To fund the purchase or acquisition of any facilities or 
equipment of an affiliate, unless approved by the Agency in writing. The 
Agency may approve such a purchase or acquisition if the applicant 
demonstrates that the purchase or acquisition will involve an arms-
length transaction and that the cost is advantageous for the applicant.
    (e) To fund the purchase of CPE and the installation of associated 
inside wiring unless the CPE will be owned by the applicant throughout 
its economic life or
    (1) The applicant pledges additional collateral that is not 
currently owned by the applicant, acceptable to the Agency. Such 
collateral must have a value at least equal to the purchase price of the 
CPE and cannot be purchased with loan funds; or
    (2) The applicant establishes a revolving fund for the initial 
purchase of CPE to be sold, and as CPE is sold to the customer, at least 
the applicant's cost of such equipment is returned to the revolving fund 
and used to purchase additional CPE units.
    (f) To fund the purchase or lease of any vehicle unless it is used 
primarily in construction or system improvements.
    (g) To fund the cost of systems or facilities that have not been 
designed and constructed in accordance with the loan contract and other 
applicable requirements.
    (h) To fund broadband facilities leased under the terms of an 
operating lease.
    (i) To fund merger or consolidation of entities.

[[Page 360]]



Secs. 1738.53-1738.100  [Reserved]



                   Subpart C_Eligibility Requirements



Sec. 1738.101  Eligible applicants.

    (a) To be eligible for a broadband loan, an applicant may be either 
a nonprofit or for-profit organization, and must take one of the 
following forms:
    (1) Corporation;
    (2) Limited liability company (LLC);
    (3) Cooperative or mutual organization;
    (4) Indian tribe or tribal organization as defined in 25 U.S.C. 
450b; or
    (5) State or local government, including any agency, subdivision, or 
instrumentality thereof.
    (b) To be eligible for a broadband loan, the applicant must:
    (1) Submit a loan application which meets the requirements set forth 
herein as well as any additional requirements published in the Federal 
Register;
    (2) Agree to complete the build-out of the broadband system 
described in the loan application within three years from the day the 
applicant is notified that loan funds are available. The loan 
application must demonstrate that all proposed construction be completed 
within this three year period with the exception of CPE. CPE can be 
funded throughout the forecast period;
    (3) Demonstrate an ability to furnish, improve, or extend broadband 
facilities to provide service at the broadband lending speed in rural 
areas;
    (4) Demonstrate an equity position equal to at least 10 percent of 
the amount of the loan requested in the application (see Sec. 1738.207); 
and
    (5) Provide additional security if it is necessary to ensure 
financial feasibility (see Sec. 1738.208) as determined by the 
Administrator.



Sec. 1738.102  Eligible service area.

    (a) A service area may be eligible for a broadband loan if all of 
the following are true:
    (1) The service area is completely contained within a rural area;
    (2) At least 25 percent of the households in the service area are 
underserved households;
    (3) No part of the service area has three or more incumbent service 
providers;
    (4) No part of the funded service area overlaps with the service 
area of current RUS borrowers and grantees;
    (5) No part of the funded service area is included in a pending 
application before RUS seeking funding to provide broadband service. If 
two or more applications are submitted for the same service area, a 
lending decision must be made on the application that was submitted to 
the Agency first before a lending decision can be made on the other 
application(s).
    (b) Multiple service areas may be included in a single broadband 
loan application. Non-contiguous areas are considered separate service 
areas and must be treated separately for the purpose of determining 
service area eligibility. If non-contiguous areas within an application 
are determined to be ineligible, the Agency may pursuant to this 
regulation consider the remaining areas in the application. If an 
applicant fails to respond to agency requests for additional information 
or modifications to remove ineligible areas, the application may be 
returned and the application will lose its place in the processing 
queue.



Sec. 1738.103  Eligible service area exceptions for broadband
facility upgrades.

    (a) Broadband borrowers that apply to upgrade existing broadband 
facilities in its existing service area are exempt from the requirement 
concerning the number of underserved households in Sec. 1738.102(b)(2).
    (b) Incumbent service providers, including borrowers and grantees, 
which apply to upgrade existing broadband facilities in existing service 
territories are exempt from the requirement concerning the number of 
incumbent service providers in Sec. 1738.102(b)(3) unless they are 
eligible for funding under Titles II and III of the RE Act. Eligibility 
requirements for entities that would be eligible under Titles II and III 
can be found in 7 CFR part 1735.
    (c) An applicant which is a borrower, grantee or incumbent service 
provider may submit one application to upgrade

[[Page 361]]

existing broadband facilities in existing service areas, which qualify 
for the exemptions specified in paragraphs (a) and (b) of this section, 
and to expand services at the broadband lending speed into new service 
areas, provided the upgrade area and the expansion area are proposed as 
two separate service areas even if the upgrade and expansion areas are 
contiguous.
    (d) The applicant will be asked to remove areas determined to be 
ineligible from their funding request. The application will then be 
evaluated on the basis of what remains. The applicant may be requested 
to provide additional information to the agency relating to the 
ineligible areas. If the applicant fails to respond, the application 
will be returned and the application will lose its place in the 
processing queue.



Sec. 1738.104  Preliminary assessment of service area eligibility.

    (a) The Agency will make information available to prospective 
applicants to allow a preliminary assessment of a proposed service 
area's eligibility. At a minimum, the prospective applicant will be able 
to determine:
    (1) Whether the proposed service area is located in a rural area;
    (2) Whether the proposed service area overlaps with any part of a 
borrower's or grantee's service area; and
    (3) Whether the proposed service area overlaps with any part of a 
proposed service area in a pending application for a loan.
    (b) A preliminary assessment of service area eligibility does not 
account for all eligibility factors, and the situation within a proposed 
service area may change between the preliminary assessment and 
application submission. A preliminary assessment indicating that a 
proposed service area may be eligible does not guarantee that the area 
will remain eligible at the time of application.



Secs. 1738.105-1738.150  [Reserved]



                       Subpart D_Direct Loan Terms



Sec. 1738.151  General.

    (a) Direct loans shall be in the form of a cost-of-money loan, a 4-
percent loan, or a combination of the two.
    (b) The amount of funds available for each type of loan, as well as 
maximum and minimum loan amounts, will be published in the Federal 
Register.
    (c) An applicant that provides telecommunications or broadband 
service to at least 20 percent of the households in the United States is 
limited to a loan amount that is no more than 15 percent of the funds 
available to the Broadband Loan Program for the Federal fiscal year.



Sec. 1738.152  Interest rates.

    (a) Direct cost-of-money loans shall bear interest at a rate equal 
to the cost of borrowing to the Department of Treasury for obligations 
of comparable maturity. The applicable interest rate will be set at the 
time of each advance.
    (b) [Reserved]



Sec. 1738.153  Loan terms and conditions.

    Terms and conditions of loans are set forth in a mortgage, note, and 
loan contract. Samples of the mortgage, note, and loan contract can be 
found on the Agency's Web site.
    (a) Unless requested to be shorter by the applicant, broadband loans 
must be repaid with interest within a period that, rounded to the 
nearest whole year, is equal to the expected composite economic life of 
the assets to be financed, as determined by the Agency based upon 
acceptable depreciation rates. Expected composite economic life means 
the depreciated life plus three years.
    (b) Loan advances are made at the request of the borrower. Principal 
payments for each advance are amortized over the remaining term of the 
loan and are due monthly. Principal payments will be deferred until two 
years after the date of the first advance of loan funds. Interest begins 
accruing when the advance is made and interest payments are due monthly, 
with no deferral period.
    (c) Borrowers are required to carry fidelity bond coverage. 
Generally this amount will be 15 percent of the loan amount, not to 
exceed $5 million. The Agency may reduce the percentage required if it 
determines that the amount

[[Page 362]]

is not commensurate with the risk involved.

[76 FR 13785, Mar. 14, 2011, as amended at 78 FR 8360, Feb. 6, 2013]



Sec. 1738.154  Loan security.

    (a) The broadband loan must be secured by the assets purchased with 
the loan funds, as well as all other assets of the applicant and any 
other signer of the loan documents except as provided in Sec. 1738.155.
    (b) The Agency must be given an exclusive first lien, in form and 
substance satisfactory to the Agency, on all of the applicant's property 
and revenues and such additional security as the Agency may require. The 
Agency may share its first lien position with another lender on a pari 
passu, prorated basis if security arrangements are acceptable to the 
Agency.
    (c) Unless otherwise designated by the Agency, all property 
purchased with loan funds must be owned by the applicant.
    (d) In the case of loans that include financing of facilities that 
do not constitute self-contained operating systems, the applicant shall 
furnish assurance, satisfactory to the Agency, that continuous and 
efficient service at the broadband lending speed will be rendered.
    (e) The Agency will require financial, investment, operational, 
reporting, and managerial controls in the loan documents.



Sec. 1738.155  Special terms and conditions.

    (a) The Agency may, when it is in the best interest of the Agency 
and its mission, the affected community, and the applicant, aid in 
achieving financial feasibility in an underserved area by taking the 
following steps:
    (1) Extend the loan term up to 35 years, and
    (2) Modify its security requirements.
    (b) The Agency may reduce the security requirements discussed in 
Sec. 1738.154(a) to ensure that the security is commensurate with the 
risk involved.



Sec. 1738.156  Other Federal requirements.

    (a) To receive a broadband loan, the applicant must certify or agree 
in writing to comply with a variety of Federal regulations including, 
but not limited to:
    (1) The nondiscrimination and equal employment opportunity 
requirements of Title VI of the Civil Rights Act of 1964, as amended (7 
CFR part 15);
    (2) Section 504 of the Rehabilitation Act of 1973, as amended (29 
U.S.C. 794 et seq.; 7 CFR part 15b);
    (3) The Age Discrimination Act of 1975, as amended (42 U.S.C. 6101 
et seq.; 45 CFR part 90);
    (4) Executive Order 11375, amending Executive Order (E.O.) 11246, 
Relating to Equal Employment Opportunity (3 CFR, 1966-1970). See 7 CFR 
parts 15 and 15b and 45 CFR part 90, RUS Bulletin 1790-1 
(``Nondiscrimination Among Beneficiaries of RUS Programs''), and RUS 
Bulletin 20-15:320-15 (``Equal Employment Opportunity in Construction 
Financed with RUS Loans'');
    (5) The Architectural Barriers Act of 1968, as amended (42 U.S.C. 
4151 et seq.);
    (6) The Uniform Federal Accessibility Standards (UFAS) (Appendix A 
to 41 CFR subpart 101-19.6);
    (7) The requirements of the National Environmental Policy Act of 
1969 (NEPA), as amended;
    (8) The Council on Environmental Quality Regulations for 
Implementing the Procedural Provisions of NEPA and certain related 
Federal environmental laws, statutes, regulations, and Executive Orders 
found in 7 CFR part 1794;
    (9) The Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970, as amended, 42 U.S.C. 4601 et seq., and with 
implementing Federal regulations in 49 CFR part 24 and 7 CFR part 21;
    (10) The regulations implementing E.O. 12549, Debarment and 
Suspension, 7 CFR 3017.510, Participants' Responsibilities;
    (11) The requirements regarding Lobbying for Contracts, Grants, 
Loans, and Cooperative Agreements in 31 U.S.C. 1352;
    (12) Certification regarding Flood Hazard Area Precautions;
    (13) Certification regarding Debarment, Suspension, and Other 
Responsibility Matters--Primary Covered Transactions; and
    (14) Certification that the borrower is not delinquent on any 
Federal debt and

[[Page 363]]

has been informed of the collection options the Federal Government may 
use to collect delinquent debt.
    (b) Applicants must agree in writing to comply with all Federal, 
State and local laws, rules, regulations, ordinances, codes, and orders 
applicable to the project.



Secs. 1738.157-1739.200  [Reserved]



              Subpart E_Application Review and Underwriting



Sec. 1738.201  Application submission.

    (a) Loan applications must be submitted directly to the Agency's 
National Office or to the General Field Representative (GFR) that is 
assigned to the area where the applicant's headquarters are located. A 
list of GFRs and the areas they are assigned can be found on the 
Agency's Web site. All applications must contain two hard copies and an 
electronic copy of the entire application. An application is considered 
received upon receipt of the hard and electronic copies by the National 
Office. The date and time of that receipt will establish the 
application's placement in the processing queue.
    (b) The Agency may publish additional application submission 
requirements in the Federal Register.



Sec. 1738.202  Elements of a complete application.

    An applicant must submit to the Agency a complete application in a 
format as required by the Agency in the Rural Broadband Access Loan and 
Loan Guarantee Program Application Guide (the Application Guide). To be 
considered complete, the application must contain at least the following 
items, each of which must be completed in a manner acceptable to the 
Agency:
    (a) A completed RUS Form 532, including any additional items 
required by the form;
    (b) Information required for the public notice to determine service 
area eligibility (see Sec. 1738.204);
    (c) Documentation demonstrating how the applicant will meet the 
equity requirement (see Sec. 1738.207);
    (d) A market survey, unless not required by Sec. 1738.209(b);
    (e) A competitive analysis (see Sec. 1738.210);
    (f) Required financial information (see Sec. 1738.211);
    (g) A network design (see Sec. 1738.212);
    (h) A legal opinion that addresses the applicant's ability to enter 
into a loan as requested in the loan application, to pledge security as 
required by the Agency, to describe all pending litigation matters, and 
such other requirements as are detailed in the Application Guide;
    (i) All required licenses and regulatory approvals for the proposed 
operation or the status of obtaining these items; and
    (j) Additional items that may be required by the Administrator 
through a notice in the Federal Register.



Sec. 1738.203  Priority for processing loan applications.

    (a) Except as provided in Section 306F of the RE Act (SUTA) and 
section 1738.3 herein, in making or guaranteeing loans, the Agency shall 
give priority to applications in the following order:
    (1) Applications in which no broadband service is available in any 
funded service area;
    (2) Applications in which at least 75 percent of households in the 
funded service area have no incumbent service provider. For applications 
with multiple funded service areas, the 75 percent calculation is based 
on all funded service areas combined;
    (3) Applications in which at least 50 percent of households in the 
funded service area have no incumbent service provider. For applications 
with multiple funded service areas, the 50 percent calculation is based 
on all funded service areas combined;
    (4) Applications in which at least 25 percent of households in the 
funded service area have no incumbent service provider. For applications 
with multiple funded service areas, the 25 percent calculation is based 
on all funded service areas combined; and
    (5) All other applications.
    (b) Once applications have been prioritized according to the 
criteria listed in paragraph (a) of this section, the applications will 
be processed on a

[[Page 364]]

first-in, first-out basis within each priority category.
    (c) The Agency shall establish the National and State reserve levels 
in accordance with Title VI of the RE Act. In instances when funds in a 
particular area are insufficient to cover a loan request, priority will 
be given to processing applications for which funding is available.



Sec. 1738.204  Public notice.

    (a) The Agency will publish a public notice of each application. The 
application must provide a summary of the information required for such 
public notice including all of the following information:
    (1) The identity of the applicant;
    (2) A map of each service area showing the rural area boundaries and 
the underserved areas using the Agency's Mapping Tool;
    (3) The estimated number of underserved households in each service 
area;
    (4) The estimated number of households without terrestrial-based 
broadband service in each service area; and
    (5) A description of all the types of services that the applicant 
proposes to offer in each service area.
    (b) The Agency will publish the public notice on an Agency webpage 
after the application has been received in the Agency's National Office. 
The notice will remain on the webpage for a period of 30 calendar days. 
The notice will ask existing service providers to submit to the Agency, 
within this 30-day period, the following information:
    (1) The number of residential and business customers within the 
applicant's service area that are currently offered broadband service by 
the existing service provider;
    (2) The number of residential and business customers within the 
applicant's service area currently purchasing the existing service 
provider's broadband service, the rates of data transmission being 
offered, and the cost of each level of broadband service charged by the 
existing service provider;
    (3) The number of residential and business customers within the 
applicant's service area receiving the existing service provider's non-
broadband services and the associated rates for these other services; 
and
    (4) A map showing where the existing service provider's services 
coincide with the applicant's service area using the Agency's Mapping 
Tool.
    (5) Whether the existing service provider is an existing RUS 
borrower or grantee.
    (c) The Agency will use the information submitted to determine if 
the existing service provider will be classified as an incumbent service 
provider. If an existing service provider does not submit a response 
within the timeframe specified in the public notice, it will not be 
considered an incumbent service provider. However, all existing service 
providers will be considered in the Agency's feasibility study and 
lending decision.
    (d) The Agency will determine whether the service areas included in 
the application are eligible for funding based on the information 
provided during the public notice period, whether all portions of the 
service area qualify as rural areas, and the number of incumbent service 
providers servicing any portion of the service area. If the applicant's 
funded service area is ineligible, the Agency will contact the applicant 
and require that those ineligible areas be removed from the funded 
service area. If the ineligible service areas are not removed from the 
funding request, the Agency will reject the application and remove it 
from the processing queue. The applicant will be notified, in writing, 
and the application will be returned with an explanation of the reasons 
for the rejection.
    (e) The information submitted by an existing service provider will 
be treated as proprietary and confidential to the extent permitted under 
applicable law.



Sec. 1738.205  Notification of completeness.

    If all funded service areas are eligible, the Agency will review the 
application for completeness. The completeness review will include an 
assessment of whether all required documents and information have been 
submitted and whether the information provided is of adequate quality to 
allow further analysis.

[[Page 365]]

    (a) If the application contains all required documents and 
information and is of adequate quality, the Agency will notify the 
applicant, in writing, that the application is complete. The 
notification of completeness will mark the date as of which costs 
incurred for the eligible purposes listed in Sec. 1738.51(a) through (d) 
can be reimbursed with loan funds if the loan is ultimately made and 
proper procedures have been followed. A notification of completeness is 
not a commitment that the loan will be approved.
    (b) If the application is of adequate quality but does not contain 
all required documents and information, the Agency will notify the 
applicant, in writing, that the application is incomplete. The 
notification of incompleteness will include a list of items that the 
applicant must address and will specify a date by which the applicant's 
additional information must be received.
    (1) If the applicant fails to respond by the specified date, the 
application will be rejected.
    (2) If the applicant responds by the specified date but does not 
satisfactorily address the issues identified, the Agency will assess the 
applicant's progress toward submission of a complete application. If the 
applicant has made progress acceptable to the Agency, a second 
notification of incompleteness will be provided. If the applicant's 
progress is not acceptable to the Agency, the application will be 
rejected.
    (c) If the application is considered to be of inadequate quality, 
the Agency will notify the applicant, in writing, that the application 
has been rejected. The rejection letter will include an explanation of 
the reasons for the rejection and the application will be removed from 
the queue.



Sec. 1738.206  Evaluation for feasibility.

    After an applicant is notified that the application is complete, the 
Agency will evaluate the application's financial and technical 
feasibility. The Agency will only make a broadband loan if the 
applicant's financial operations, taking into account the impact of the 
facilities financed with the proceeds of the loan and the associated 
debt, are financially and technically feasible, as determined by the 
Agency.
    (a) The Agency will determine financial feasibility by evaluating 
the applicant's equity, market survey (if required), competitive 
analysis, financial information, and other relevant information in the 
application.
    (b) The Agency will determine technical feasibility by evaluating 
the applicant's network design and other relevant information in the 
application.



Sec. 1738.207  Equity requirement.

    (a) To be eligible for a loan, an applicant must demonstrate a 
minimum equity position equal to 10 percent of the requested loan amount 
at the time of application which must remain available at loan closing. 
In addition to this minimum equity requirement, please refer to section 
Sec. 1738.208, Additional Cash Requirements which could cause the equity 
requirement to be higher than 10 percent.
    (b) If the applicant does not have the required equity at the time 
the application is submitted, the applicant may satisfy the equity 
requirement at the time of application with an investor's unconditional 
legal commitment to cover the shortfall by providing additional equity. 
The additional equity must be transferred to the applicant prior to loan 
closing. If this option is elected, the applicant must provide evidence 
in the application that clearly identifies the investor's commitment to 
the applicant; the amount, terms, and conditions of the investment; and 
the investor's bank or financial statements that demonstrate its ability 
to fulfill its commitment. The terms and conditions of the investment 
must be acceptable to the Agency, which generally prohibits redemption 
of the investment until such time as stated requirements and financial 
thresholds are achieved by the applicant. The Agency will reject 
applications that do not provide evidence acceptable to the Agency 
regarding the investor's commitment.
    (c) For State and local government applicants, the equity 
requirement can be satisfied with a general obligation bond, as long as 
the additional equity will be available to the applicant at closing. If 
the equity requirement is

[[Page 366]]

satisfied with a general obligation bond, the broadband loan cannot be 
subordinate to the bond. The applicant must submit an opinion from its 
legal counsel that the applicant has the authority to issue a general 
obligation bond in an amount sufficient to meet the minimum equity 
requirement. Revenue bonds supported by the operations to be funded 
cannot be used to satisfy the equity requirement.



Sec. 1738.208  Additional cash requirements.

    (a) If the Agency's financial analysis indicates that the 
applicant's entire operation (existing operations and new operations 
combined) will show a negative cash balance at the end of any year 
during the five-year forecast period, the Agency will require the 
applicant to obtain additional cash infusions necessary to maintain an 
appropriate cash balance throughout the five-year forecast period. This 
cash infusion would be in conjunction with the required 10 percent 
minimum equity position.
    (1) The Agency will require the applicant and its investors to:
    (i) Infuse additional cash to cover projected deficits for the first 
two years of operations at loan closing; and
    (ii) Enter into legal arrangements that commit them to making 
additional cash infusions to ensure that the operation will sustain a 
positive cash position on a quarterly basis throughout the five-year 
forecast period.
    (2) For purposes of identifying the additional cash requirement for 
a start-up operation or an operation that has not demonstrated positive 
cash flow for the two years prior to the submission date of the 
application, 50 percent of projected revenues for each year of the five-
year forecast period will be considered to determine if an operation can 
sustain a positive cash position. In addition to the initial financial 
projections required to demonstrate financial feasibility, such 
applicants must complete adjusted financial projections using the 
reduced revenue projections in order to identify the amount of 
additional cash that will be required. Projections must be fully 
supported with assumptions acceptable to the Agency. The applicant may 
present evidence in its loan application that projected revenues or a 
portion of projected revenues are based on binding commitments and 
request that more than 50 percent of the projected revenues be 
considered for the purpose of identifying the additional cash 
requirement.
    (3) For purposes of satisfying the additional cash requirements for 
an existing operation that has demonstrated a positive cash flow for the 
two fiscal years prior to the submission date of the application, 100 
percent of the projected revenues for each year of the five-year 
forecast period will be used to determine if an operation can sustain a 
positive cash position, as long as these projections are fully supported 
with assumptions acceptable to the Agency.
    (4) If debt is incurred to satisfy the additional cash requirement, 
this debt must take a subordinate lien position to the Agency debt and 
must be at terms acceptable to the Agency.
    (b) An applicant may satisfy the additional cash requirement with an 
unconditional, irrevocable letter of credit (LOC) satisfactory to the 
Agency. The LOC must be issued from a financial institution acceptable 
to the Agency and must remain in effect throughout the forecast period. 
The applicant and the Agency must both be payees under the LOC. The LOC 
must have payment conditions acceptable to the Agency, and it must be in 
place prior to loan closing. The applicant cannot secure the LOC with 
its assets and cannot pay for any LOC charges or fees with its funds.
    (c) If the Agency offers a loan to the applicant, the applicant must 
ensure that the additional cash infusion required in the first two years 
is deposited into its bank account within 120 days from the date the 
applicant signs the loan offer letter (see Sec. 1738.251) and must enter 
into any other legal arrangements necessary to cover further projected 
operating deficits (or in the case of the LOC, to provide an acceptable 
LOC to the Agency) prior to closing. If these requirements are not 
completed within this timeframe, the loan offer will be terminated, 
unless the applicant requests and the Agency approves an extension based 
on extenuating circumstances that the Agency was not aware of at the 
time the offer was made.

[[Page 367]]

    (d) The Administrator may modify the requirements of this section 
for loans in service areas that are underserved when it is in the best 
interests of the Agency.



Sec. 1738.209  Market survey.

    (a) Except as provided in paragraph (b) of this section, the 
applicant must complete a separate market survey for each service area 
where the applicant proposes to provide service at the broadband lending 
speed. Each market survey must demonstrate the need for the service at 
the broadband lending speed, support the projected penetration rates and 
price points for the services to be offered, and support the feasibility 
analysis. The market survey must also address all other services that 
will be provided in connection with the broadband loan. Additional 
information on the requirements of the market survey can be found in the 
Application Guide.
    (b) The applicant is not required to complete a market survey for 
any service offering for which the applicant is projecting less than a 
20 percent penetration rate in each service area by the end of the five-
year forecast period. For example, if the applicant is projecting a 
penetration rate of 30 percent for data services and 15 percent for 
video services, a market survey must be completed for the data services. 
The proposed prices for those services with a projected penetration rate 
less than 20 percent must be affordable, as determined by the Agency.
    (c) For a market survey to be acceptable to the Agency, it must have 
been completed within six months of the application submission date. The 
Agency may reject any application in which the financial projections are 
not supported by the market survey. If the demographics of the proposed 
service area have significantly changed since the survey was completed, 
the Agency may require an updated market survey.
    (d) The Administrator may modify the requirements of this section 
for loans in service areas that are underserved when it is in the best 
interests of the Agency.



Sec. 1738.210  Competitive analysis.

    The applicant must submit a competitive market analysis for each 
service area regardless of projected penetration rates. Each analysis 
must identify all existing service providers and all resellers in each 
service area regardless of the provider's market share, for each type of 
service the applicant proposes to provide. This analysis must include 
each competitor's rate packages for all services offered, the area that 
is being covered, and to the extent possible, the quality of service 
being provided.



Sec. 1738.211  Financial information.

    (a) The applicant must submit financial information acceptable to 
the Agency that demonstrates that the applicant has the financial 
capacity to fulfill the loan requirements and to successfully complete 
the proposed project.
    (1) If the applicant is an existing company, it must provide 
complete copies of audited financial statements (opinion letter, balance 
sheet, income statement, statement of changes in financial position, and 
notes to the financial statement) for the three fiscal years preceding 
the application submission. If audited statements are not available, the 
applicant must submit unaudited financial statements and tax returns for 
those fiscal years. Applications from start-up entities must, at a 
minimum, provide an opening balance sheet dated within 30 days of the 
application submission date.
    (2) If the applicant is a subsidiary operation, it must also provide 
complete copies of audited financial statements for the parent operation 
for the fiscal year preceding the application submission. If audited 
statements are not available, unaudited financial statements and tax 
returns for the previous year must be submitted.
    (3) If the applicant relies on services provided by an affiliated 
operation, it must also provide complete copies of audited financial 
statements for any affiliate for the fiscal year preceding the 
application submission. If audited statements are not available, 
unaudited statements and tax returns for the previous year must be 
submitted.

[[Page 368]]

    (4) Applicants must provide a list of all its outstanding 
obligations. Copies of existing notes and loan and security agreements 
must be included in the application.
    (5) Applicants must provide a detailed description of working 
capital requirements and the source of these funds.
    (b) Applicants must submit the following documents that demonstrate 
the proposed project's financial viability and ability to repay the 
requested loan.
    (1) Customer projections for the five-year forecast period that 
substantiate the projected revenues for each service that is to be 
provided. The projections must be provided on at least an annual basis 
and must be developed separately for each service area. These 
projections must be clearly supported by the information contained in 
the market survey, unless no market survey is required (see 
Sec. 1738.209(b)).
    (2) Annual financial projections in the form of balance sheets, 
income statements, and cash flow statements for the five-year forecast 
period. Prior to the submission of an application, an applicant may 
request that alternative information related to financial viability be 
considered when the applicant can for good cause demonstrate why a full 
five-year forecast cannot be provided. If this request is approved by 
the Agency, then the applicant can submit the application using the 
alternative information that was approved.
    (i) These projections must use a system of accounts acceptable to 
the Agency and be supported by a detailed narrative that fully explains 
the methodology and assumptions used to develop the projections.
    (ii) The financial projections submitted by the applicant must 
demonstrate that their entire operation will be able to meet a minimum 
TIER requirement equal to 1.25 by the end of the five-year forecast 
period. Demonstrating that the operation can achieve a projected TIER of 
1.25 does not ensure that the Agency will approve the loan.
    (iii) If the financial analysis suggests that the operation will not 
be able to achieve the required TIER ratio, the Agency will not approve 
the loan without additional capital, additional cash, additional 
security, and/or a change in the loan terms.
    (c) Based on the financial evaluation, the loan documents will 
specify TIER requirements that must be met throughout the amortization 
period.



Sec. 1738.212  Network design.

    (a) Applications must include a network design that demonstrates the 
project's technical feasibility. The network design must fully support 
the delivery of service at the broadband lending speed, together with 
any other services to be provided. In measuring speed, the Agency will 
take into account industry and regulatory standards. The design must 
demonstrate that the project will be complete within three years from 
the day the Agency notifies the applicant that loan funds are available 
and must include the following items:
    (1) A detailed description of the proposed technology that will be 
used to provide service at the broadband lending speed. This description 
must clearly demonstrate that all households in the funded service area 
will be offered service at the broadband lending speed;
    (2) A detailed description of the existing network. This description 
should provide a synopsis of the current network infrastructure;
    (3) A detailed description of the proposed network. This description 
should provide a synopsis of the proposed network infrastructure;
    (4) A description of measurable service metrics and target service 
level objectives (SLOs) that will be provided to the customer, and the 
methods that will be used to measure performance and respond to unmet 
SLOs;
    (5) A description of the approach and methodology for monitoring 
ongoing service delivery and service quality for the services being 
deployed;
    (6) Estimated project costs detailing all facilities that are 
required to complete the project. These estimated costs must be broken 
down to indicate costs associated with each proposed service area and 
must specify how Agency and non-Agency funds will be used to complete 
the project;
    (7) A construction build-out schedule of the proposed facilities by 
service

[[Page 369]]

area on a quarterly basis. The build-out schedule must include:
    (i) A description of the work force that will be required to 
complete the proposed construction;
    (ii) A timeline demonstrating project completion within three years 
from the date the Agency notifies the applicant that loan funds are 
available;
    (iii) Detailed information showing that all households within the 
funded service area will be offered service at the broadband lending 
speed when the system is complete; and
    (iv) Detailed information showing that construction of the proposed 
facilities will start within six months from the date the Agency 
notifies the borrower that loan funds are available.
    (8) A depreciation schedule for all facilities financed with loan 
and non-loan funds;
    (9) An environmental report prepared in accordance with 7 CFR part 
1794; and
    (10) Any other system requirements required by the Administrator 
through a notice published in the Federal Register.
    (b) The network design must be prepared by a registered Professional 
Engineer with telecommunications experience or by qualified personnel on 
the applicant's staff. If the network design is prepared by the 
applicant's staff, the application must clearly demonstrate the staff's 
qualifications, experience, and ability to complete the network design. 
To be considered qualified, staff must have at least three years of 
experience in designing the type of broadband system proposed in the 
application.
    (c) The Administrator may modify the requirements of this section 
for loans in underserved service areas.



Sec. 1738.213  Loan determination.

    (a) If the application meets all statutory and regulatory 
requirements and the feasibility study demonstrates that the TIER 
requirement can be satisfied, the application will be submitted to the 
Agency's credit committees for consideration. Submission of the 
application to the Agency's credit committees does not guarantee that a 
loan will be approved. In making a loan determination, the Administrator 
shall consider the recommendations of the credit committees.
    (b) The applicant will be notified of the Agency's decision in 
writing. If the Agency approves the loan, a loan offer will be extended. 
If the Agency does not approve the loan, a rejection letter will be sent 
to the applicant, and the application will be returned with an 
explanation of the reasons for the rejection.



Secs. 1738.214-1738.250  [Reserved]



               Subpart F_Closing, Servicing, and Reporting



Sec. 1738.251  Loan offer and loan closing.

    The Agency will notify the applicant of the loan offer, in writing, 
and the applicant will typically have 10 working days to accept the 
offer. If the applicant accepts the loan offer, a loan contract will be 
executed and sent to the applicant. The applicant must execute the loan 
contract and satisfy all conditions precedent to loan closing within the 
timeframe specified by the Agency which is typically 120 days from the 
date of the loan contract. If the conditions are not met within this 
timeframe, the loan offer will be terminated, unless the applicant 
requests and the Agency approves an extension. The Agency may approve 
such a request if the applicant has diligently sought to meet the 
conditions required for loan closing and has been unable to do so for 
reasons outside its control.



Sec. 1738.252  Construction.

    (a) Construction paid for with broadband loan funds must comply with 
7 CFR part 1788, 7 CFR part 1794, RUS Bulletin 1738-2 and any other 
guidance from the Agency.
    (b) Upon notification by the Agency that an applicant has submitted 
all the required documentation and the application is considered 
complete for analysis (see Sec. 1738.205), the applicant, at its own 
risk, may enter into an interim financing agreement with a third-party 
lender or use its own funds to start construction that is included in 
the loan application. For this construction to be eligible for 
reimbursement with loan funds, all construction procedures contained 
herein must be followed. The

[[Page 370]]

Agency's determination that an application is complete is not a 
commitment that a loan will be approved.
    (c) The borrower must begin construction within six months from the 
date the Agency notifies the applicant that loan funds are available. 
This is the final step in closing the loan with the applicant. If the 
borrower fails to begin construction, the Agency may cancel the loan.
    (d) The build-out must be complete within three years from the day 
the Agency notifies the applicant that loan funds are available. Build-
out is considered complete when the network design has been fully 
implemented, the service operations and management systems 
infrastructure is operational, and the borrower is ready to support the 
activation and commissioning of individual customers to the new system.



Sec. 1738.253  Servicing.

    (a) Borrowers must make payments on the broadband loan as required 
in the note.
    (b) Borrowers must comply with all terms, conditions, affirmative 
covenants, and negative covenants contained in the loan documents.
    (c) In the event of default of any required payment or other term or 
condition:
    (1) A late charge shall be charged on any payment not made in 
accordance with the terms of the note.
    (2) The Agency may exercise the default remedies provided in the 
loan documents but is not required to do so.
    (3) If the Agency chooses to not exercise its default remedies, it 
does not waive its right to do so in the future.



Sec. 1738.254  Accounting, reporting, and monitoring requirements.

    (a) Borrowers must adopt a system of accounts for maintaining 
financial records acceptable to the Agency, as described in 7 CFR 1770, 
subpart B.
    (b) Borrowers must submit annual audited financial statements along 
with a report on compliance and on internal control over financial 
reporting, and management letter in accordance with the requirements of 
7 CFR part 1773. The Certified Public Accountant (CPA) conducting the 
annual audit is selected by the borrower and must be approved by RUS as 
set forth in 7 CFR 1773.4.
    (c) Borrowers must comply with all reasonable Agency requests to 
support ongoing monitoring efforts. The Borrower shall afford RUS, 
through its representatives, reasonable opportunity, at all times during 
business hours and upon prior notice, to have access to and the right to 
inspect the Broadband System, and any other property encumbered by the 
Mortgage, and any or all books, records, accounts, invoices, contracts, 
leases, payrolls, timesheets, cancelled checks, statements, and other 
documents, electronic or paper of every kind belonging to or in the 
possession of the Borrower or in anyway pertaining to its property or 
business, including its subsidiaries, if any, and to make copies or 
extracts therefore.
    (d) Borrowers records shall be retained and preserved in accordance 
with the provisions of 7 CFR part 1770, subpart A.



Secs. 1738.255-1738.300  [Reserved]



                        Subpart G_Loan Guarantee



Sec. 1738.301  General.

    (a) Applicants wishing to obtain a loan guarantee for private 
financing are subject to the same requirements as direct loan borrowers 
with respect to:
    (1) Loan purposes as described in subpart B;
    (2) Eligible borrowers and eligible areas as described in subpart C;
    (3) The loan terms described in subpart D, with the exception of the 
interest rates described in Sec. 1738.152; and
    (4) The application review and underwriting requirements in subpart 
E.
    (b) The Agency will publish a notice annually in the Federal 
Register indicating any additional requirements, as well as the amount 
of funds available, if any, for loan guarantees.



Sec. 1738.302  Eligible guaranteed lenders.

    To be eligible for a loan guarantee, a guaranteed lender must be:
    (a) A financial institution in good standing that has been a 
concurrent lender with RUS; or

[[Page 371]]

    (b) A legally organized lending institution, such as commercial 
bank, trust company, mortgage banking firm, insurance company, or any 
other institutional investor authorized by law to loan money, which must 
be subject to credit examination and supervision by a Federal or State 
agency, unless the Agency determines that alternative examination and 
supervisory mechanisms are adequate.



Sec. 1738.303  Requirements for the loan guarantee.

    At the time of application, applicants must provide in form and 
substance acceptable to the Agency:
    (a) Evidence of the guaranteed lender's eligibility under 
Sec. 1738.302;
    (b) Evidence that the guaranteed lender has the demonstrated 
capacity to adequately service the guaranteed loan;
    (c) Evidence that the guaranteed lender is in good standing with its 
licensing authority and meets the loan making, loan servicing, and other 
requirements of the jurisdiction in which the lender makes loans;
    (d) Evidence satisfactory to the Agency of its qualification under 
this part, along with the name of the authority that supervises it;
    (e) A commitment letter from the guaranteed lender that will be 
providing the funding, and the terms of such funding, all of which may 
be conditioned on final approval of the broadband loan guarantee by the 
Agency; and
    (f) A description of any and all charges and fees for the loan, 
along with documentation that they are comparable to those normally 
charged other applicants for the same type of loan in the ordinary 
course of business. Such charges and fees will not be included within 
the Agency's loan guarantee.



Sec. 1738.304  Terms for guarantee.

    Loan guarantees will only be given on the conditions that:
    (a) The loan guarantee is no more than 80 percent of the principal 
amount, which shall exclude any and all charges and fees;
    (b) The guarantee is limited to the outstanding loan repayment 
obligation of the borrower and does not extend to guaranteeing that the 
guaranteed lender will remit to a holder, loan payments made by the 
borrower;
    (c) The interest rate must be fixed and must be the same or lesser 
for the guaranteed loan amount or the respective guaranteed loan portion 
amount or the respective guaranteed amount equivalent, as the case may 
be, and unguaranteed loan amount or the respective unguaranteed loan 
portion amount or the respective unguaranteed-amount equivalent, as the 
case may be;
    (d) The entire loan will be secured by the same security with equal 
lien priority for the guaranteed loan amount or the respective 
guaranteed loan portion amount or the respective guaranteed-amount 
equivalent, as the case may be, and unguaranteed loan amount or the 
respective unguaranteed loan portion amount or the respective 
unguaranteed-amount equivalent, as the case may be;
    (e) The unguaranteed loan amount or the respective unguaranteed loan 
portion amount or the respective unguaranteed-amount equivalent, as the 
case may be, will neither be paid first nor given any preference or 
priority over the guaranteed loan amount or the respective guaranteed 
loan portion amount or the respective guaranteed-amount equivalent, as 
the case may be;
    (f) Prior written approval is obtained from the Agency for any 
assignment by the guaranteed lender. Any assignment shall entitle the 
holder to all of the guaranteed lender's rights but shall maintain the 
guaranteed lender responsible for servicing the entire loan;
    (g) The borrower, its principal officers, members of the borrower's 
board of directors and members of the immediate families of said 
officials shall not be a holder of the guaranteed lender's loan;
    (h) The Agency will not guarantee any loan under this subpart that 
provides for a balloon payment of principal or interest at the final 
maturity date of the loan or for the payment of interest on interest;
    (i) All loan guarantee documents between the Agency and the 
guaranteed lender are prepared by the Agency; and

[[Page 372]]

    (j) The guaranteed loan agreement between the borrower and the 
lender shall be subject to Agency approval.



Sec. 1738.305  Obligations of guaranteed lender.

    Once a loan guarantee has been approved, the guaranteed lender will 
be responsible for:
    (a) Servicing the loan;
    (b) Determining that all prerequisites to each advance of loan funds 
by the lender under the terms of the contract of guarantee, all 
financing documents, and all related security documents have been 
fulfilled;
    (c) Obtaining approval from the Agency to advance funds prior to 
each advance;
    (d) Billing and collecting loan payments from the borrower;
    (e) Notifying the Administrator promptly of any default in the 
payment of principal and interest on the loan and submit a report no 
later than 30 days thereafter, setting forth the reasons for the 
default, how long it expects the borrower will be in default, and what 
corrective actions the borrower states that it is taking to achieve a 
current debt service position; and
    (f) Notifying the Administrator of any known violations or defaults 
by the borrower under the lending agreement, contract of guarantee, or 
related security instruments or conditions of which the lender is aware 
which might lead to nonpayment, violation, or other default.



Sec. 1738.306  Agency rights and remedies.

    (a) The guarantee must provide that upon notice to the lender, the 
Agency may assume loan servicing responsibilities for the loan or the 
guaranteed loan amount or the respective guaranteed loan portion amount 
or the respective guaranteed-amount equivalent, as the case may be, or 
require the lender to assign such responsibilities to a different 
entity, if the lender fails to perform its loan servicing 
responsibilities under the loan guarantee agreement, or if the lender 
becomes insolvent, makes an admission in writing of its inability to pay 
its debts generally as they become due, or becomes the subject of 
proceedings commenced under the Bankruptcy Reform Act of 1978 (11 U.S.C. 
101 et seq.) or any similar applicable Federal or State law, or is no 
longer in good standing with its licensing authority, or ceases to meet 
the eligibility requirements of this subpart. Such negligent servicing 
is defined as the failure to perform those services which a reasonable 
prudent lender would perform in servicing its own portfolio of loans 
that are not guaranteed and includes not only a failure to act but also 
not acting in a timely manner.
    (b) The guarantee shall cease to be effective with respect to any 
guaranteed loan amount or any guaranteed loan portion amount or any 
guaranteed-amount equivalent to the extent that:
    (1) The guaranteed loan amount or the respective guaranteed loan 
portion amount or the respective guaranteed amount equivalent, as the 
case may be, is separated at any time from the unguaranteed loan amount 
or the respective unguaranteed loan portion amount or the respective 
unguaranteed-amount equivalent, as the case may be, in any way, directly 
or through the issuance of any guaranteed-amount equity derivative or 
any guaranteed-amount debt derivative; or
    (2) Any holder of the guaranteed loan note or any guaranteed loan 
portion note or any derivative, as the case may be, having a claim to 
payments on the guaranteed loan receives more than its pro-rata 
percentage of any payment due to such holder from payments made under 
the guarantee at any time during the term of the guaranteed loan.



Sec. 1738.307  Additional policies.

    The Agency shall provide additional loan guarantee policies, 
consistent with OMB Circular A-129, in order to achieve its mission of 
promoting broadband in rural areas, which shall be published annually in 
the Federal Register.



Sec. 1738.308  Full faith and credit of the United States.

    Loan guarantees made under this part are supported by the full faith 
and

[[Page 373]]

credit of the United States and are incontestable except for fraud or 
misrepresentation of which the holder had actual knowledge at the time 
it became a holder.



Secs. 1738.309-1738.349  [Reserved]



Sec. 1738.350  OMB control number.

    The information collection requirements in this part are approved by 
the Office of Management and Budget (OMB) and assigned OMB control 
number 0572-0130.



PART 1739_BROADBAND GRANT PROGRAM--Table of Contents



                Subpart A_Community Connect Grant Program

Secs.
1739.1  Purpose.
1739.2  Funding availability and application dates and submission.
1739.3  Definitions.
1739.4-1739.8  [Reserved]
1739.9  USDA Rural Development State Director notification.
1739.10  Eligible applicant.
1739.11  Eligible Community Connect Competetive Grant Project.
1739.12  Eligible grant purposes.
1739.13  Ineligible grant purposes
1739.14  Matching contributions.
1739.15  Completed application.
1739.16  Review of grant applications.
1739.17  Scoring of applications.
1739.18  Grant documents.
1739.19  Reporting and oversight requirements.
1739.20  Audit requirements.
1739.21  OMB control number.

Subpart B [Reserved]

    Authority: Title III, Pub. L. 108-199, 118 Stat. 3.

    Source: 78 FR 25791, June 3, 2013, unless otherwise noted.



                Subpart A_Community Connect Grant Program



Sec. 1739.1  Purpose.

    (a) The provision of broadband service is vital to the economic 
development, education, health, and safety of rural Americans. The 
purpose of the Community Connect Grant Program is to provide financial 
assistance in the form of grants to eligible applicants that will 
provide, on a ``community-oriented connectivity'' basis, broadband 
service that fosters economic growth and delivers enhanced educational, 
health care, and public safety benefits. The Agency will give priority 
to rural areas that have the greatest need for broadband services, based 
on the criteria contained herein and in the Notice of Funds Availability 
(hereinafter referred to as NOFA) published in the Federal Register.
    (b) Grant authority will be used for the deployment of service to 
all premises in eligible rural areas at the Broadband Grant Speed on a 
``community-oriented connectivity'' basis. In addition to providing 
service to all premises the ``community-oriented connectivity'' concept 
will stimulate practical, everyday uses and applications of broadband by 
cultivating the deployment of new broadband services that improve 
economic development and provide enhanced educational and health care 
opportunities in rural areas. Such an approach will also give rural 
communities the opportunity to benefit from the advanced technologies 
that are necessary to achieve these goals.



Sec. 1739.2  Funding availability and application dates and submission.

    (a) The Agency will periodically publish, (usually on an annual 
basis) in the Federal Register, a NOFA that will set forth the total 
amount of funding available; the maximum and minimum funding for each 
grant; funding priority; the application submission dates; and the 
appropriate addresses and agency contact information. The NOFA will also 
outline and explain the procedures for submission of applications, 
including electronic submissions. The Agency may publish more than one 
NOFA should additional funding become available.
    (b) Notwithstanding paragraph (a) of this section, the Agency may, 
in response to a surplus of qualified eligible applications which could 
not be funded from the previous fiscal year, decline to publish a NOFA 
for the following fiscal year and fund said applications without further 
public notice.

[[Page 374]]



Sec. 1739.3  Definitions.

    As used in this subpart:
    Agency or RUS shall mean the Rural Utilities Service, which 
administers the United States Department of Agriculture (USDA) Rural 
Development Utilities Programs.
    Broadband Grant Speed means the minimum bandwidth described in the 
NOFA that an applicant must propose to deliver to every customer in the 
proposed funded service area in order for the Agency to approve a 
broadband grant. The Broadband Grant Speed may be different for fixed 
and mobile broadband services and from the minimum rate of data 
transmission required to determine the availability of broadband service 
when qualifying a service area.
    Broadband service means any terrestrial technology having the 
capacity to provide transmission facilities that enable subscribers of 
the service to originate and receive high-quality voice, data, graphics, 
and video at the minimum rate of data transmission described in the 
NOFA. The broadband service speed may be different from the broadband 
grant speed for the Community Connect program.
    Community Center means a building within the Proposed Funded Service 
Area that provides access to the public, or a section of a public 
building with at least two (2) Computer Access Points and wireless 
access, that is used for the purposes of providing free access to and/or 
instruction in the use of broadband Internet service, and is of the 
appropriate size to accommodate this purpose. The community center must 
be open and accessible to area residents before, during, and after 
normal working hours and on Saturdays or Sunday.
    Computer Access Point means a new computer terminal with access to 
service at the Broadband Grant Speed.
    Critical Community Facilities means the Community Center; any public 
school, public education center, public library, public medical clinic, 
public hospital, community college, public university; or law 
enforcement, fire or ambulance station in the Proposed Funded Service 
Area.
    Eligible applicant shall have the meaning as set forth in 
Sec. 1739.10.
    Eligible grant purposes shall have the meaning as set forth in 
Sec. 1739.12.
    Matching contribution means the applicant's qualified contribution 
to the Project, as outlined in Sec. 1739.14 of this part.
    Project means the delivery of service at the Broadband Grant Speed 
financed by the grant and Matching Contribution for the Proposed Funded 
Service Area.
    Proposed Funded Service Area (PFSA) means the contiguous geographic 
area within an eligible Rural Area or eligible Rural Areas, in which the 
applicant proposes to provide service at the Broadband Grant Speed.
    Rural area means any area, as confirmed by the latest decennial 
census of the Bureau of the Census, which is not located within:
    (1) A city, town, or incorporated area that has a population of 
greater than 20,000 inhabitants; or
    (2) An urbanized area contiguous and adjacent to a city or town that 
has a population of greater than 50,000 inhabitants. For purposes of the 
definition of rural area, an urbanized area means a densely populated 
territory as defined in the latest decennial census of the U.S. Census 
Bureau.



Secs. 1739.4-1739.8  [Reserved]



Sec. 1735.9  USDA Rural Development State Director notification.

    Applicants shall complete a notification form which will be a public 
document that the RUS provides to USDA Rural Development State Directors 
and others in the state(s) of the PFSA. The notification shall include a 
brief project description and the location of the PFSA.



Sec. 1739.10  Eligible applicant.

    To be eligible for a Community Connect competitive grant, the 
applicant must:
    (a) Be legally organized as an incorporated organization, an Indian 
tribe or tribal organization, as defined in 25 U.S.C. 450b(e), a state 
or local unit of government, or other legal entity, including 
cooperatives or private corporations or limited liability companies 
organized on a for-profit or not-for-profit basis.

[[Page 375]]

    (b) Have the legal capacity and authority to own and operate the 
broadband facilities as proposed in its application, to enter into 
contracts and to otherwise comply with applicable federal statutes and 
regulations.
    (c) As required by the Office of Management and Budget (OMB), all 
applicants for grants must supply a Dun and Bradstreet Data Universal 
Numbering System (DUNS) number when applying. The Standard Form 424 (SF-
424) contains a field for you to use when supplying your DUNS number. 
Obtaining a DUNS number costs nothing and requires a short telephone 
call to Dun and Bradstreet. Please see http://www.grants.gov/applicants/
request--duns--number.jsp for more information on how to obtain a DUNS 
number or how to verify your organization's number.
    (d) Register in the System for Award Management (SAM) (formerly 
Central Contractor Registry (CCR)).
    (1) In accordance with 2 CFR part 25, applicants, whether applying 
electronically or by paper, must be registered in the SAM prior to 
submitting an application. Applicants may register for the SAM at 
https://www.sam.gov/.
    (2) The SAM registration must remain active, with current 
information, at all times during which an entity has an application 
under consideration by an agency or has an active Federal Award. To 
remain registered in the SAM database after the initial registration, 
the applicant is required to review and update, on an annual basis from 
the date of initial registration or subsequent updates, its information 
in the SAM database to ensure it is current, accurate and complete.



Sec. 1739.11  Eligible Community Connect Competitive Grant Project.

    To be eligible for a Community Connect competitive grant, the 
Project must:
    (a) Serve a PFSA in which Broadband Service does not currently 
exist;
    (b) Offer service at the Broadband Grant Speed to all residential 
and business customers within the PFSA ;
    (c) Offer free service at the Broadband Grant Speed to all Critical 
Community Facilities located within the PFSA for at least 2 years 
starting from the time service becomes available to each Critical 
Community Facility;
    (d) Provide a Community Center with at least two (2) Computer Access 
Points and wireless access at the Broadband Grant Speed, free of all 
charges to all users for at least 2 years; and
    (e) Not overlap with the service areas of current RUS borrowers and 
grantees.



Sec. 1739.12  Eligible grant purposes.

    Grant funds may be used to finance the following:
    (a) The construction, acquisition, or leasing of facilities, 
including spectrum, land or buildings, used to deploy service at the 
Broadband Grant Speed to all residential and business customers located 
within the PFSA and all participating Critical Community Facilities, 
including funding for up to ten Computer Access Points to be used in the 
Community Center. Buildings constructed with grants funds must reside on 
property owned by the awardee. Leasing costs will only be covered 
through the advance of funds period included in the award documents;
    (b) The improvement, expansion, construction, or acquisition of a 
Community Center and provision of Computer Access Points. Grant funds 
for the Community Center will be limited to ten percent of the requested 
grant amount. If a community center is constructed with grant funds, the 
center must reside on property owned by the awardee;
    (c) The cost of providing the necessary bandwidth for service free 
of charge to the Critical Community Facilities for 2 years.



Sec. 1739.13  Ineligible grant purposes.

    Operating expenses not specifically permitted in Sec. 1739.12.



Sec. 1739.14  Matching contributions.

    (a) At the time of closing of the award, the awardee must contribute 
or demonstrate available cash reserves in an account(s) of the awardee 
equal to at least 15% of the grant. Matching contributions must be used 
solely for the Project and shall not include any financial assistance 
from federal

[[Page 376]]

sources unless there is a federal statutory exception specifically 
authorizing the federal financial assistance to be considered as such. 
An applicant must provide evidence of its ability to comply with this 
requirement in its application.
    (b) At the end of every calendar quarter, the award must submit a 
schedule to RUS that identifies how the match contribution was used to 
support the project until the total contribution is expended.



Sec. 1739.15  Completed application.

    Applications should be prepared in conformance with the provisions 
of this part and all applicable USDA regulations, including 7 CFR parts 
3015, 3016, and 3019. Applicants must also conform to the requirements 
of the individual NOFA to be published when funds are available for the 
program and are advised to use the Agency's Application Guide for this 
program, found at the Agency's Web site. Applicants must submit one 
paper copy and one electronic copy of the application. The application 
guide contains instructions and forms, as well as other important 
information needed to prepare an application and may be updated 
periodically. Paper copies of the application guide can be requested by 
contacting the, Director, Broadband Division at the following address: 
Stop 1599, South Agriculture Building, Room 2868, Washington, DC 20250. 
Completed applications must include the following documentation, 
studies, reports and information, in form and substance satisfactory to 
the Agency:
    (a) An Application for Federal Assistance. A completed Standard Form 
424;
    (b) An executive summary of the Project. A general project overview 
that addresses the following categories:
    (1) A description of why the Project is needed;
    (2) A description of the applicant;
    (3) An explanation of the total Project costs;
    (4) A general overview of the broadband telecommunications system to 
be developed, including the types of equipment, technologies, and 
facilities to be used;
    (5) Documentation describing the procedures used to determine the 
unavailability of existing Broadband Service; and
    (6) A list of the Critical Community Facilities that will take 
service from the Applicant at the Broadband Grant Speed, and evidence 
that any remaining Critical Community Facility located in the PFSA has 
rejected the offer;
    (c) Scoring Criteria Documentation. A narrative, with documentation 
where necessary, addressing the elements listed in the scoring criteria 
of Sec. 1739.17;
    (d) System design. A system design of the Project that is economical 
and practical, including a detailed description of the facilities to be 
funded, technical specifications, data rates, and costs. In addition, a 
network diagram detailing the proposed system must be provided. The 
system design must also address the environmental requirements specified 
in 7 CFR 1794;
    (e) Service Area Demographics. The following information about the 
PFSA:
    (1) A map, submitted electronically through RUS' web-based Mapping 
Tool, which identifies the Rural Area boundaries of the PFSA; and
    (2) The total population, number of households, and number of 
businesses located within the PFSA;
    (f) Scope of work. A description of the scope of work, which at a 
minimum must include:
    (1) The specific activities and services to be performed under the 
Project;
    (2) Who will carry out the activities and services;
    (3) A construction build-out schedule and project milestones, 
showing the time-frames for accomplishing the Project objectives and 
activities on a quarterly basis; and
    (4) A budget for all capital and administrative expenditures 
reflecting the line item costs for Eligible Grant Purposes and other 
sources of funds necessary to complete the Project;
    (g) Community-oriented connectivity plan. A community-oriented 
connectivity plan consisting of the following:
    (1) A listing of all participating Critical Community Facilities to 
be connected. The applicant must also provide documentation that it has 
consulted with the appropriate agent of every Critical Community 
Facility in

[[Page 377]]

the PFSA, and must provide statements from each one as to its 
willingness to participate, or not to participate, in the proposed 
Project;
    (2) A description of the services the applicant will make available 
to local residents and businesses; and
    (3) A list of any other telecommunications provider (including 
interexchange carriers, cable television operators, enhanced service 
providers, wireless service providers and providers of satellite 
services) that is participating in the delivery of services and a 
description of the consultations and the anticipated role of such 
provider in the Project;
    (h) Financial information and sustainability. A narrative 
description demonstrating the sustainability of the Project: from the 
commencement of construction to completion, and beyond the grant period; 
the sufficiency of resources; how and when the matching requirement is 
met; and the expertise necessary to undertake and complete the Project. 
The following financial information is required:
    (1) If the applicant is an existing company, it must provide 
complete copies of audited financial statements, if available, for the 
two fiscal years preceding the application submission. If audited 
statements are unavailable, the applicant must submit unaudited 
financial statements for those fiscal years. Applications from start-up 
entities must, at minimum, provide an opening balance sheet dated within 
30 days of the application submission date; and
    (2) Annual financial projections in the form of balance sheets, 
income statements, and cash flow statements for a forecast period of 
five years, which prove the sustainability of the Project for that 
period and beyond. These projections must be inclusive of the 
applicant's existing operations and the Project, and must be supported 
by a detailed narrative that fully explains the methodology and 
assumptions used to develop the projections, including details on the 
number of subscribers projected to take the applicant's services. 
Applicants submitting multiple applications for funding must demonstrate 
that each Project is feasible and sustainable on its own, funds are 
available to cover each of the matching requirements and that all 
Projects for which funding is being requested are financially feasible 
as a whole;
    (i) Statement of experience. A statement of experience which 
includes information on the owners' and principal employees' relevant 
work experience that would ensure the success of the Project. The 
applicant must also provide a written narrative demonstrating its 
capability and experience, if any, in operating a broadband 
telecommunications system;
    (j) Legal authority. Evidence of the applicant's legal authority and 
existence, and its ability to enter into a grant agreement with the RUS, 
and to perform the activities proposed under the grant application;
    (k) Additional funding. Evidence that funding agreements have been 
attained, if the Project requires funding commitment(s) from sources 
other than the grant. An applicant submitting multiple applications for 
funding must demonstrate its financial wherewithal to support all 
applications, if accepted, and that it can simultaneously complete and 
operate all of the Projects under consideration. Additionally, 
commitments for outside funding must be explicit that they will be 
available if all applications are not funded;
    (l) Federal compliance. Evidence of compliance with other federal 
statutes and regulations including, but not limited to the following:
    (1) 7 CFR part 15, subpart A--Nondiscrimination in Federally 
Assisted Programs of the Department of Agriculture--Effectuation of 
Title VI of the Civil Rights Act of 1964;
    (2) 7 CFR part 3015--Uniform Federal Assistance Regulations;
    (3) 2 CFR part 417--Nonprocurement Debarment and Suspension;
    (4) 7 CFR part 3018--New Restrictions on Lobbying;
    (5) 2 CFR part 421--Requirements for Drug-Free Workplace (Financial 
Assistance);
    (6) Certification regarding Architectural Barriers;
    (7) Certification regarding Flood Hazard Precautions;

[[Page 378]]

    (8) An environmental report/questionare, in accordance with 7 CFR 
part 1794;
    (9) A certification that grant funds will not be used to duplicate 
lines, facilities, or systems providing Broadband Service;
    (10) Federal Obligation Certification on Delinquent Debt; and
    (11) Assurance Regarding Felony Conviction or Tax Delinquent Status 
for Corporate Applicants.



Sec. 1739.16  Review of grant applications.

    (a) All applications for grants must be delivered to the Agency at 
the address and by the date specified in the NOFA (see Sec. 1739.2) to 
be eligible for funding. The Agency will review each application for 
conformance with the provisions of this part, and may contact the 
applicant for clarification of information in the application.
    (b) Incomplete applications as of the deadline for submission will 
not be considered. If an application is determined to be incomplete, the 
applicant will be notified in writing and the application will be 
returned with no further action.
    (c) If the Agency determines that the Project is technically or 
financially infeasible or unsustainable, the Agency will notify the 
applicant, in writing, and the application will be returned with no 
further action.
    (d) Applications conforming with this part will be evaluated 
competitively by the Agency and will be ranked in accordance with 
Sec. 1739.17. Applications will then be awarded generally in rank order 
until all grant funds are expended, subject to paragraphs (e) and (f) of 
this section.
    (e) In addition to scoring, the Agency may take geographic 
distribution into consideration when making final award determinations.
    (f) An award may be made out of rank order if a higher ranked 
application would require an award that exceeded available funding or 
would consume a disproportionate amount of funds available relative to 
its ranking.
    (g) The Agency reserves the right to offer an applicant a lower 
amount than proposed in the application.



Sec. 1739.17  Scoring of applications.

    The ranking of the ``community-oriented connectivity'' benefits of 
the Project will be based on documentation in support of the need for 
services, benefits derived from the proposed services, characteristics 
of the PFSA, local community involvement in planning and implementation 
of the Project, and the level of experience of the management team. In 
ranking applications the Agency will consider the following criteria 
based on a scale of 100 possible points:
    (a) An analysis of the challenges of the following criteria, laid 
out on a community-wide basis, and how the Project proposes to address 
these issues (up to 50 points):
    (1) The economic characteristics;
    (2) Educational challenges;
    (3) Health care needs; and
    (4) Public safety issues;
    (b) The extent of the Project's planning, development, and support 
by local residents, institutions, and Critical Community Facilities. 
Documentation must include evidence of community-wide involvement, as 
exemplified by community meetings, public forums, and surveys. In 
addition, applicants should provide evidence of local residents' 
participation in the Project planning and development (up to 40 points).
    (c) The level of experience and past success of operating broadband 
systems for the management team. (up to 10 points)
    (d) In making a final selection among and between applications with 
comparable rankings and geographic distribution, the Administrator may 
take into consideration the characteristics of the PFSA. Only 
information provided in the application will be considered. Applicants 
should therefore specifically address each of the following criteria to 
differentiate their applications:
    (1) Persistent poverty counties that will be served within the PFSA;
    (2) Out-migration Communities that will be served within the PFSA;
    (3) The rurality of the PFSA;
    (4) The speed of service provided by the project;

[[Page 379]]

    (5) Substantially underserved trust areas that will be served within 
the PFSA;
    (6) Community members with disabilities that will be served within 
the PFSA; and
    (7) Any other additional factors that may be outlined in the NOFA.



Sec. 1739.18  Grant documents.

    The terms and conditions of grants shall be set forth in grant 
documents prepared by the Agency. The documents shall require the 
applicant to own all equipment and facilities financed by the grant. 
Among other matters, the Agency may prescribe conditions to the advance 
of funds that address concerns regarding the Project feasibility and 
sustainability. The Agency may also prescribe terms and conditions 
applicable to the construction and operation of the Project and the 
delivery of service at the Broadband Grant Speed to eligible Rural 
Areas, as well as other terms and conditions applicable to the 
individual Project. Dividend distributions will not be allowed until all 
grant funds and matching contributions have been expended.



Sec. 1739.19  Reporting and oversight requirements.

    (a) A project performance activity report will be required of all 
recipients on an annual basis until the Project is complete and the 
funds are expended by the applicant. The reporting period will start 
with the calendar year the award is made and continue for every calendar 
year through the term of the award. The report must be submitted by 
January 31 of the following year of the reporting period. Recipients are 
to submit an original and one copy of all project performance reports, 
including, but not limited to, the following:
    (1) A comparison of actual accomplishments to the objectives 
established for that period;
    (2) A description of any problems, delays, or adverse conditions 
which have occurred, or are anticipated, and which may affect the 
attainment of overall Project objectives, prevent the meeting of time 
schedules or objectives, or preclude the attainment of particular 
Project work elements during established time periods. This disclosure 
shall be accompanied by a statement of the action taken or planned to 
resolve the situation; and
    (3) Objectives and timetable established for the next reporting 
period.
    (b) A final project performance report must be provided by the 
recipient. It must provide an evaluation of the success of the Project 
in meeting the objectives of the program. The final report may serve as 
the last annual report.
    (c) The Agency will monitor recipients, as it determines necessary, 
to assure that Projects are completed in accordance with the approved 
scope of work and that the grant is expended for Eligible Grant 
Purposes.
    (d) Recipients shall diligently monitor performance to ensure that 
time schedules are being met, projected work within designated time 
periods is being accomplished, and other performance objectives are 
being achieved.
    (e) The applicant must have the necessary processes and systems in 
place to comply with the reporting requirements for first-tier sub-
awards and executive compensation under the Federal Funding 
Accountability and Transparency Act of 2006 in the event the applicant 
receives funding unless such applicant is exempt from such reporting 
requirements pursuant to 2 CFR 170.110(b). The reporting requirements 
under the Transparency Act pursuant to 2 CFR part 170 are as follows:
    (1) First Tier Sub-Awards of $25,000 or more in non-Recovery Act 
funds (unless they are exempt under 2 CFR part 170) must be reported by 
the Recipient to http://www.fsrs.gov no later than the end of the month 
following the month the obligation was made.
    (2) The Total Compensation of the Recipient's Executives (5 most 
highly compensated executives) must be reported by the Recipient (if the 
Recipient meets the criteria under 2 CFR part 170) to http://www.sam.gov 
by the end of the month following the month in which the award was made.
    (3) The Total Compensation of the Subrecipient's Executives (5 most 
highly compensated executives) must be reported by the Subrecipient (if 
the Subrecipient meets the criteria under 2 CFR part 170) to the 
Recipient by the

[[Page 380]]

end of the month following the month in which the subaward was made.



Sec. 1739.20  Audit requirements.

    A grant recipient shall provide the Agency with an audit for each 
year in which a portion of the financial assistance is expended, in 
accordance with the following:
    (a) If the recipient is a for-profit entity, an existing 
Telecommunications or Electric Borrower with the Agency, or any other 
entity not covered by the following paragraph, the recipient shall 
provide an independent audit report in accordance with 7 CFR part 1773, 
``Policy on Audits of the Agency's Borrowers.'' Please note that the 
first audit submitted to the Agency and all subsequent audits must be 
comparative audits as described in 7 CFR part 1773.
    (b) If the recipient is a Tribal, State or local government, or non-
profit organization, the recipient shall provide an audit in accordance 
with OMB Circular A-133, ``Audits of States, Local Governments, and Non-
Profit Organizations.''



Sec. 1739.21  OMB control number.

    The information collection requirements in this part are approved by 
the Office of Management and Budget (OMB) and assigned OMB control 
number 0572-0127.

Subpart B [Reserved]



PART 1740_PUBLIC TELEVISION STATION DIGITAL TRANSITION 
GRANT PROGRAM--Table of Contents



  Subpart A_ Public Television Station Digital Transition Grant Program

Sec.
1740.1  Purpose.
1740.2  Definitions.
1740.3  Applicant eligibility.
1740.4  Maximum amounts of grants.
1740.5  Matching funds.
1740.6  Eligible purposes of grants.
1740.7  Ineligible purposes.
1740.8  Scoring criteria for the grant competition.
1740.9  Grant application.
1740.10  Grant documents.
1740.11  Request for funds.

Subpart B [Reserved]

    Authority: Consolidated Appropriations Act, 2005; Title III: Rural 
Development Programs; Rural Utilities Service; Distance Learning, 
Telemedicine, and Broadband Program; Public Law 108-447.

    Source: 71 FR 3206, Jan. 20, 2006, unless otherwise noted.



  Subpart A_Public Television Station Digital Transition Grant Program



Sec. 1740.1  Purpose.

    The purpose of the Rural Utilities Service (RUS) Public Television 
Station Digital Transition Grant Program (Grant Program) is to enable 
public television stations serving rural areas to transition from 
broadcasting in analog to digital, as required under the Federal 
Communications Commission rules, by awarding grants through a 
competitive process.



Sec. 1740.2  Definitions.

    Core coverage area is the set of counties fully covered, or at least 
75% covered, by a digital television transmitter or translator.
    Coverage contour area is the area estimated to receive a digital 
television signal from a transmitter or translator of 41 dB[mu] for UHF 
signals, 36 dB[mu] for channel 7-13 signals, or 28 dB[mu] for channel 2-
6 signals, as shown on the public television station's map filed with 
the FCC.
    Digital television, or DTV, means the digital television system 
which will replace the current analog system.
    Digital transition means the transition from analog television 
broadcasting to digital television broadcasting. To transition according 
to FCC rules, a broadcaster must initiate digital television 
broadcasting while continuing to operate analog television broadcasting 
until December 31, 2006, to enable viewers the necessary time to acquire 
digital television reception capability.
    Distance learning means any digital public television broadcast to a 
school, library, home, or other end-user site located in a rural area, 
for the purpose of providing educational and cultural programming.

[[Page 381]]

    Grant Program means this Public Television Station Digital 
Transition Grant Program.
    High definition television, or HDTV, means an enhanced television 
service which is authorized by the FCC as part of the digital television 
standard.
    Public television station means a noncommercial educational 
television broadcast station that serves rural areas and is qualified 
for Community Service Grants by the Corporation for Public Broadcasting 
under section 396(k) of the Communications Act of 1934.
    Rural area means any area of the United States not included within 
the boundaries of any incorporated or unincorporated city, village, or 
borough having a population in excess of 20,000 inhabitants.
    Rural population means the number of people within the core coverage 
area of a transmitter who do not live within the boundaries of an 
incorporated or unincorporated city, village, or borough having a 
population in excess of 20,000 inhabitants as calculated pursuant to 
Section 1740.8(c)(1).
    Rural Utilities Service, or RUS, is a Rural Development agency of 
the United States Department of Agriculture, which will administer this 
Grant Program.
    Urban area means any area of the United States which is not a Rural 
area.



Sec. 1740.3  Applicant eligibility.

    Eligibility for grants is limited to public television stations that 
serve rural areas, regardless of whether urban areas are additionally 
served.



Sec. 1740.4  Maximum amounts of grants.

    The maximum grant amount shall be announced in each fiscal year's 
Notice of Funds Availability.



Sec. 1740.5  Matching funds.

    No matching funds are required in this program.



Sec. 1740.6  Eligible purposes of grants.

    Grants shall be made to enable applicants to perform digital 
transitions of television broadcasting serving rural areas, regardless 
of the location of their main transmitter. Grant funds may be used to 
acquire, lease, and/or install facilities and software necessary to the 
digital transition. Specific purposes include:
    (a) Digital transmitters, translators, and repeaters, including all 
facilities required to initiate DTV broadcasting. All broadcast 
facilities acquired with grant funds shall be capable of delivering DTV 
programming and HDTV programming, at both the interim and final channel 
and power authorizations. There is no limit to the number of 
transmitters or translators that may be included in an application;
    (b) Power upgrades of existing DTV transmitter equipment;
    (c) Studio-to-transmitter links;
    (d) Equipment to allow local control over digital content and 
programming, including master control equipment;
    (e) Digital program production equipment, including cameras, 
editing, mixing and storage equipment;
    (f) Multicasting and datacasting equipment;
    (g) Cost of the lease of facilities, if any, for up to three years; 
and
    (h) Associated engineering and environmental studies necessary to 
implementation.



Sec. 1740.7  Ineligible purposes.

    (a) Grant funds shall not be used to fund ongoing operations or for 
facilities that will not be owned by the applicant, except for leased 
facilities as provided in Sec. 1740.6.
    (b) Costs of salaries, wages, and employee benefits of public 
television station personnel are not eligible for funding under this 
program unless they are for construction or installation of eligible 
facilities.
    (c) Facilities for which other grant funding from any source has 
been approved are not eligible for funding under this program.
    (d) Expenditures made prior to this deadline are not eligible for 
funding. To be an eligible grant purpose, an expenditure must be made 
after the application deadline specified in the Notice of Funds 
Available.

[[Page 382]]



Sec. 1740.8  Scoring criteria for the grant competition.

    (a) After an application is found to be eligible, it will be scored 
in three categories: the rurality of the applicant's core coverage area, 
the average National School Lunch Program eligibility ratio in the 
applicant's core coverage area, and the critical need for the project.
    (b)(1)(i) Scoring in this program is based on a simplified 
representation of the project's digital coverage area. To find a 
transmitter's simplified coverage area, go to the FCC TV Query Web site 
(http://www.fcc.gov/fcc-bin/audio/tvq.html) and access the station 
Service Contour Map. This map shows coverage at the appropriate field 
strength in dB[mu], overlaid on a Census Tiger Map. The map also shows 
counties covered. The core coverage area is the set of counties that are 
either entirely within the appropriate coverage contour, or are at least 
seventy-five percent (75%) within the contour. For contours where 
counties are very large with respect to coverage, as might be the case 
for some western states and for most translators, there may be only one 
county within the coverage contour. In such cases, this county is the 
station's core coverage area. Every transmitter and translator must have 
a core coverage area consisting of one or more counties.
    (ii) In the case of translators, where a coverage contour area does 
not exist, the applicant shall define a coverage contour area and 
explain how coverage was estimated. This estimated coverage contour area 
is subject to acceptance by RUS.
    (2) When an application covers more than one transmitter or 
translator, the core coverage area of the application is the sum of the 
core coverage areas of all transmitters and translators included in the 
application.
    (c) Rurality is a measure of the degree to which a project benefits 
rural areas. Up to fifty (50) points are available in this category. 
Urban areas bisected by the computed contour line are disregarded, since 
they represent fringe viewers. The Rurality score is computed as 
follows:
    (1) The rural population of a core coverage area must be calculated. 
The rural population of a county is calculated by subtracting the 
county's urban population(s) from the total county population. If the 
core coverage area consists of multiple counties, the rural population 
is the sum of all included counties' rural populations. Urban area and 
county populations may be found at the American Factfinder Web site 
http://factfinder.census.gov/home/saff/main.html?--lang=en).
    (2) The Rurality score is computed by multiplying the rural 
population for the core coverage area by one hundred (100), and 
subtracting fifty (50) from it. If this calculation results in a 
negative number, the Rurality score is zero. The formula is:

100 x [(total population - urban population)/total population] - 50

    (3) If an applicant has no urban communities within the core 
coverage area, the computation would deliver a score of 50.
    (d) Economic Need will be measured by the ability of the public in 
an area to support Public Television financially. Up to 25 points are 
available in this category.
    (1) The score for Economic Need is computed from the average of the 
National School Lunch Program (NSLP) eligibility percentages for all 
school districts within the core coverage area. NSLP eligibility 
percentage information may be obtained from the state or local agency 
that administers the program, and the application must include a 
certification from this organization that the percentages provided are 
correct. Please note that the score for Economic Need is computed from 
the eligibility percentage, not the participation percentage. The score 
is computed by multiplying the average eligibility percentage by 100 (to 
convert percentage to a whole number), subtracting 25, dividing the 
quotient by two, and limiting the result to 25 points. A negative result 
yields a score of zero.

[(average NSLP eligibility percentage x 100) - 25] / 2, not to exceed 25 
points

    (2) [Reserved]

[[Page 383]]

    (e) Critical Need will be measured by the urgency and importance of 
the project to the rural community the applicant serves. Up to 25 points 
are available in this category. Critical Need evaluates factors not 
captured in the Rurality and Economic Need scoring categories, such as:
    (1) Geographic or coverage characteristics of the public television 
station's digital television coverage area that make the digital 
transition unusually expensive;
    (2) A severe lack of specialized human resources (such as teachers) 
for which digital educational television will compensate;
    (3) Geographic isolation of communities which will be overcome with 
public television station services;
    (4) Non-traditional community needs (such as adult vocational 
retraining) that may be met only with digital public television station 
broadcast capabilities;
    (5) Historical events that have placed the public television station 
in severe financial stress; and
    (6) The degree to which the project purposes will specifically 
benefit the rural public.



Sec. 1740.9  Grant application.

    The grant application must include the following:
    (a) An application for federal assistance, Standard Form 424.
    (b) An executive summary, not to exceed two pages, describing the 
public television station, its service area and offerings, its current 
digital transition status, and the proposed project.
    (c) Evidence of the applicant's eligibility to apply under this 
Notice, proving that the applicant is a Public Television Station as 
defined in this Part, and that it is required by the FCC to perform the 
digital transition.
    (d) A spreadsheet showing the total project cost, with a breakdown 
of items sufficient to enable RUS to determine individual item 
eligibility.
    (e) A coverage contour map showing the digital television coverage 
area of the applicant. This map must show the counties (or county) 
comprising the core coverage area by shading and by name. Partial 
counties included in the applicant's core coverage area must be 
identified as partial and must contain an attachment with the 
applicant's estimate of the percentage that its coverage contour 
comprises the total area of the county (total area is available from 
American Factfinder, referenced in Sec. 1740.8 (c)(1)). If the 
application is for a translator, the coverage area may be estimated by 
the applicant through computer modeling or some other reasonable method, 
and this estimate is subject to acceptance by RUS.
    (f) The applicant's own calculation of its Rurality score, supported 
by a worksheet showing the population of its core coverage area, and the 
urban and rural populations within the core coverage area. The data 
source for the urban and rural components of that population must be 
identified. If the application includes computations made by a 
consultant or other organization outside the public television station, 
the application shall state the details of that collaboration.
    (g) The applicant's own calculation of its Economic Need score, 
supported by a worksheet showing the National School Lunch Program 
eligibility levels for all school districts within the core coverage 
area and averaging these eligibility percentages. The application must 
include a statement from the state or local organization that 
administers the NSLP program certifying the school district scores used 
in the computations.
    (h) If applicable, a presentation not to exceed five pages 
demonstrating the Critical Need for the project.
    (i) Evidence that the FCC has authorized the initiation of digital 
broadcasting at the project sites. In the event that an FCC construction 
permit has not been issued for one or more sites, the RUS may include 
those sites in the grant, and make advance of funds for that site 
conditional upon the submission of a construction permit.
    (j) Compliance with other Federal statutes. The applicant must 
provide evidence or certification that it is in compliance with all 
applicable Federal statutes and regulations, including, but not limited 
to the following:
    (1) Executive Order (E.O.) 11246, Equal Employment Opportunity, as

[[Page 384]]

amended by E.O. 11375 and as supplemented by regulations contained in 41 
CFR part 60;
    (2) Architectural barriers;
    (3) Flood hazard area precautions;
    (4) Assistance and Real Property Acquisition Policies Act of 1970;
    (5) Drug-Free Workplace Act of 1998 (41 U.S.C. 701);
    (6) E.O.s 12549 and 12689, Debarment and Suspension; and
    (7) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352).
    (k) Environmental impact and historic preservation. The applicant 
must provide details of the digital transition's impact on the 
environment and historic preservation, and comply with 7 CFR part 1794, 
which contains RUS' policies and procedures for implementing a variety 
of Federal statutes, regulations, and executive orders generally 
pertaining to the protection of the quality of the human environment. 
This must be contained in a separate section entitled ``Environmental 
Impact of the Digital Transition,'' and must include the Environmental 
Questionnaire/Certification, available from RUS, describing the impact 
of its digital transition. Submission of the Environmental 
Questionnaire/Certification alone does not constitute compliance with 7 
CFR part 1794.



Sec. 1740.10  Grant documents.

    The terms and conditions of each grant shall be set forth in 
standard grant documents prepared by RUS. These documents shall require 
that the applicant own or lease all facilities financed by the grant. In 
addition, however, RUS may prescribe special conditions to the advance 
of funds, such as those concerning FCC licensing.



Sec. 1740.11  Requests for funds.

    (a) Once grant documents have been executed, funds may be requested 
for eligible purposes up to the amounts in the grant. Funds may either 
be requested in anticipation of known obligations, or may be requested 
to reimburse disbursements made by the grantee.
    (b) Requests for funds shall be submitted on Standard Form 270 
(Request for Advancement or Reimbursement).
    (c) All requests for funds shall be supported by invoices or 
receipts.

 PART 1741_PRE-LOAN POLICIES AND PROCEDURES FOR INSURED TELEPHONE LOANS 
                               [RESERVED]



PART 1744_POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED 
AND INSURED TELEPHONE LOANS--Table of Contents



Subpart A [Reserved]

         Subpart B_Lien Accommodations and Subordination Policy

Sec.
1744.20  General.
1744.21  Definitions.
1744.22-1744.29  [Reserved]
1744.30  Automatic lien accommodations.
1744.31-1744.39  [Reserved]
1744.40  Act purposes.
1744.41-1744.49  [Reserved]
1744.50  Non-Act purposes.
1744.51-1744.54  [Reserved]
1744.55  Application procedures.
1744.56-1744.59  [Reserved]

Appendix A to Subpart B--Statement, Certification, and Agreement of 
          Borrower's President of Board of Directors Regarding 
          Refinancing and Refunding Notes Pursuant to 7 CFR 1744.30(c)
Appendix B to Subpart B--Certification of Independent Certified Public 
          Accountant Regarding Notes To Be Issued Pursuant to 7 CFR 
          1744.30(c)
Appendix C to Subpart B--Statement, Certification, and Agreement of 
          Borrower's President of Board of Directors Regarding Notes To 
          Be Issued Pursuant to 7 CFR 1744.30(d)
Appendix D to Subpart B--Certification of Independent Certified Public 
          Accountant Regarding Notes To Be Issued Pursuant to 7 CFR 
          1744.30
Appendix E to Subpart B--Statement, Certification, and Agreement of 
          Borrower's President of Board of Directors Regarding Notes To 
          Be Issued Pursuant to 7 CFR 1744.30(e)
Appendix F to Subpart B--Form of Supplemental Mortgage

               Subpart C_Advance and Disbursement of Funds

1744.60  General.
1744.61  [Reserved]
1744.62  Introduction.
1744.63  The telephone loan budget.
1744.64  Budget adjustment.

[[Page 385]]

1744.65  The construction fund.
1744.66  The financial requirement statement (FRS).
1744.67  Temporary excess construction funds.
1744.68  Order and method of advances of telephone loan funds.
1744.69  [Reserved]

Subpart D [Reserved]

                     Subpart E_Borrower Investments

1744.200  General statement.
1744.201  Definitions.
1744.202  Borrowers may make qualified investments without prior 
          approval of the Administrator.
1744.203  Establishing amount of rural development investment.
1744.204  Rural development investments that do not meet the ratio 
          requirements.
1744.205  Determinations and application of limitations described in 
          Sec. 1744.202.
1744.206  Effect of subsequent failure to maintain ratios.
1744.207  Investment not to jeopardize loan security.
1744.208  Rural development investments before November 28, 1990.
1744.209  Records.
1744.210  Effect of this subpart on RUS loan contract and mortgage.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.

Subpart A [Reserved]



         Subpart B_Lien Accommodations and Subordination Policy

    Source: 51 FR 32430, Sept. 12, 1986, unless otherwise noted. 
Redesignated at 55 FR 39396, Sept. 27, 1990.



Sec. 1744.20  General.

    (a) Recent changes in the telecommunications industry, including 
deregulation and technological developments, have caused Rural Utilities 
Service (RUS) borrowers and other organizations providing 
telecommunications services to consider undertaking projects that 
provide new telecommunications services and other telecommunications 
services not ordinarily financed by RUS. Although some of these services 
may not be eligible for financing under the Rural Electrification Act of 
1936 (RE Act), these services may nevertheless advance RE Act objectives 
where the borrower obtains financing from private lenders. The 
borrower's financial strength and the assurance of repayment of 
outstanding Government debt may be improved as a result of providing 
such telecommunications services.
    (b) To facilitate the financing of new services and other services 
not ordinarily financed by RUS, RUS is willing to consider accommodating 
the Government's lien on telecommunications borrowers' systems or 
accommodating or subordinating the Government's lien on after-acquired 
property of telecommunications borrowers. To expedite this process, 
requests for lien accommodations meeting the requirements of 
Sec. 1744.30 will receive automatic approval from RUS.
    (c) This subpart establishes RUS policy with respect to all requests 
for lien accommodations and subordinations for loans from private 
lenders. For borrowers that do not qualify for automatic lien 
accommodations in accordance with Sec. 1744.30, RUS will consider lien 
accommodations for RE Act purposes under Sec. 1744.40 and non-Act 
purposes under Sec. 1744.50.

[66 FR 41758, Aug. 9, 2001]



Sec. 1744.21  Definitions.

    The following definitions apply to this subpart:
    Administrator means the Administrator of RUS and includes the 
Governor of the RTB.
    Advance means transferring funds from RUS, RTB, or a lender 
guaranteed by RUS to the borrower's construction fund.
    After-acquired property means property which is to be acquired by 
the borrower and which would be subject to the lien of the Government 
mortgage when acquired.
    Amortization expense means the sum of the balances of the following 
accounts of the borrower:

------------------------------------------------------------------------
                        Account names                            Number
------------------------------------------------------------------------
(1) Amortization expense.....................................     6560.2
(2) Amortization expense--tangible...........................       6563
(3) Amortization expense--intangible.........................       6564
(4) Amortization expense--other..............................       6565
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).


[[Page 386]]


    Asset means a future economic benefit obtained or controlled by the 
borrower as a result of past transactions or events.
    Automatic lien accommodation means the approval, by RUS, of a 
request to share the Government's lien on a pari passu or pro-rata basis 
with a private lender in accordance with the provisions of Sec. 1744.30.
    Borrower means any organization that has an outstanding 
telecommunications loan made or guaranteed by RUS, or that is seeking 
such financing. See 7 CFR part 1735.
    Construction Fund means the RUS Construction Fund Account into which 
all advances of loan funds are deposited pursuant to the provisions of 
the loan documents.
    Debt Service Coverage (DSC) ratio means the ratio of the sum of the 
borrower's net income, depreciation and amortization expense, and 
interest expense, all divided by the sum of all payments of principal 
and interest required to be paid by the borrower during the year on all 
its debt from any source with a maturity greater than 1 year and capital 
lease obligations.
    Default means any event or occurrence which, unless corrected, will, 
with the passage of time and the giving of proper notices, give rise to 
remedies under one or more of the loan documents.
    Depreciation expense means the sum of the balances of the following 
accounts of the borrower:

------------------------------------------------------------------------
                        Account names                            Number
------------------------------------------------------------------------
(1) Depreciation expense.....................................     6560.1
(2) Depreciation expense--telecommunications plant in service       6561
(3) Depreciation expense--property held for future                  6562
 telecommunications use......................................
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Disbursement means a transfer of money by the borrower out of the 
construction fund in accordance with the provisions of the fund.
    Equity percentage means the total equity or net worth of the 
borrower expressed as a percentage of the borrower's total assets.
    FFB means the Federal Financing Bank.
    Financial Requirement Statement (FRS) means RUS Form 481 (OMB--No. 
0572--0023). (This RUS Form is available from RUS, Program Development 
and Regulatory Analysis, Washington, DC 20250-1522).
    Government mortgage means any instrument to which the Government, 
acting through the Administrator, is a party and which creates a lien or 
security interest in the borrower's property in connection with a loan 
made or guaranteed by RUS whether the Government is the sole mortgagee 
or is a co-mortgagee with a private lender.
    Hardship loan means a loan made by RUS under section 305(d)(1) of 
the RE Act.
    Interim construction means the purchase of equipment or the conduct 
of construction under an RUS-approved plan of interim financing. See 7 
CFR part 1737.
    Interest expense means the sum of the balances of the following 
accounts of the borrower:

------------------------------------------------------------------------
                        Account names                            Number
------------------------------------------------------------------------
(1) Interest and related items...............................       7500
(2) Interest on funded debt..................................       7510
(3) Interest expense--capital leases.........................       7520
(4) Amortization of debt issuance expense....................       7530
(5) Less Allowance for funds used during construction........      7340/
                                                                  7300.4
(6) Other interest deductions................................       7540
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Interim financing means funding for a project which RUS has 
acknowledged may be included in a loan, should said loan be approved, 
but for which RUS loan funds have not yet been made available.
    Lien accommodation means sharing the Government's lien on a pari 
passu or pro-rata basis with a private lender.
    Loan means any loan made or guaranteed by RUS.
    Loan documents means the loan contract, note and mortgage between 
the borrower and RUS and any associated document pertinent to a loan.
    Loan funds means the proceeds of a loan made or guaranteed by RUS.
    Material and supplies means any of the items properly recordable in 
the following account of the borrower:

[[Page 387]]



------------------------------------------------------------------------
                        Account names                            Number
------------------------------------------------------------------------
(1) Material and Supplies....................................     1220.1
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Net income/Net margins means the sum of the balances of the 
following accounts of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Local Network Services Revenues.......  5000 through 5069
(2) Network Access Services Revenues......  5080 through 5084
(3) Long Distance Network Services          5100 through 5169
 Revenues.
(4) Miscellaneous Revenues................  5200 through 5270
(5) Nonregulated Revenues.................  5280
(6) Less Uncollectible Revenues...........  5200 through 5302
(7) Less Plant Specific Operations Expense  6110 through 6441
(8) Less Plant Nonspecific Operations       6510 through 6565
 Expense.
(9) Less Customer Operations Expense......  6610 through 6623
(10) Less Corporate Operations Expense....  6710 through 6790
(11) Other Operating Income and Expense...  7100 through 7160
(12) Less Operating Taxes.................  7200 through 7250/7200.5
(13) Nonoperating Income and Expense......  7300 through 7370
(14) Less Nonoperating Taxes..............  7400 through 7450/7400.5
(15) Less Interest and Related Items......  7500 through 7540
(16) Extraordinary Items..................  7600 through 7640/7600.4
(17) Jurisdictional Differences and         7910 through 7990
 Nonregulated Income Items.
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Net plant means the sum of the balances of the following accounts of 
the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Property, Plant and Equipment.........  2001 through 2007
(2) Less Depreciation and Amortization....  3100 through 3600
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Notes means evidence of indebtedness secured by or to be secured by 
the Government mortgage.
    Pari Passu means equably; ratably; without preference or precedence.
    Plant means any of the items properly recordable in the following 
accounts of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Property, Plant and Equipment.........  2001 through 2007
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Private lender means any lender other than the RUS or the lender of 
a loan guaranteed by RUS.
    Private lender notes means the notes evidencing a private loan.
    Private loan means any loan made by a private lender.
    RE Act (Act) means the Rural Electrification Act of 1936 (7 U.S.C. 
901 et seq.) RTB means the Rural Telephone Bank.
    RUS means the Rural Utilities Service, and includes its predecessor, 
the Rural Electrification Administration. The term also includes the 
RTB, unless otherwise indicated.
    RUS cost-of-money loan means a loan made under section 305(d)(2) of 
the RE Act.
    Subordination means allowing a private lender to have a lien on 
specific property which will have priority over the Government's lien on 
such property.
    Tangible plant means any of the items properly recordable in the 
following accounts of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Telecommunications Plant in Service--   2110 through 2124
 General Support Assets.
(2) Telecommunications Plant in Service--   2210 through 2232
 Central Office Assets.
(3) Telecommunications Plant in Service--   2310 through 2362
 Information Origination/Termination
 Assets.
(4) Telecommunications Plant in Service--   2410 through 2441
 Cable and Wire Facilities Assets.
(5) Amortizable Tangible Assets...........  2680 through 2682
(6) Nonoperating Plant....................  2006
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Telecommunication services means any service for the transmission, 
emission, or reception of signals, sounds, information, images, or 
intelligence of any nature by optical waveguide, wire, radio, or other 
electromagnetic systems and shall include all facilities used in 
providing such service as well as the development, manufacture, sale, 
and distribution of such facilities.
    Times interest earned ratio (TIER) means the ratio of the borrower's 
net income or net margins plus interest expense, divided by said 
interest expense.

[[Page 388]]

    Total assets means the sum of the balances of the following accounts 
of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Current Assets........................  1100s through 1300s
(2) Noncurrent Assets.....................  1400s through 1500s
(3) Total telecommunications plant........  2001 through 2007
(4) Less accumulated depreciation.........  3100 through 3300s
(5) Less accumulated amortization.........  3400 through 3600s
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Total equity or net worth means the excess of a borrower's total 
assets over its total liabilities.
    Total liabilities means the sum of the balances of the following 
accounts of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Current Liabilities...................  4010 through 4130.2
(2) Long-Term Debt........................  4210 through 4270.3
(3) Other Liabilities and Deferred Credits  4310 through 4370
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Total long-term debt means the sum of the balances of the following 
accounts of the borrower:

------------------------------------------------------------------------
               Account names                           Number
------------------------------------------------------------------------
(1) Long-Term Debt........................  4210 through 4270.3
------------------------------------------------------------------------

    Note: All references to account numbers are to the Uniform System of 
Accounts (7 CFR part 1770, subpart B).

    Weighted-average life of the loans or notes means the average life 
of the loans or notes based on the proportion of original loan principal 
paid during each year of the loans or notes. It shall be determined by 
calculating the sum of all loan or note principal payments expressed as 
a fraction of the original loan or note principal amount, times the 
number of years and fractions of years elapsed at the time of each 
payment since issuance of the loan or note. For example, given a $5 
million loan, with a maturity of 5 years and equal principal payments of 
$1 million due on the anniversary date of the loan, the weighted-average 
life would be: (.2)(1 year) + (.2)(2 years) + (.2)(3 years) + (.2)(4 
years) + (.2)(5 years) = .2 years + .4 years + .6 years + .8 years + 1.0 
years = 3.0 years. If instead the loan had a balloon payment of $5 
million at the end of 5 years, the weighted-average life would be: ($5 
million/$5 million)(5 years) = 5 years.
    Weighted-average remaining life of the loans or notes means the 
remaining average life of the loans or notes based on the proportion of 
remaining loan or note principal expressed in years remaining to 
maturity of the loans or notes. It shall be determined by calculating 
the sum of the remaining principal payments of each loan or note 
expressed as a fraction of the total remaining loan or note amounts 
times the number of years and fraction of years remaining until maturity 
of the loan or note.
    Weighted-average remaining useful life of the assets means the 
estimated original average life of the assets to be acquired with the 
proceeds of the private lender notes expressed in years based on 
depreciation rates less the number of years those assets have been in 
service (or have been depreciated). It shall be determined by 
calculating the sum of each asset's remaining value expressed as a 
fraction of the total remaining value of the assets, times the estimated 
number of years and fraction of years remaining until the assets are 
fully depreciated.
    Wholly-owned subsidiary means a corporation owned 100 percent by the 
borrower.

[66 FR 41758, Aug. 9, 2001]



Secs. 1744.22-1744.29  [Reserved]



Sec. 1744.30  Automatic lien accommodations.

    (a) Purposes and requirements for approval. Automatic lien 
accommodations are available only for refinancing and refunding of notes 
secured by the borrower's existing Government mortgage; financing 
assets, to be owned by the borrower, to provide telecommunications 
services; or financing assets, to be owned by a wholly-owned subsidiary 
of the borrower, to provide telecommunications services in accordance

[[Page 389]]

with the procedures set forth in this section.
    (b) Private lender responsibility. The private lender is responsible 
for ensuring that its notes, for which an automatic lien accommodation 
has been approved as set forth in this section, are secured under the 
mortgage. The private lender is responsible for ensuring that the 
supplemental mortgage is a valid and binding instrument enforceable in 
accordance with its terms, and recorded and filed in accordance with 
applicable law. If the private lender determines that additional 
documents are required or that RUS must take additional actions to 
secure the notes under the mortgage, the private lender shall follow the 
procedures set forth in Sec. 1744.40 or Sec. 1744.50, as appropriate.
    (c) Refinancing and refunding. The Administrator will automatically 
approve a borrower's execution of private lender notes and the securing 
of such notes on a pari passu or pro-rata basis with all other notes 
secured under the Government mortgage, when such private lender notes 
are issued for the purpose of refinancing or refunding any notes secured 
under the Government mortgage, provided that all of the following 
conditions are met:
    (1) No default has occurred and is continuing under the Government 
mortgage;
    (2) The borrower has delivered to the Administrator, at least 10 
business days before the private lender notes are to be executed, a 
certification and agreement executed by the President of the borrower's 
Board of Directors, such certification and agreement to be substantially 
in the form set forth in Appendix A of this subpart, providing that:
    (i) No default has occurred and is continuing under the Government 
mortgage;
    (ii) The principal amount of such refinancing or refunding notes 
will not be greater than 112 percent of the then outstanding principal 
balance of the notes being refinanced or refunded;
    (iii) The weighted-average life of the private loan evidenced by the 
private lender notes will not exceed the weighted-average remaining life 
of the notes being refinanced or refunded;
    (iv) The private lender notes will provide for substantially level 
debt service or level principal amortization over a period not less than 
the original remaining years to maturity;
    (v) Except as provided in the Government mortgage, the borrower has 
not agreed to any restrictions or limitations on future loans from RUS; 
and
    (vi) If the private lender determines that a supplemental mortgage 
is necessary, the borrower will comply with those procedures contained 
in paragraph (h) of this section for the preparation, execution, and 
delivery of a supplemental mortgage and take such additional action as 
may be required to secure the notes under the Government mortgage.
    (d) Financing assets to be owned directly by a borrower. The 
Administrator will automatically approve a borrower's execution of 
private lender notes and the securing of such notes on a pari passu or 
pro-rata basis with all other notes secured under the Government 
mortgage, when such private lender notes are issued for the purpose of 
financing the purchase or construction of plant and material and 
supplies to provide telecommunication services and when such assets are 
to be owned and the telecommunications services are to be offered by the 
borrower, provided that all of the following conditions are met:
    (1) The borrower has achieved a TIER of not less than 1.5 and a DSC 
of not less than 1.25 for each of the borrower's two fiscal years 
immediately preceding the issuance of the private lender notes;
    (2) The ratio of the borrower's net plant to its total long-term 
debt at the end of any calendar month ending not more than 90 days prior 
to execution of the private lender notes is not less than 1.2, on a pro-
forma basis, after taking into account the effect of the private lender 
notes and additional plant on the total long-term debt of the borrower;
    (3) The borrower's equity percentage, as of the most recent fiscal 
year-end, was not less than 25 percent;
    (4) No default has occurred and is continuing under the Government 
mortgage;

[[Page 390]]

    (5) The borrower has delivered to the Administrator, at least 10 
business days before the private lender notes are to be executed, a 
certification by an independent certified public accountant that the 
borrower has met each of the requirements in paragraphs (d)(1) and 
(d)(3) of this section, such certification to be substantially in the 
form in appendix B of this subpart; and
    (6) The borrower has delivered to the Administrator, at least 10 
business days before the private lender notes are to be executed, a 
certification and agreement executed by the President of the borrower's 
Board of Directors, such certification and agreement to be substantially 
in the form in appendix C of this subpart: provided, that:
    (i) The borrower has met each of the requirements in paragraphs 
(d)(2) and (d)(4) of this section;
    (ii) The proceeds of the private lender notes are to be used for the 
construction or purchase of the plant and materials and supplies to 
provide telecommunications services in accordance with this section and 
such construction or purchase is expected to be completed not later than 
4 years after execution of such notes;
    (iii) The weighted-average life of the private loan evidenced by the 
private lender notes does not exceed the weighted-average remaining 
useful life of the assets being financed;
    (iv) The private lender notes will provide for substantially level 
debt service or level principal amortization over a period not less than 
the original remaining years to maturity;
    (v) All of the assets financed by the private loans will be 
purchased or otherwise procured in bona fide arm's length transactions;
    (vi) The financing agreement with the private lender will provide 
that the private lender shall cease the advance of funds upon receipt of 
written notification from RUS that the borrower is in default under the 
RUS loan documents;
    (vii) Except as provided in the Government mortgage, the borrower 
has not agreed to any restrictions or limitations on future loans from 
RUS; and
    (viii) If the private lender determines that a supplemental mortgage 
is necessary, the borrower will comply with those procedures set forth 
in paragraph (h) of this section for the preparation, execution, and 
delivery of a supplemental mortgage and take such additional action as 
may be required to secure the notes under the Government mortgage.
    (e) Financing assets to be owned by a wholly-owned subsidiary of the 
borrower. The Administrator will automatically approve a borrower's 
execution of private lender notes and the securing of such notes on a 
pari passu or pro-rata basis with all other notes secured under the 
Government mortgage, when such private lender notes are issued for the 
purpose of financing the purchase or construction of tangible plant and 
material and supplies to provide telecommunication services and when 
such services are to be offered and the associated tangible assets are 
to be owned by a wholly-owned subsidiary of the borrower, provided that 
all of the following conditions are met:
    (1) The borrower has achieved a TIER of not less than 2.5 and a DSC 
of not less than 1.5 for each of the borrower's two fiscal years 
immediately preceding the issuance of the private lender notes;
    (2) The ratio of the borrower's net plant to its total long-term 
debt at the end of any calendar month ending not more than 90 days prior 
to execution of the private lender notes is not less than 1.6, on a pro-
forma basis, after taking into account the effect of the private lender 
notes and additional plant on the total long-term debt of the borrower;
    (3) The borrower's equity percentage, as of the most recent fiscal 
year-end, was not less than 45 percent;
    (4) No default has occurred and is continuing under the Government 
mortgage;
    (5) The borrower has delivered to the Administrator, at least 10 
business days before the private lender notes are to be executed, a 
certification by an independent certified public accountant that the 
borrower has met each of the requirements in paragraphs (e)(1) and 
(e)(3) of this section, such certification to be substantially in the 
form in appendix D of this subpart; and
    (6) The borrower has delivered to the Administrator, at least 10 
business

[[Page 391]]

days before the private lender notes are to be executed, a certification 
and agreement executed by the President of the borrower's Board of 
Directors, such certification and agreement to be substantially in the 
form in appendix E of this subpart; providing that:
    (i) The borrower has met each of the requirements in paragraphs 
(e)(2) and (e)(4) of this section;
    (ii) The proceeds of the private lender notes are to be used for the 
construction or purchase of the tangible plant and materials and 
supplies to provide telecommunications services in accordance with this 
section and such construction or purchase is expected to be completed 
not later than 4 years after execution of such notes;
    (iii) The weighted-average life of the private loan evidenced by the 
private lender notes does not exceed the weighted-average remaining 
useful life of the assets being financed;
    (iv) The private lender notes will provide for substantially level 
debt service or level principal amortization over a period not less than 
the original remaining years to maturity;
    (v) All of the assets financed by the private loans will be 
purchased or otherwise procured in bona fide arm's length transactions;
    (vi) The proceeds of the private lender notes will be lent to a 
wholly-owned subsidiary of the borrower pursuant to terms and conditions 
agreed upon by the borrower and subsidiary;
    (vii) The borrower will, whenever requested by RUS, provide RUS with 
a copy of the financing or guarantee agreement between the borrower and 
the subsidiary or any similar or related material including security 
instruments, loan contracts, or notes issued by the subsidiary to the 
borrower;
    (viii) The borrower will promptly report to the Administrator any 
default by the subsidiary or other actions that impair or may impair the 
subsidiary's ability to repay its loans;
    (ix) The financing agreement with the private lender will provide 
that the private lender shall cease the advance of funds upon receipt of 
written notification from RUS that the borrower is in default under the 
RUS loan documents;
    (x) Except as provided in the Government mortgage, the borrower has 
not agreed to any restrictions or limitations on future loans from RUS; 
and
    (xi) If the private lender determines that a supplemental mortgage 
is necessary, the borrower will comply with those procedures contained 
in paragraph (h) of this section for the preparation, execution, and 
delivery of a supplemental mortgage and take such additional action as 
may be required to secure the notes under the Government mortgage.
    (f) Borrower notification. The borrower shall notify RUS of its 
intention to obtain an automatic lien accommodation under Sec. 1744.30 
by providing the following:
    (1) The board resolution cited in Sec. 1744.55(b)(1) and the opinion 
of counsel cited in Sec. 1744.55(b)(2);
    (2) The applicable certification or certifications required by 
paragraph (c)(2); paragraphs (d)(5) and (d)(6); or paragraphs (e)(5) and 
(e)(6), respectively, of this section, in substantially the form 
contained in the applicable appendices to this subpart.
    (g) RUS acknowledgment. Within 5 business days of receipt of the 
completed certifications and any other information required under this 
section, RUS will review the information and provide written 
acknowledgment to the borrower and the private lender of its 
qualification for an automatic lien accommodation. Upon receipt of the 
acknowledgment, the borrower may execute the private lender notes.
    (h) Supplemental mortgage. If the private lender determines that a 
supplemental mortgage is required to secure the private lender notes on 
a pari passu or pro-rata basis with all other notes secured under the 
Government mortgage, the private lender may prepare the supplemental 
mortgage using the form attached as appendix F to this subpart or the 
borrower may request RUS to prepare such supplemental mortgage in 
accordance with the following procedures:
    (1) The private lender preparing the supplemental mortgage shall 
execute and forward the completed document to RUS. Upon ascertaining the 
correctness of the form and the information concerning RUS, RUS will 
execute and

[[Page 392]]

forward the supplemental mortgage to the borrower.
    (2) When requested by the borrower, RUS will expeditiously prepare 
the supplemental mortgage, using the form in appendix F to this subpart, 
upon submission by the private lender of:
    (i) The name of the private lender;
    (ii) The Property Schedule for inclusion as supplemental mortgage 
Schedule B, containing legally sufficient description of all real 
property owned by the borrower; and
    (iii) The amount of the private lender note.
    (3) The government is not responsible for ensuring that the 
supplemental mortgage has been executed by all parties and is a valid 
and binding instrument enforceable in accordance with its terms, and 
recorded and filed in accordance with applicable law. If the private 
lender determines that additional security instruments or other 
documents are required or that RUS must take additional actions to 
secure the private lender notes under the mortgage, the private lender 
shall follow the procedures established in Secs. 1744.40 or 1744.50, as 
appropriate. Except for the actions of the government expressly 
established in Sec. 1744.40, the government undertakes no obligation to 
effectuate an automatic lien accommodation. When processing of the 
supplemental mortgage has been completed to the satisfaction of the 
private lender, the borrower shall provide RUS with the following:
    (i) A fully executed counterpart of the supplemental mortgage, 
including all signatures, seals, and acknowledgements; and
    (ii) Copies of all opinions rendered by borrower's counsel to the 
private lender.
    (i) Other approvals. (1) The borrower is responsible for meeting all 
requirements necessary to issue private lender notes and to accommodate 
the lien of the Government mortgage to secure the private lender notes 
including, but not limited to, those of the private lender, of any other 
mortgagees secured under the existing RUS mortgage, and of any 
governmental entities with jurisdiction over the issuance of notes or 
the execution and delivery of the supplemental mortgage.
    (2) To the extent that the borrower's existing mortgage requires RUS 
approval before the borrower can make an investment in an affiliated 
company, approval is hereby given for all investments made in affiliated 
companies with the proceeds of private lender notes qualifying for an 
automatic lien accommodation under paragraph (e) of this section. Any 
reference to an approval by RUS under the mortgage shall apply only to 
the rights of RUS and not to any other party.

[66 FR 41760, Aug. 9, 2001]



Sec. 1744.40  Act purposes.

    (a) Borrowers are encouraged to submit requests for accommodation of 
the Government's lien on the borrower's system in order to facilitate 
obtaining financing from private lenders for purposes provided in the RE 
Act.
    (b) The Administrator will consider requests for the subordination 
of the Government's lien on after-acquired property which will enable 
borrowers to obtain financing from private lenders for purposes provided 
in the Act: Provided, however, that property integral to the operation 
of projects financed with loans made or guaranteed by RUS shall be 
financed with funds obtained through lien accommodations instead of lien 
subordinations, unless the Administrator determines that it is in the 
Government's interest to do otherwise.

[51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 
1990, and further redesignated at 66 FR 41760, Aug. 9, 2001]



Secs. 1744.41-1744.49  [Reserved]



Sec. 1744.50  Non-Act purposes.

    (a) The Administrator will consider requests for the accommodation 
of the Government's lien on the borrower's system or the subordination 
of the Government's lien on after-acquired property which will enable 
the borrowers to obtain financing from private lenders for the purpose 
of providing new telecommunication services which may not be eligible 
for financing under the Act if the Administrator is satisfied that:
    (1) The borrower will have the ability to repay its existing and 
proposed indebtedness;

[[Page 393]]

    (2) The security for outstanding Government loans and guarantees is 
reasonably adequate and will not be adversely affected by the 
accommodation or subordination; and
    (3) Approval of the request is in the interests of the Government 
with respect to the financial soundness of the borrower and other 
matters, such as assuring that the borrower's system is constructed 
cost-effectively using sound engineering practices.
    (b) In determining that the security for outstanding Government 
loans and guarantees is reasonably adequate and will not be adversely 
affected by the accommodation or subordination the Administrator will 
consider, among other matters, when applicable, the following:
    (1) Market forecasts for the project;
    (2) Projected revenues, expenses and net income of the borrower's 
existing system and the project;
    (3) Maximum debt service on indebtedness of both the borrower's 
system and the project;
    (4) Projected rate of return on the borrower's investment in the 
project;
    (5) Fair market value of property acquired by the borrower as part 
of the project;
    (6) Impact of the project on the ratio of the borrower's secured 
debt to assets;
    (7) Projected growth in borrower's system and project equity; and
    (8) Amount of funds available for plant additions, replacements and 
other similar costs of the system and the project.
    (c) In determining whether the accommodation or subordination is in 
the interests of the Government, the Administrator may consider, among 
other matters, whether the project will improve the borrower's financial 
strength and the assurance of repayment of Government debt.

[51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43716, Aug. 25, 1994. Redesignated at 66 FR 
41760, Aug. 9, 2001 as amended at 66 FR 41763, Aug. 9, 2001]



Secs. 1744.51-1744.54  [Reserved]



Sec. 1744.55  Application procedures.

    (a) Requests for information regarding applications for lien 
accommodations or subordination under this part should be addressed to 
the Assistant Administrator, Telecommunications Program, Rural Utilities 
Service, Washington, DC 20250-1590.
    (b) An application for a lien accommodation or subordination shall 
include the following supporting information:
    (1) A board Resolution from the applicant requesting the lien 
accommodation or subordination and stating the general purpose for which 
the funds from the private lender will be used, the proposed amount of 
the loan, and the proposed terms and conditions of the loan;
    (2) An opinion from counsel representing the applicant that the 
applicant has the authority under its articles of incorporation, bylaws, 
and under applicable state law to undertake the project;
    (3) Engineering and pertinent studies related to the projects or 
purposes to be financed, when applicable;
    (4) Feasibility studies with pro forma financial statements showing 
the ability to repay the loan and provide an appropriate margin or net 
income;
    (5) Any other information or documentation deemed pertinent by the 
borrower or the Administrator in support of the application.
    (c) When the Administrator makes a determination that an application 
for an accommodation or subordination will not be approved the 
Administrator shall set forth the reasons therefor in writing and 
furnish such determination and reasons to the borrower within 30 days of 
the determination.

[51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 
1990, and further redesignated at 66 FR 41760, Aug. 9, 2001 as amended 
at 66 FR 41763, Aug. 9, 2001]



Secs. 1744.56-1744.59  [Reserved]

[[Page 394]]



Sec. Appendix A to Subpart B of Part 1744--Statement, Certification, and 
   Agreement of Borrower's President of Board of Directors Regarding 
      Refinancing and Refunding Notes Pursuant to 7 CFR 1744.30(c)
[GRAPHIC] [TIFF OMITTED] TR09AU01.026


[66 FR 41763, Aug. 9, 2001]

[[Page 395]]



Sec. Appendix B to Subpart B of Part 1744--Certification of Independent 
 Certified Public Accountant Regarding Notes To Be Issued Pursuant to 7 
                             CFR 1744.30(c)
[GRAPHIC] [TIFF OMITTED] TR09AU01.027


[66 FR 41763, Aug. 9, 2001]

[[Page 396]]



Sec. Appendix C to Subpart B of Part 1744--Statement, Certification, and 
Agreement of Borrower's President of Board of Directors Regarding Notes 
                To Be Issued Pursuant to 7 CFR 1744.30(d)
[GRAPHIC] [TIFF OMITTED] TR09AU01.028


[66 FR 41763, Aug. 9, 2001]

[[Page 397]]



Sec. Appendix D to Subpart B of Part 1744--Certification of Independent 
 Certified Public Accountant Regarding Notes To Be Issued Pursuant to 7 
                               CFR 1744.30
[GRAPHIC] [TIFF OMITTED] TR09AU01.029


[66 FR 41763, Aug. 9, 2001]

[[Page 398]]



Sec. Appendix E to Subpart B of Part 1744--Statement, Certification, and 
Agreement of Borrower's President of Board of Directors Regarding Notes 
                To Be Issued Pursuant to 7 CFR 1744.30(e)
[GRAPHIC] [TIFF OMITTED] TR09AU01.030


[[Page 399]]


[GRAPHIC] [TIFF OMITTED] TR09AU01.031


[66 FR 41763, Aug. 9, 2001]

[[Page 400]]



Sec. Appendix F to Subpart B of Part 1744--Form of Supplemental Mortgage
[GRAPHIC] [TIFF OMITTED] TR09AU01.032


[[Page 401]]


[GRAPHIC] [TIFF OMITTED] TR09AU01.033


[[Page 402]]


[GRAPHIC] [TIFF OMITTED] TR09AU01.034


[66 FR 41763, Aug. 9, 2001]



               Subpart C_Advance and Disbursement of Funds

    Source: 54 FR 12186, Mar. 24, 1989, unless otherwise noted. 
Redesignated at 55 FR 39396, Sept. 27, 1990.



Sec. 1744.60  General.

    (a) The standard loan documents (as defined in 7 CFR part 1758) 
contain provisions regarding advances and disbursements of loan funds by 
telephone borrowers. This part implements certain of the provisions by 
setting forth requirements and procedures to be followed by borrowers in 
obtaining advances and making disbursements of loan and nonloan funds.
    (b) This part supersedes any sections of RUS Bulletins with which it 
is in conflict.



Sec. 1744.61  [Reserved]



Sec. 1744.62  Introduction.

    RUS is under no obligation to make or approve advances of loan funds 
unless the borrower is in compliance with all terms and conditions of 
the loan documents. The borrower shall use funds in its construction 
fund only to make disbursements approved by RUS.



Sec. 1744.63  The telephone loan budget.

    When the loan is made, RUS provides the borrower a Telephone Loan 
Budget, RUS Form 493. This budget divides the loan into budget accounts 
such as ``Engineering.'' When a contract or other document is approved 
by RUS, funds are encumbered from the appropriate budget account. See 7 
CFR part 1753.

[[Page 403]]



Sec. 1744.64  Budget adjustment.

    (a) If more funds are required than are available in a budget 
account, the borrower may request RUS's approval of a budget adjustment 
to use funds from another account. The request shall include an 
explanation of the change, the budget account to be used, and a 
description of how the adjustment will affect loan purposes. RUS will 
not approve a budget adjustment that affects other loan purposes unless 
the borrower satisfies RUS that the additional funds are available from 
another source, requests a deficiency loan, or scales back the project.
    (b) RUS may make a budget adjustment without a formal request by the 
borrower when a budget account is insufficient to encumber funds for a 
contract that otherwise would be approved by RUS. See 7 CFR part 1753.



Sec. 1744.65  The construction fund.

    (a) The construction fund is used by the borrower primarily to hold 
advances until disbursed.
    (b) All advances shall be deposited in the construction fund.
    (c) RUS may require that other funds be deposited in the 
construction fund. These may include equity or general fund 
contributions to construction, service termination payments, proceeds 
from the sale of property, amounts recovered from insurance for losses 
during the construction period, and interest received on loan funds in 
savings or interest bearing checking accounts, and similar receipts. 
Deposit slips for any deposit to the construction fund shall show the 
source and amount of funds deposited and be executed by an authorized 
representative of the bank.
    (d) Funds shall be disbursed only up to the amount approved for 
advance on the FRS as described in Sec. 1744.66. No funds may be 
withdrawn from the fund except for loan purposes approved by RUS.
    (e) The disbursement of nonloan funds requires the same RUS 
approvals as loan funds.
    (f) Disbursements must be evidenced by canceled checks. The invoices 
and supporting documentation needed for construction contracts are 
specified in the contracts and in 7 CFR part 1753. Disbursements to 
reimburse the borrower's general funds shall be documented by a 
reimbursement schedule, to be retained in the borrower's files, that 
lists the construction fund check number, date, and an explanation of 
amounts reimbursed by budget account.



Sec. 1744.66  The financial requirement statement (FRS).

    (a) To request advances, the borrower must submit to RUS an FRS, a 
description of the advances desired, and other information related to 
the transactions when required by RUS.
    (b) The FRS is used by RUS and the borrower to record and control 
transactions in the construction fund. Approved contracts and other 
items are shown on the FRS under ``Approved Purposes.'' Except as noted 
below, the amount approved for advance is 100 percent of the amount 
encumbered for that item. Funds are approved for advance as follows:
    (1) Construction--(i) Construction contracts and force account 
proposals. Ninety percent of the encumbered amount (95 percent for 
outside plant), with the final 10 percent (5 percent) approved when RUS 
approves the closeout documents. When a contract contains supplement 
``A'' (See 7 CFR part 1753), 90 percent (95 percent) of the contract is 
approved less materials supplied by the borrower. For the Supplement 
``A'' materials, which are a separate entry on the FRS, 100 percent of 
the material cost is approved.
    (ii) Work orders. The portion of the work order summary (See 7 CFR 
part 1753) determined by RUS to be for approved loan purposes.
    (iii) Work order fund. Based on a borrower's request as described in 
7 CFR part 1753.
    (iv) Real estate. Upon request by the borrower after submission of 
evidence of a valid title.
    (v) Right of way procurement. Based on the borrower's itemized 
costs.
    (vi) Joint use charges. Based on copies of invoices from the other 
utility.
    (2) Engineering--(i) Preloan engineering. Based on a final itemized 
invoice from the engineer.

[[Page 404]]

    (ii) Postloan engineering contracts. The amount shown on the 
engineering estimate, RUS Form 506, less the amount estimated for 
construction contract closeouts. The balance is approved when the 
engineering contract is closed.
    (iii) Force account engineering. Ninety percent of the total amount 
of the RUS approved force account engineering proposal. The balance is 
approved when the force account engineering proposal is closed.
    (3) Office equipment, vehicles and work equipment. Based on copies 
of invoices for the equipment.
    (4) General--(i) Organization and loan expenditures. Based on an 
itemized list of requirements prepared by the borrower.
    (ii) Construction overhead. Based on an itemized list of 
expenditures. If funds are required for employee salaries, the 
itemization shall include the employee's position, the period covered, 
total compensation for the period, and the portion of compensation 
attributable to the itemized construction.
    (iii) Legal fees. Based on itemized invoices from the attorney.
    (iv) Bank stock.Based on the requirements for purchase of class B 
Rural Telephone Bank stock established in the loan. Funds for class B 
stock will be advanced in an amount equal to 5 percent of the amount, 
exclusive of the amount for class B stock, of each loan advance, at the 
time of such advance.
    (5) Operating expenses--(i) Working capital--new system. Based on 
the borrower's itemized estimate.
    (ii) Current operating deficiencies. Based on a current and 
projected balance sheet submitted by the borrower.
    (6) Debt retirement and refinancing. Upon release of the loan, based 
on the amount in the approved budget.
    (7) Acquisitions. Based on final itemized costs, but cannot exceed 
the amount in the approved loan budget.
    (c) Funds other than loan funds deposited in the construction fund, 
which shall include proceeds from the sale of property on which RUS has 
a lien, (lines 10 and 11 on the FRS) are reported as a credit under 
total disbursements. Disbursements of these funds are subject to the 
same RUS approvals as loan funds.
    (d) The borrower shall request advances as needed to meet its 
obligations promptly. Generally, RUS does not approve an advance 
requested more than 60 days before the obligation is payable.
    (e) Funds should be disbursed for the item for which they were 
advanced. If the borrower needs to pay an invoice for which funds have 
not been advanced, and disbursement of advanced funds for another item 
has been delayed, the latter funds may be disbursed to pay the invoice 
up to the amount approved for advance for that item on the FRS. The 
borrower shall make erasable entries on the next FRS showing the changes 
under ``Total Advances to Date'' and shall explain the changes in 
writing before RUS will process the next FRS.
    (f) Advances will be rounded down to the nearest thousands of 
dollars except for final amounts.
    (g) The certification on each of the three copies of the FRS sent to 
RUS shall be signed by a corporate officer of manager authorized by 
resolution of the board of directors to sign such statements. At the 
time of such authorization a certified copy of the resolution and one 
copy of RUS Form 675, Certificate of Authority, shall be submitted to 
RUS.
    (h) The documentation required for the FRS transactions are the 
deposit slips, the canceled construction fund checks and the supporting 
invoices or reimbursement schedules. These shall be kept in the 
borrower's files for periodic audits by RUS.

[54 FR 12186, Mar. 24, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 56 FR 26600, June 10, 1991]



Sec. 1744.67  Temporary excess construction funds.

    (a) When unanticipated events delay the borrower's disbursement of 
advanced funds, the funds may be used as follows:
    (1) With RUS loan funds for loans approved prior to November 1, 
1993, or hardship loan funds, the borrower may invest the funds in 5 
percent Treasury Certificates of Indebtedness--RUS Series.

[[Page 405]]

    (2) With RUS cost-of-money, FFB or RTB loan funds, the following 
apply:
    (i) The borrower may invest the funds in short term securities 
issued by the United States Treasury.
    (ii) If permitted by state law, the borrower may deposit the funds 
in savings accounts, including certificates of deposit, of federally 
insured savings institutions.
    (3) Funds advanced by a guaranteed lender other than the FFB may, if 
so permitted by such lender, be invested under the terms and conditions 
described above for FFB advances.
    (4) Any security or investment made under this authorization shall 
identify the borrower by its corporate name followed by the words 
``Trustee, Rural Utilities Service.''
    (5) All temporary investments and all income derived from them shall 
be considered part of the construction fund and be subject to the same 
controls as cash in that account.
    (6) Securities and other investments shall have maturity dates or 
liquidating provisions that ensure the availability of funds as required 
for the completion of projects and the payment of obligations.
    (7) Any instrument evidencing a security or other investment herein 
authorized to be purchased or made, may not be sold, discounted, or 
pledged as collateral for a loan or as security for the performance of 
an obligation or for any other purpose.
    (8) The Administrator may, at his sole discretion, require a 
borrower to pledge any security or other evidence of investment 
authorized hereby by forwarding to him all pertinent instruments and 
related documentation as he may reasonably require.
    (9) Borrowers shall be responsible for the safekeeping of securities 
and other investments.
    (b) All interest and income received from investments of temporary 
excess funds, as described in this section, shall be deposited in the 
Construction Fund.
    (c) The borrower shall account for investment proceeds on the next 
FRS submitted to RUS. RUS will make the necessary adjustments on 
budgetary records.
    (d) The Administrator reserves the right to suspend any borrower's 
authorization to invest temporary excess funds contained herein if the 
borrower does not comply with the requirements.
    (e) For RUS loans approved prior to October 1, 1991, the borrower 
may return advanced funds to RUS as a refund of an advance. Interest 
stops accruing on the refunded advance upon receipt by RUS. A refunded 
advance may be readvanced. A refund of an advance shall be sent to the 
Rural Utilities Service, United States Department of Agriculture, 
Collections and Custodial Section, Washington, DC, 20250. The borrower 
should clearly indicate that this is a refund of an advance, and not a 
loan payment or prepayment.

[54 FR 12186, Mar. 24, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990, as amended at 58 FR 66257, Dec. 20, 1993]



Sec. 1744.68  Order and method of advances of telephone loan funds.

    (a) Borrowers may specify the sequence of advances of funds under 
any combination of approved telephone loans from RUS, RTB, or FFB, 
except that for all loans approved on or after November 1, 1993, the 
borrower may use loan funds:
    (1) Only for purposes for which that type of loan (i.e. Hardship, 
RUS cost-of-money, RTB, or FFB) may be made; and
    (2) Only in exchanges that qualify for the type of loan from which 
the funds are drawn.
    (b) The first or subsequent advances of loan funds may be 
conditioned on the satisfaction of certain requirements stated in the 
borrower's loan contract.
    (c) Normally, only one payment is made by the Automatic Clearing 
House (ACH) for an advance of funds.
    (d) Borrowers of RUS and RTB funds may request advances by wire 
service only for amounts greater than $500,000 or for advances to 
borrowers outside the Continental United States. FFB advances in any 
amount over $100,000 can be sent by wire service.
    (e) The following information shall be included with the FRS:
    (1) Name and address of borrower's bank.

[[Page 406]]

    (2) If borrower's bank is not a member of the Federal Reserve 
System, the name and address of its correspondent bank that is a member 
of the Federal Reserve System.
    (3) American Bankers Association (ABA) nine digit identifier of the 
receiving banks (routing number and check digit).
    (4) Borrower's bank account title and number.
    (5) Any other necessary identifying information.

[54 FR 12186, Mar. 24, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990, as amended at 58 FR 66257, Dec. 20, 1993]



Sec. 1744.69  [Reserved]

Subpart D [Reserved]



                     Subpart E_Borrower Investments

    Source: 58 FR 52642, Oct. 12, 1993, unless otherwise noted.



Sec. 1744.200  General statement.

    (a) RUS telephone borrowers are encouraged to utilize their own 
funds to participate in the economic development of rural areas, 
provided that such activity does not impair a borrower's ability to 
provide modern telecommunications services at reasonable rates or to 
repay its indebtedness to RUS and other lenders. When considering loans, 
investments, or guarantees, borrowers are expected to act in accordance 
with prudent business practices and in conformity with the laws of the 
jurisdictions in which they serve.
    (b) This subpart E applies to both RUS and RTB borrowers. For the 
purposes of RTB borrowers, as used in this subpart E, if a borrower has 
received a loan from the RTB, RUS means RTB, and Administrator means 
Governor unless the text indicates otherwise.



Sec. 1744.201  Definitions.

    As used in this subpart:
    Administrator means the Administrator of the Rural Utilities Service 
(RUS) and, as provided in Sec. 1744.200(b), the Governor of the Rural 
Telephone Bank (RTB).
    Advance means any funds provided of which repayment is expected.
    Affiliated company means any organization that directly, or 
indirectly through one or more intermediaries, controls or is controlled 
by, or is under common control with, the borrower.
    Borrower means any organization which has an outstanding loan made 
by RUS or RTB, or guaranteed by RUS, or which is seeking such financing.
    Extension of credit means to make loans or advances.
    Guarantee means to undertake collaterally to answer for the payment 
of another's debt or the performance of another's duty, liability, or 
obligation, including, without limitation, the obligations of affiliated 
companies. Some examples of such guarantees would include:
    (1) Guarantees of payment or collection on a note or other debt 
instrument;
    (2) Issuing performance bonds or completion bonds; or
    (3) Cosigning leases or other obligations of third parties.
    Maximum investment ratio means that the aggregate of all qualified 
investments by the borrower including the proposed qualified investment 
shall not be more than one-third of the net worth of the borrower.
    Minimum total assets ratio means the borrower's net worth is at 
least twenty percent of its total assets including the proposed 
qualified investment.
    Net plant means the sum of the balances of the following accounts of 
the borrower:

------------------------------------------------------------------------
                 Account Names                           Number
------------------------------------------------------------------------
(1) Telecommunications plant in service         2001
(2) Property held for future                    2002
 telecommunications use
(3) Telecommunications plant under              2003
 construction-short term
(4) Telecommunications plant under              2004
 construction-long term
(5) Telecommunications plant adjustment         2005
(6) Nonoperating plant                          2006
(7) Goodwill                                    2007
(8) Less accumulated depreciation               3100 through 3300s
(9) Less accumulated amortization               3400 through 3600s
------------------------------------------------------------------------
Note: All references to account numbers are to the Uniform System of
  Accounts (47 CFR part 32).

    Net worth means the sum of the balances of the following accounts of 
the borrower:

[[Page 407]]



------------------------------------------------------------------------
                 Account Names                           Number
------------------------------------------------------------------------
(1) Capital stock                               4510
(2) Additional paid-in capital                  4520
(3) Treasury stock                              4530
(4) Other capital                               4540
(5) Retained earnings                           4550
------------------------------------------------------------------------
Note: For nonprofit organizations, owners' equity is shown in
  subaccounts of 4540 and 4550. All references regarding account numbers
  are to the Uniform System of Accounts (47 CFR part 32).

    Qualified investment is defined in Sec. 1744.202(b).
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
    REA means the Rural Electrification Administration formerly an 
agency of the United States Department of Agriculture and predecessor 
agency to RUS with respect to administering certain electric and 
telephone loan programs.
    RTB means the Rural Telephone Bank, an agency and instrumentality of 
the United States within the United States Department of Agriculture.
    Rural development investment is defined in Sec. 1744.202(d).
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    RUS mortgage means the instrument creating a lien on or security 
interest in the borrower's assets in connection with a loan made or 
guaranteed under the RE Act.
    Total assets means the sum of the balances of the following accounts 
of the borrower:

------------------------------------------------------------------------
                 Account Names                           Number
------------------------------------------------------------------------
(1) Current assets                              1100s through 1300s
(2) Noncurrent assets                           1400s through 1500s
(3) Total telecommunications plant              2001 through 2007
(4) Less accumulated depreciation               3100 through 3300s
(5) Less accumulated amortization               3400 through 3600s
------------------------------------------------------------------------
Note: All references regarding account numbers are to the Uniform System
  of Accounts (47 CFR part 32).

    Uniform System of Accounts means the Federal Communications 
Commission Uniform System of Accounts for Telecommunications Companies 
(47 CFR part 32) as supplemented by 7 CFR Part 1770, Accounting 
Requirements for RUS Telephone Borrowers.

[58 FR 52642, Oct. 12, 1993, as amended at 59 FR 66440, Dec. 27, 1994]



Sec. 1744.202  Borrowers may make qualified investments without prior
approval of the Administrator.

    (a) A borrower that equals or exceeds the minimum total assets ratio 
may make a qualified investment, defined in paragraph (b) of this 
section without prior written approval of the Administrator.
    (b) A qualified investment is a rural development investment, 
defined in paragraph (d) of this section meeting the following criteria:
    (1) Unless the borrower's commitment is a guarantee, extension of 
credit, or advance, the borrower receives any financial return accruing 
to such investment, or the borrower's proportionate share of such 
return;
    (2) Unless the borrower's commitment is a guarantee, extension of 
credit, or advance, the borrower retains title to any asset acquired 
with such investment, or the borrower's proportionate share of such 
title; and
    (3) The funds committed are the borrower's own funds. As used in 
this subpart, the term own funds shall not include proceeds of loans 
made, guaranteed or lien accommodated by RUS; funds necessary to make 
timely payments of principal and interest on loans made, guaranteed or 
lien accommodated by RUS; and funds on deposit in the cash construction 
fund-trustee account, as defined in the borrower's loan contract with 
RUS.
    (c) A rural development investment will not be considered to be a 
qualified investment to the extent that the amount of such investments 
exceeds the borrower's maximum investment ratio.
    (d) A rural development investment is an investment, extension of 
credit, advance, or guarantee by a borrower for a period longer than one 
year and for one or more of the following purposes:
    (1) Improve the economic well-being of rural residents and alleviate 
the

[[Page 408]]

problems of low income, elderly, minority, and otherwise disadvantaged 
rural residents;
    (2) Improve the business and employment opportunities, occupational 
training and employment services, health care services, educational 
opportunities, energy utilization and availability, housing, 
transportation, community services, community facilities, water 
supplies, sewage and solid waste management systems, credit 
availability, and accessibility to and delivery of private and public 
financial resources in the maintenance and creation of jobs in rural 
areas;
    (3) Improve state and local government management capabilities, 
institutions, and programs related to rural development and expand 
educational and training opportunities for state and local officials, 
particularly in small rural communities;
    (4) Strengthen the family farm system; or
    (5) Maintain and protect the environment and natural resources of 
rural areas.
    (e) As used in paragraph (d) of this section, the term rural 
development investment shall include investments by a borrower in its 
own name, in affiliated companies, and in entities not affiliated with 
the borrower.



Sec. 1744.203  Establishing amount of rural development investment.

    For purposes of determining whether a rural development investment 
is within the limits of the borrower's maximum investment ratio or the 
minimum total assets ratio, the amount of the qualified investment shall 
be the total amount of funds committed to the rural development project 
as of the date of determination. The total amount of funds committed to 
the rural development project includes:
    (a) The principal amount of loans and advances made by the borrower;
    (b) Guarantees made by the borrower; and
    (c) A reasonable estimate of the amount the borrower is committed to 
provide to the rural development project in future years.



Sec. 1744.204  Rural development investments that do not meet
the ratio requirements.

    (a) Each borrower is authorized to make investments other than 
qualified investments only in accordance with the provisions of the 
borrower's mortgage with RUS. Without RUS's approval, the portion of any 
investment of funds or commitment to invest funds for any rural 
development investment that will exceed the borrower's maximum 
investment ratio or cause the borrower to fall below the minimum total 
assets ratio, must comply with the provisions of the RUS mortgage.
    (b) RUS will consider, on a case-by-case basis, requests for 
approval of rural development investments not constituting qualified 
investments. RUS may condition such approval, if granted, on such 
requirements and restrictions as RUS may determine to be in the best 
interests of the Government, including, without limitation, the 
borrower's agreement to limit dividends or distributions of capital by 
an amount specified by RUS. Requests for such approvals must be 
submitted in writing to the relevant RUS regional office and shall 
include:
    (1) A description of the rural development project and the type of 
investment to be made, such as a loan, guarantee, stock purchase or 
equity investment;
    (2) A reasonable estimate of the amount the borrower is committed to 
provide to the rural development project including investments that may 
be required in the future; and
    (3) A pro forma balance sheet and cash flow statement for the period 
covering the borrower's future commitments to the rural development 
project.
    (c) In determining whether to approve a rural development investment 
that may cause the borrower to exceed the maximum investment ratio or to 
fall below the minimum total assets ratio in the future, RUS will 
consider annual increases to the borrower's net worth and total assets 
as might be reasonably anticipated from the borrower's normal 
operations.

[[Page 409]]



Sec. 1744.205  Determinations and application of limitations described
in Sec. 1744.202.

    (a) RUS will not include qualified investments, including qualified 
investments in affiliated companies, in calculating the amount of 
dividend or capital distributions a borrower may make under its RUS 
mortgage.
    (b) A borrower's investment in its net plant shall not be considered 
a rural development investment for purposes of calculating the maximum 
investment ratio or the minimum total assets ratio.
    (c) The borrower's net worth and total assets shall be determined 
using the balances of the respective accounts of the borrower as of 
December 31 of the last complete calendar year preceding the date on 
which the borrower's maximum investment ratio and minimum total assets 
ratio are calculated.
    (d) All determinations required to be made under 7 U.S.C. 926 or 
this subpart will be made in accordance with the Uniform System of 
Accounts (USoA)(47 CFR part 32). References to specific USoA accounts 
shall include revised or replacement accounts.



Sec. 1744.206  Effect of subsequent failure to maintain ratios.

    If an expenditure constitutes a qualified investment under the terms 
of this subpart, it does not cease to be a qualified investment merely 
because subsequently the borrower fails to maintain the maximum 
investment ratio or the minimum total assets ratio.



Sec. 1744.207  Investment not to jeopardize loan security.

    A borrower shall not make a qualified investment or a rural 
development investment which jeopardizes:
    (a) The security of loans made or guaranteed by RUS; or
    (b) The borrower's ability to repay such loans under the terms and 
conditions as agreed.



Sec. 1744.208  Rural development investments before November 28, 1990.

    All investments made by a borrower shall be subject to the 
provisions of this subpart, regardless of when the investment was made 
or whether it has been approved by RUS. Any restrictions required by RUS 
as a condition to approving a rural development investment before 
November 28, 1990, shall continue to be in effect to the extent that 
such investment exceeds the maximum investment ratio or causes the 
borrower to fall below the minimum total assets ratio.



Sec. 1744.209  Records.

    (a) The records of borrowers, including records relating to 
qualified investments, shall be subject to the auditing procedures 
prescribed in part 1773 of this chapter. RUS reserves the right to 
review the records of the borrower relating to qualified investments to 
determine if the borrower is in compliance with this subpart.
    (b) Borrowers shall report to RUS on the end-of-year operating 
report, RUS Form 479, the current status and principal amount of each 
qualified investment it has made or is committed to make pursuant to 
Sec. 1744.202.

(Approved by the Office of Management and Budget under control number 
0572-0098)



Sec. 1744.210  Effect of this subpart on RUS loan contract and mortgage.

    (a) Except as expressly provided in this subpart, the borrower shall 
comply with all provisions of its loan contract with RUS, its notes 
issued to RUS, and the RUS mortgage, including all provisions thereof 
relating to investments not covered by this subpart.
    (b) Nothing in this subpart shall affect any rights of supplemental 
lenders under the RUS mortgage, or other creditors of the borrower, to 
limit a borrower's investments, loans and guarantees to levels below 
those permitted in Sec. 1744.202.
    (c) As used in paragraph (b) of this section, supplemental lender 
means a creditor of the borrower, other than RUS, whose loan to the 
borrower is secured by the RUS mortgage.

PART 1748_POST-LOAN POLICIES AND PROCEDURES FOR INSURED TELEPHONE LOANS 
                               [RESERVED]

[[Page 410]]



PART 1751_TELECOMMUNICATIONS SYSTEM PLANNING AND DESIGN CRITERIA,
AND PROCEDURES--Table of Contents



Subpart A [Reserved]

1751.1-1751.99  [Reserved]

          Subpart B_State Telecommunications Modernization Plan

Sec.
1751.100  Definitions.
1751.101  General.
1751.102  Modernization Plan Developer; eligibility.
1751.103  Loan and loan advance requirements.
1751.104  Obtaining RUS approval of a proposed Modernization Plan.
1751.105  Amending a Modernization Plan.
1751.106  Modernization Plan; requirements.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq.; Pub. L. 103-354, 108 
Stat. 3178 (7 U.S.C. 6941 et seq.).

    Source: 60 FR 8174, Feb. 13, 1995, unless otherwise noted.

Subpart A [Reserved]



Secs. 1751.1-1751.99  [Reserved]



          Subpart B_State Telecommunications Modernization Plan



Sec. 1751.100  Definitions.

    As used in this subpart:
    Bit rate. The rate of transmission of telecommunications signals or 
intelligence in binary (two state) form in bits per unit time, e.g., Mb/
s (megabits per second), kb/s (kilobits per second), etc.
    Borrower. Any organization that has received an RUS loan designation 
number and which has an outstanding telephone loan made by RUS or the 
Rural Telephone Bank, or guaranteed by RUS, or which has a completed 
loan application with RUS.
    Emerging technologies. New or not fully developed methods of 
telecommunications.
    Modernization Plan (State Telecommunications Modernization Plan). A 
State plan, which has been approved by RUS, for improving the 
telecommunications network of those Telecommunications Providers covered 
by the plan. A Modernization Plan must conform to the provisions of this 
subpart.
    New facilities. Facilities which are wholly or partially constructed 
or reconstructed after a short- or medium-term requirements start date, 
as appropriate. This does not include connections or capacity extensions 
within the wired capacity of existing plant such as adding line cards to 
existing equipment.
    Plan Developer. The entity creating the Modernization Plan for the 
State, which may be the State PUC, the State legislature, or a numeric 
majority of the RUS Borrowers within the State. When this part refers to 
the PUC as the Plan Developer, this includes the State legislature.
    PUC (Public Utilities Commission). The public utilities commission, 
public service commission or other State body with such jurisdiction 
over rates, service areas or other aspects of the services and operation 
of providers of telecommunications services as vested in the commission 
or other body authority, to the extent provided by the State, to guide 
development of telecommunications services in the State. When this part 
refers to the PUC as the Plan Developer, this includes the State 
legislature.
    RE Act. The Rural Electrification Act of 1936, as amended (7 U.S.C. 
901 et seq.).
    REA. The Rural Electrification Administration, formerly an agency of 
the United States Department of Agriculture and predecessor agency to 
RUS with respect to administering certain electric and telephone loan 
programs.
    RELRA. The Rural Electrification Loan Restructuring Act of 1993 (107 
Stat. 1356).
    RUS. The Rural Utilities Service, an agency of the United States 
Department of Agriculture established pursuant to Section 232 of the 
Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178 (7 U.S.C. 
6941 et seq.)), successor to REA with respect to administering certain 
electric and telephone programs. See 7 CFR 1700.1.
    RUS cost-of-money loan. A loan made under section 305(d)(2) of the 
RE Act bearing interest as determined under 7

[[Page 411]]

CFR 1735.31(c). RUS cost-of-money loans are made concurrently with RTB 
loans.
    RUS hardship loan. A loan made by RUS under section 305(d)(1) of the 
RE Act bearing interest at a rate of 5 percent per year.
    RTB loan. A loan made by the Rural Telephone Bank (RTB) under 
section 408 of the RE Act bearing interest as determined under 7 CFR 
1610.10. RTB loans are made concurrently with RUS cost-of-money loans.
    State. Each of the 50 states of the United States, the District of 
Columbia, and the territories and insular possessions of the United 
States. This does not include countries in the Compact of Free 
Association.
    Telecommunications. The transmission or reception of voice, data, 
sounds, signals, pictures, writings, or signs of all kinds, by wire, 
fiber, radio, light, or other visual or electromagnetic means.
    Telecommunications providers. RUS Borrowers and if the Plan 
Developer is a PUC, such other entities providing telecommunications 
services as the developer of the Modernization Plan (See Sec. 1751.101) 
may determine.
    Wireline Service. Telecommunica-tions service provided over 
telephone lines. It is characterized by a wire or wirelike connection 
carrying electricity or light between the subscriber and the rest of the 
telecommunications network. Wireline Service implies a physical 
connection. Although radio may form part of the circuit, it is not the 
major method of transmission as in radiotelephone.



Sec. 1751.101  General.

    (a) It is the policy of RUS that every State have a Modernization 
Plan which provides for the improvement of the State's 
telecommunications network.
    (b) A proposed Modernization Plan must be submitted to RUS for 
approval. RUS will approve the proposed Modernization Plan if it 
conforms to the provisions of this subpart. Once obtained, RUS's 
approval of a Modernization Plan cannot be rescinded.
    (c) The Modernization Plan shall not interfere with RUS's authority 
to issue such other telecommunications standards, specifications, 
requirements, and procurement rules as may be promulgated from time to 
time by RUS including, without limitation, those set forth in 7 CFR part 
1755.
    (d) The Modernization Plan must, at a minimum, apply to RUS 
Borrowers' wireline service areas. If a Modernization Plan is developed 
by the PUC, RUS encourages, but does not require, that the Modernization 
Plan's requirements apply to the rural service areas of all providers of 
telecommunications services in the State. A PUC's decision not to 
include non-RUS Borrowers will not prejudice RUS approval of that PUC's 
Modernization Plan. The PUC may also, at its option, extend coverage of 
the Modernization Plan to all service areas of all providers of 
telecommunications services in the State. In addition, while the 
requirements and goals contained in Sec. 1751.106 apply only to wireline 
services, the PUC, at its discretion, may extend coverage of 
Modernization Plans to wireless or other communications services in the 
State as it deems appropriate. Borrower-developed Modernization Plans 
apply only to Borrowers.



Sec. 1751.102  Modernization Plan Developer; eligibility.

    (a) Each PUC is eligible until February 13, 1996 to develop a 
proposed Modernization Plan and deliver it to RUS. RUS will review and 
consider for approval all PUC-developed Modernization Plans received by 
RUS within this one year period. The review and approval, if any, may 
occur after the one year period ends even though the PUC is no longer 
eligible to submit a proposed Modernization Plan.
    (b) The PUC must notify all Telecommunications Providers in the 
State and other interested parties of its intent to develop a proposed 
Modernization Plan. The PUC is encouraged to consider all 
Telecommunications Providers' and interested parties' views and 
incorporate these views into the Modernization Plan. In the event that 
the PUC does not intend to develop a proposed Modernization Plan, RUS 
requests that the PUC inform RUS of this decision as soon as possible.
    (c)(1) If the PUC is no longer eligible to develop a Modernization 
Plan or has informed RUS that it will not develop a Modernization Plan, 
as described in

[[Page 412]]

paragraphs (a) and (b) of this section, a majority of the Borrowers 
within the State may develop the Modernization Plan. If a majority of 
Borrowers develops the Modernization Plan, the following apply:
    (i) All Borrowers shall be given reasonable notice of and shall be 
encouraged to attend and contribute to all meetings and other 
proceedings relating to the development of the Modernization Plan; and
    (ii) Borrowers developing a Modernization Plan are encouraged to 
solicit the views of other providers of telecommunications services and 
interested parties in the State.
    (2) There is no time limit placed on Borrowers to develop a 
Modernization Plan. Borrowers should be aware that certain types of 
loans may be restricted until a Modernization Plan is approved. See 
Sec. 1751.103.



Sec. 1751.103  Loan and loan advance requirements.

    (a) For information about loan eligibility requirements in relation 
to the Modernization Plan, see 7 CFR part 1735. In particular, beginning 
February 13, 1996, RUS will make RUS hardship loans, RUS cost-of-money 
loans, and RTB loans for facilities and other RE Act purposes in a State 
only if:
    (1) The State has an RUS approved Modernization Plan; and
    (2) The Borrower to whom the loan is to be made is participating in 
the Modernization Plan for the State. A Borrower is considered to be 
participating if, in RUS's opinion, the purposes of the loan requested 
by the Borrower are consistent with the Borrower achieving the 
requirements stated in the Modernization Plan within the timeframe 
stated in the Modernization Plan unless RUS has determined that 
achieving the requirements is not technically or economically feasible.
    (b) With regard to the three types of loans discussed in paragraph 
(a), only loans approved after the date the State has an RUS approved 
Modernization Plan are subject to complying with the Modernization Plan.
    (c) For loans subject to complying with the Modernization Plan, 
advances will not be made if, in RUS's opinion, the advances are not 
consistent with achieving the requirements of the Modernization Plan.



Sec. 1751.104  Obtaining RUS approval of a proposed Modernization Plan.

    (a) To obtain RUS approval of a proposed Modernization Plan, the 
Plan Developer must submit the following to RUS:
    (1) A certified copy of the statute or PUC order, if the PUC is the 
Plan Developer, or a written request for RUS approval of the proposed 
Modernization Plan signed by an authorized representative of the Plan 
Developer, if a majority of Borrowers is the Plan Developer; and
    (2) Three copies of the proposed Modernization Plan.
    (b) Generally, RUS will review the proposed Modernization Plan 
within (30) days and either:
    (1) Approve the Modernization Plan if it conforms to the provisions 
of this subpart in which case RUS will return a copy of the 
Modernization Plan with notice of approval to the Plan Developer; or
    (2) Not approve the proposed Modernization Plan if it does not 
conform to the provisions of this subpart. In this event, RUS will 
return the proposed Modernization Plan to the Plan Developer with 
specific written comments and suggestions for modifying the proposed 
Modernization Plan so that it will conform to the provisions of this 
subpart. If the Plan Developer remains eligible, RUS will invite the 
Plan Developer to submit a modified proposed Modernization Plan for RUS 
consideration. This process can continue until the Plan Developer gains 
approval of a proposed Modernization Plan unless the Plan Developer is a 
PUC whose eligibility has expired. If a PUC's eligibility has expired, 
RUS will return the proposed Modernization Plan unapproved. Because RUS 
does not have authority to extend the term of a PUC's eligibility, RUS 
recommends that the PUC submit a proposed Modernization Plan at least 90 
days in advance of February 13, 1996 to allow time for this process.

[[Page 413]]



Sec. 1751.105  Amending a Modernization Plan.

    (a) RUS understands that changes in standards, technology, 
regulation, and the economy could indicate that an RUS-approved 
Modernization Plan should be amended.
    (b) The Plan Developer of the Modernization Plan may amend the 
Modernization Plan if RUS finds the proposed changes continue to conform 
to the provisions of this subpart.
    (c) The procedure for requesting approval of an amended 
Modernization Plan is identical to the procedure for a proposed 
Modernization Plan except that there are no time limits on the 
eligibility of the Plan Developer.
    (d) The existing Modernization Plan remains in force until RUS has 
approved the proposed amended Modernization Plan.
    (e) RUS may from time to time revise these regulations to 
incorporate newer technological and economic standards that RUS believes 
represent more desirable goals for the future course of 
telecommunications services. Such revisions will be made in accordance 
with the Administrative Procedure Act. These revisions shall not 
invalidate Modernization Plans approved by RUS but shall be used by RUS 
to determine whether to approve amendments to Modernization Plans 
presented for RUS approval after March 15, 1995.



Sec. 1751.106  Modernization Plan; requirements.

    (a) The requirements for a Modernization Plan as stated in RELRA 
are:
    (1) The plan must provide for the elimination of party line service.
    (2) The plan must provide for the availability of telecommunications 
services for improved business, educational, and medical services.
    (3) The plan must encourage and improve computer networks and 
information highways for subscribers in rural areas.
    (4) The plan must provide for--
    (i) Subscribers in rural areas to be able to receive through 
telephone lines--
    (A) Conference calling;
    (B) Video images; and
    (C) Data at a rate of at least 1,000,000 bits of information per 
second; and
    (ii) The proper routing of information to subscribers.
    (5) The plan must provide for uniform deployment schedules to ensure 
that advanced services are deployed at the same time in rural and 
nonrural areas.
    (6) The plan must provide for such additional requirements for 
service standards as may be required by the Administrator.
    (b) To implement the requirements of the law described in paragraph 
(a) of this section, RUS has set minimum requirements as described in 
paragraphs (i) and (j) of this section. They are grouped into short-term 
and medium-term requirements. RUS has also included long-term goals 
which are not requirements. The Modernization Plan must meet all of the 
statutory requirements of RELRA and shall provide that short- and 
medium-term requirements be implemented as set forth in this section of 
the regulation except that the PUC, if it is the Plan Developer, or RUS, 
if a majority of Borrowers is the Plan Developer, may approve extensions 
of time if the required investment is not economically feasible or if 
the best available telecommunications technology lacks the capability to 
enable the Telecommunications Provider receiving the extension to comply 
with the Modernization Plan. Extensions shall be granted only on a case-
by-case basis and generally shall not exceed a total of five years from 
the first such extension granted to the Telecommunications Provider.
    (c) Each State's Modernization Plan shall be a strategic development 
proposal for modernizing the telecommunications network of the 
Telecommunications Providers covered by the Modernization Plan. In 
addition to implementing the requirements described in paragraphs (a), 
(i), and (j) of this section, the Modernization Plan shall include a 
short engineering description of the characteristics of a future 
telecommunications structure that would enable all Telecommunications 
Providers to achieve the requirements and goals of the Modernization 
Plan.
    (d) Within the scope of Sec. 1751.101(d), if the Plan Developer is 
the PUC, the

[[Page 414]]

Modernization Plan shall name the Telecommunications Providers in the 
State, in addition to Borrowers, that are covered by the Modernization 
Plan.
    (e) The Modernization Plan must require that the design of the 
network provided by Telecommunications Providers allow for the 
expeditious deployment and integration of such emerging technologies as 
may from time to time become commercially feasible.
    (f) The Modernization Plan must provide guidelines to 
Telecommunications Providers for the development of affordable tariffs 
for medical links and distance learning services.
    (g) With regard to the uniform deployment requirement of the law 
restated in paragraph (a)(5) of this section, if services cannot be 
deployed at the same time, only the minimum feasible interval of time 
shall separate availability of the services in rural and nonrural areas.
    (h) The Modernization Plan must make provision for reliable powering 
of ordinary voice telephone service operating over those portions of the 
telecommunications network which are not network powered. In the event 
of electric utility power outages, an alternative source of power must 
be available to ensure reliable voice service.
    (i) Short-term requirements. (1) The ``short-term requirements start 
date'' is the date one year after the date RUS approves the 
Modernization Plan for the State.
    (2) All New Facilities providing Wireline Service after the short-
term requirements start date, even if the construction began before such 
date, shall be constructed so that:
    (i) Every subscriber can be provided 1-party service.
    (ii) The New Facilities are suitable, as built or with additional 
equipment, to provide transmission and reception of data at a rate no 
lower than 1 Mb/sec.
    (3) All switching equipment installed by a Telecommunications 
Provider after the short-term requirements start date shall be capable 
of:
    (i) Providing custom calling features. At a minimum, custom calling 
features must include call waiting, call forwarding, abbreviated 
dialing, and three-way calling; and
    (ii) Providing E911 service for areas served by the 
Telecommunication Provider when requested by the government responsible 
for this service.
    (j) Medium-term requirements. (1) The ``medium-term requirements 
start date'' is the date six years after the date RUS approves the 
Modernization Plan for the State, or such earlier date as the 
Modernization Plan shall provide.
    (2) All New Facilities providing Wireline Service after the medium-
term requirements start date, even if the construction began before such 
date, shall be capable, as built or with additional equipment, of 
transmitting video to a subscriber. The video must be capable of 
depicting a reasonable representation of motion. The frame rate, 
resolution, and other measures of audio and video quality shall be 
determined by the Plan Developer.
    (3) No later than the medium-term requirements start date, all 
switching equipment of Telecommunications Providers covered by the 
Modernization Plan must be capable of providing E911 service when 
requested by the government responsible for this service.
    (4) No later than five years after the medium-term requirements 
start date, one-party service must be provided upon demand to any 
subscriber of a Telecommunications Provider covered by the Modernization 
Plan.
    (k) Long-term goals. RUS suggests, but does not require, that the 
provisions of each Modernization Plan be consistent with the 
accomplishment of the following:
    (1) The elimination of party line service.
    (2) For subscribers that desire the service, universal availability 
of:
    (i) Digital voice and data service (56-164 kb/sec).
    (ii) Service that provides transmission and reception of high bit 
rate (no less than 1 Mb/sec) data.
    (iii) Service that provides reception of video as described in 
paragraph (j)(2) of this section.

[[Page 415]]



PART 1753_TELECOMMUNICATIONS SYSTEM CONSTRUCTION POLICIES AND
PROCEDURES--Table of Contents



                            Subpart A_General

Sec.
1753.1  General.
1753.2  Definitions.
1753.3  Preconstruction review.
1753.4  Major and minor construction.
1753.5  Methods of major construction.
1753.6  Standards, specifications, and general requirements.
1753.7  Plans and specifications (P&S).
1753.8  Contract construction procedures.
1753.9  Subcontracts.
1753.10  Preconstruction conference.
1753.11  Contract amendments.
1753.12-1753.14  [Reserved]

                     Subpart B_Engineering Services

1753.15  General.
1753.16  Architectural services.
1753.17  Engineering services.
1753.18  Engineer and architect contract closeout certifications.
1753.19-1753.20  [Reserved]

Subpart C [Reserved]

                   Subpart D_Construction of Buildings

1753.25  General.
1753.26  Plans and specifications (P&S).
1753.27  Bidding procedure.
1753.28  Contract amendments.
1753.29  Force account procedures.
1753.30  Closeout procedures.
1753.31-1753.35  [Reserved]

     Subpart E_Purchase and Installation of Central Office Equipment

1753.36  General.
1753.37  Plans and specifications (P&S).
1753.38  Procurement procedures.
1753.39  Closeout documents.
1753.40-1753.45  [Reserved]

         Subpart F_Outside Plant Major Construction by Contract

1753.46  General.
1753.47  Plans and specifications (P&S).
1753.48  Procurement procedures.
1753.49  Closeout documents.
1753.50-1753.55  [Reserved]

       Subpart G_Outside Plant Major Construction by Force Account

1753.56  General.
1753.57  Procedures.
1753.58  Closeout documents.
1753.59-1753.65  [Reserved]

        Subpart H_Purchase and Installation of Special Equipment

1753.66  General.
1753.67  Contracts and specifications.
1753.68  Purchasing special equipment.
1753.69-1753.75  [Reserved]

                      Subpart I_Minor Construction

1753.76  General.
1753.77  Methods of minor construction.
1753.78  Construction by contract.
1753.79  Construction by force account.
1753.80  Minor construction procedure.
1753.81  Inspection and certification.
1753.82  Minor construction closeout.
1753.83-1753.90  [Reserved]

              Subpart J_Construction Certification Program

1753.91  General.
1753.92  Policies and requirements.
1753.93  Responsibilities.
1753.94  Procedures.
1753.95  Advance of loan funds.
1753.96  Certification addendum.
1753.97-1753.99  [Reserved]

    Authority: 5 U.S.C. 501, 7 U.S.C. 901 et seq.



                            Subpart A_General

    Source: 54 FR 39267, Sept. 25, 1989, unless otherwise noted. 
Redesignated at 55 FR 39396, Sept. 27, 1990.



Sec. 1753.1  General.

    (a) The standard RUS Telecommunications Loan Documents contain 
provisions regarding procurement of materials and equipment and 
construction of telecommunications facilities by telecommunications 
borrowers. This part implements certain of the provisions by setting 
forth requirements and procedures. Borrowers shall follow these 
requirements and procedures whenever using loan funds to purchase 
materials and equipment or perform construction, unless they have 
received the Administrator's written approval to do otherwise.
    (b) The typical procedure followed in constructing a project 
financed by an RUS loan begins with the prospective borrower obtaining 
the necessary preloan engineering and developing a complete loan 
application, including an LD (See 7 CFR part 1737). If a loan

[[Page 416]]

is approved and all prerequisites to advance of funds are satisfied, the 
borrower may proceed with the purchase and installation of materials and 
equipment and the construction of telephone facilities pursuant to this 
part 1753. Subpart A describes
    (1) RUS's general requirements with respect to steps to be taken 
after the loan is approved and before construction begins (See 
Sec. 1753.3),
    (2) RUS requirements with respect to methods of construction (See 
Secs. 1753.5 and 1753.6),
    (3) RUS requirements regarding sealed competitive bidding and 
negotiated bidding of construction contracts (See Secs. 1753.6 and 
1753.9),
    (4) RUS standards for materials, equipment, and construction 
financed with loan funds (See Sec. 1753.7), and
    (5) RUS requirements for subcontracts and contract amendments 
covering construction financed with loan funds (See Secs. 1753.10 and 
1753.12).
    (c) Each borrower is responsible for the construction of its 
facilities and for the procurement of materials and equipment that are 
best suited to its needs.
    (d) If contracts, P&S, or other methods of procurement are subject 
to RUS approval pursuant to the provisions of the loan contract, as 
implemented by this part, RUS will review the documents or proposals 
submitted and notify the borrower in writing of approval or disapproval. 
RUS may withhold approval if, in RUS's judgment:
    (1) The P&S or contract will not accomplish loan purposes.
    (2) Provisions of the P&S or contract will add unnecessary expense 
to the project.
    (3) The proposal, method of procurement, or P&S do not conform to 
RUS engineering criteria or construction standards, or if they present 
unacceptable loan security risks to RUS.
    (4) The P&S or contract have been modified.
    (e) The requirements and procedures covering procurement of 
architectural and engineering services are described in subpart B of 
this part.
    (f) Single copies of RUS forms cited in this part are available from 
Administrative Services Division, Rural Utilities Service, United States 
Department of Agriculture, Washington, DC 20250-1500. These RUS forms 
may be reproduced.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 64 FR 16604, Apr. 6, 1999]



Sec. 1753.2  Definitions.

    For the purpose of this part 1753:
    Alternate-- A solicitation for a bid adjustment for a specified 
deviation from the Plans and Specifications.
    Architect-- A person registered as an architect in the state where 
construction is performed, or a person on the borrower's staff, approved 
by RUS, authorized to perform architectural services.
    Bid guarantee-- A bid bond or certified check required of 
contractors bidding on construction work to ensure that the bidder, if 
successful, will furnish a satisfactory performance bond ensuring 
completion of work.
    Central office building-- The facility housing the central office 
equipment.
    Central office equipment-- Switching and signaling equipment that 
performs call origination and completion functions for subscribers.
    Closeout documents-- The documents required to certify satisfactory 
completion of all obligations under a contract or force account 
proposal.
    Construction-- Purchase and installation of telecommunications 
facilities in a borrower's system using loan funds.
    Contract-- The agreement between the borrower and an independent 
contractor covering the purchase, construction, or both of telephone 
facilities to be included in the borrower's telephone system.
    Contract construction-- Construction and installations performed 
using an RUS contract form. See 7 CFR 1755.93.
    Engineer-- A person registered as an engineer in the state where 
construction is performed, or a person on the borrower's staff, approved 
by RUS, authorized to perform engineering services.
    FAP (force account proposal)--The borrower's detailed plans 
submitted to RUS for force account construction.
    Force account construction--Construction performed by the borrower's 
employees under an RUS approved FAP,

[[Page 417]]

with the borrower furnishing all materials, equipment, tools, and 
transportation.
    FRS--RUS Form 481 (OMB control number 0572-0023), Financial 
Requirement Statement.
    GFR--RUS General Field Representative.
    Installation--The act of setting up or placing in position equipment 
for service or use in the borrower's system.
    Interim construction--The purchase of equipment or the conduct of 
construction under an RUS-approved plan of interim financing. See 7 CFR 
part 1737.
    Interim financing--Funding for a project which RUS has acknowledged 
may be included in a loan, should said loan be approved, but for which 
RUS loan funds have not yet been made available.
    Labor and materials--All the labor and materials required for 
construction.
    LD (loan design)--Supporting data for a loan application. See 7 CFR 
part 1737.
    Loan--Any loan made or guaranteed by RUS. See 7 CFR part 1735.
    Loan funds--Funds provided by RUS through direct or guaranteed 
loans. See 7 CFR part 1744 subpart C.
    Loan purposes--The high level objectives of the loan are to fund the 
construction. These purposes are first stated in the characteristics 
letter described in 7 CFR 1737.80, which is sent to the applicant to 
offer a loan after RUS has completed its preloan studies.
    Major construction--A telecommunications plant project estimated to 
cost more than $250,000, including all labor and materials.
    Minor construction--A telecommunications plant project estimated to 
cost $250,000 or less, including all labor and materials.
    Minor errors or irregularities--A defect or variation in a seller's 
bid that is a matter of form and not of substance. Errors or 
irregularities are ``minor'' if they can be corrected or waived without 
being prejudicial to other bidders and when they do not affect the 
price, quantity, quality, or timeliness of construction. Unless 
otherwise noted, the borrower determines whether an error or 
irregularity is ``minor.''
    Modernization plan--A State plan, which has been approved by RUS, 
for improving the telecommunications network of those Telecommunications 
Providers covered by the plan. A Modernization Plan must conform to the 
provisions of 7 CFR part 1751, subpart B.
    Negotiation--Any form of purchasing or contracting other than sealed 
competitive bidding. Any contract awarded without using the sealed 
competitive bidding procedure is a negotiated contract.
    Outside plant--The facilities that conduct electrical or optical 
signals between the central office and the subscriber's network 
interface or between central offices.
    Performance bond--A surety bond on a form satisfactory to RUS 
guaranteeing the contractor's faithful performance of a contract.
    P&S (plans and specifications)--An RUS contract form, the 
appropriate specifications, and such additional information and 
documents needed to provide a clear, accurate, and complete 
understanding of the installations to be made or construction to be 
performed.
    Project--The construction or installation described in the P&S.
    Responsive bid--A bid that complies with the requirements of the 
plans and specifications.
    RTB--the Rural Telephone Bank, established as a body corporate and 
an instrumentality of the United States, to obtain supplemental funds 
from non-Federal sources and utilize them in making loans, for the 
purposes of financing, or refinancing, the construction, improvement, 
expansion, acquisition, and operation of telephone lines, facilities, or 
systems, for RUS borrowers financed under sections 201 and 408 of the 
Act.
    RUS--the Rural Utilities Service, an agency of the United States 
Department of Agriculture established pursuant to Section 232 of the 
Federal Crop Insurance and Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to Rural Electrification Administration with respect to administering 
certain electric and telecommunications program. See 7 CFR 1700.1.

[[Page 418]]

    Sealed competitive bidding--A method of contracting that employs 
sealed competitive bids, public opening of bids, and award of the 
contract to the bidder submitting the lowest responsive bid. See 
Sec. 1753.8.
    Single source negotiation--Negotiating with a single source 
(contractor or seller).
    Special equipment--Equipment used primarily for the transmission and 
enhancement of voice, data, carrier, radio and light signals, and other 
equipment and facilities, including incidental cable and other 
transmission equipment.
    Subcontract--A secondary contract undertaking some of the 
obligations of a primary contract. Under all RUS forms of contract, the 
primary contractor bears full responsibility for the performance of the 
subcontractor.
    Unbalanced bid--A bid which contains pricing for a task or material 
that is significantly higher or lower than pricing for similar tasks or 
materials.
    Work order construction--Minor construction performed by the 
borrower's employees, pursuant to its work order procedure, with the 
borrower furnishing all materials, equipment, tools, and transportation.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 58 FR 66259, Dec. 20, 1993; 59 FR 17464, Apr. 13, 
1994; 64 FR 16604, Apr. 6, 1999]



Sec. 1753.3  Preconstruction review.

    (a) Advance RUS approval must be obtained for any construction that 
does not conform to RUS standards and specifications or the approved LD, 
such as construction of extensions to serve subscribers in areas not 
included in the LD (See 7 CFR part 1737). For loans approved after RUS 
approval of the modernization plan in the borrower's state, the proposed 
construction must conform to the modernization plan, as required by 7 
CFR part 1751, subpart B. To obtain approval, the borrower shall submit 
a written proposal containing:
    (1) A description of the work, indicating any deviations from the 
approved LD or RUS standards and specifications.
    (2) An engineering study covering the deviations if there are 
changes in the design.
    (3) A cost estimate for labor, engineering, materials, and 
overheads.
    (4) If applicable, a brief analysis from the borrower demonstrating 
that the proposed changes conform to the modernization plan.
    (b) Before any construction, including interim construction, is 
initiated, the GFR shall meet with the borrower to review the LD to 
determine if any significant changes have occurred since its approval by 
RUS. It is important that the design and construction of the proposed 
facilities be based on the latest information on subscriber needs.
    (c) If the borrower and GFR agree that there have been no 
significant changes, the borrower may proceed.
    (d) If the GFR finds that the LD is no longer satisfactory, the 
borrower shall prepare an amendment to the LD incorporating the 
necessary revisions (See 7 CFR part 1737). The borrower must obtain RUS 
approval of the LD amendment before proceeding with engineering 
activities on any project to be financed with loan funds.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 58 FR 66259, Dec. 20, 1993; 59 FR 17464, Apr. 13, 
1994; 64 FR 16604, Apr. 6, 1999]



Sec. 1753.4  Major and minor construction.

    RUS's general requirements for construction are set forth in this 
subpart A. Additional requirements and procedures for different types of 
major construction are presented in subparts D, E, F, G, and H (OMB 
control number 0572-0062). The requirements and procedures for minor 
construction are presented in subpart I. Borrowers may, at their option, 
follow the procedures in subparts D, E, F, G, and H for any minor 
construction.



Sec. 1753.5  Methods of major construction.

    (a) All major construction projects financed by loan funds shall be 
performed pursuant to a contract approved by RUS and awarded through 
sealed competitive bidding unless
    (1) A specific exception is granted in subparts D, E, F, G, or H, or
    (2) Written RUS approval is obtained.
    (b) Contract construction. (1) RUS approval of the borrower's award 
of the

[[Page 419]]

contract is not required if the contractor is selected through sealed 
competitive bidding, the bid amount is $500,000 or less and the 
contractor is not a company or organization affiliated with the 
borrower. This does not relieve the borrower of the requirements of 
bidding or bid evaluation set contained in this part.
    (2) RUS approval of the borrower's award of the contract is required 
for all other competitively-bid and for negotiated major construction 
contracts.
    (3) The requirements and procedures for sealed competitive bidding 
are presented in Sec. 1753.8(a). The requirements and procedures for 
negotiation are presented in Sec. 1753.8(b).
    (c) Force account construction. To obtain RUS approval of the force 
account method for major construction the borrower must demonstrate its 
ability to perform major construction based on past force account 
construction which fully met RUS construction standards and was as cost-
effective as contract construction in the area. If the borrower has no 
record of past performance to support its request, but has adequate 
equipment and experienced personnel to perform the proposed 
construction, RUS may approve a small trial project. The requirements 
and procedures for force account construction are presented in subparts 
D, E, G, and H.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43716, Aug. 25, 1994; 64 FR 16604, Apr. 6, 
1999]



Sec. 1753.6  Standards, specifications, and general requirements.

    (a) Materials, equipment, and construction financed with loan funds 
must meet the standards and specifications established by RUS. 7 CFR 
part 1755 lists the RUS Bulletins containing the standards and 
specifications for telephone facilities. Materials and equipment meeting 
these standards are included on the List of Material Acceptable for Use 
on Telecommunications Systems of RUS Borrowers, I.P. 300-4. This 
bulletin may be obtained by subscription from the Superintendent of 
Documents, Government Printing Office, Washington, DC 20402.
    (b) The borrower may use RUS loan funds to finance nonstandard 
construction materials or equipment only if approved by RUS in writing 
prior to purchase or commencement of construction.
    (c) Only new materials and equipment may be financed with loan 
funds, unless otherwise approved by RUS. The materials and equipment 
must be year 2000 compliant, as defined in 7 CFR 1735.22(e).
    (d) All materials and equipment financed with loan funds are subject 
to the ``Buy American'' provision (7 U.S.C. 901 et seq. as amended in 
1938).
    (e) All software, software systems, and firmware financed with loan 
funds must be year 2000 compliant, as defined in 7 CFR 1732.22(e).

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43716, Aug. 25, 1994; 63 FR 45679, Aug. 27, 
1998; 64 FR 16605, Apr. 6, 1999]



Sec. 1753.7  Plans and specifications (P&S).

    (a) The P&S consist of an RUS contract form, the appropriate RUS 
specifications, and such additional information and documents needed to 
provide a clear, accurate, and complete understanding of what is 
included in the construction.
    (b) 7 CFR 1755.93 provides a list of the RUS forms of 
telecommunications contracts for use in purchasing telephone materials 
and equipment and for constructing telephone facilities with loan funds. 
Also listed is the source where copies may be obtained.
    (c) The appropriate standards and specifications listed in 7 CFR 
part 1755 shall be included in the P&S. When RUS has not prepared 
standards and specifications, the borrower shall use general engineering 
requirements and specifications prepared by the borrower's engineer. The 
specifications prepared by the borrower's engineer and based on general 
engineering requirements shall be subject to review and approval by RUS 
for all major construction, including major projects which would be 
exempted from RUS approval under paragraph (e) of this section.

[[Page 420]]

    (d) The P&S shall be based on the LD approved by RUS. Section 1753.3 
presents the requirements and procedures for obtaining RUS approval for 
construction that does not conform to the LD approved by RUS.
    (e) RUS approval of P&S is required for construction that is 
estimated to cost over $500,000 or 25% of the total loan, whichever is 
less, and for all building construction. P&S for all other construction 
are exempt from RUS review and approval except that, at the time of 
contract approval, RUS will examine the plans and specifications for 
conformity with the loan purposes and to determine that they comply with 
other requirements of this part.
    (f) RUS will approve only contracts that will provide for at least 
the following requirements.
    (1) Equal employment opportunity provision. If this provision is not 
already in the contract, RUS Contract Form 270, Equal Opportunity 
Addendum, shall be attached and made a part of the contract.
    (2) Liquidated damages provision. (i) If not covered by the 
contract, an appropriate liquidated damages provision, in a form 
prescribed by RUS, shall be included and made a part of the contract
    (ii) The liquidated damages must be based upon the borrower's best 
estimate of the damages it would incur as a result of the contractor's 
default.
    (3) Insurance and bond requirements. (i) The insurance provision 
shall provide coverage as required by 7 CFR 1788.
    (ii) A contractor's bond shall be furnished as required by 7 CFR 
part 1788.
    (iii) The borrower is responsible for ensuring that its contractor 
complies with the insurance and bond requirements.
    (4) Telecommunications software license provision. If the borrower 
is required to enter into a software license agreement in order to use 
the equipment, the contract must contain the RUS prepared Software 
License Agreement as an Addendum.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 17679, Apr. 14, 1994; 64 FR 16605, Apr. 6, 
1999]



Sec. 1753.8  Contract construction procedures.

    (a) Sealed, competitive bidding--(1) Bid opening date. The borrower 
is responsible for scheduling the bid opening date. If RUS review of P&S 
is required by Sec. 1753.7, the borrower shall wait until approval has 
been received before setting the date. In setting the date, sufficient 
time should be allowed for the bidders to examine the project site and 
prepare their bids. The borrower shall notify GFR of the bid date and 
invite GFR to attend.
    (2) Invitations to bid. The borrower is responsible for sending 
invitations to prospective bidders and taking any other action necessary 
to procure full, free, and competitive bidding. The borrower should 
obtain from its engineer a list of prospective bidders and a 
recommendation indicating which bidders are considered qualified. The 
minimum number of contractors to be invited to bid on contracts for 
various types of facilities is set forth in subparts D, E, F, or H.
    (3) Qualifying bidders. If the notice and instructions to bidders 
require that bidders show evidence of meeting certain requirements, the 
borrower shall qualify bidders before issuing P&S to them. Procedures 
for qualifying bidders are contained in subparts D, E, and F.
    (4) Receipt of bids. The borrower shall write on the outside 
envelope of any bid or bid amendment, the date and time the bid was 
received. Any bid received from an unqualified bidder or after the time 
specified for opening shall be returned promptly to the bidder unopened.
    (5) Procedure when fewer than three bids are received. If fewer than 
three valid bids are received, the borrower shall consult with RUS to 
determine whether the bids are to be opened or returned unopened. RUS 
requires that the project be rebid if fewer than three bids are received 
and RUS determines that one or more other bidders with an express 
interest in bidding is available and could meet the bid requirements, 
but was not invited to bid. RUS shall also require rebidding if it is 
found that qualified bidders were discouraged from bidding by 
unreasonable bid requirements (such as late notification

[[Page 421]]

to bidders) or if the borrower fails to follow the bid procedure.
    (6) Conduct of bid openings. The borrower shall conduct bid openings 
open to the public. The borrower should be able to contact its attorney 
for immediate consultation.
    (7) Review of bids. The borrower shall review all bids prior to 
reading any bid results to determine that:
    (i) The bid guarantees are adequate.
    (ii) All minor errors or irregularities made through inadvertence 
are corrected or waived. Failing this, the bid shall be rejected as 
nonresponsive.
    (iii) In the event of non-minor errors or irregularities, the bid is 
rejected and the bid price not disclosed.
    (8) Reading of bids. Bid prices shall not be read until the borrower 
has reviewed all bids to determine if there are any minor errors or 
irregularities that may affect the recommendation as to award. These 
shall be made public at the same time the bid price is announced.
    (9) Evaluating bids. The borrower shall consider the same alternates 
in all bids in determining the low bid.
    (10) Rejection. The borrower shall reject:
    (i) All bids if quoted prices are not acceptable or if the 
specifications were ambiguous and resulted in bidders having different 
interpretations of the requirements.
    (ii) Any bid that is not responsive, or is incomplete, or submitted 
by an unqualified bidder, or unbalanced between labor and materials or 
other respects.
    (11) Award of contract. (i) The borrower shall obtain from the 
engineer the determination of the lowest responsive bid, a tabulation of 
all bids and the engineer's recommendation for award of the contract. 
Contract award is subject to RUS approval if either the cost of the 
project is over $500,000 or the contract is with an organization 
affiliated with the borrower. Contract award of all other projects is 
not subject to RUS approval.
    (ii) If an award is made, the borrower shall award the contract to 
the lowest responsive bidder. The borrower may award the contract 
immediately upon determination of the lowest responsive bidder if the 
following conditions are met:
    (A) The project is included in an approved loan and adequate funds 
were budgeted in the loan and are available.
    (B) All applicable RUS procedures were followed, including those in 
the Notice and Instructions to Bid in the standard forms of contract.
    (iii) If RUS approval of the award of contract is required under 
this paragraph (a)(11), the borrower shall send to RUS for consideration 
of approval of the award:
    (A) Two copies of the low bid.
    (B) The engineer's recommendation and the tabulation of all bids.
    (C) Evidence of acceptance of the low bid by the borrower, such as:
    (1) Certified copy of board resolution or
    (2) letter or telegram to RUS signed by a properly authorized 
corporate official.
    (iv) If RUS approval of the award of contract is not required under 
this paragraph (a)(11), the borrower shall keep a file available for 
inspection by RUS. The file shall be kept for at least two years and 
shall include:
    (A) One copy of all received bids.
    (B) The engineer's recommendation and tabulation of all bids 
including ``Buy American'' evaluations, if any, and all other 
evaluations required by law.
    (C) Evidence of acceptance of the low bid by the borrower, such as a 
copy of the board resolution certified by the Secretary of the board.
    (12) Execution of contract. (i) The borrower shall submit to RUS 
three original counterparts of the contract executed by the contractor 
and borrower.
    (ii) If RUS approves the contract, it shall return one copy to the 
borrower and send one copy to the contractor.
    (b) Negotiated construction contracts. (1) For the construction of 
certain facilities the borrower may negotiate a contract rather than 
solicit sealed competitive bids. Refer to the appropriate subparts E, F, 
or H for specific requirements and procedures.
    (2) For negotiated purchases, borrowers shall use RUS contract 
forms, standards, and specifications.
    (3) For all contract forms except RUS Form 773:

[[Page 422]]

    (i) After a satisfactory negotiated proposal has been obtained, the 
borrower shall submit it to RUS for approval, along with the engineer's 
recommendation, and evidence of acceptance by the borrower.
    (ii) If RUS approves the negotiated proposal, the borrower shall 
submit three copies of the contract, executed by the contractor and 
borrower, to RUS for approval.
    (iii) If RUS approves the contract, RUS shall return one copy of the 
contract to the borrower and one copy to the contractor.
    (4) For RUS Form 773, the borrower is responsible for negotiating a 
satisfactory proposal, executing contracts, and closing the contract. 
See subparts F and I of this part for requirements for major and minor 
construction, respectively, on Form 773.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43716, Aug. 25, 1994; 64 FR 16605, Apr. 6, 
1999]



Sec. 1753.9  Subcontracts.

    (a) RUS construction contract Forms 257, 397, 515, and 525 contain 
provisions for subcontracting. Reference should be made to the 
individual contracts for the amounts and conditions under which a 
contractor may subcontract work under the contract.
    (b) RUS Form 282, Subcontract, shall be used for subcontracts under 
construction and installation contracts.
    (1) Minor modifications or additions may be made to the subcontract 
form, as long as they do not change the intent of the primary contract. 
Any alterations to the subcontract shall be initialed and dated by the 
persons executing the subcontract.
    (2) Subcontracts shall be prepared in quadruplicate and all copies 
executed by the contractor and subcontractor and consented to by the 
borrower and surety, if any.
    (3) Four executed copies of the subcontract shall be forwarded to 
RUS for approval. Upon approval, one copy each will be sent to the 
borrower, contractor, and subcontractor.
    (c) As stated in contract Forms 257, 397, 515, and 525, the 
contractor shall bear full responsibility for the acts and omissions of 
the subcontractor and is not relieved of any obligations to the borrower 
and to the Government under the contract.
    (d) As stated in the contract, construction shall not be performed 
by the subcontractor before approval of the subcontract by RUS.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43716, Aug. 25, 1994]



Sec. 1753.10  Preconstruction conference.

    The borrower shall conduct a conference, attended by the borrower, 
contractor, and resident engineer prior to the beginning of construction 
to provide an opportunity to discuss and agree on responsibilities, 
procedures, practices, and methods before the work begins. The borrower 
shall provide each participant with a copy of the conference results. 
The GFR shall be invited to attend this conference.



Sec. 1753.11  Contract amendments.

    (a) The borrower must obtain RUS approval before execution of any 
amendment to a contract if
    (1) The amendment alters the terms and conditions of the contract or 
changes the scope of the project covered by the contract regardless of 
the amount of the contract before amendment,
    (2) The amendment increases the amount to be paid under the contract 
by 20% or more, or
    (3) The amendment causes an unbonded contract to require a 
contractor's performance bond. This would occur when a contract that is 
executed in an amount below that requiring a performance bond by 7 CFR 
part 1788, subpart C, is amended to an amount above that amount.
    (b) Advance RUS approval to execute other contract amendments is not 
required. These amendments may be submitted to RUS at any time prior to 
closeout. If a borrower wishes to receive an advance of funds based on 
an amended contract amount (i.e., amendments that increase a contract by 
less than 20%), the borrower may initiate an increase in the amount 
approved for advance by submitting three copies of the amendment to RUS 
for approval.
    (c) For each amendment executed, the borrower shall make certain 
that:

[[Page 423]]

    (1) The contractor's bond covers the additional work to be 
performed. If the amendment by itself (or together with preceding 
amendments) increases the original contract price by 20% or more, a bond 
extension will be required to bring the penal sum of the bond to the 
total amended contract price.
    (2) If an amendment covers construction in a county or state not 
included in the original contract, the borrower and contractor are 
licensed to do business in that location.
    (d) Upon execution of any amendment that causes the amended contract 
amount to exceed the original contract amount by 20% or more, three 
copies of the amendment shall be submitted to RUS for approval.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 64 FR 16605, Apr. 6, 1999]



Secs. 1753.12-1753.14  [Reserved]



                     Subpart B_Engineering Services

    Source: 54 FR 3984, Jan. 27, 1989, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.15  General.

    (a)(1) The standard RUS loan documents contain provisions regarding 
engineering and architectural services performed by or for RUS 
telecommunications borrowers. This part implements certain of the 
provisions by setting forth the requirements and procedures to be 
followed by borrowers in selecting architects and engineers and 
obtaining architectural and engineering services by contract or by force 
account.
    (2) Borrowers shall obtain architectural and engineering services 
only from persons or firms which are not affiliated with, and have not 
represented, a contractor, vendor or manufacturer who may provide labor, 
materials, or equipment to the borrower under any current loan.
    (3) Preloan architectural and engineering services may be provided 
by qualified personnel on the borrower's staff or by consultants. 
Neither the selection of a preloan architect or engineer by a borrower, 
nor the contractual arrangements with them, requires RUS approval.
    (4) Postloan architectural and engineering services shall be 
obtained by borrowers from registered architects and engineers licensed 
in the State in which the facilities will be located, except where RUS 
has approved the borrower to provide these services by the force account 
method. When the extent of the proposed major or minor construction is 
such that the postloan engineering involved is within the capabilities 
of employees on the borrower's staff, the borrower may request RUS 
approval to provide such services. This method of providing engineering 
services is referred to as force account engineering. Refer to 
Sec. 1753.17(c).
    (5)(i) For major construction, services provided by architects and 
engineers not on the borrower's staff must be provided under Form 220, 
Architectural Service Contract, or Form 217, Postloan Engineering 
Service Contract--Telecommunications. These contracts require RUS 
approval.
    (ii) For minor construction, borrowers may use the contracts in 
paragraph (a)(5)(i) of this section for postloan architectural or 
engineering services or any other form of contract, such as Form 245, 
Engineering Service Contract, Special Services--Telephone. RUS approval 
of contracts for postloan architectural or engineering services 
associated with minor construction, except for buildings covered in 
paragraph (a)(6) of this section, is not required.
    (6) For buildings to be constructed with RUS funds, postloan 
architectural or engineering services shall be obtained if (1) the 
construction cost exceeds $50,000 (prefab buildings using manufacturer's 
specifications approved by RUS are exempt from this requirement) or (2) 
soil or seismic conditions require special design considerations.
    (b) For the purpose of this subpart B:
    (1) Contract--The services contract between the borrower and its 
architect or engineer.
    (2) Force Account Engineering--Any preloan or postloan engineering 
services performed by the borrower's staff.
    (3) Postloan engineering services--The design, procurement, and 
inspection of

[[Page 424]]

construction to accomplish the objectives of a loan as stated in a LD 
approved by RUS.
    (4) Preloan engineering services--The planning and design work 
performed in preparing a LD. This consists of helping the borrower 
determine the objectives for a loan, including consideration of RUS's 
requirements relating to the modernization plan, selecting the most 
effective and efficient methods of meeting loan objectives, and 
preparing the LD which describes the objectives and presents the method 
selected to meet them.
    (c) Single copies of RUS forms and publications cited in this part 
are available free from Administrative Services Division, Rural 
Utilities Service, United States Department of Agriculture, Washington, 
DC 20250-1500. These forms and publications may be reproduced.
    (d)(1) All outside architects and engineers employed by RUS 
telephone borrowers shall have insurance coverage as required by 7 CFR 
part 1788.
    (2) Borrowers shall ensure that their architects and engineers 
comply with the insurance requirements of their contracts. See 7 CFR 
1788.54.
    (e)(1) Borrowers shall make prompt payments to architects and 
engineers as required by the contract.
    (2) RUS shall not make loan funds available for late payment 
interest charges.

[54 FR 3984, Jan. 27, 1989. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 58 FR 66259, Dec. 20, 1993; 59 FR 17464, Apr. 13, 1994; 64 
FR 16605, Apr. 6, 1999]



Sec. 1753.16  Architectural services.

    (a) The borrower shall be responsible for selecting an architect to 
perform the architectural services required in the design and 
construction of buildings.
    (b)(1) The borrower shall use Form 220 when contracting for 
architectural services for major construction, except that the borrower 
may use either Form 220 or Form 217 if the building is an unattended 
central office building.
    (2) The borrower and the architect negotiate the fees for services 
under Form 220.
    (3) Reasonable modifications or additions to the terms and 
provisions in Form 220 may be made, subject to RUS approval, to obtain 
the specific services needed for a building.
    (4)(i) Three copies of Form 220, executed by the borrower and the 
architect, shall be sent to GFR to be forwarded to RUS for approval. RUS 
will review the contract terms and conditions. RUS will not approve the 
contract if, in RUS's judgment:
    (A) Unacceptable modifications have been made to the contract form.
    (B) The contract will not accomplish loan purposes.
    (C) The architectural service fees are unreasonable.
    (D) The contract presents unacceptable loan security risk to RUS.
    (ii) If RUS approves the contract, RUS will send one copy to the 
architect and one copy to the borrower.
    (5) Loan funds will not be available to pay for the preliminary 
architectural services if a loan is not made for the construction 
project, or if the construction project is abandoned.
    (6) Subpart D of 7 CFR part 1753 sets forth the requirements and 
procedures to be followed by borrowers constructing central office, 
warehouse, and garage buildings with RUS loan funds.
    (c)(1) RUS telephone borrowers shall obtain two copies of a 
completed Form 284, Final Statement of Architect's Fees, when all 
services and obligations required under the architectural services 
contract have been completed. All fees shown on the statement shall be 
supported by detailed information where appropriate. For example: out-
of-pocket expense, cost plus, and per diem types of compensation shall 
be listed separately with labor, transportation, etc., itemized for each 
service involving these types of compensation.
    (2) If Form 284 and supporting data are satisfactory, the borrower 
shall approve the statement, sign both copies, and send one copy to the 
GFR.
    (3) Upon approval of Form 284 by RUS, the borrower shall promptly 
make final payment to the architect.

[54 FR 3984, Jan. 27, 1989. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16606, Apr. 6, 1999]

[[Page 425]]



Sec. 1753.17  Engineering services.

    (a)(1) All engineering services required by a borrower to support 
its application for a loan shall be rendered by a qualified engineer 
selected by the borrower or by qualified employees on the borrower's 
staff. The selection of the preloan engineer, the form of preloan 
engineering service contract, and the contract itself, are not subject 
to RUS approval. Borrowers, however, should discuss their proposed 
method of obtaining preloan engineering services with the GFR before 
proceeding with any arrangements.
    (2) Form 835, Preloan Engineering Service Contract, Telephone System 
Design, is a suggested form of preloan engineering service contract. 
While use of this form of contract is not required, it will be helpful 
in determining the tasks to be performed. Any form of contract used 
shall specify that preloan engineering services conform to RUS 
requirements for preloan studies. See subpart D of 7 CFR part 1737.
    (b)(1) Major construction. (i) Three copies of Form 217 executed by 
the borrower and the engineer shall be sent to the GFR to forward to RUS 
for approval. The engineer's estimate of the engineering fees, on Form 
506, shall be included.
    (ii) RUS will review the contract terms and conditions. RUS will not 
approve the contract if, in RUS's judgement:
    (A) Unacceptable modifications have been made to the contract form.
    (B) The contract will not accomplish loan purposes.
    (C) The engineering service fees are unreasonable.
    (D) The contract presents unacceptable loan security risk to RUS.
    (E) The consulting engineering firm is affiliated with or has 
represented a contractor, vendor, or manufacturer who may provide labor, 
materials, or equipment to the borrower under any current loan.
    (2) Minor construction. When a borrower contracts for an engineering 
firm to inspect and certify construction accounted for under the work 
order procedure or the Contract for Miscellaneous Construction Work and 
Maintenance Services, Form 773 (See 7 CFR part 1753 subpart I), the 
borrower shall require that the certification be signed by a licensed 
engineer.
    (c)(1) Major construction. When the extent and complexity of the 
proposed construction is such that the engineering involved is within 
the capabilities of employees on the borrower's staff, borrowers may 
request RUS approval to provide such services.
    (i) The request shall include:
    (A) A description of services to be performed.
    (B) The name and qualifications of the employee to be in charge. RUS 
requires this employee to meet the State experience requirements for 
registered engineers. In the absence of specific State experience 
requirements, the employee must have at least eight years experience in 
the design and construction of telecommunication facilities, with at 
least two years of the work experience at a supervisory level. RUS does 
not require professional registration of this employee, but this does 
not relieve the borrower from compliance with applicable State 
registration requirements which may require a licensed individual to 
perform such services.
    (C) The names, qualifications, and responsibilities of other 
principal employees who will be associated with providing the 
engineering services.
    (D) A letter signed by an authorized representative of the borrower 
authorizing the engineering services to be performed by force account 
and certifying the information supporting the request.
    (ii) RUS shall notify the borrower by letter of approval or 
disapproval to perform force account engineering. The letter shall set 
forth any conditions associated with an approval or the reasons for 
disapproval.
    (iii) RUS's approval of force account engineering for major 
construction shall be only for the specific projects named in the notice 
of approval.
    (2) Minor construction. (i) When the borrower proposes to perform 
the inspection and certification of minor construction, the following 
shall be submitted to the RUS:
    (A) A copy of the employee's qualifications and experience record, 
unless previously submitted. RUS requires a minimum of four years of 
construction

[[Page 426]]

and inspection experience. The employee cannot be engaged in the actual 
construction.
    (B) A letter signed by an authorized representative of the borrower 
authorizing the performance of these services by the employee, subject 
to RUS approval, and certifying the supporting information.
    (ii) RUS shall notify the borrower by letter of approval or 
disapproval of the borrower's staff employee to perform the inspection 
and certification of construction. The approval shall be limited to the 
employee's area of expertise.
    (d)(1) Subject to the requirements of this part and other applicable 
regulations, RUS will make loan funds available for the architectural 
and engineering services up to the amounts included in the approved 
loan.
    (2) Advance of funds shall be requested on an FRS as set forth in 7 
CFR part 1744 subpart C.
    (e) The borrower shall obtain status of contract and force account 
proposal reports from the engineer once each month. The report shall 
show for each contract or FAP the approved contract or FAP amount, the 
date of approval, the scheduled date construction was to begin and the 
actual date construction began, the scheduled completion date, the 
estimated or actual completion date, the estimated or actual date of 
submission of closeout documents, and an explanation of delays or other 
pertinent data relative to progress of the project. One copy of this 
report shall be submitted to the GFR.
    (f)(1) Upon completion of all services required under the 
engineering service contract Form 217, the borrower shall obtain from 
the engineer four copies of the Final Statement of Engineering Fee, Form 
506.
    (2) If the statement is satisfactory, the borrower shall sign all 
copies and send three to the GFR.
    (3) After RUS approval of Form 506, one copy shall be sent to the 
borrower and one copy sent to the engineer.
    (4) The borrower shall promptly make final payment to the engineer.

[54 FR 3984, Jan. 27, 1989. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16606, Apr. 6, 1999]



Sec. 1753.18  Engineer and architect contract closeout certifications.

    A certification of completion and inspection of construction signed 
by the borrower and countersigned in accordance with accepted 
professional engineering and architectural practice, by the engineer or 
architect, shall be prepared as evidence of completion of a major 
construction project. This certification shall make reference to the 
contract number and contract amount, and shall include the following:
    (a) A statement that the construction is complete and was done in 
accordance with the RUS approved system design or layout or subsequent 
RUS approved changes.
    (b) A statement that the construction was for loan purposes.
    (c) A statement that construction used RUS-accepted materials and 
was in accordance with specifications published by RUS covering the 
construction which were in effect when the contract was executed, or in 
the absence of such specifications, that it meets other applicable 
specifications and standards (specify), and that it meets all applicable 
national and local code requirements as to strength and safety.
    (d) A statement that the construction complies with the ``Buy 
American'' provision (7 U.S.C. 903 note) of the Rural Electrification 
Act of 1936 (7 U.S.C. 901 et seq.).
    (e) A statement that all necessary approvals have been obtained from 
regulatory bodies and other entities with jurisdiction over the project.
    (f) A statement that all closeout documents required by this part 
have been examined and found complete such that the Contractor has 
fulfilled all obligations under the contract except for warranty 
coverage.
    (g) A statement that the engineer or architect is not affiliated 
with and does not represent the contractor, vendor, or manufacturer who 
is a participant in the contract.

[64 FR 16606, Apr. 6, 1999]



Secs. 1753.19-1753.20  [Reserved]

Subpart C [Reserved]

[[Page 427]]



                   Subpart D_Construction of Buildings

    Source: 54 FR 39267, Sept. 25, 1989, unless otherwise noted. 
Redesignated at 55 FR 39396, Sept. 27, 1990.



Sec. 1753.25  General.

    (a) This subpart implements and explains the provisions of the Loan 
Documents setting forth the requirements and the procedures to be 
followed by borrowers in constructing headquarters, commercial office, 
central office, warehouse, and garage buildings with loan funds.
    (b) Terms used in this subpart are defined in Sec. 1753.2.
    (c) All plans and specifications for buildings to be constructed 
with loan funds are subject to the approval of RUS. In addition, 
preliminary plans and specifications for headquarters and commercial 
office buildings to be constructed with loan funds are subject to RUS 
approval.
    (d) RUS Form 257, Contract to Construct Buildings, shall be used for 
the construction of all headquarters, commercial office, central office, 
warehouse, and garage buildings with loan funds. Refer to Sec. 1753.26 
for further instructions.
    (e) The borrower shall use the sealed competitive bid procedure for 
all building construction, except for:
    (1) Minor construction using subpart I procedures.
    (2) Major construction, where the borrower has received advanced 
approval to perform the construction by force account.
    Refer to Secs. 1753.27 and 1753.29 for further instructions.
    (f) The site location, design, and construction of the facilities 
must comply with all applicable laws and regulations, including:
    (1) Pub. L. 90-480 (42 U.S.C. 4151) (Access to Physically 
Handicapped), which requires certain buildings financed with Federal 
funds be designed and constructed to be accessible to the physically 
handicapped.
    (2) Pub. L. 91-596 (29 U.S.C. 651) the Occupational Safety and 
Health Act of 1970. OSHA issues rules and regulations covering 
occupational safety and health standards for buildings. These 
regulations are codified in 29 CFR chapter XVII.
    (3) 7 CFR part 1794, which provides for compliance with the National 
Environmental Policy Act (NEPA) and Council on Environmental Quality 
(CEQ) regulations (40 CFR parts 1500-1508) implementing the procedural 
provisions of NEPA, as well as RUS's conformance with other laws, 
regulations, and Executive Orders regarding environmental protection.
    (4) 7 CFR part 1792, subpart C, which requires that the building 
design comply with applicable seismic design criteria. Prior to the 
design of buildings, borrowers shall submit to RUS a written 
acknowledgement from the architect or engineer that the design will 
comply.
    (g) All construction pertaining to the building structure shall be 
performed under one contract. Separate contracts may be used for 
planting shrubbery, surfacing of roads and parking areas, and other 
identifiable parts of the project not pertaining to the building 
structure. These separate contracts shall also be subject to RUS 
approval as described in this subpart D.
    (h) The borrower is responsible for submitting evidence, 
satisfactory to RUS, establishing that clear title to the building site 
has been obtained. RUS will not approve the construction contract until 
it has given title clearance.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16606, Apr. 6, 
1999]



Sec. 1753.26  Plans and specifications (P&S).

    (a) For headquarters and commercial office buildings only, the 
borrower shall prepare preliminary P&S showing the floor plan and 
general architectural details of the building to be constructed using 
loan funds. In particular, the preliminary P&S shall address the 
requirements of Sec. 1753.25(f) and the Uniform Relocation Assistance 
and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et 
seq.). The P&S shall be submitted to the GFR and are subject to RUS 
approval.

[[Page 428]]

    (b) The borrower shall prepare P&S for construction of all 
buildings. Each set of P&S shall include:
    (1) RUS Contract Form 257, Contract to Construct Buildings, 
completed to the extent explained in (c) of this section.
    (2) Complete and detailed specifications covering materials and 
workmanship.
    (3) A detailed building plan. Where the building is to house 
electronic apparatus, the detailed plan or specifications shall include 
the equipment environmental requirements and special equipment required.
    (4) A site plan for each building showing the building location and 
giving the legal description of the site. Sufficient information must be 
provided for the site so that it can be identified as the same property 
on which title opinion was submitted to RUS. The legal description shall 
be typed on the site plan. The borrower shall also furnish topographical 
information and a description of any proposed site development work and 
show proposed connections for public utilities.
    (c) RUS Contract Form 257 shall be completed as follows:
    (1) List of names or kinds of buildings and locations--Site plan and 
specifications must be identified with the appropriate building.
    (2) Alternates--The borrower shall keep the number of alternates to 
a minimum. Items for which alternates are to be taken shall be fully 
described on a separate sheet in the specifications and the details 
shown on the plans, when necessary, and identified by the alternate 
number. The Notice and Instructions to Bidders shall explain how bids 
will be evaluated with respect to alternates.
    (3) Time for construction--A reasonable time for completion of 
construction, considering local conditions, shall be determined by the 
borrower and inserted in the space provided. Too short a construction 
period may discourage bidders or influence their bids. Completion of the 
building, where central office equipment is involved, shall be 
coordinated with delivery of the equipment. The time of completion shall 
allow adequate drying time before the central office equipment is stored 
or installed in the building.
    (d) The plans and specifications shall show the identification and 
date of the model code used for seismic safety design considerations, 
and the seismic factor used. See 7 CFR part 1792, subpart C.
    (e) Two sets of the building plans and specifications shall be 
prepared and submitted to the GFR.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16606, Apr. 6, 
1999]



Sec. 1753.27  Bidding procedure.

    Upon RUS approval of the P&S, the borrower shall proceed as follows:
    (a) Bid documents shall consist of a copy of the approved P&S, 
including RUS Contract Form 257, completed in accordance with the 
instructions on the cover of the form and the plot plans showing site 
development details. For contracts in amounts of $100,000 or less, the 
borrower must specify in the Notice and Instructions to Bidders whether 
the contractor will be required to furnish a performance bond or a 
builder's risk policy.
    (b) The borrower shall determine that title to the real estate has 
been approved by RUS before the invitations to bid are released.
    (c) The borrower shall set the time for opening of bids, allowing 
ample time for bidders to prepare bids.
    (d) The borrower shall solicit bids as set forth in 
Sec. 1753.8(a)(2). Invitations shall be sent to at least six prospective 
bidders.
    (e) The borrower shall conduct bid opening and award of contract in 
accordance with the procedure set forth in Sec. 1753.8(a).



Sec. 1753.28  Contract amendments.

    (a) The general requirements for contract amendments are set forth 
in Sec. 1753.11.
    (b) The borrower shall prepare construction contract amendments on 
RUS Contract Form 238, Construction or Equipment Contract Amendments. 
See 7 CFR 1755.93 to obtain copies of Form 238.

[[Page 429]]



Sec. 1753.29  Force account procedures.

    (a) The borrower must obtain RUS approval of the force account 
method of construction of buildings in advance in order to obtain RUS 
financing.
    (b) The borrower shall prepare the P&S in accordance with 
Sec. 1753.26.
    (c) Prior to any construction activity or the purchase of materials 
or equipment, the borrower shall submit the FAP in duplicate to RUS, 
accompanied by a resolution indicating approval of the board of 
directors of the borrower or a letter signed by an authorized corporate 
official. The proposal shall include:
    (1) A Copy of the P&S.
    (2) An itemized list of all items of materials required for 
construction.
    (3) A construction schedule showing the estimated construction 
period for each major construction item.
    (4) An estimate of the material and labor and other costs for any 
construction item not provided for in the approved loan.
    (d) Force Account construction to be financed with loan funds shall 
not be started until RUS approval has been received by the borrower.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43717, Aug. 25, 1994]



Sec. 1753.30  Closeout procedures.

    (a) This section outlines the procedure to be followed to close out 
RUS Contract Form 257 (Contract to Construct Buildings) and construction 
or rehabilitation performed by the force account method.
    (b) RUS Form 257 Contract. (1) Whenever changes were made in the 
plans and specifications which did not require immediate submission to 
RUS of an amendment under Sec. 1753.11, a final contract amendment 
showing the changes shall be prepared.
    (2) Upon completion of the project, the borrower shall obtain 
certifications from the architect or engineer that the project and all 
required documentation are satisfactory and complete. The requirements 
for this certification are contained in Sec. 1753.18.
    (3) The engineer's or architect's contract closeout certification 
and the final amendment shall be submitted to RUS as a basis for the 
final advance of funds for the contract.
    (4) After all required RUS approvals are obtained, final payment is 
made in accordance with article III of RUS Form 257 once the borrower 
has received the architect's or engineer's certifications regarding 
satisfactory completion of the project.
    (c) Upon completion of force account construction, the borrower 
shall:
    (1) Arrange with its architect or engineer and the GFR for final 
inspection of the project.
    (2) Complete, with the assistance of its architect or engineer, the 
documents listed in the following table that are required for the 
closeout of force account construction.

                            Documents Required To Closeout Construction of Buildings
----------------------------------------------------------------------------------------------------------------
                                                      Use with      No. of copies prepared      Distribution
                                                -------------------           by           ---------------------
         RUS Form No.             Description                      ------------------------
                                                 Contract   Force               Architect/  Borrower  Contractor
                                                           account  Contractor   engineer
----------------------------------------------------------------------------------------------------------------
238..........................  Construction or          X  .......  ..........        (3)   (to RUS)   (to RUS)
                                Equipment
                                Contract
                                Amendment (if
                                not previously
                                submitted, send
                                to RUS for
                                approval).
181..........................  Certificate of           X  .......  ..........          2          1          1
                                Completion
                                (contract
                                construction) \
                                1\.
231..........................  Certificate of           X  .......          1   ..........         1  ..........
                                Contractor.
224..........................  Waiver and               X  .......          1   ..........         1  ..........
                                Release of Lien
                                From Each
                                Supplier.
213..........................  Certificate (buy         X  .......          1   ..........         1  ..........
                                American).
None \2\.....................  ``As Built''             X        X  ..........          1          1  ..........
                                Plans and
                                Specifications.
None.........................  Guarantees,              X  .......          1   ..........         1  ..........
                                Warranties,
                                Bonds,
                                Operating or
                                Maintenance
                                Instructions,
                                etc.
None.........................  Architect/               X        X  ..........          2          1          1
                                Engineer
                                seismic safety
                                certification.
----------------------------------------------------------------------------------------------------------------
\1\ Cost of materials and services furnished by borrower are not to be included in Total Cost on RUS Form 181.
\2\ When only minor changes were made during construction, two copies of a statement to that effect from the
  Architect will be accepted instead of the ``as built'' Plans and Specifications.


[[Page 430]]

    (3) Make distribution of the completed documents as indicated in the 
table in this section.
    (d) Final payment shall not be made until RUS has approved the 
closeout documents.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39396, Sept. 27, 
1990, as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16606, Apr. 6, 
1999]



Secs. 1753.31-1753.35  [Reserved]



     Subpart E_Purchase and Installation of Central Office Equipment

    Source: 54 FR 39267, Sept. 25, 1989, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.36  General.

    (a) This subpart implements and explains the provisions of the Loan 
Documents setting forth the requirements and the procedures to be 
followed by borrowers in purchasing and installing central office 
equipment financed with loan funds.
    (b) Terms used in this subpart are defined in Sec. 1753.2 and RUS 
Contract Forms 525 and 545.
    (c) Borrowers shall use RUS Contract Form 525, Central Office 
Equipment Contract (Including Installation), when the firm supplying the 
equipment will install it and RUS Contract Form 545, Central Office 
Equipment Contract (Not Including Installation) when the supplier of the 
equipment will not be installing it. In either case the appropriate 
specifications shall be included in the contract.
    (d) Alternates, if any, specified in the P&S shall be kept to a 
minimum.
    (e) The borrower shall take sealed competitive bids for all central 
office equipment to be purchased under RUS Contract Form 525 or 545 
using the procedure set forth in Sec. 1753.38(a), unless RUS approval to 
negotiate is obtained.
    (f) The borrower may request permission to negotiate with a single 
supplier for additional central offices to standardize equipment on a 
system basis. RUS approval to negotiate must be obtained before release 
of the plans and specifications to the supplier. Except for remote 
switching terminals associated with an existing central office, RUS will 
not approve negotiation with a non-domestic manufacturer for the purpose 
of standardization because such a purchase does not meet the RE Act 
``Buy American'' provisions.
    (g) Materials and equipment must meet the standards and general 
specifications approved by RUS. Materials and equipment included in I.P. 
300-4, ``List of Materials Acceptable for Use on Telecommunications 
Systems of RUS Borrowers'', have been accepted as meeting these 
requirements. If the equipment is not included in the ``List of 
Materials'' but has been approved for field trial installation, the 
borrower must in each instance obtain field trial approval from RUS 
prior to entering into any agreement with a supplier.
    (h) Only new equipment shall be purchased unless otherwise approved 
by RUS.
    (i) All purchases of materials and equipment are subject to the 
``Buy American'' requirements.
    (j) If the sealed competitive bid procedure is followed, negotiation 
after bid opening will not be permitted.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 64 FR 16607, Apr. 6, 1999]



Sec. 1753.37  Plans and specifications (P&S).

    (a) General. (1) Prior to the preparation of P&S, the borrower shall 
review with the GFR the current and future requirements for central 
office equipment.
    (2) The P&S shall specify the delivery and completion time required 
for each exchange.
    (3) The P&S shall provide for a complement of spare parts to be 
provided to the borrower. The quantity and type of spare parts shall be 
determined in accordance with the provisions in RUS Form 522 ``General 
Specification for Digital, Stored Program Controlled Central Office 
Equipment.''
    (4) P&S for equipment to be provided under a Form 545 contract shall 
require the supplier to provide specific installation information and a 
detailed bonding and grounding plan to be utilized by the engineer. 
borrower, and others responsible for the installation of the equipment.

[[Page 431]]

    (b) Preparation of P&S. (1) The P&S shall include RUS Contract Form 
525 or 545, Notice and Instructions to Bidders, specifications for the 
required equipment for each exchange, provision for spare parts, and all 
other pertinent data needed by the bidder to complete its proposal.
    (2) Guidelines for the preparation of the detailed equipment 
specifications are contained in the Telecommunications Engineering and 
Construction Manual (TE&CM), which is available from RUS.
    (c) RUS review of P&S is required for construction estimated to cost 
over $500,000 total or estimated to cost more than 25% of the total 
loan, whichever is less.
    (1) If RUS review is required, the borrower shall submit one copy of 
the P&S to the GFR for RUS review.
    (2) RUS will review the P&S and notify the borrower in writing of 
approval or disapproval.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 64 FR 16607, Apr. 6, 1999]



Sec. 1753.38  Procurement procedures.

    (a) Sealed competitive bidding. Sealed competitive bidding of 
central office equipment shall be in two steps: presentation and 
evaluation of suppliers' technical proposals, and compliance with the 
sealed competitive bidding procedure set forth in Sec. 1753.8(a). The 
procedure is as follows:
    (1) Solicitation of bids. (i) After RUS approval of the 
specifications and equipment requirements (required only for projects 
expected to exceed $500,000 or 25% of the loan, whichever is less), the 
borrower shall send ``Notice and Instructions to Bidders'' to suppliers 
with central office equipment included in the current Informational 
Publication (I.P.) 300-4, ``List of Materials Acceptable for Use on 
Telecommunications Systems of RUS Borrowers.'' I.P. 300-4 is a 
subscription item available from the Superintendent of Documents, U.S. 
Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. 
This ``Notice'' may also be sent to suppliers of non-domestic equipment 
currently accepted by RUS as meeting RUS technical standards. The 
``Notice'' may also be sent to suppliers of central office equipment 
accepted for field trial.
    (ii) The ``Notice'' must set forth the method of evaluating bids and 
must require the submission of equipment lists and traffic calculations 
with the bids.
    (iii) RUS Contract Forms 525 or 545 shall be used, except that the 
``Notice'' shall state that prior to the bid opening a technical session 
will be conducted with each supplier to resolve any questions related to 
the technical proposal submitted by the supplier. The suppliers' 
technical proposals should be requested for presentation 30 days in 
advance of the bid opening to enable sufficient time to make the 
technical evaluation.
    (iv) The borrower shall solicit bids as set forth in 
Sec. 1753.8(a)(2). The ``Notice'' shall be sent to at least three 
prospective bidders. A copy of the ``Notice'' and a list of such bidders 
shall be sent to RUS.
    (v) At the request of an invited supplier, the borrower shall 
provide two copies of the P&S.
    (2) Technical Sessions. (i) The borrower shall schedule individual 
technical sessions by the suppliers, notify each supplier of its 
scheduled date and time, notify the GFR of all scheduled dates and 
times, and request the following be available at the technical session:
    (A) Lists of equipment, material and software.
    (B) Proposed floor plan.
    (C) Power and heat dissipation calculations.
    (D) List of exceptions to plans and specifications.
    (E) Protection and grounding requirements.
    (F) Description of how office administration, maintenance and 
traffic collection are handled with step-by-step examples and printouts.
    (G) Explanation of processor and/or memory expansion required to 
meet ultimate size. This shall include discussions of software, 
processor memory, and hardware additions needed for line additions and 
the introduction of various future services; the relative costs of 
installing the necessary hardware and software initially as compared 
with the anticipated cost if installed at

[[Page 432]]

the time when the future services are to be offered.
    (H) Description of how special equipment such as loop tests, 
volunteer fire alarm circuit, line load control, etc., will function.
    (I) Description of method for translating initial office 
administration information into machine language, and proposal as to 
whether it will be done by the borrower or by the supplier.
    (J) A software license agreement (if required by the manufacturer) 
in the form indicated in Sec. 1753.38(c).
    (K) Any other items pertinent to the technical proposal, such as 
information regarding changes that have been made in hardware and 
software of the equipment that is of like manufacture to that presently 
in operation in the borrower's system. This shall include requirements 
for additional spare parts or training which have developed as a result 
of significant change in system device technology.
    (ii) The borrower shall review in detail all exceptions to the P&S. 
No exceptions will be accepted unless all bidders are notified, in 
writing, of the change in the specifications and permitted to 
incorporate the change in their proposal.
    (iii) If the technical proposal is not responsive, the borrower 
shall notify the supplier, in writing, that its proposal will not be 
given further consideration and why.
    (iv) Changes in the P&S resulting from the technical sessions shall 
be subject to RUS's review and approval.
    (v) After evaluation of the technical proposals and RUS approval of 
the changes to P&S (required only for projects that are expected to 
exceed $500,000 or 25% of the loan, whichever is less), sealed bids 
shall be solicited from only those bidders whose technical proposals 
meet P&S requirements. When fewer than three bidders are adjudged 
qualified by the borrower to bid, RUS approval must be obtained to 
proceed. Generally, RUS will grant such approval only if the borrower 
can demonstrate to the satisfaction of RUS that a good faith effort was 
made to obtain at least three competitive bids. This would be 
demonstrated if all suppliers currently listed in I.P. 300-4 were 
invited to submit technical proposals.
    (vi) The borrower shall invite the GFR to attend the technical 
sessions.
    (3) Bidding and award of contract. (i) All bids must be completed, 
dated, and signed prior to submission.
    (ii) The bid opening and award of contract shall be conducted in 
accordance with the procedure set forth in Sec. 1753.8(a).
    (iii) The spare parts bid shall always be priced separately and 
added to the base bid when determining the low bidder.
    (b) Single source negotiated procurement. If RUS has approved the 
borrower's request to procure central office equipment through single 
source negotiation in accordance with requirements contained in 
Sec. 1753.36(f), the borrower shall proceed in accordance with this 
subsection.
    (1) After RUS approval of the P&S and equipment requirements 
(required only for contracts expected to exceed $500,000 or 25% of the 
loan, whichever is less), the borrower shall send two complete copies of 
the approved P&S to the supplier and request that a proposal be 
submitted.
    (2) The borrower shall schedule a time and date for a technical 
session by the supplier and request that the items listed in 
Sec. 1753.38(a)(2)(i) be available at the technical session. In addition 
to these items, the supplier shall be requested to provide a description 
of the exact differences in hardware and software between the borrower's 
existing equipment and the proposed equipment so that the borrower can 
determine spare parts interchangeability, need for retraining, and the 
compatibility of administration of the old and new equipment.
    (3) If the contract is expected to exceed $500,000 or 25% of the 
loan, whichever is less, changes in the P&S resulting from the technical 
session shall be subject to RUS review and approval.
    (4) The submitted proposal shall be based on the agreed-upon results 
of the technical evaluation and must be complete, dated, and signed.
    (5) The borrower shall obtain an award recommendation from its 
engineer.
    (6) The following shall be sent to RUS for review and approval:

[[Page 433]]

    (i) A copy of the engineer's recommendation to the borrower, and
    (ii) Evidence of acceptance of the proposal by the borrower, such as
    (A) A certified copy of the board resolution, or
    (B) A letter to RUS signed by an authorized corporate official.
    (7) RUS approval of the proposal will be conditioned upon the 
borrower obtaining prices that are consistent with current competitive 
prices. Upon RUS approval of the proposal, three copies of the contract 
shall be prepared with all specifications and proposal documents, and 
performance bonds, to be executed by the supplier and borrower.
    (8) The three complete, executed contracts shall be sent to the RUS 
Area Engineering Branch Chief for approval.
    (9) If RUS approves the contract, one copy will be returned to the 
borrower and one copy will be sent to the supplier.
    (10) Installation of the central office equipment and materials 
provided under RUS Contract Form 545 may be made in accordance with 
subpart I, if applicable, or by an approved Force Account Proposal 
(FAP).
    (c) Software license agreement (Addendum 2). The Addendum in this 
paragraph to RUS Form 525, Central Office Equipment Contract (Including 
Installation), and RUS Form 545, Central Office Equipment Contract (Not 
Including Installation), must be used with any central office equipment 
contract that requires a software license agreement and for which RUS 
financial assistance is to be provided.

                 Addendum 2--Software License Agreement

    (1) Definitions. For the purpose of this Software License 
Agreement--
    Contract means the RUS Form 525 Central Office Equipment Contract 
(Including Installation) or RUS Form 545 Central Office Equipment 
Contract (Not Including Installation),

dated------------, between

________________________________________________________________________

(the Licensee) and______________________________________________________

(the Licensor).

    Days means calendar days.
    Licensed Software means the computer programs, furnished for the 
operation of the System(s) provided under the Contract, whether 
contained on a tape, disc, semiconductor device, or other memory device 
or system memory consisting of logic instructions and instruction 
sequences in machine-readable object code, which manipulate data in the 
central processor, control and perform input/output operations, perform 
error diagnostic and recovery routines, control call processing, and 
perform peripheral control, administrative and maintenance functions; as 
well as Licensor's standard customer documentation, excluding source 
code, used to describe, maintain and use the programs provided under the 
Contract.
    Licensee and Licensor, respectively, mean the parties signing the 
software license agreement as the licensee and licensor.
    Right-to-Use Fee is defined in section (2).
    Specifications means the RUS Form 522, General Specification for 
Digital, Stored Program Controlled Central Office Equipment, which is 
part of the Contract.
    System means the stored program controlled central office and 
associated remote switching terminal or terminals which use the Licensed 
Software covered by this License.
    (2) Software License Provisions. The Licensor may charge a fee, 
herein referred to as a Right-to-Use Fee, for use of the Licensed 
Software. The Right-to-Use Fee shall be included in the Total Base Bid 
as defined in the Contract. In consideration of the Right-to-Use Fee, 
the Licensor hereby grants the Licensee the right to use all Licensed 
Software, solely in connection with the System provided under this 
Contract, so that the System performs in accordance with the Contract 
and the Specifications.
    (i) The Licensee's right to use the Licensed Software is non-
exclusive and limited to use or operation in the United States of 
America, including its Territories, the Federated States of Micronesia, 
the Marshall Islands, Palau and the Commonwealth of Puerto Rico, with 
the System for which the Licensed Software is provided by the Licensor. 
The Licensee may reuse the equipment and its accompanying Licensed 
Software at another location within the Licensee's System without 
obtaining additional approvals from Licensor, provided, however, that 
the Licensee notify the Licensor, within ten (10) days, of the change in 
location of the equipment and Licensed Software.
    (ii) The Licensee and any successor to the Licensee's title in the 
System may, without further consent of the Licensor, transfer the 
Licensed Software and all of the Licensee's rights and interests under 
this Software License to any transferee who acquires legal title to the 
System, provided that such transferee first agrees in writing to the 
Licensor to abide by all of the terms and conditions of this License 
including, without limitation, the territorial limitation stated in 
section (2)(i) and the restrictions on decompiling or reverse assembly 
stated in section (2)(iii). Licensee shall give Licensor

[[Page 434]]

written notice thirty (30) days prior to any transfer. The Licensor 
shall not place any additional conditions on the transferee's use of the 
System or the Licensed Software. If the provisions of this section 
(2)(ii) are satisfied, thereafter the Licensee shall bear no 
responsibility for transferee's failure to abide by the terms and 
conditions of this License.
    (iii) The Licensee shall take reasonable steps to protect the 
confidentiality of the Licensed Software and shall not decompile or 
reverse assemble all or any part of the Licensed Software to generate 
source code. The Licensee shall not make the Licensed Software available 
to any person except on a need to know basis. The obligations of the 
Licensee hereunder shall not extend to any information or data relating 
to the Licensed Software which is now available to the general public or 
becomes available by reason of the acts of the Licensor or third 
parties.
    (iv) The Licensee may reproduce or copy the Licensed Software and 
related materials solely for the purpose of archival backup, in-house 
training and operating, maintaining, and administering the System 
provided under this Contract. In such reproduction, the Licensee shall 
include, upon all such copies of the Licensed Software, all proprietary 
notices, including the copyright notice within the Licensed Software 
program and related documentation in the form in which it is received 
from the Licensor.
    (v) The Licensee acknowledges that the Licensed Software program is 
the property of the Licensor, and shall not do, or cause to be done, 
anything to activate any of the subsisting nonactivated computer 
instruction steps therein unless authorized in writing by the Licensor. 
The Licensor shall have the exclusive right to activate, or authorize 
the activation of, the subsisting nonactivated program instruction steps 
in the Licensed Software. In this event Licensee shall pay any 
additional Right-To-Use Fee(s) agreed to by Licensee and Licensor.
    (vi) In the event the Licensor develops significant improvements to 
the Licensed Software, the Licensor may market the improvements as a 
separate offering requiring payment of an additional Right-to-Use Fee.
    (vii) The Licensee shall not modify or otherwise change the Licensed 
Software other than at the direction of the Licensor. This provision 
shall not apply to:
    (A) Changes to the Licensed Software which are necessary to preserve 
or restore service. Licensee shall use all reasonable efforts to contact 
Licensor before making any such changes. If the Licensor is unable to 
make the necessary changes promptly to the Licensed Software to preserve 
or restore service, then the Licensee may make only such changes to the 
Licensed Software as are necessary to preserve or restore service. In 
such event, Licensee shall promptly notify Licensor of the changes made 
by Licensee.
    (B) Changes made by the Licensee to its own database; and
    (C) Changes made by the Licensee in connection with the exercise of 
its rights under section (2)(xi).
    (viii) Within thirty (30) days after written notice that a program 
or a release thereof has been discontinued and is no longer required for 
the operation of the System and the Licensor has furnished the Licensee 
with a new program that is fully satisfactory to the Licensee, the 
Licensee agrees to return the original and all copies of the 
discontinued program and specified related documents. If such return is 
impossible or impractical, the Licensee shall destroy said program and 
documents and provide the Licensor with a written notice of such 
destruction.
    (ix) The Licensor warrants to the Licensee that any Software 
licensed under this Software License shall function for a period of five 
(5) years from the warranty start date defined in the Contract in 
accordance with the Specifications and any written or printed technical 
material provided by the Licensor to explain the operation of the 
Licensed Software and aid in its use. The Licensor shall correct all 
deficiencies within thirty (30) days from the date of receipt by the 
Licensor of written notice of such deficiencies from the Licensee. An 
extension of this thirty (30) day period may be allowed only if agreed 
upon by the Licensee and RUS. It shall be the Licensor's obligation to 
insert and thoroughly test, at no charge to the Licensee, any software 
amendment or alteration provided to satisfy the obligations of this 
section (2)(ix). If a deficiency is detected or a correction made within 
the final ninety (90) days of the warranty, the warranty shall be 
extended to a date ninety (90) days after the deficiency has been 
corrected.
    (x) The Licensor shall hold harmless and indemnify the Licensee from 
any and all claims, suits, and proceedings for the infringement of any 
patent, copyright, trademark, or violation of trade secrets covering any 
Licensed Software used with the System, except for items of the 
Licensee's design or selection. If the Licensee's use of the Licensed 
Software is enjoined, the Licensor shall promptly, at its own expense, 
place the Licensee in a position where it is able to use the System in 
accordance with the Specifications, whether by:
    (A) Modifying the Licensed Software or portion thereof so that it no 
longer infringes but remains functionally equivalent,
    (B) Replacing the Licensed Software with noninfringing equivalent 
software,
    (C) Obtaining for the Licensee a license or other right to use, or
    (D) Such other actions as may be required. This shall be in addition 
to any other rights or claims which the Licensee may have. The Licensor 
shall, at its own expense, (and the

[[Page 435]]

Licensee agrees to permit the Licensor to do so) defend any suits which 
may be instituted by any party against the Licensee for alleged 
infringement of patents, copyright, trademark, or violation of trade 
secrets relative to the Licensor's performance hereunder. Either party 
shall notify the other promptly of any such claims, and the Licensee 
shall give to the Licensor full authority and opportunity to settle such 
claims, and shall reasonably cooperate with the Licensor in obtaining 
information relative to such claims.
    (xi) In the event the Licensor becomes unwilling or unable to 
furnish support required by the Contract for the Licensed Software, the 
Licensor shall, upon written request of the Licensee, provide with the 
greatest possible dispatch all Licensed Software back-up documentation 
including proprietary information other than agreed excluded 
documentation. In this event, (1) the Licensee shall be permitted full 
use of all Licensed Software and documentation as long as the System is 
operational and (2) the Licensee may modify, or have modified, the 
Licensed Software for feature enhancement or proper equipment operation 
and becomes the owner of such modifications for all purposes, including 
patenting, copywriting, sale, or license thereof. Agreed excluded 
documentation is Licensed Software back-up documentation described in 
the first sentence of this section (2)(xi) which (A) is proprietary 
information of a third party, (B) was specifically described at the pre-
bid technical session and individually identified in an attachment to 
the Bid, and (C) RUS and the Licensee agree, before bids are opened, may 
be excluded from the requirements of this section (2)(xi). In the event 
the Licensor furnishes agreed excluded documentation and the Licensee 
exercises its rights under this section (2)(xi), the Licensor shall use 
its best efforts to provide such agreed excluded information to the 
Licensee, or obtain continuing support agreements from the parties 
retaining legal rights to the excluded documentation. Licensor agrees 
that certain Licensed Software cannot be excluded from the requirements 
of this section (2)(xi) including, but not limited to, software, the 
absence or improper operation of which would significantly impair the 
operation of the System, would significantly impair the ability of the 
Licensee to generate revenue, or would pose a risk to RUS loan security.
    (xii) A breach of this License by the Licensor is a breach of the 
Contract. Therefore, the remedies specified in the Contract shall apply.
    (xiii) The Licensee shall have thirty (30) days after receipt of 
written notice from the Licensor to correct any breach of this License. 
Damages payable by the Licensee for its breach of this License shall not 
exceed the total Contract price. The Licensor shall not terminate this 
License unless:
    (A) The Licensor has given RUS sixty (60) days notice before 
termination; and
    (B) RUS agrees with the Licensor that termination is the only method 
available to prevent significant harm to the Licensor from additional 
Licensee defaults.
    (xiv) The obligations of Licensee and Licensor and any successors in 
title under this Agreement shall survive the termination of this 
Agreement and continue after any termination of rights granted 
hereunder.
    (xv) Licensee and Licensor agree that it will not, without the prior 
written permission of the other party, use in advertising, publicity, 
packaging, labeling, or otherwise, any trade name, trademark, trade 
device, service mark, symbol, or any other identification or any 
abbreviation, contraction, or simulation thereof owned by the other 
party or any of its affiliates or used by the other party or any of its 
affiliates to identify any of their products or services, unless 
otherwise agreed by the parties.
    (xvi) This Software License Agreement shall prevail notwithstanding 
any conflicting terms or legends which may appear on or in the Licensed 
Software.
    (xvii) If any Section or part thereof, in this Agreement shall be 
held to be invalid or unenforceable in any jurisdiction in which this 
Agreement is being performed, then the meaning of such section or part 
shall be construed so as to render it enforceable, to the extent 
feasible; and if no feasible interpretation would save such section or 
part, it shall be severed from this Agreement and the remainder shall 
remain in full force and effect. However, in the event such section or 
part is considered an essential element of this Agreement, the parties 
shall promptly negotiate a replacement therefor.
    (xviii) This Software License and any amendments thereto, or 
revisions thereof, are subject to RUS approval.

                                Licensor

Company

Name____________________________________________________________________

By______________________________________________________________________

Title___________________________________________________________________

Date____________________________________________________________________

                                Licensee

Company

Name____________________________________________________________________

By______________________________________________________________________

Title___________________________________________________________________

Date____________________________________________________________________

                             [End of clause]

    (d) Contract amendments. (1) The general requirements for contract 
amendments are set forth in Sec. 1753.11.

[[Page 436]]

    (2) Equipment contract amendments shall be prepared on RUS Contract 
Form 238, Construction or Equipment Contract Amendments.
    (e) Additions. When additions to existing central office equipment 
are required:
    (1) A proposal shall be requested from the supplier.
    (2) The borrower shall prepare a plan containing an outline of the 
proposed use of the equipment, the proposal from the supplier and an 
estimate of the installation cost. If the total cost exceeds $500,000, 
RUS approval of the award of contract is required. The borrower shall in 
this case submit its plan and the supplier's proposal to GFR. If the 
cost does not exceed $500,000, the borrower's award of contract is not 
subject to RUS approval.
    (3) If RUS approval was required by paragraph (e)(2) of this 
section, upon RUS approval the purchase may be made using RUS Contract 
Form 525, or 545, or when applicable, the procedures contained in 
subpart I of this part.
    (4) If the purchase is to be made by contract, three executed copies 
of the contract with attachments are to be submitted to the RUS.
    (5) Installation of the central office equipment and materials 
procured by RUS Contract Form 545 may be made in accordance with subpart 
I, if applicable, or by an approved FAP.
    (f) Preinstallation conference. RUS recommends, but does not 
require, that the borrower hold a preinstallation conference, attended 
by the borrower, its engineer, equipment installers, and if possible the 
GFR, prior to the beginning of the installation of the central office 
equipment.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 59 FR 17679, Apr. 14, 1994; 64 FR 16607, Apr. 6, 
1999]



Sec. 1753.39  Closeout documents.

    Closeout of RUS Contract Form 525, Central Office Equipment Contract 
(Including Installation), and RUS Contract Form 545, Central Office 
Equipment Contract (Not Including Installation), shall be conducted as 
follows:
    (a) Contract amendments. Amendments that must be submitted to RUS 
for approval, as required by Sec. 1753.11, shall be submitted promptly. 
All other amendments may be submitted to RUS with the engineer's 
contract closeout certification.
    (b) Taxes. Under the terms of RUS Contract Forms 525 and 545, the 
bid prices do not include any amounts which are or may be payable by the 
bidder or the borrower on account of taxes imposed upon the sale, 
purchase or use of equipment, material and software covered by the 
contracts. If any such tax is paid by the bidder, the contract requires 
that the amount is to be stated separately on all invoices and paid by 
the borrower.
    (c) Acceptance tests. The borrower will perform acceptance tests as 
part of the partial closeout and final closeout of RUS Contract Form 
525. Tests that will demonstrate compliance with the requirements of 7 
CFR 1755.522 are contained in RUS Bulletin 1753E-201. Other tests 
demonstrating compliance will be acceptable. RUS Bulletin 1753E-201 is 
available from RUS, Program Support and Regulatory Analysis, STOP 1522, 
1400 Independence Ave., SW., Washington, DC 20250-1522.
    (d) Grounding system audit. A grounding system audit shall be 
performed and found acceptable for equipment provided under Form 525 and 
545 Contracts, prior to placing a central office or remote switching 
terminal into full service operation. The audits are to be conducted in 
accordance with guidelines contained in the applicable sections of RUS 
Form 522 ``General Specification for Digital, Stored Program Controlled 
Central Office Equipment.'' The audits shall be performed by the 
contractor and borrower for Form 525 equipment and by the borrower for 
Form 545 equipment.
    (e) Partial Closeout Procedure. Under conditions set forth in RUS 
Contract Form 525, a contractor may, when approved by the borrower, 
receive payment in full for central offices and their respective 
associated remote switching terminals upon completion of the 
installation without awaiting completion of the project where the 
contractor is to receive such payment, the procedure contained in the 
applicable sections of RUS Contract Form 525 shall be followed. In 
addition to complying with the appropriate partial

[[Page 437]]

closeout procedure contained in RUS Contract Form 525, the borrower 
shall:
    (1) Obtain from the engineer a certification of partial closeout.
    (2) Submit one copy of the summary to RUS with an FRS.
    (f) Final contract closeout procedure. The documents required for 
the final closeout of the central office equipment contract, RUS 
Contract Forms 525 and 545, are listed in the following table, which 
also indicates the number of copies and their distribution. The 
procedure to be followed is as follows:

                        Documents Required To Closeout Central Office Equipment Contract
----------------------------------------------------------------------------------------------------------------
                                            Use with                 Prepared by              Distribution
                                   -----------------------------------------------------------------------------
  RUS Form No.      Description       RUS Form     RUS Form
                                        525          545       Contractor    Engineer     Borrower    Contractor
----------------------------------------------------------------------------------------------------------------
238............  Construction or              X            X  ...........          (3)     (to RUS)     (to RUS)
                  Equipment
                  Contract
                  Amendment (if
                  not previously
                  submitted, send
                  to RUS for
                  approval).
754............  Certificate of               X  ...........            3            3            2            1
                  Completion and
                  Certificate of
                  Contractor and
                  Indemnity
                  Agreement (if
                  submitted, Form
                  744 is not
                  required).
517............  Results of                   X  ...........  ...........            2            1            1
                  Acceptance Tests
                  (prepare and
                  distribute
                  copies
                  immediately upon
                  completion of
                  the acceptance
                  tests of each
                  central office).
752a...........  Certificate of     ...........            X  ...........            2            1            1
                  Completion--Not
                  Including
                  Installation.
224............  Waiver and                   X  ...........            1  ...........            1  ...........
                  Release of Lien
                  (from each
                  supplier).
231............  Certificate of               X  ...........            1  ...........            1  ...........
                  Contractor.
213............  Certificate (Buy             X            X            1  ...........            1  ...........
                  American).
None...........  Switching                    X            X            2  ...........            2  ...........
                  Diagram, as
                  installed.
None...........  Set of Drawings              X            X            2  ...........            2  ...........
                  (each set to
                  include all the
                  drawings
                  required under
                  the
                  Specification,
                  RUS Form 522).
----------------------------------------------------------------------------------------------------------------

    (1) The borrower shall:
    (i) Immediately following completion of the last central office 
equipment installation, arrange with the contractor's installer, 
connecting company (where necessary), and the GFR for performance of the 
acceptance tests of offices not previously tested. The date for testing 
should be established so that the installer will not be required to 
return to the site for the sole purpose of assisting in these tests. 
Acceptance tests shall be performed within 30 days of completion of the 
installation, unless otherwise requested in writing by the contractor 
and approved in writing by the borrower.
    (ii) When the acceptance tests have been satisfactorily completed 
and the contractor has corrected all the discrepancies:

[[Page 438]]

    (A) Prepare and assemble the documents listed in the table in this 
section, Documents Required to Close Out Central Office Equipment 
Contracts.
    (B) Notify the GFR that the project is ready for final RUS 
inspection.
    (iii) Make the documents listed in the table available for GFR 
review on the date of final inspection.
    (iv) Distribute the documents as indicated in the table. The 
documents listed for RUS shall be retained by the borrower for 
inspection by RUS for at least two years from the date of the engineer's 
contract closeout certificate.
    (2) The documents required and the procedure to be used for 
equipment purchased and/or installations made using the method of minor 
construction are set forth in subpart I.
    (g) Once RUS approval has been obtained for any required amendments, 
the borrower shall obtain certifications from the engineer that the 
project and all required documentation are satisfactory and complete. 
The requirements for the final contract certification are contained in 
Sec. 1753.18.
    (h) Once these certifications have been received, final payment 
shall be made according to the payment terms of the contract. Copies of 
the certifications shall be submitted with the FRS, requesting the 
remaining funds on the contract.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 59 FR 31126, June 17, 1994; 59 FR 43717, Aug. 25, 
1994; 62 FR 32477, June 16, 1997; 64 FR 16608, Apr. 6, 1999]



Secs. 1753.40-1753.45  [Reserved]



         Subpart F_Outside Plant Major Construction by Contract

    Source: 54 FR 39267, Sept. 25, 1989, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.46  General.

    (a) This subpart implements and explains the provisions of the loan 
documents setting forth the requirements and procedures to be followed 
by borrowers when outside plant major construction by contract is 
financed by loan funds. Terms used in this subpart are defined in 
Sec. 1753.2 and RUS Contract Form 515.
    (b) The contract method for major construction is described in 
Sec. 1753.5(b).
    (c) The two contract forms which may be used for major outside plant 
construction are Form 515 and Form 773. Limitations on the applicability 
of these forms shall be as follows:
    (1) Form 515 shall be used for major outside plant construction 
projects which will be competitively bid. The contract contains plans 
and specifications and has no dollar limitation. See Secs. 1753.47, 
1753.48 and 1753.49.
    (2) Contract Form 515, which is for $250,000 or less, may, at the 
borrower's option, be negotiated. See Sec. 1753.48(b).
    (3) RUS Form 773 may be used for minor outside plant projects which 
are not competitively bid because they cannot be designed and staked at 
the time of contract execution. Projects of this nature include routine 
line extensions and placement of subscriber drops. See subpart I of this 
part.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16608, Apr. 6, 
1999]



Sec. 1753.47  Plans and specifications (P&S).

    (a) General. (1) Prior to the preparation of P&S for the 
construction project:
    (i) A review shall be made of the outside plant requirements, and 
the Loan Design (LD) shall be revised to reflect any needed changes (See 
Sec. 1753.3).
    (ii) Deviations from the approved LD (7 CFR part 1737) must be 
approved by RUS (See Sec. 1753.3).
    (2) The standard RUS specifications required for construction of 
outside plant facilities are:
    (i) RUS Form 515a (Bulletin 345-150)--Specifications and Drawings 
for Construction of Direct Buried Plant.
    (ii) RUS Form 515c (Bulletin 345-151)--Specifications and Drawings 
for Conduit and Manhole Construction.
    (iii) RUS Form 515d (Bulletin 345-152)--Specifications and Drawings 
for Underground Cable Installation.
    (iv) RUS Form 515f (Bulletin 345-153)--Specifications and Drawings 
for Construction of Pole Lines and Aerial Cables.

[[Page 439]]

    (v) RUS Form 515g (Bulletin 345-154)--Specifications and Drawings 
for Service Entrance and Station Protector Installation.
    (b) Preparation of plans and specifications. Each set of plans and 
specifications shall include:
    (1) RUS Contract Form 515, ``Telephone System Construction Contract 
(Labor and Materials).''
    (2) The specifications described in paragraph (a)(2) of this section 
as specified by the borrower in the RUS Contract Form 515.
    (3) Description of special assembly units and guide drawings, if 
any.
    (4) Key, detail, and cable layout maps.
    (5) RUS Contract Form 787, ``Supplement A to Construction Contract, 
RUS Contract Form 515,'' when the borrower proposes to provide any 
materials to the contractor. The borrower shall not order materials for 
a contractor without RUS approval. In such cases the borrower must 
attach Form 787 and a ``List of Owner's Materials on Hand'' and/or a 
``List of Materials Ordered by Owner but Not Delivered'' to contract 
Form 515 (See Sec. 1753.48(f) of this part). Any materials furnished 
under Supplement A shall be listed in RUS Bulletin 344-2 unless special 
RUS approval has been received by the borrower to use unlisted 
materials.
    (c) Submission of plans and specifications to RUS. (1) If the 
project does not exceed $500,000 or 25% of the loan, whichever is less, 
the borrower shall furnish GFR one set of P&S. The borrower may then 
proceed with procurement in accordance with Sec. 1753.48.
    (2) If the project exceeds $500,000 or 25% of the loan, whichever is 
less, RUS approval of P&S is required. Two sets of P&S shall be 
furnished to GFR. RUS will return one set to the borrower upon notice of 
approval. The borrower may then proceed with procurement in accordance 
with Sec. 1753.48.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, 55 FR 53488, Dec. 31, 1990, as amended at 64 FR 16609, Apr. 6, 
1999]



Sec. 1753.48  Procurement procedures.

    (a) Sealed competitive bidding--(1) Qualifying bidders. (i) The 
borrower is responsible for selecting qualified contractors to bid on 
the project. See Sec. 1753.8(a)(3). Questions relating to bidders' 
qualifications shall be resolved prior to the pre-bid conference.
    (ii) RUS Form 274 or its equivalent, supplemented by RUS Form 276, 
shall be used for the submission of bidders' qualifications for all 
types of construction and for the required information on the bidder and 
subcontractors.
    (2) Invitations to bid-- The borrower shall solicit bids as set 
forth in Sec. 1753.8(a)(2). Invitations shall be sent to at least 6 
prospective bidders.
    (3) Pre-bid conference. (i) Representatives of the borrower and its 
engineer shall be present at the pre-bid conference at the time and 
place designated in the Notice to Bidders. The borrower shall invite the 
GFR to attend the pre-bid conference.
    (ii) The purpose of the pre-bid conference is to acquaint the 
bidders with the scope and special considerations of the project and to 
clarify any concerns the bidders may have.
    (iii) No proposals shall be considered from bidders that do not 
attend the pre-bid conference unless the bidder has been notified by the 
engineer that such bidder's attendance has been waived. Attendance can 
be waived if, in the judgment of the engineer, the bidder would gain no 
additional understanding of the construction project by attending the 
pre-bid conference.
    (iv) The borrower shall obtain from the engineer the minutes of the 
pre-bid conference and shall distribute them to all potential bidders.
    (v) When fewer than three bidders have been qualified to submit 
bids, RUS written approval must be obtained to proceed with requesting 
bids.
    (4) Bid openings. (i) Bid openings and award of the contract shall 
be conducted in accordance with Secs. 1753.5(b)(1) and 1753.8(a).
    (ii) If Sec. 1753.8 requires RUS approval of award of the bid, the 
borrower shall submit to RUS two copies of the assembly unit sections of 
the apparent lowest responsive bid accepted by the borrower.
    (b) Negotiated procurement. (1) Competitive bids are not required 
for outside plant construction that is estimated to cost $250,000, or 
less, inclusive of labor and materials.

[[Page 440]]

    (2) The procedures to be followed are contained in Sec. 1753.8(b) 
and paragraphs (3) and (4) of this section.
    (3) Negotiation conference. (i) The borrower shall schedule a 
conference to be attended by representatives of the engineer, the 
borrower and the contractor selected for negotiations. The borrower 
shall invite the GFR to attend this conference.
    (ii) The purpose of the negotiation conference is to acquaint the 
contractor with the scope and special considerations of the project and 
to answer any questions.
    (iii) The borrower shall obtain from the engineer notes covering the 
negotiation conference and shall distribute them to all attendees.
    (4) Two copies of the assembly unit sections of the negotiated 
contractor's proposal shall be sent to the GFR for approval.
    (c) Contract amendments. The borrower shall prepare contract 
amendments in accordance with Sec. 1753.11 on RUS Contract Form 526, 
Construction Contract Amendment.
    (d) Subcontracts. The RUS requirements for subcontracts and the 
procedures to be followed are set forth in Sec. 1753.9.
    (e) Preconstruction conference. The borrower shall conduct a 
conference, attended by the borrower, contractor, subcontractors, 
resident engineer, and the GFR, prior to the beginning of cable 
placement, to resolve any questions pertaining to the construction. 
Results of the conference shall be provided to each conference 
participant (See Sec. 1753.10).
    (f) Owner-furnished materials. When the borrower furnishes materials 
under RUS Contract Form 787, Supplement A to Construction Contract, 
these steps shall be followed:
    (1) Materials on hand to be furnished by the borrower shall be 
released to the contractor at the start of construction. Materials on 
order but not received shall be provided to the contractor as they 
become available. The borrower shall obtain from the contractor a 
written receipt for all such materials delivered.
    (2) Materials on hand, until released to the contractor, shall be 
covered by fire and either wind-storm or extended coverage insurance, 
exclusive of materials stored in the open and not within 100 feet of any 
building. Poles, wherever stored, shall be covered by fire insurance. 
All insured values must be at least 80 percent of the cash value of the 
property insured.
    (3) Subject to adjustment at the time of final settlement, the 
borrower shall obtain from the contractor monthly invoices that show 
credit to the borrower, at the prices quoted in Form 787, Supplement A, 
for all materials furnished by the borrower and installed by the 
contractor during the preceding month.
    (4) Any materials furnished by the borrower remaining as surplus at 
the completion of construction shall be returned to the borrower. For 
such materials, the borrower shall furnish a written receipt to the 
contractor and credit the contractor at the prices quoted in Supplement 
A.
    (g) Changes or corrections in construction. (1) When changes or 
corrections in construction are necessary, and the cost of such changes 
or corrections is properly chargeable to the borrower, the borrower 
shall have its engineer prepare and sign four copies of a Construction 
Change Order, RUS Form 216, obtain borrower's approval and forward the 
four copies to the contractor. Receipt of the executed Construction 
Change Order by the contractor will constitute authorization to proceed 
with the changes or corrections.
    (2) When the changes or corrections have been made, the borrower 
shall have the contractor complete the form, itemizing the costs in 
accordance with the terms of the contract, and return three copies to 
the borrower's engineer. A copy of each change order shall be attached 
to each copy of the construction inventory required to close out the 
contract.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 64 FR 16609, Apr. 6, 1999]



Sec. 1753.49  Closeout documents.

    (a) General. The borrower shall be responsible for preparing the 
closeout documents with, if necessary, the assistance of the GFR.

[[Page 441]]

    (b) Documents required. The following table lists the documents 
required to closeout the RUS contract Form 515.

                              Documents Required To Closeout Construction Contract
                                                 [RUS Form 515]
----------------------------------------------------------------------------------------------------------------
                                                               No. of copies prepared         Distribution
                                                                         by            -------------------------
        RUS Form No.                    Description          --------------------------
                                                               Contractor    Engineer     Borrower    Contractor
----------------------------------------------------------------------------------------------------------------
724.........................  Final Inventory--Certificate    ...........            2            1            1
                               of Completion.
724a........................  Final Inventory--Assembly       ...........            2            1            1
                               Units.
None........................  Contractor's Bond Extension             (3)  ...........     (to RUS)     (to RUS)
                               (send to RUS when required).
281.........................  Tabulation of Materials                   2  ...........            1            1
                               Furnished by Borrower.
213.........................  Certificate--``Buy American''.            1  ...........            1  ...........
None........................  Listing of Construction Change  ...........            1            1  ...........
                               Orders.
224.........................  Waiver and Release of Lien                1  ...........            1  ...........
                               (from each supplier).
231.........................  Certificate of Contractor.....            1  ...........            1  ...........
527.........................  Final Statement of              ...........            2            1            1
                               Construction.
None........................  Reports on Results of           ...........            1            1            1
                               Acceptance Tests.
None........................  Set of Final Staking Sheets...  ...........            1            1  ...........
None........................  Tabulation of Staking Sheets..  ...........            1            1  ...........
None........................  Correction Summary (legible     ...........            1            1  ...........
                               copy).
None........................  Treated Forest Products         ...........  ...........            1  ...........
                               Inspection Reports or
                               Certificates of Compliance
                               (prepared by inspection
                               company or supplier).
None........................  Final Key Map (when             ...........            1            1  ...........
                               applicable).
None........................  Final Central Office Area and   ...........            1            1  ...........
                               Town Maps.
----------------------------------------------------------------------------------------------------------------

    (c) Closeout procedure. (1) After construction has been completed in 
accordance with the plans and specifications, and acceptance tests have 
been made, the borrower shall arrange the time for a final inspection to 
be made by the borrower's engineer, the contractor, the GFR and a 
representative of the borrower.
    (2) Final inventory documents. (i) The borrower shall obtain 
certifications from the engineer that the project and all required 
documentation are satisfactory and complete. Requirements for these 
contract closeout certifications are contained in Sec. 1753.18.
    (ii) The borrower shall prepare and distribute the final inventory 
documents in accordance with the tables contained in this section. The 
documents listed for RUS shall be retained by the borrower for 
inspection by RUS for at least two years from the date of the engineer's 
contract closeout certification.

                          Step-by-Step Procedure for Closeout of Construction Contract
                                                 [RUS Form 515]
----------------------------------------------------------------------------------------------------------------
                      Sequence
----------------------------------------------------           By                         Procedure
        Step No.                    When
----------------------------------------------------------------------------------------------------------------
1......................  Upon Completion of          Borrower's Engineer..  Prepares the following: a set of
                          Construction.                                      Detail Maps and a set (when
                                                                             applicable) of Key Maps which show
                                                                             in red the work done under the 515
                                                                             contract; a Tabulation of Staking
                                                                             Sheet; and a tentative Final
                                                                             Inventory, RUS Forms 724 and 724a.
2......................  After acceptance tests      Borrower's Engineer..  Forwards letter to the borrower with
                          made.                                              copies to the GFR stating that the
                                                                             project is ready for final
                                                                             inspection. Schedules inspection
                                                                             date.
3......................  Upon receipt of letter      GFR..................  Advises borrower whether attending
                          from Borrower's Engineer.                          the final inspection will be
                                                                             possible.

[[Page 442]]

 
4......................  By inspection date........  Borrower's Engineer..  Obtains and makes available the
                                                                             following documents: a set of ``as
                                                                             constructed'' detail maps and (when
                                                                             applicable) ``as built'' key maps;
                                                                             a list of construction change
                                                                             orders; the final staking sheets;
                                                                             the tabulation staking sheets; the
                                                                             treated forest products inspection
                                                                             reports or certificates of
                                                                             compliance; the tentative final
                                                                             inventory, RUS Forms 724 and 724a;
                                                                             the tentative tabulation, RUS Form
                                                                             231 (if borrower furnished part of
                                                                             material); and, a report of results
                                                                             of acceptance tests.
5......................  During inspection.........  Borrower's Engineer..  Issues instructions to contractor
                                                                             covering corrections to be made in
                                                                             construction as a result of
                                                                             inspection.
6......................  During inspection.........  Contractor...........  Corrects construction on basis of
                                                                             instructions from the borrower's
                                                                             engineer. The corrections should
                                                                             proceed closely behind the
                                                                             inspection in order that the
                                                                             borrower's engineer can check the
                                                                             corrections before leaving the
                                                                             system.
7......................  During inspection.........  Borrower's Engineer..  Inspects and approves corrected
                                                                             construction. Marks inspected areas
                                                                             on the key map, if available,
                                                                             otherwise on the detail maps.
8......................  Upon completion of          Borrower's Engineer..  Prepares or obtains all the closeout
                          inspection.                                        documents listed in Table 3.
9......................  After signing final         Borrower.............  Prepares and submits to RUS the
                          inventory.                                         engineer's certifications of
                                                                             completion and a Financial
                                                                             Requirement Statement, RUS Form
                                                                             481, requesting amount necessary to
                                                                             make final payment due under
                                                                             contract.
10.....................  On receipt of final         Borrower.............  Promptly forwards check for final
                          advance.                                           payment to contractor.
11.....................  During subsequent loan      RUS Field Accountant.  Examines borrower's construction
                          fund audit review                                  records for compliance with the
                          following final payment.                           construction contract and Subpart
                                                                             F, and examines RUS Form 281
                                                                             (Tabulation of Materials Furnished
                                                                             by Borrower) if any, for
                                                                             appropriate costs.
----------------------------------------------------------------------------------------------------------------

    (iii) When the total inventory price exceeds the maximum contract by 
more than 20 percent, an extension to the contractor's bond is required.
    (iv) The borrower shall submit the engineer's contract closeout 
certification with FRS for the final advance of funds.
    (3) Final payment shall be made according to the payment provisions 
of article III of RUS Form 515, except that certificates and other 
documents required to be submitted to or approved by the Administrator 
shall be submitted to and approved by the Owner.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 59 FR 43717, Aug. 25, 1994; 64 FR 16609, Apr. 6, 
1999]



Secs. 1753.50-1753.55  [Reserved]



       Subpart G_Outside Plant Major Construction by Force Account

    Source: 55 FR 3572, Feb. 2, 1990, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.56  General.

    (a) This subpart implements and explains the provisions of the loan 
documents setting forth the requirements and the procedures to be 
followed by borrowers for outside plant major construction by the force 
account method with RUS loan funds. Terms used in this subpart are 
defined in Sec. 1753.2 and RUS Contract Form 515.
    (b) A borrower shall not use the force account method for 
construction financed with loan funds unless prior RUS approval has been 
obtained.
    (c) Generally, RUS will not approve the force account method for 
major

[[Page 443]]

outside plant construction for the initial loan to a borrower.
    (d) The Force Account Proposals (FAPs) are subject to review and 
approval by RUS.
    (e) The FAP is approved by RUS on the basis of estimated labor and 
material costs. The FAP is closed based on the borrower's actual cost of 
performing the construction. RUS will provide loan funds only up to the 
amount determined by the completed assembly units priced at the unit 
prices in the approved FAP.

(Approved by the Office of Management and Budget under control number 
0572-0062)



Sec. 1753.57  Procedures.

    (a) The request. (1) The borrower shall submit to RUS a certified 
copy of the board resolution or a letter signed by an authorized 
corporate official requesting approval to use the force account method 
of construction. The request shall state the advantages of the force 
account method of construction and provide the following information:
    (i) The scope of the construction to be undertaken, stating briefly 
the facilities and equipment to be installed and other pertinent data.
    (ii) The name and qualifications of the construction supervisor who 
will be directly in charge of construction, the names and qualifications 
of the construction foremen, and the availability of qualified 
construction personnel. The construction supervisor must have at least 5 
years outside plant construction experience with at least 2 years at the 
supervisory level on RUS financed projects. Construction foremen must 
have at least 3 years of outside plant construction experience.
    (iii) The availability of equipment for construction, exclusive of 
equipment needed for normal operation and maintenance.
    (2) [Reserved]
    (b) Force Account Proposal (FAP). Upon receiving RUS approval to use 
the force account method, the borrower, prior to any construction 
activity or the purchase of materials or equipment, shall submit to RUS 
two copies of its FAP. The FAP shall consist of:
    (1) The RUS Contract Form 515 and appropriate supporting attachments 
that normally would be provided as plans and specifications for contract 
construction. See Sec. 1753.47.
    (2) The cost estimate, using Form 515 as a convenient means of 
showing the following:
    (i) The quantity and cost estimates of the various assembly units 
required. ``Labor and other'' cost will not include the cost of 
engineering, legal, and other professional services, interest during 
construction, preliminary survey and investigation charges, and right-
of-way easement procurement costs.
    (ii) A list identifying materials or construction for which loan 
funds will not be requested.
    (3) The estimated completion time.
    (c) Storage of materials. All materials ordered for the construction 
shall be stored separate from normal maintenance materials.
    (d) Construction--(1) Preconstruction conference. The borrower shall 
arrange a conference, attended by the manager, construction supervisor, 
construction foremen, resident engineer and the GFR prior to the 
beginning of construction to clarify any questions pertaining to the 
construction. Notes of the conference shall be provided to each 
conference participant.
    (2) Construction schedule and progress reports. The borrower shall 
obtain from the engineer a construction schedule and submit one copy to 
the GFR. The schedule shall include the starting date and a statement 
indicating that materials are either delivered or deliveries are assured 
to permit construction to proceed in accordance with the construction 
schedule. The borrower shall obtain from the engineer progress reports 
and submit one copy of each to the GFR. RUS Form 521 may be used for the 
construction schedule and the progress report.
    (3) Borrower's management responsibilities. (i) Obtain all right-of-
way easements, permits, etc., prior to construction.
    (ii) Maintain records on all expenditures for materials, labor, 
transportation, and other costs of construction, in order that all costs 
may be fully accounted for upon completion of construction.

[[Page 444]]

    (iii) Ensure that all the required inspections and tests are made.
    (4) Engineer's responsibilities. (i) Inspect and inventory 
construction as completed.
    (ii) Require timely corrections and cleanup.
    (iii) Perform acceptance tests as construction is completed.
    (iv) Provide ``as built'' staking sheets of completed construction 
when the final inspections are made.
    (v) Maintain accurate and current inventories of completed 
construction.
    (5) Construction supervisor's responsibilities. (i) Correct 
construction errors as construction progresses.
    (ii) Maintain an accurate inventory of completed construction.
    (iii) Perform cleanup as construction is completed.
    (iv) Perform all the inspections and acceptance tests a contractor 
would be required to make under the construction contract.
    (v) Promptly perform cleanup required after final inspection.



Sec. 1753.58  Closeout documents.

    (a) General. (1) This section outlines the procedure to be followed 
in the preparation of closeout documents for the FAP.
    (2) The period between the completion of construction and submission 
of the closeout documents to RUS should not exceed 60 days.
    (b) Documents. The documents required to close the FAP are listed in 
the following table. The following is a brief description of the 
closeout documents:

Documents Required To Close Out Force Account Outside Plant Construction
------------------------------------------------------------------------
         RUS Form No.                         Description
------------------------------------------------------------------------
817, 817a, 817b..............  Final Inventory Force Account
                                Construction and Certificate of
                                Engineer. Submit one copy to RUS, if
                                required \1\
213..........................  Certificate--``Buy American'' (as
                                applicable from each supplier).
None.........................  Detail Maps.
None.........................  Key map, if applicable.
None.........................  Staking Sheets.
None.........................  Tabulation of staking sheets.
None.........................  Treated Forest Products Inspection
                                Reports or Certificates of Compliance
                                (prepared by inspection company or
                                supplier).
------------------------------------------------------------------------
\1\ RUS Forms 817, 817a, and 817b are to be submitted to GFR only if
  required in paragraph (c)(5) of this section. Otherwise, the final
  inventory documents are to be assembed and retained by the borrower
  for at least two years.

    (c) Closeout procedures. (1) The borrower shall notify the GFR when 
the project is ready for final inspection.
    (2) The GFR shall be invited to make the final inspection 
accompanied by the engineer and the borrower.
    (3) The borrower shall correct all deficiencies found during the 
final inspection.
    (4) The borrower may request the assistance of an RUS field 
accountant to review the borrower's record of construction expenditures 
and assist the borrower with any accounting problems in connection with 
construction expenditures.
    (5) After inspection, the final inventory documents shall be 
assembled as indicated in the table in this section. RUS Forms 817, 
817a, and 817b are to be submitted to GFR only if the amount of the 
closeout exceeds the original force account proposal by 20% or more. 
Otherwise, the final inventory documents are to be assembed and retained 
by the borrower for at least two years.
    (6) Upon approval of the closeout documents, RUS will notify the 
borrower of approval and of any adjustments to be made in funds advanced 
in connection with the construction.
    (d) The above are not intended to be a complete description of the 
requirements of the documents relating to RUS's closeout procedure. 
Refer to the documents for additional requirements.

[55 FR 3572, Feb. 2, 1990. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 64 FR 16610, Apr. 6, 1999]

[[Page 445]]



Secs. 1753.59-1753.65  [Reserved]



        Subpart H_Purchase and Installation of Special Equipment

    Source: 54 FR 39267, Sept. 25, 1989, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.66  General.

    (a) This subpart implements and explains the provisions of the Loan 
Documents setting forth the requirements and the procedures to be 
followed by borrowers in purchasing and installing special equipment 
financed with loan funds.
    (b) Terms used in this subpart are defined in Sec. 1753.2 and RUS 
Contract Forms 397 and 398.
    (c) Special equipment purchased with loan funds must be included in 
the List of Materials Acceptable for Use on Telephone Systems of RUS 
Borrowers (See Bulletin 344-2) and meet RUS's standards and 
specifications (See 7 CFR part 1755) unless otherwise approved by RUS.
    (d) Borrowers must obtain RUS review and approval of the LD for 
their telephone systems. Applications of special equipment not included 
in an approved LD must conform to the modernization plan as required by 
7 CFR part 1751, subpart B, and must be submitted to RUS for review and 
approval.
    (e) RUS Form 397 and applicable specifications shall be used for the 
purchase of special equipment for major construction on a furnish and 
install basis.
    (f) RUS Form 398 and applicable specifications shall be used for the 
purchase of equipment for major construction on a furnish only basis. 
The procedures provided in subpart I, if applicable, or a FAP approved 
by RUS may be used for the installation of special equipment purchased 
with a Form 398 contract.
    (g) For special equipment purchases for minor construction, the 
borrower may at its option use the Methods of Minor Construction 
procedures contained in subpart I or the purchase procedures contained 
in this subpart H.
    (h) Some types of special equipment contain software. See subpart E 
for RUS software licensing requirements.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 58 FR 66259, Dec. 20, 1993; 59 FR 17464, Apr. 13, 
1994]



Sec. 1753.67  Contracts and specifications.

    (a) Special Equipment Contract, RUS Form 397 shall be used to 
purchase equipment on a furnish and install basis.
    (b) Special Equipment Contract, RUS Form 398 shall be used to 
purchase equipment on a furnish only basis.
    (c) The equipment specifications must accompany the selected 
contract form.
    (1) Each specification consists of performance specifications, 
installation requirements (if applicable) and application engineering 
requirements.
    (2) RUS specifications for the Special Equipment Contract are listed 
in 7 CFR part 1755.



Sec. 1753.68  Purchasing special equipment.

    (a) General. (1) Equipment purchases are categorized as initial 
equipment purchase, equipment additions to existing systems and new 
system additions.
    (i) An initial equipment purchase is a first time purchase by a 
borrower of a complete system of special equipment.
    (ii) Equipment additions to existing systems are additions of 
components to complete operating systems to increase system capacity 
that require components made by the manufacturer of the existing system.
    (iii) New system additions are purchases of complete systems of 
special equipment when the purpose can be accomplished either with 
equipment of the same type and manufacture as other complete operating 
systems in the borrower's system, or with complete systems of special 
equipment from other manufacturers.
    (iv) Where equipment is obtained under a Form 398 Contract, the 
borrower shall require the supplier to provide a detailed proposed 
bonding and

[[Page 446]]

grounding plan and detailed installation information. The installation 
information is to enable acceptance testing by the borrower upon 
completion of the installation.
    (2) For initial equipment purchases that qualify as major 
construction, the borrower shall obtain proposals from at least three 
suppliers of equipment of different manufacturers.
    (3) For equipment additions to increase the capacity of existing 
systems, the borrower may negotiate for equipment of a specific type and 
manufacture. RUS approval to negotiate in this instance is not required 
if these additions were specifically described in the LD approved by RUS
    (4) For new system additions, the borrower may request RUS approval 
to negotiate for additional equipment for the purpose of standardization 
on a system basis, provided RUS approved the procurement method used for 
the initial equipment purchase. RUS approval to negotiate must be 
obtained before release of the P&S to the seller.
    (5) RUS will not approve negotiation with a seller of non-domestic 
equipment for the purpose of standardization, because such a purchase 
does not meet the ``Buy American'' provision.
    (6) RUS recommends, but does not require, that borrowers include 
installation by the seller for initial installations of special 
equipment that qualify as major construction.
    (7) Special equipment may be installed by the borrower if it has 
qualified personnel and test equipment available to install the 
equipment and make the required acceptance tests, and written approval 
is given by RUS.
    (8) Installations, whether by the borrower or the seller, must meet 
the installation requirements of Form 397 specifications. A copy of the 
acceptance tests results must be attached to the closeout documents or 
work order summary.
    (9) Detailed considerations and guidelines for the preparation of 
the specifications for the various applications of special equipment can 
be found in RUS Telecommunications Engineering and Construction Manuals.
    (10) The borrower must obtain authorization from the Federal 
Communications Commission (FCC) to construct and operate radio 
transmitting equipment. Evidence of FCC authorization is required for 
RUS contract approval. Where required, the borrower must obtain approval 
of state regulatory bodies regarding tariffs and related matters.
    (b) Procurement procedures--(1) General. The following are the 
procurement procedure steps required for the purchase of special 
equipment by borrowers.
    (2) Initial equipment purchase. (i) The borrower prepares P&S and, 
for projects estimated to exceed $500,000 or 25% of the loan, whichever 
is less, sends two copies to GFR for approval.
    (ii) For projects estimated to exceed $500,000 or 25% of the loan, 
whichever is less, RUS will either approve P&S in writing or notify the 
borrower of the reasons for withholding approval.
    (iii) For projects estimated to cost less than $500,000 or 25% of 
the loan, whichever is less, the borrower may proceed with procurement 
upon completion of the P&S.
    (iv) If the borrower has employed full competitive bidding in the 
selection, a contract may be executed with the successful bidder and the 
borrower may proceed to paragraph (b)(2)(vi) of this section.
    (v) If the borrower did not follow a fully competitive bidding 
process as described in Sec. 1753.8, the selection, along with a summary 
of all proposals and an engineer's recommendation, shall be sent to RUS. 
RUS shall approve the proposal selection in writing or notify the 
borrower of any reason for withholding approval.
    (vi) The borrower sends three executed contracts including 
specifications to RUS for approval.
    (vii) After RUS approval of the contract, one copy will be returned 
to the borrower and one copy will be sent to the seller.
    (3) Equipment additions to existing systems. Purchase procedures for 
equipment additions to existing systems are the same as for initial 
system purchase except that the borrower may negotiate for equipment of 
a specific type and manufacture instead of obtaining proposals from 
three or more sellers.
    (4) New system additions. (i) The borrower prepares the P&S and, if 
the

[[Page 447]]

project is estimated to exceed $500,000 or 25% of the loan, whichever is 
less, sends two copies to the GFR for approval. The borrower may request 
RUS approval to negotiate for the purpose of standardization on a system 
basis prior to preparing the P&S.
    (ii) RUS notifies the borrower in writing as to whether the borrower 
may negotiate for specific equipment. If P&S were required to be 
submitted to RUS under paragraph (b)(4)(i) of this section, RUS notifies 
the borrower in writing of P&S approval (or notifies the borrower of the 
reasons for withholding approval).
    (iii) The remainder of the purchase procedure for new system 
additions is the same as for initial equipment purchase.
    (c) Contract amendments. (1) The general requirements for contract 
amendments are set forth in Sec. 1753.11.
    (2) The borrower shall prepare any required amendments to the 
special equipment contract, arrange for the execution by all parties, 
and submit these amendments to RUS in accordance with Sec. 1753.11(d). 
RUS Form 238, Construction or Equipment Contract Amendment, shall be 
used for this purpose.
    (d) Closeout procedures--(1) Acceptance tests for Form 397. (i) 
Immediately upon completion of the installation and alignment of the 
equipment, the borrower shall arrange with the contractor's installer 
and the GFR for acceptance tests.
    (ii) The borrower shall obtain from the contractor, in writing, the 
results of all inspections and tests made by the contractor as required 
in the specifications. The borrower will analyze the test results and 
determine whether the performance of the equipment meets the contract 
specifications.
    (2) Acceptance tests for Form 398. (i) Upon completion of the 
installation and alignment of the equipment (under this contract the 
installation alignment will be by other than the seller) the borrower 
shall perform all the inspections and tests outlined in the 
specifications.
    (3) Closeout documents. When the acceptance tests have been 
completed and all deficiencies have been corrected, the borrower:
    (i) Assembles and distributes the documents listed in the following 
table that are required for the closeout of the special equipment 
contract. The documents listed for RUS shall be retained by the borrower 
for inspection by RUS for at least two years from the date of the 
engineer's contract closeout certification.

                           Documents Required To Close Out Special Equipment Contracts
                                             [RUS Forms 397 and 398]
----------------------------------------------------------------------------------------------------------------
                                          No. of copies prepared by                           Distribution
  RUS Form No.      Description    ---------------------------------------   Engineer  -------------------------
                                      Form 397     Form 398    Contractor                 Borrower    Contractor
----------------------------------------------------------------------------------------------------------------
238              Construction or    ...........          (3)  ...........          (3)     (to RUS)     (to RUS)
                  Equipment
                  Contract
                  Amendment (if
                  not previously
                  submitted, send
                  to RUS for
                  approval).
396              Certificate of     ...........            2  ...........  ...........            1            1
                  Completion--Spec
                  ial Equipment
                  Contract
                  (Including
                  Installation).
396a             Certificate of     ...........  ...........  ...........            2            1            1
                  Completion--Spec
                  ial Equipment
                  Contract (Not
                  Including
                  Installation).
744              Certificate of               1  ...........  ...........  ...........            1  ...........
                  Contractor and
                  Indemnity
                  Agreement.
213              Certificate (Buy             1  ...........            1  ...........            1  ...........
                  American).

[[Page 448]]

 
None             Report in                    1  ...........  ...........            1            1  ...........
                  writing,
                  including all
                  measurements and
                  other
                  information
                  required under
                  Part II of the
                  applicable
                  specifications.
None             Set of                       1  ...........            1  ...........            1  ...........
                  maintenance
                  recommendations
                  for all
                  equipment
                  furnished under
                  the contract.
----------------------------------------------------------------------------------------------------------------

    (ii) Obtains certifications from the engineer that the project and 
all required documentation are satisfactory and complete. Requirements 
for this contract closeout certification are contained in Sec. 1753.18.
    (iii) Submits copies of the engineer's certifications to RUS with 
the FRS requesting the remaining funds on the contract.
    (iv) Makes final payment in accordance with the payment terms of the 
contract.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 59 FR 43718, Aug. 25, 1994; 64 FR 16611, Apr. 6, 
1999]



Secs. 1753.69-1753.75  [Reserved]



                      Subpart I_Minor Construction

    Source: 55 FR 3573, Feb. 2, 1990, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.76  General.

    (a) This subpart implements and explains the provisions of the Loan 
Documents containing the requirements and procedures to be followed by 
borrowers for minor construction of telecommunications facilities using 
RUS loan funds. Terms used in this subpart are defined in Sec. 1753.2.
    (b) [Reserved]

(Approved by the Office of Management and Budget under control number 
0572-0062)

[55 FR 3573, Feb. 2, 1990. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 64 FR 16611, Apr. 6, 1999]



Sec. 1753.77  Methods of minor construction.

    Minor construction may be performed by contract using RUS Contract 
Form 773, ``Miscellaneous Construction Work and Maintenance Services'', 
by RUS Contract Form 515, or by work order construction. The rules for 
using Form 515 for minor construction are contained in subpart F of this 
part.

[64 FR 16612, Apr. 6, 1999]



Sec. 1753.78  Construction by contract.

    (a) RUS Form 773 shall be used for minor construction by contract. 
Compensation may be based upon unit prices, hourly rates, or another 
basis agreed to in advance by the borrower and the contractor. A single 
work project may require more than one contractor.
    (b) The borrower shall prepare the contract form and attach any 
diagrams, sketches and tabulations necessary to specify clearly the work 
to be performed and who shall provide which materials. Neither the 
selection of the contractor nor the contract requires RUS approval.
    (c) Borrowers are urged to obtain quotations from several 
contractors before entering into a contract to be assured of obtaining 
the lowest cost. The

[[Page 449]]

borrower must ensure that the contractor selected meets all Federal and 
State licensing and bonding requirements, and that the contractor 
maintains the insurance coverage required by the contract for the 
duration of the work. (See 7 part CFR 1788)
    (d) Upon completion and final inspection of the construction the 
borrower shall obtain from the Contractor a final invoice and an 
executed copy of RUS Form 743, Certificate of Contractor and Indemnity 
Agreement.
    (e) RUS Contract Form 773 may also be used to contract for the 
maintenance and repair of telephone equipment and facilities. Generally, 
RUS will not finance maintenance and repair contracts.

[55 FR 3573, Feb. 2, 1990. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 59 FR 43718, Aug. 25, 1994]



Sec. 1753.79  Construction by force account.

    The borrower shall require that:
    (a) Minor construction by the force account method be supervised by 
a competent foreman. The work shall be performed in accordance with all 
regulatory and safety codes.
    (b) Daily time and material reports, referenced by the work project 
number, shall be kept to record labor and materials used as construction 
is performed.
    (c) The construction foreman shall maintain a tabulation of all 
construction units installed.



Sec. 1753.80  Minor construction procedure.

    (a) If the borrower performs minor construction financed with loan 
funds, the borrower's regular work order procedure shall be used to 
administer construction activities that may be performed entirely by a 
contractor under Form 773 contract, by work order, or jointly by work 
order and one or more contractors under Form 773 contracts.
    (b) RUS financing under Form 773 contracts dated in the same 
calendar year is limited to the following amounts for the following 
discrete categories of minor construction. The date of the Form 773 
contract is the date the Form 773 contract is executed.
    (1) For outside plant construction, the limit is $500,000 or ten per 
cent (10%) of the borrower's previous calendar year's outside plant 
total construction, whichever is greater.
    (2) For central office equipment, the limit is $500,000.
    (3) For special equipment and buildings, the limit is $250,000 in 
each category.
    (c) A single minor construction project may be a discrete element of 
a somewhat larger overall project, such as the provision and 
installation of a standby power generator or heating/air conditioning 
equipment in connection with a building modification or expansion 
project or the splicing on a major cable placement project. It cannot be 
a portion, by dividing into smaller segments, of a discrete major 
construction project, such as the placement of a continuous cable 
facility.
    (d) RUS approval must be obtained in advance for minor construction 
unless all of the following conditions are met:
    (1) RUS has approved the engineering design.
    (2) All standard RUS procedures are followed, including use of new 
materials listed in the List of Materials for Use on Telephone Systems 
of RUS Borrowers (Bul. 344-2) and the application of RUS construction 
practices. (See Sec. 1753.6)
    (3) The Standard Form 773 contract is used without modification.
    (e) The borrower shall determine the scope of each proposed 
construction project and decide how it will be constructed. A work 
project number shall be assigned to which all charges for that project 
are referenced.
    (f) The borrower shall maintain accounting and plant records 
sufficient to document the cost and location of all construction and to 
support loan fund advances and disbursements.
    (g) Normally the borrower will finance minor construction with 
general funds and obtain reimbursement with loan funds when construction 
is completed and executed Form 771 has been submitted to RUS. If a 
borrower satisfies RUS of its inability to finance the construction 
temporarily with general funds, RUS may establish, on a case by case 
basis, a work order fund for specific construction projects. The work 
order fund will be closed upon receipt of an FRS and the executed Forms 
771

[[Page 450]]

for the specific projects for which the work order fund was established.
    (h) RUS will advance funds to finance minor construction work 
projects only if all necessary documents, including an FRS and 
supporting data covering the project, are received within one year of 
the date construction of the project is completed.

[55 FR 3573, Feb. 2, 1990. Redesignated at 55 FR 39397, Sept. 27, 1990, 
as amended at 59 FR 43718, Aug. 25, 1994; 64 FR 16612, Apr. 6, 1999]



Sec. 1753.81  Inspection and certification.

    (a) Upon completion and prior to closeout, minor construction must 
be inspected and certified to be in compliance with RUS construction 
standards, to be reasonable in cost, and to meet applicable codes. The 
certification is made by an experienced telephone engineer who is either 
licensed in the state where the inspection will be performed, or is a 
borrower's staff engineer, who meets the requirements of the ``employee 
in charge'' of force account engineering as described in subpart B of 
this part. The GFR will periodically audit the inspection of minor 
construction to ensure integrity of the procedure. RUS borrowers with 
less than 2000 subscribers may use the above procedure or have 
construction inspection performed by the GFR.
    (b) Engineering services for minor construction may be contracted 
using RUS Form 245, Engineering Service Contract--Special Services. 
Costs for these services may be included in the costs for construction 
on the Form 771. (See subpart B of this part.
    (c) Upon completion of construction, the borrower shall obtain the 
engineer's certification on RUS Form 771. An official of the borrower, 
designated by the board of directors, shall also execute the borrower's 
certification on Form 771.

[54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 
1990, as amended at 55 FR 53488, Dec. 31, 1990]



Sec. 1753.82  Minor construction closeout.

    (a) For minor construction inspected by the borrower's engineer, an 
original and two copies of Form 771 shall be sent to the GFR. The GFR 
will initial and return the original and one copy.
    (b) When funds are requested for minor construction, the original 
Form 771 signed or initialed by the GFR, shall be submitted with the 
FRS. Forms 771 should be submitted only with the FRS which they support. 
RUS does not encumber funds pursuant to Forms 771 unless an advance is 
made to the borrower. (See 7 CFR part 1744 subpart C).



Secs. 1753.83-1753.90  [Reserved]



              Subpart J_Construction Certification Program

    Source: 55 FR 3574, Feb. 2, 1990, unless otherwise noted. 
Redesignated at 55 FR 39397, Sept. 27, 1990.



Sec. 1753.91  General.

    (a) This subpart implements and explains the provisions of the loan 
documents setting forth the requirements and procedures to be followed 
by borrowers accepting nomination for the construction certification 
program. Terms used in this subpart are defined in Sec. 1753.2.
    (b) [Reserved]

(Approved by the Office of Management and Budget under control number 
0572-0062)



Sec. 1753.92  Policies and requirements.

    (a) It is RUS policy that, as borrowers gain in experience and 
maturity, the advice and assistance rendered by RUS shall progressively 
diminish. Prior to approval of a loan, RUS may nominate certain 
borrowers to fulfill the responsibilities for administration and 
construction of projects financed with RUS loans. Borrowers who accept 
this nomination will be known as ``certification borrowers,'' and the 
program in which they participate will be known as the ``certification 
program.''
    (b) Generally, initial loan borrowers are not eligible for the 
certification program.
    (c) Generally, the factors which RUS will consider in selecting 
borrowers for the certification program will include:
    (1) The experience of the staff of the borrower.

[[Page 451]]

    (2) The RUS assessment of the borrower's ability to handle the 
certification program requirements considering the size and complexity 
of the proposed construction in the LD.
    (3) The history of the borrower in following RUS's policies and 
procedures.
    (4) Other factors deemed relevant by RUS.
    (d) Except as specifically stated in this subpart, certification 
borrowers must comply with all requirements applicable to other 
borrowers.
    (e) RUS reserves the right at any time to require submission of 
construction documents or to remove the borrower from the certification 
program.



Sec. 1753.93  Responsibilities.

    (a) Responsibilities transferred to certification borrowers. (1) 
Approval of engineering and architectural service contracts.
    (2) Approval of P&S.
    (3) Approval of price quotations and bids, except where the low 
price bid is not accepted.
    (4) Approval of award of construction contracts and amendments.
    (5) Approval of FAP's if RUS has approved the force account method 
of construction for the construction project.
    (6) Inspection and certification of construction.
    (7) Approval of closeout documents.
    (8) Other responsibilities as may be specifically granted in writing 
by RUS.
    (b) Responsibilities retained by RUS. (1) Approval to deviate from 
RUS requirements, except as provided in (a) above.
    (2) Approval of use of loan funds for projects other than those 
included in the loan construction budget. See 7 CFR part 1744 subpart C.
    (3) Approval of use of loan funds in excess of amounts included in 
the loan budget.
    (4) Approval of force account methods of engineering and 
construction.
    (5) Approval to make significant deviations from the work plan 
approved by RUS.
    (6) Approval of interim construction.
    (7) Approval to use materials not listed in the List of Materials 
Acceptable for Use on Telephone Systems of RUS Borrowers.
    (8) Approval of field trials.
    (9) Approval to modify or alter standard forms and contracts.
    (10) Approval to open bids when fewer than the required number have 
been received.
    (11) Approval of outside plant layouts.
    (12) ``Buy American'' determinations.
    (13) Other responsibilities not specifically transferred by this 
subpart or in writing by RUS.



Sec. 1753.94  Procedures.

    (a) Certification borrowers shall appoint three certification 
officials. These appointments shall be subject to RUS approval.
    (1) The ``Certifying Officer'' shall be an officer or employee of 
the borrower who is authorized to execute binding agreements. This 
officer shall sign all contracts, amendments, closeout documents and the 
certification on RUS Form 158, Certification of Contract or Force 
Account Proposal Approval, and RUS Form 159, Summary of Completed 
Construction.
    (2) The ``Construction Certifier'' shall be an experienced telephone 
engineer who is either licensed in the state where the inspection will 
be performed, or is a borrower's staff engineer who meets the 
requirements of the ``employee in charge'' of force account engineering 
as described in subpart B of this part. RUS may determine that it will 
accept the certification only for matters within the staff engineer's 
area of specialization. In such cases the position of ``Construction 
Certifier'' shall be filled by more than one engineer. This official is 
responsible for certifying that the construction complies with all 
technical and code requirements.
    (3) The ``Certification Coordinator'' shall administer the 
certification program and serve as the official point of contact for 
RUS. The certifying officer or construction certifier may also serve as 
the certification coordinator.
    (b) Certification borrowers, shall submit and obtain RUS approval of 
a work plan before construction and related engineering begin.
    (1) The work plan shall provide a description of the proposed 
construction and methods of purchasing in such detail as to enable RUS 
to monitor the

[[Page 452]]

construction program to ensure to its satisfaction that loan purposes 
are accomplished in an organized construction program.
    (2) The work plan shall include the following:
    (i) The names and qualifications of the proposed certification 
officials defined in Sec. 1753.94(a).
    (ii) A listing of the proposed work projects to accomplish the loan 
purposes showing the estimated cost, method of performing the 
construction, and the proposed commencement and completion dates for 
each work project. The proposed work projects shall be summarized on RUS 
Form 157, Construction Work Plan and Cost Distribution, or a form 
providing essentially the same information.
    (iii) The proposed source of funds for meeting cost overruns if the 
total estimated cost of work projects exceeds the loan budget.
    (iv) A statement signed by the borrower's certification officials 
and the GFR that the work plan is accurate and complete.
    (c) Under the certification program, the borrower shall follow all 
standard RUS postloan engineering and construction procedures except 
that the approvals shown in Sec. 1753.93(a) will be made by 
certification officials rather than RUS. The approvals noted in 
Sec. 1753.93(a)(1), (4) and (5) will be reported immediately to RUS 
using RUS Form 158. Approval of closeouts, Sec. 1753.93(a) (6) and (7), 
will be reported immediately on RUS Form 159.
    (d) As the construction program progresses, the certification 
borrower shall request, by letter, RUS approval of any significant 
changes in work plan schedules and budgets and in certification 
officials.



Sec. 1753.95  Advance of loan funds.

    Advance of loan funds needed to meet the certification borrower's 
current financial obligations are to be requested on RUS Form 481 for 
construction and engineering items supported by appropriate RUS Forms 
158 and 159. For items other than construction or engineering, other 
supporting data shall be submitted. (See 7 CFR part 1744 subpart C.)



Sec. 1753.96  Certification addendum.

    The certification borrower shall modify standard RUS forms of 
contract for use under the certification program by inserting an 
executed copy of the following certification addendum in each copy of 
the contract.

                         Certification Addendum

    Permission has been obtained by the Owner to proceed with this 
contract under 7 CFR part 1753 subpart J, pursuant to which the 
references in the RUS construction document requiring approvals and 
other actions of the RUS Administrator will not apply unless RUS gives 
specific notice in writing to the affected parties that designated 
approval(s) or action(s) will be required. Certifications by the 
Contractor of amounts due and certifications of completions of work 
under the contract are to be construed to be rendered for the purpose of 
inducing the Rural Utilities Service or Rural Telephone Bank to advance 
funds to the Owner to make, or reimburse the Owner for, payments under 
this contract.
Date
________________________________________________________________________
Owner
By______________________________________________________________________
Certifying Officer
Date____________________________________________________________________
________________________________________________________________________
Contractor
By______________________________________________________________________
________________________________________________________________________
Title



Secs. 1753.97-1753.99  [Reserved]



PART 1755_TELECOMMUNICATIONS POLICIES ON SPECIFICATIONS, 
ACCEPTABLE MATERIALS, AND STANDARD CONTRACT FORMS--Table of Contents



Sec.
1755.1-1755.2  [Reserved]
1755.3  Field trials.
1755.4-1755.25  [Reserved]
1755.26  RUS standard contract forms.
1755.27  Borrower contractual obligations.
1755.28  Notice and publication of listed contract forms.
1755.29  Promulgation of new or revised contract forms.
1755.30  List of telecommunications standard contract forms.
1755.31-1755.96  [Reserved]
1755.97  Incorporation by reference of telecommunications standards and 
          specifications.
1755.98  List of telecommunications specifications included in other 7 
          CFR parts.

[[Page 453]]

1755.99-1755.199  [Reserved]
1755.200  RUS standard for splicing copper and fiber optic cables.
1755.201-1755.369  [Reserved]
1755.370  RUS specification for seven wire galvanized steel strand.
1755.371-1755.389  [Reserved]
1755.390  RUS specifications for filled telephone cables.
1755.391-1755.396  [Reserved]
1755.397  RUS performance specification for line concentrators.
1755.398-1755.399  [Reserved]
1755.400  RUS standard for acceptance tests and measurements of 
          telecommunications plant.
1755.401  Scope.
1755.402  Ground resistance measurements.
1755.403  Copper cable telecommunications plant measurements.
1755.404  Fiber optic cable telecommunications plant measurements.
1755.405  Voiceband data transmission measurements.
1755.406  Shield or armor ground resistance measurements.
1755.407  Data formats.
1755.408-1755.499  [Reserved]
1755.500  RUS standard for service installations at customers access 
          locations.
1755.501  Definitions applicable to Secs. 1755.501 through 1755.510.
1755.502  Scope.
1755.503  General.
1755.504  Demarcation point.
1755.505  Buried services.
1755.506  Aerial wire services
1755.507  Aerial cable services.
1755.508  Customer access location protection.
1755.509  Mobile homes.
1755.510  Construction and assembly unit drawings.
1755.511-1755.521  [Reserved]
1755.522  RUS general specification for digital, stored program 
          controlled central office equipment.
1755.523-1755.699  [Reserved]
1755.700  RUS specification for aerial service wires.
1755.701  Scope.
1755.702  Copper coated steel reinforced (CCSR) aerial service wire.
1755.703  Nonmetallic reinforced (NMR) aerial service wire.
1755.704  Requirements applicable to both CCSR and NMR aerial service 
          wires.
1755.705-1755.859  [Reserved]
1755.860  RUS specification for filled buried wires.
1755.861-1755.869  [Reserved]
1755.870  RUS specification for terminating cables.
1755.871-1755.889  [Reserved]
1755.890  RUS specification for filled telephone cables with expanded 
          insulation.
1755.900  Abbreviations and definitions.
1755.901  Incorporation by reference.
1755.902  Minimum performance specification for fiber optic cables.
1755.903  Fiber optic service entrance cables.
1755.910  RUS specification for outside plant housings and serving area 
          interface systems.

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.



Secs. 1755.1-1755.2  [Reserved]



Sec. 1755.3  Field trials.

    (a) Except as covered in Bulletin 345-3, no loan funds shall be 
advanced for any product if any item to be included in the project is 
not included in the ``List of Materials Acceptable for Use on Telephone 
Systems of RUS Borrowers,'' RUS Bulletin 344-2. When new items of 
materials or equipment are considered for acceptance by RUS or when a 
previously accepted item has been subjected to such major modifications 
that its suitability cannot be determined based on laboratory data and/
or field experience, a field trial shall be required if RUS so 
determines. This field trial consists of limited field installations of 
the materials or equipment in closely monitored situations designed to 
determine, to RUS's satisfaction, their operational effectiveness under 
actual field conditions. Field trials are to be used only as a means for 
determining, to RUS's satisfaction, the operational effectiveness of a 
new or revised product under actual field conditions. Both the 
manufacturer and borrower are responsible for assuring that the field 
trial is carried out and that the required information on the product's 
performance is received by RUS in a timely manner. The use of materials 
or equipment derived from new inventions or concepts untried within the 
telephone industry is defined as ``an experiment'' and shall be handled 
as a special case using procedures considered appropriate by RUS to meet 
the individual experiment.
    (b) To qualify for a field trial, the new and improved materials and 
equipment must appear to RUS to offer one or more of the following 
benefits:
    (1) Improved performance.
    (2) Decreased cost.
    (3) Broader application.
    (c) The item of material or equipment subject to field trial may be 
only

[[Page 454]]

part of the total amount of materials or equipment included in a bid or 
it may be the key component of the facility or system provided; 
therefore, RUS shall have authority to require that a satisfactory plan 
be provided to maintain or restore service in the event that the 
materials and equipment fail to meet established performance 
requirements. RUS shall limit the quantity of new materials and 
equipment installed on any field trial and shall also limit the number 
of field trials for a given product to what RUS considers reasonable to 
provide the necessary information.
    (d) A borrower may participate in a field trial only if, in RUS's 
opinion, the borrower possesses:
    (1) Adequate financial resources so that no delay in the project 
will result from lack of funds.
    (2) The financial stability to overcome difficulties which may 
result from an unsuccessful field trial. The borrower must be able to 
restore and maintain service until the manufacturer meets its financial 
obligations with respect to the field trial.
    (3) Qualified personnel to enable it to discharge its 
responsibilities.
    (4) A record satisfactory to RUS for maintaining equipment and plant 
facilities and for providing RUS with information when requested.
    (5) Willingness to participate in the field trial and awareness of 
the effort and responsibility this entails.
    (e) The test site for the field trial shall be, in RUS's opinion, 
readily accessible and provide the conditions, such as temperature 
extremes, high probability of lightning damage, etc., for which the 
product is being evaluated. The material or equipment involved shall be 
covered by an RUS specification or a suitable standard acceptable to 
RUS. The supplier is required to submit test data to show conformance 
with the applicable specification or standard. Further testing shall be 
performed if required by RUS personnel.
    (f) A field trial shall normally continue for a minimum of six 
months, or for a longer period of time determined by RUS to be required 
to obtain conclusive data that the item either fulfills all requirements 
or is unacceptable. Either the borrower or supplier may terminate a 
field trial at any time, in accordance with their contractual agreement. 
Such termination, if prior to the time required by RUS, shall constitute 
withdrawal of the product from consideration by RUS. RUS has authority 
to terminate field trials based on its determination that the equipment 
is not performing satisfactorily and that this lack of performance may, 
in RUS's opinion, cause service degradation or hazards to life or 
property.
    (g) Field trials shall be conducted in accordance with the 
instructions set forth in this regulation and the agreement relating to 
the specific application. Both the supplier and the borrower shall 
agree, and obtain RUS approval before the start of the trial, on the 
following:
    (1) The specific purpose of the field trial;
    (2) Ownership of items during trial;
    (3) Starting date and duration;
    (4) Responsibility for costs and removal of items in the event of 
noncompliance with the specification or purpose intended and 
arrangements for service continuity or restoration;
    (5) Responsibility for testing, test equipment and normal operation 
and maintenance during the trial period;
    (6) Availability of test equipment on site during the trial period; 
and
    (7) Responsibility for spare parts and components consumed during 
the trial period.
    (h) Both the supplier and the borrower shall keep RUS informed of 
the status of a field trial. These reports shall not be limited to 
details of problems of failures encountered during installation and 
subsequent operation but shall include information on progress of the 
field trial. If these reports are not received in accordance with the 
requirements of the RUS Form 399b, RUS shall have the authority to deny 
or suspend loan funds related to these products until the delinquent 
reports are received.
    (i) Before a borrower purchases materials or equipment that require 
a field trial, prior approval must be obtained from RUS and RUS Form 
399b, RUS Telecommunications Equipment Field

[[Page 455]]

Trial (available from the Director, Administrative Services Division, 
Rural Utilities Service, Room 0175, South Building, U.S. Department of 
Agriculture, Washington, DC 20250) will be completed by RUS and must be 
signed by both the borrower and supplier as an indication that they 
understand their responsibilities in the field trial. Assurance must 
also be obtained from RUS that the ``particular item'' that is the 
subject of the field test is eligible for a field trial. To obtain this 
assurance, any proposal for use of an item on a field trial basis shall 
be forwarded to the Chief, Area Engineering Branch, for review and 
approval.
    (j) Procedures for establishing field trials for the various 
categories of equipment after RUS has approved the 399b:
    (1) Electronic transmission equipment. The procedure set forth in 
Bulletin 385-2 ``Purchasing and Installing Special Electronic 
Equipment'' shall be followed except that the Special Equipment Contract 
(Including Installation), RUS Form 397, shall be used in all purchases 
of electronic equipment for field trials. In addition, the borrower and 
supplier shall execute three copies of a ``Supplemental Agreement to 
Equipment Contract for Field Trial,'' RUS Form 399, or a ``Supplemental 
Agreement to Equipment Contract for Field Trial (Secondary--Delivery, 
Installation, Operation)'', RUS Form 399a, as well as three copies of 
the RUS Form 399b, ``RUS Telecommunications Equipment Field Trial'', and 
forward them, together with three copies of the executed contract and 
specifications, to the Chief, Area Engineering Branch. A limited number 
of copies of RUS Forms 399, 399a, and 399b are available from RUS upon 
request from the Director, Administrative Services Division, Rural 
Utilities Service, Room 0175, South Building, U.S. Department of 
Agriculture, Washington, DC 20250. Additional copies may be reproduced 
by the user as needed. This category includes:
    (i) Voice frequency repeaters;
    (ii) Trunk carriers;
    (iii) Subscriber carrier;
    (iv) Point-to-point radio (Microwave);
    (v) Coaxial cable system electronics;
    (vi) Fiber optic cable system electronics;
    (vii) Multiplex equipment;
    (viii) Mobile and fixed radiotelephone; and
    (ix) Other items of electronic equipment associated with 
transmission.
    (2) Central office equipment. The procedure set forth in Bulletin 
384-1 ``Purchasing and Installing Central Office Equipment'' shall be 
followed except that ``The Central Office Equipment Contract (Including 
Installation)'', RUS Form 525, shall be used to purchase switching 
equipment for field trials. In addition, the borrower and supplier shall 
execute three copies of a ``Supplemental Agreement to Equipment Contract 
for Field Trial,'' RUS Form 399, or a ``Supplemental Agreement to 
Equipment Contract for Field Trial (Secondary--Delivery, Installation, 
Operation)'', RUS Form 399a, as the case may be, as well as three copies 
of the RUS Form 399b, ``RUS Telecommunications Equipment Field Trial'', 
and forward them, together with three copies of the executed contract 
and specification to the Chief, Area Engineering Branch. This category 
includes:
    (i) Central office dial equipment;
    (ii) Direct distance dialing equipment;
    (iii) Automatic number identification equipment;
    (iv) Line concentrators;
    (v) Remote switching equipment; and
    (vi) All other items of equipment associated with switching 
equipment, such as loop extenders.
    (3) Protection equipment and materials, outside plant equipment and 
materials, and all other equipment and materials, which includes all 
items not covered in paragraph (j) (1) or (2) of this section, shall be 
handled as described in Bulletin 344-1 ``Methods of Purchasing Materials 
and Equipment for Use on Systems of Telephone Borrowers'' except that 
the borrower's purchase order form is to be used for purchasing 
materials and equipment in these categories. In addition, the borrower 
and supplier shall execute three copies of the ``Supplemental Agreement 
to Equipment Contract for Field

[[Page 456]]

Trial,'' RUS Form 399, or a ``Supplemental Agreement to Equipment 
Contract for Field Trial (Secondary--Delivery, Installation, 
Operation)'', RUS Form 399a, as the case may be, as well as three copies 
of the RUS Form 399b, ``RUS Telecommunications Field Trial'', and 
forward them, together with three copies of the purchase order to the 
Chief, Area Engineering Branch.
    (k) For all items except Electronic Central Office Equipment, 
suppliers and manufacturers must furnish warranties or guarantees 
satisfactory to RUS against the failure of the material and equipment 
used in the field trial. Terms of this warranty must not be less than 
the provisions of the standard warranty included in the ``Telephone 
System Construction Contract'', RUS Form 515, or the warranty provided 
for similar materials and equipment included in the ``List of Materials 
Acceptable for Use on Telephone Systems of RUS Borrowers'', RUS Bulletin 
344-2. In lieu of a warranty, materials and equipment are sometimes 
furnished to RUS borrowers on a reduced or no cost basis. Terms of such 
arrangements are subject to RUS approval and should be fully covered in 
field trial proposals forwarded by borrowers to the Chief, Area 
Engineering Branch for review and approval. For the purchase of 
electronic central office equipment, suppliers and manufacturers are to 
provide warranties as provided in the applicable RUS contract form: RUS 
Form 397 for electronic equipment and RUS Form 525 for central office 
equipment. Forms 399 and 399a, which apply to field trials of these 
devices, specify that the term of the warranty does not begin until the 
satisfactory conclusion of the field trial.

[49 FR 28394, July 12, 1984. Redesignated at 55 FR 39397, Sept. 27, 
1990]



Secs. 1755.4-1755.25  [Reserved]



Sec. 1755.26  RUS standard contract forms.

    (a) The standard loan agreement between RUS and its borrowers 
provides that, in accordance with applicable RUS regulations, borrowers 
shall use standard contract forms promulgated by RUS for construction, 
procurement, engineering services, and architectural services financed 
by a loan or guaranteed by RUS. This part implements these provisions of 
the RUS loan agreement and prescribes the procedures that RUS follows in 
promulgating standard contract forms that borrowers are required to use. 
Part 1753 prescribes when and how borrowers are required to use these 
standard forms of contracts.
    (b) Contract forms. RUS promulgates standard contract forms, 
identified in Sec. 1755.30(c), List of Standard Contract Forms, that 
borrowers are required to use.

[64 FR 6500, Feb. 10, 1999]



Sec. 1755.27  Borrower contractual obligations.

    (a) Loan agreement. As a condition of a loan or loan guaranteed 
under the RE Act, borrowers are normally required to enter into RUS loan 
agreements pursuant to which the borrowers agree to use RUS standard 
contract forms for construction, procurement, engineering services, and 
architectural services financed in whole or in part by the RUS loan. To 
comply with the provisions of the loan agreements as implemented by this 
part, borrowers must use those contract forms identified in the list of 
telecommunications standard contract forms, set forth in Sec. 1755.30(c) 
of this part.
    (b) Compliance. (1) If a borrower is required by part 1753 to use a 
listed contract form, the borrower shall use the listed contract form in 
the format available from RUS. The forms shall not be retyped, changed, 
modified, or altered in any manner not specifically authorized in this 
part or approved by RUS in writing. Any modifications approved by RUS 
must be clearly shown so as to indicate the difference from the listed 
contract form.
    (2) The borrower may use electronic reproductions of a contract form 
if the contract documents submitted for RUS approval are exact 
reproductions of the RUS form and include the following certification by 
the borrower: I (Insert name of the person.), certify that the attached 
(Insert name of the contract form.), between (Insert name of the 
parties.), dated (Insert contract date.) is an exact reproduction of RUS 
Form

[[Page 457]]

(Insert form number), dated (Insert date of RUS form).

________________________________________________________________________
  (Signature)

________________________________________________________________________
  (Title)

________________________________________________________________________
(Employer's Address)

    (c) Amendment. Where a borrower has entered into a contract in the 
form required by 7 CFR part 1753, no change may be made in the terms of 
the contract, by amendment, waiver or otherwise, without the prior 
written approval of RUS.
    (d) Waiver. RUS may waive for good cause, on a case-by-case basis, 
the requirements imposed on a borrower pursuant to this part. Borrowers 
seeking an RUS waiver must provide RUS with a written request explaining 
the need for the waiver.
    (e) Violations. A failure on the part of the borrower to use listed 
contracts as prescribed in 7 CFR part 1753 is a violation of the terms 
of the loan agreement with RUS and RUS may exercise any and all remedies 
available under the terms of the agreement or otherwise.

[64 FR 6500, Feb. 10, 1999]



Sec. 1755.28  Notice and publication of listed contract forms.

    (a) Notice. Upon initially entering a loan agreement with RUS, 
borrowers will be provided with all listed contract forms. Thereafter, 
new or revised listed contract forms promulgated by RUS, including RUS 
approved exceptions and alternatives, will be sent by regular or 
electronic mail to the borrower's address as identified in its loan 
agreement with RUS.
    (b) Availability. Listed contract forms are published by RUS. 
Interested parties may obtain the forms from the Rural Utilities 
Service, Program Development and Regulatory Analysis, U.S. Department of 
Agriculture, Stop 1522, Washington DC 20250-1522, telephone number (202) 
720-8674. The list of contract forms can be found in Sec. 1755.30(c).

[64 FR 6500, Feb. 10, 1999]



Sec. 1755.29  Promulgation of new or revised contract forms.

    RUS may, from time to time, promulgate new contract forms or revise 
or eliminate existing contract forms. In so doing, RUS shall publish a 
notice of rulemaking in the Federal Register announcing, as appropriate, 
a revision in, or a proposal to amend Sec. 1755.30(c), List of 
telecommunications standard contract forms. The amendment may change the 
existing identification of a listed contract form by, for example, 
changing the issuance date of the listed contract form or identifying a 
new required contract form. The notice of rulemaking will describe the 
new standard contract form or substantive change in the listed contract 
form, as the case may be, and the issues involved. The standard contract 
form or relevant portions thereof may be appended to the supplementary 
information section of the notice of rulemaking. As appropriate, the 
notice of rulemaking shall provide an opportunity for interested persons 
to provide comments. RUS shall send, by regular or electronic mail, a 
copy of each such Federal Register document to all borrowers.

[64 FR 6500, Feb. 10, 1999]



Sec. 1755.30  List of telecommunications standard contract forms.

    (a) General. The following is a list of RUS telecommunications 
program standard contract forms for procurement, construction, 
engineering services, and architectural services. Borrowers are required 
to use these contract forms by the terms of their RUS loan agreements 
implemented by part 1753 and this part.
    (b) Issuance Date. Where part 1753 requires the use of a standard 
contract form in connection with RUS financing, the borrower shall use 
the appropriate form identified in Sec. 1755.30(c), List of 
Telecommunications Standard Contract Forms, published as of the date the 
borrower releases the plans and specifications to solicit bids or price 
quotes.
    (c) List of telecommunications standard contract forms. (1) RUS Form 
157, issued 10-77, Construction Work Plan and cost Distribution--
Telephone.

[[Page 458]]

    (2) RUS Form 158, issued 10-77, Certification of Contract or Force 
Account Approval.
    (3) RUS Form 159, issued 10-77, Summary of Completed Construction.
    (4) RUS Form 168b, issued 2-04, Contractor's Bond.
    (5) RUS Form 168c, issued 2-04, Contractor's Bond.
    (6) RUS Form 181a, issued 3-66, Certificate of Completion (Force 
Account Construction).
    (7) RUS Form 187, issued 2-04, Certificate of Completion, Contract 
Construction.
    (8) RUS Form 213, issued 2-04, Certificate (Buy American).
    (9) RUS Form 216, issued 7-67, Construction Change Order.
    (10) RUS Form 217, issued 3-97, Postloan Engineering Services 
Contract--Telecommunications Systems.
    (11) RUS Form 220, issued 6-98, Architectural Services Contract.
    (12) RUS Form 224, issued 2-04, Waiver and Release of Lien.
    (13) RUS Form 231, issued 2-04, Certificate of Contractor.
    (14) RUS Form 238, issued 2-04, Construction or Equipment Contract 
Amendment.
    (15) RUS Form 242, issued 11-58, Assignment of Engineering Service 
Contract.
    (16) RUS Form 245, issued 11-75, Engineering Services Contract, 
Special Services--Telephone.
    (17) RUS Form 257, issued 2-04, Contract to Construct Buildings.
    (18) RUS Form 257a, issued 10-69, Contractor's Bond.
    (19) RUS Form 274, issued 6-81, Bidder's Qualifications.
    (20) RUS Form 276, issued 5-59, Bidder's Qualifications for Buried 
Plant Construction.
    (21) RUS Form 281 issued 5-61, Tabulation of Materials Furnished by 
Borrower.
    (22) RUS Form 282, issued 11-53, Subcontract (Under Construction or 
Equipment Contracts).
    (23) RUS Form 284, issued 4-72, Final Statement of Cost for 
Architectural Service and Certificate of Architect.
    (24) RUS Form 307, issued 2-04, Bid Bond.
    (25) RUS Form 396, issued 3-64, Certificate of Completion--Special 
Equipment Contract (Including Installation).
    (26) RUS Form 396a, issued 3-64, Certificate of Completion--Special 
Equipment Contract (Not Including Installation).
    (27) RUS Form 397, issued September 25, 2000, Special Equipment 
Contract (Including Installation).
    (28) RUS Form 397f, issued 2-63, Contractor's Bond (Special 
Telephone Equipment).
    (29) Addendum No. 1 to RUS Form 397, issued 7-78, Special Equipment 
Contract (Including Installation).
    (30) RUS Form 398, issued 11-62, Special Equipment Contract (Not 
Including Installation).
    (31) RUS Form 399, issued 8-82, Supplemental Agreement to Equipment 
Contract for Field Trial.
    (32) RUS Form 399a, issued 8-82, Supplemental Agreement to Equipment 
Contract for Field Trial (Secondary-Delivery, Installation, Operation).
    (33) RUS Form 506, issued 3-97, Statement of Engineering Fee--
Telecommunications.
    (34) RUS Form 515, issued September 17, 2001, Telecommunications 
Systems Construction Contract (Labor and Materials).
    (35) RUS Form 517, issued 9-64, Results of Acceptance Tests
    (36) RUS Form 525, issued 7-94, Central Office Equipment Contract 
(Including Installation).
    (37) Addendum to RUS Form 525, issued 7-94, Central Office Equipment 
Contract (Including Installation) and RUS Form 545 Central Office 
Equipment Contract (Not Including Installation).
    (38) RUS Form 525a, issued 10-62, Contractor's Bond (Central Office 
Equipment).
    (39) RUS Form 526, issued 8-66, Construction Contract Amendment.
    (40) RUS Form 527, issued 3-71, Statement of Construction, Telephone 
System `` Outside Plant.
    (41) RUS Form 545, issued November 4, 1999, Central Office Equipment 
Contract (Not Including Installation).
    (42) RUS Form 553, issued 5-67, Check List for Review of Plans and 
Specifications.

[[Page 459]]

    (43) RUS Form 724 issued 10-63, Final Inventory, Telephone 
Construction Contract.
    (44) RUS Form 724a issued 4-61, Final Inventory, Telephone 
Construction--Telephone Construction Contract (Labor and Materials), 
columns 1-8.
    (45) RUS Form 724b issued 3-61, Final Inventory, Telephone 
Construction Contract (Labor and Materials), columns 9-14.
    (46) RUS Form 744, issued 2-62, Certificate of Contractor and 
Indemnity Agreement.
    (47) RUS Form 752a, issued 5-66, Certificate of Completion Central 
Office Equipment-Not Including Installation.
    (48) RUS Form 754, issued 6-66, Certificate of Completion and 
Certificate of Contractor and Indemnity Agreement.
    (49) RUS Form 771, Issued 10-75, Summary of Work Orders (Inspected 
by RUS Field Engineer).
    (50) RUS Form 771a, issued 10-75, Summary of Work Orders (Inspected 
by Licensed Engineer or Borrower's Staff Engineer).
    (51) RUS Form 773, issued 12-90, Miscellaneous Construction Work and 
Maintenance Services Contract.
    (52) RUS Form 787, issued 8-63, Supplement A to Construction 
Contract.
    (53) RUS Form 817, issued 6-60, Final Inventory, Telephone Force 
Account Construction.
    (54) RUS Form 817a, issued 6-60, Final Inventory, Telephone Force 
Account Construction, columns 1-8.
    (55) RUS Form 817b, issued 6-60, Final Inventory, Telephone Force 
Account Construction, Columns 9-14.
    (56) RUS Form 835, issued 3-66, Preloan Engineering Service 
Contract, Telephone System Design.

[64 FR 6501, Feb. 10, 1999, as amended at 64 FR 53887, Oct. 5, 1999; 65 
FR 51750, Aug. 25, 2000; 69 FR 7111, Feb. 13, 2004]



Secs. 1755.31-1755.96  [Reserved]



Sec. 1755.97  Telephone standards and specifications.

    (a) To comply with the provisions of this part, you must follow the 
requirements set out in the following RUS telecommunications bulletins. 
These bulletins are approved for incorporation by reference by the 
Director of the Office of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. These bulletins contain construction 
standards and specifications for materials and equipment and may be 
obtained from the Rural Utilities Service, Program Development and 
Regulatory Analysis, 1400 Independence Ave., SW., Stop 1522, Room 4028 
South Building, Washington, DC 20250-1522, phone (202) 720-8674. The 
bulletins are available for inspection at RUS, at the address above, and 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. These materials are 
incorporated as they exist on the date of the approval and notice of any 
change in these materials will be published in the Federal Register. The 
terms ``RUS form'', ``RUS standard form'', ``RUS specification'', and 
``RUS bulletin'' have the same meaning as the terms ``REA form'', ``REA 
standards form'', ``REA specification'', and ``REA bulletin'', 
respectively, unless otherwise indicated. For information on other 
standards incorporated by reference into this part see Sec. 1755.901.
    (b) The following RUS bulletins are available from the 
Superintendent of Documents, U.S. Government Printing Office (GPO) for 
Washington, DC 20402, Phone: 1-866-512-1800 (toll-free) 202-512-1800 (DC 
Area) or go to the GPO Web site at: http://www.gpoaccess.gov/about/
index.html.
    (1) Bulletin 345-39, RUS specification for telephone station 
protectors, August 19, 1985.
    (2) Bulletin 345-50 PE-60, RUS specification for trunk carrier 
systems, September 1979.
    (3) Bulletin 345-54 PE-52, RUS specification for telephone cable 
splicing connectors, December 1971.
    (4) Bulletin 345-55 PE-61, RUS specification for central office loop 
extenders and loop extender voice frequency repeater combinations, 
December 1973.
    (5) Bulletin 345-65, PE-65, Specification for shield bonding 
connectors, March 22, 1985.

[[Page 460]]

    (6) Bulletin 345-66 PE-64, RUS specification for subscriber carrier 
systems, September 1979.
    (7) Bulletin 345-69 PE-29, RUS specification for two-wire voice 
frequency repeater equipment, January 1978.
    (8) Bulletin 345-72 PE-74, RUS specification for filled splice 
closures, October 1985.
    (9) Bulletin 345-78 PE-78, RUS specification for carbon arrester 
assemblies for use in protectors, February 1980.
    (10) Bulletin 345-180 Form 397a, RUS specifications for voice 
frequency repeaters and voice frequency repeatered trunks, January 1963.
    (11) Bulletin 345-183 Form 397d, RUS design specifications for 
point-to-point microwave radio systems June 1970.
    (12) Bulletin 345-184 Form 397e, RUS design specifications for 
mobile and fixed dial radio telephone equipment May 1971.
    (13) Bulletin 1728F-700, RUS Specification for Wood Poles, Stubs and 
Anchor Logs, (3-2011).
    (14) Bulletin 1753F-150 Form 515a, Specifications and Drawings for 
Construction of Direct Buried Plant, September 30, 2010.
    (15) Bulletin 1753F-151 Form 515b, Specifications and Drawings for 
Construction of Underground Plan, September 12, 2001.
    (16) Bulletin 1753F-152 Form 515c, Specifications and Drawings for 
Construction of Aerial Plant, September 17, 2001.
    (17) Bulletin 1753F-153 Form 515d, Specifications and Drawings for 
Service Installation at Customer Access Locations, September 17, 2001.

[76 FR 36975, June 24, 2011]



Sec. 1755.98  List of telecommunications specifications included
in other 7 CFR parts.

    The following specifications are included throughout 7 CFR chapter 
XVII. These specifications are not incorporated by reference elsewhere 
in the chapter. The terms ``RUS form,'' ``RUS standard form,'' ``RUS 
specification,'' and ``RUS bulletin'' have the same meaning as the terms 
``REA form,'' ``REA standard form,'' ``REA specification,'' and ``REA 
bulletin,'' respectively, unless otherwise indicated. The list of 
specifications follows:

----------------------------------------------------------------------------------------------------------------
               Section                  Issue date                               Title
----------------------------------------------------------------------------------------------------------------
1728.202                                    09-02-93  RUS Specification for Quality Control and Inspection of
                                                       Timber Products.
----------------------------------------------------------------------------------------------------------------



Secs. 1755.99-1755.199  [Reserved]



Sec. 1755.200  RUS standard for splicing copper and fiber optic cables.

    (a) Scope. (1) This section describes approved methods for splicing 
plastic insulated copper and fiber optic cables. Typical applications of 
these methods include aerial, buried, and underground splices.
    (2) American National Standard Institute/National Fire Protection 
Association (ANSI/NFPA) 70, 1993 National Electrical Code (NEC) 
referenced in this section is incorporated by reference by RUS. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of 
the ANSI/NFPA 1993 NEC standard is available for inspection during 
normal business hours at RUS, room 2845, U.S. Department of Agriculture, 
Washington, DC 20250-1500, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html. 
Copies are available from NFPA, Batterymarch Park, Quincy, Massachusetts 
02269, telephone number 1 (800) 344-3555.
    (3) American National Standard Institute/Institute of Electrical and 
Electronics Engineers, Inc. (ANSI/IEEE), 1993 National Electrical Safety 
Code (NESC) referenced in this section is incorporated by reference by 
RUS. This incorporation by reference was approved by the Director of the 
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A 
copy of the ANSI/IEEE 1993 NESC standard is available for inspection 
during normal business hours at RUS, room 2845, U.S.

[[Page 461]]

Department of Agriculture, Washington, DC 20250-1500, or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html. Copies are available from IEEE Service 
Center, 455 Hoes Lane, Piscataway, New Jersey 08854, telephone number 1 
(800) 678-4333.
    (b) General. (1) Only Rural Utilities Service (RUS) accepted filled 
cable and splicing materials shall be used on outside plant projects 
financed by RUS.
    (2) The installation instructions provided by the manufacturer of 
splicing materials shall be followed except where those instructions 
conflict with the procedures specified in this section.
    (3) Precautions shall be taken to prevent the ingress of moisture 
and other contaminants during all phases of the splicing installation. 
When an uncompleted splice must be left unattended, it shall be sealed 
to prevent the ingress of moisture and other contaminants.
    (4) Minor sheath damage during construction may be repaired if the 
repair is completed immediately and approved by the borrower's resident 
project representative. Minor damage is typically repaired by:
    (i) Scuffing the cable sheath associated with the damaged area;
    (ii) Applying several layers of DR tape over the scuffed and damaged 
area;
    (iii) Applying several layers of plastic tape over the DR tape; and
    (iv) If damage is severe enough to rupture the cable shield, a 
splice closure shall be installed.
    (5) All splice cases installed on RUS toll trunk and feeder cables 
shall be filled, whether aerial, buried, or underground.
    (c) Splicing considerations for copper cables--(1) Preconstruction 
testing. It is desirable that each reel of cable be tested for grounds, 
opens, shorts, crosses, and shield continuity before the cable is 
installed. However, manufacturer supplied test results are acceptable. 
All cable pairs shall be free from electrical defects.
    (2) Handling precautions. The cable manufacturer's instructions 
concerning pulling tension and bending radius shall be observed. Unless 
the cable manufacturer's recommendation is more stringent, the minimum 
bending radius shall be 10 times the cable diameter for copper cables 
and 20 times the cable diameter for fiber optic cables.
    (3) Cable sheath removal. (i) The length of cable sheath to be 
removed shall be governed by the type of splicing hardware used. Follow 
the splice case manufacturer's recommendations. For pedestals or large 
pair count splice housings, consider removing enough cable sheath to 
allow the conductors to extend to the top of the pedestal and then to 
hang downward to approximately 15 centimeters (cm) (6 inches (in.)) 
above the baseplate.
    (ii) Caution shall be exercised to avoid damaging the conductor 
insulation when cutting through the cable shield and removing the 
shield. Sharp edges and burrs shall be removed from the cut end of the 
shield.
    (4) Shield bonding and grounding. For personnel safety, the shields 
of the cables to be spliced shall be bonded together and grounded before 
splicing activities are started. (See paragraphs (g)(2), and (g)(5)(i) 
through (g)(5)(iii) of this section for final bonding and grounding 
provisions.)
    (5) Binder group identification. (i) Color coded plastic tie wraps 
shall be placed loosely around each binder group of cables before 
splicing operations are attempted. The tie wraps shall be installed as 
near the cable sheath as practicable and shall conform to the same color 
designations as the binder ribbons. Twisted wire pigtails shall not be 
used to identify binder groups due to potential transmission 
degradation.
    (ii) The standard insulation color code used to identify individual 
cable pairs within 25-pair binder groups shall be as shown in Table 1:

         Table 1--Cable Pair Identification Within Binder Groups
------------------------------------------------------------------------
                                                    Color
             Pair No.              -------------------------------------
                                            Tip               Ring
------------------------------------------------------------------------
1.................................  White.............  Blue.

[[Page 462]]

 
2.................................  White.............  Orange.
3.................................  White.............  Green.
4.................................  White.............  Brown.
5.................................  White.............  Slate.
6.................................  Red...............  Blue.
7.................................  Red...............  Orange.
8.................................  Red...............  Green.
9.................................  Red...............  Brown.
10................................  Red...............  Slate.
11................................  Black.............  Blue.
12................................  Black.............  Orange.
13................................  Black.............  Green.
14................................  Black.............  Brown.
15................................  Black.............  Slate.
16................................  Yellow............  Blue.
17................................  Yellow............  Orange.
18................................  Yellow............  Green.
19................................  Yellow............  Brown.
20................................  Yellow............  Slate.
21................................  Violet............  Blue.
22................................  Violet............  Orange.
23................................  Violet............  Green.
24................................  Violet............  Brown.
25................................  Violet............  Slate.
------------------------------------------------------------------------

    (iii) The standard binder ribbon color code used to designate 25-
pair binder groups within 600-pair super units shall be as shown in 
Table 2:

               Table 2--Cable Binder Group Identification
------------------------------------------------------------------------
                                                              Group pair
            Group No.                  Color of bindings         count
------------------------------------------------------------------------
1................................  White-Blue...............       1-25
2................................  White-Orange.............      26-50
3................................  White-Green..............      51-75
4................................  White-Brown..............      76-100
5................................  White-Slate..............     101-125
6................................  Red-Blue.................     126-150
7................................  Red-Orange...............     151-175
8................................  Red-Green................     176-200
9................................  Red-Brown................     201-225
10...............................  Red-Slate................     226-250
11...............................  Black-Blue...............     251-275
12...............................  Black-Orange.............     276-300
13...............................  Black-Green..............     301-325
14...............................  Black-Brown..............     326-350
15...............................  Black-Slate..............     351-375
16...............................  Yellow-Blue..............     376-400
17...............................  Yellow-Orange............     401-425
18...............................  Yellow-Green.............     426-450
19...............................  Yellow-Brown.............     451-475
20...............................  Yellow-Slate.............     476-500
21...............................  Violet-Blue..............     501-525
22...............................  Violet-Orange............     526-550
23...............................  Violet-Green.............     551-575
24...............................  Violet-Brown.............     576-600
------------------------------------------------------------------------

    (iv) Super-unit binder groups shall be identified in accordance with 
Table 3:

                    Table 3--Super-Unit Binder Colors
------------------------------------------------------------------------
                Pair numbers                         Binder color
------------------------------------------------------------------------
1-600......................................  White.
601-1200...................................  Red.
1201-1800..................................  Black.
1801-2400..................................  Yellow.
2401-3000..................................  Violet.
3001-3600..................................  Blue.
3601-4200..................................  Orange.
4201-4800..................................  Green.
4801-5400..................................  Brown.
5401-6000..................................  Slate.
------------------------------------------------------------------------

    (v) Service pairs in screened cables shall be identified in 
accordance with Table 4:

           Table 4--Screened Cable Service Pair Identification
------------------------------------------------------------------------
                                                    Color
         Service pair No.          -------------------------------------
                                            Tip               Ring
------------------------------------------------------------------------
1.................................  White.............  Red.
2.................................  White.............  Black.
3.................................  White.............  Yellow.
4.................................  White.............  Violet.
                                    Red...............  Black.
6.................................  Red...............  Yellow.
7.................................  Red...............  Violet.
8.................................  Black.............  Yellow.
9.................................  Black.............  Violet.
------------------------------------------------------------------------

    (6) Cleaning conductors. It is not necessary to remove the filling 
compound from cable conductors before splicing. However, it is 
permissible to wipe individual conductors with clean paper towels or 
clean cloth rags. No cleaning chemicals, etc., shall be used. Caution 
shall be exercised to maintain individual cable pair and binder group 
identity. Binder group identity shall be maintained by using color coded 
plastic tie wraps. Individual pair identification shall be maintained by 
carefully twisting together the two conductors of each pair.
    (7) Expanded plastic insulated conductor (PIC) precautions. Solid 
PIC and expanded (foam or foam skin) PIC are spliced in the same manner, 
using the same tools and materials and, in general, should be treated 
the same. However, the insulation on expanded PIC is much more fragile 
than solid PIC. Twisting or forming expanded PIC into extremely compact 
splice bundles and applying excessive amounts of tension when tightening 
tie wraps causes shiners and, thus shall be avoided.
    (8) Splice connectors. (i) Only RUS accepted filled splice 
connectors shall be

[[Page 463]]

used on outside plant projects financed by RUS.
    (ii) Specialized connectors are available for splicing operations 
such as butt splices, in line splices, bridge taps, clearing and 
capping, and multiple pair splicing operations. The splice connector 
manufacturer's recommendations shall be followed concerning connector 
selection and use.
    (iii) Caution shall be exercised to maintain conductor and pair 
association both during and after splicing operations.
    (iv) Splicing operations that involve pairs containing working 
services shall utilize splice connectors that permit splicing without 
the interruption of service.
    (9) Piecing out conductors. Conductors may be pieced-out to provide 
additional slack or to repair damaged conductors. However, the 
conductors shall be pieced-out with conductors having the same gauge and 
type and color of insulation. The conductors used for piecing-out shall 
be from cables having RUS acceptance.
    (10) Splice organization. Spliced pair bundles shall be arranged in 
firm lay-ups with minimum conductor tension in accordance with the 
manufacturer's instructions.
    (11) Binder tape. Perforated nonhygroscopic and nonwicking binder 
tape should be applied to splices housed in filled splice cases. The 
binder tape allows the flow of filling compound while holding the splice 
bundles near the center of the splice case to allow adequate coverage of 
filling compound.
    (12) Cable tags. Cables shall be identified by a tag indicating the 
cable manufacturer's name, cable size, date of placement, and generic 
route information. Information susceptible to changes caused by future 
cable throws and rearrangements should not be included. Tags on load 
coil stubs shall include the serial number of the coil case, the 
manufacturer's name, and the inductance value.
    (13) Screened cable. Screened PIC cable is spliced in the same 
manner as nonscreened PIC cable. However, special considerations are 
necessary due to differences in the cable design. The transmit and 
receive bundles of the cable shall be separated and one of the bundles 
shall be wrapped with shielding material in accordance with the cable 
manufacturer's recommendations. When acceptable to the cable 
manufacturer, it is permissible to use either the scrap screening tape 
removed from the cable during the sheath opening process provided the 
screening tape is edge coated or new pressure sensitive aluminum foil 
tape over polyethylene tape.
    (14) Service wire connections. (i) Buried service wires may be 
spliced directly to cable conductors inside pedestals using the same 
techniques required for branch cables. Buried service wires may also be 
terminated on terminal blocks inside pedestals in areas where high 
service order activity or fixed count cable administration policies 
require terminal blocks. However, only RUS accepted terminal blocks 
equipped with grease or gel filled terminations to provide moisture and 
corrosion resistance shall be used.
    (ii) Only filled terminal blocks having RUS acceptance shall be used 
on aerial service wire connections.
    (15) Copper cable testing. Copper cable testing shall be performed 
in accordance with RUS Bulletin 345-63, ``RUS Standard for Acceptance 
Tests and Measurements of Telephone Plant,'' PC-4, (Incorporated by 
reference at Sec. 1755.97).
    (16) Cable acceptance. Installed cable shall be tested and pass the 
inventory and acceptance testing specified in the Telephone System 
Construction Contract (Labor and Materials), RUS Form 515. The tests and 
inspections shall be witnessed by the borrower's resident project 
representative. All conductors shall be free from grounds, shorts, 
crosses, splits, and opens.
    (d) Splice arrangements for copper cables--(1) Service distribution 
closures. (i) Ready access closures permit cable splicing activities and 
the installation of filled terminal blocks for service wire connections 
in the same closure. Ready access designs shall allow service 
technicians direct access to the cable core as well as the terminal 
block.
    (ii) Fixed count terminals shall restrict service technician access 
to the cable core. Predetermined cable pairs shall be spliced to the 
terminal leads or

[[Page 464]]

stub cable in advance of service assignments.
    (2) Aerial splices. Aerial splice cases accommodate straight 
splices, branch splices, load coils, and service distribution terminals. 
Aerial splicing arrangements having more than 4 cables spliced in the 
same splice case are not recommended. Stub cabling to a second splice 
case to avoid a congested splice is acceptable.
    (3) Buried splices. (i) Direct buried splice cases accommodate 
straight splices, branch splices, and load coils. Direct buried splices 
shall be filled and shall be used only when above ground splicing in 
pedestals is not practicable.
    (ii) A treated plank or equivalent shall be placed 15 cm (6 in.) 
above the buried splice case to prevent damage to the splice case from 
future digging. Where a firm base for burying a splice cannot be 
obtained, a treated plank or equivalent shall be placed beneath the 
splice case.
    (iii) Each buried splice shall be identified for future locating. 
One method of marking the splice point is the use of a warning sign. 
Another method is the burying of an electronic locating device.
    (4) BD-type pedestals. (i) BD-type pedestals are housings primarily 
intended to house, organize, and protect cable terminations 
incorporating splice connectors, ground lugs, and load coils. Activities 
typically performed in pedestals are cable splicing, shield bonding and 
grounding, loading, and connection of subscriber service drops.
    (ii) The recommended splice capacities for BD-type pedestals are 
shown in Table 5. However, larger size pedestals are permissible if 
service requirements dictate their usefulness. Table 5 is as follows:

            Table 5--Splice Capacities for BD-Type Pedestals
------------------------------------------------------------------------
                                                          Maximum load
                                    Maximum straight       splice pair
                                  splice pair capacity   capacity using
                                    using single pair      single pair
          Pedestal type               connectors or       connectors or
                                  multiple pair splice    multiple pair
                                         modules         splice modules
                                                          (see note 1)
------------------------------------------------------------------------
BD3, BD3A.......................  100 Pair............  50 Pair.
BD4, BD4A.......................  200 Pair............  100 Pair.
BD5, BD5A.......................  600 Pair............  300 Pair.
BD7.............................  1200 Pair...........  600 Pair.
BD14, BD14A.....................  100 Pair............  50 Pair.
BD15, BD15A.....................  400 Pair............  200 Pair.
BD16, BD16A.....................  600 Pair............  300 Pair.
------------------------------------------------------------------------
Note 1: This table refers to load coil cases that are to be direct
  buried with stub cables extending into the pedestal for splicing.
  Requirements involving individual coil arrangements inside the
  pedestal should be engineered on a case-by-case basis.

    (iii) Special distribution pedestals having a divider plate for 
mounting filled terminal blocks are available. Distribution pedestals 
are also equipped with service wire channels for installation of buried 
service wires without disturbing the cabling and gravel inside the base 
of the pedestal. Distribution pedestals are recommended in locations 
where the connection of service wires is required.
    (5) Large pair count splice housings. Large pair count splice 
housings are recommended for areas not suitable for man- holes. The 
recommended capacities are shown in Table 6:

           Table 6--Splice Capacities for Large Count Housings
------------------------------------------------------------------------
                                                          Maximum load
                                   Maximum straight       splice pair
                                 splice pair capacity    capacity using
                                  using single pair       single pair
         Housing type               connectors or        connectors or
                                 multiple pair splice    multiple pair
                                       modules           splice modules
                                                          (see note 1)
------------------------------------------------------------------------
BD 6000.......................  6,000 Pair...........  3,000 Pair.
BD 8000.......................  8,000 Pair...........  4,000 Pair.
BD 10000......................  10,000 Pair..........  5,000 Pair.
------------------------------------------------------------------------

    (6) Pedestal restricted access inserts. Restricted access inserts 
may be used to protect splices susceptible to unnecessary handling where 
subsequent work activities are required or expected to occur after 
splices have been completed. Restricted access inserts also provide 
moisture protection in areas susceptible to temporary flooding. A 
typical restricted access insert is shown in Figure 1:

[[Page 465]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.002

    (7) Serving Area Interface (SAI) Systems. SAI systems provide the 
cross-connect point between feeder and distribution cables. Connection 
of feeder to distribution pairs is accomplished by placing jumpers 
between connecting blocks. Only RUS accepted connecting blocks having 
grease or gel filled terminations to provide moisture and corrosion 
resistance shall be used.
    (8) Buried cable splicing arrangements. Typical buried cable 
splicing arrangements are illustrated in Figures 2 through 5:

[[Page 466]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.003


[[Page 467]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.004


[[Page 468]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.005


[[Page 469]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.006

    (9) Underground splices (manholes). Underground splice cases 
accommodate straight splices, branch splices, and load coils. 
Underground splices shall be filled.
    (10) Central office tip cable splices. (i) Filled cable or filled 
splices are not recommended for use inside central offices, except in 
cable vault locations. Outside plant cable sheath and cable filling 
compound are susceptible to fire and will support combustion. Fire, 
smoke, and gases generated by these materials during burning are 
detrimental to telephone switching equipment.
    (ii) Tip cables should be spliced in a cable vault. However, as a 
last resort, tip cables may be spliced inside a central office if flame 
retardant splice cases or a noncombustible central office splice housing 
is used to contain the splice.
    (iii) Splices inside the central office shall be made as close as 
practical to

[[Page 470]]

the point where the outside plant cables enter the building. Except in 
cable vault locations, outside plant cables within the central office 
shall be wrapped with fireproof tape or enclosed in noncombustible 
conduit.
    (e) Splicing considerations for fiber optic cables--(1) Connection 
characteristics. Splicing efficiency between optical fibers is a 
function of light loss across the fiber junctions measured in decibels 
(dB). A loss of 0.2 dB in a splice corresponds to a light transmission 
efficiency of approximately 95.5 percent.
    (2) Fiber core alignment. Fiber splicing techniques shall be 
conducted in such a manner that the cores of the fibers will be aligned 
as perfectly as possible to allow maximum light transmission from one 
fiber to the next. Without proper alignment, light will leave the fiber 
core and travel through the fiber cladding. Light outside the fiber core 
is not a usable light signal. Core misalignment is illustrated in Figure 
6:
[GRAPHIC] [TIFF OMITTED] TR26JA95.007

    (3) Splice loss. (i) Splice loss can also be caused by fiber defects 
such as nonidentical core diameters, cores not in center of the fiber, 
and noncircular cores. Such defects are depicted in Figure 7:

[[Page 471]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.008

    (ii) Undesirable splice losses are caused by poor splicing 
techniques including splicing irregularities such as improper cleaves 
and dirty splices. Typical cleave problems are illustrated in Figure 8:

[[Page 472]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.009

    (4) Handling precautions. The following precautions shall be 
observed:
    (i) Avoid damaging the cable during handling operations prior to 
splicing. Minor damage may change the transmission characteristics of 
the fibers to the extent that the cable section will have to be 
replaced;
    (ii) The cable manufacturer's recommendations concerning pulling 
tension shall be observed. The maximum pulling tension for most fiber 
optic cable is 2669 newtons (600 pound-force);
    (iii) The cable manufacturer's recommendations concerning bending 
radius shall be observed. Unless the cable manufacturer's recommendation 
is more stringent, the minimum bending radius for fiber optic cable 
shall be 20 times the cable diameter;
    (iv) The cable manufacturer's recommendations concerning buffer tube 
bending radius shall be observed. Unless the cable manufacturer's 
recommendation is more stringent, the minimum bending radius for buffer 
tubes is usually between 38 millimeters (mm) (1.5 in.) and 76 mm (3.0 
in.). The bending limitations on buffer tubes are intended to prevent 
kinking. Buffer tube kinking may cause excessive optical loss or fiber 
breakage; and
    (v) Handle unprotected glass fibers carefully to avoid introducing 
flaws such as scratched or broken fibers.
    (5) Personnel safety. The following safety precautions shall be 
observed:
    (i) Safety glasses shall be worn when handling glass fibers;

[[Page 473]]

    (ii) Never view open-ended fibers with the naked eye or a magnifying 
device. Improper viewing of a fiber end that is transmitting light may 
cause irreparable eye damage; and
    (iii) Dispose of bare scrap fibers by using the sticky side of a 
piece of tape to pick up and discard loose fiber ends. Fiber scraps 
easily penetrate the skin and are difficult to remove.
    (6) Equipment requirements. (i) Fiber optic splices shall be made in 
areas where temperature, humidity, and cleanliness can be controlled. 
Both fusion and mechanical splicing techniques may require a splicing 
vehicle equipped with a work station that will allow environmental 
control.
    (ii) Both fusion and mechanical splicing techniques are permitted on 
RUS financed projects. When using the mechanical splicing technique, 
only RUS accepted mechanical fiber optic splice connectors can be used.
    (iii) Fusion splicing machines shall be kept in proper working 
condition. Regular maintenance in accordance with the machine 
manufacturer's recommendations shall be observed.
    (iv) Mechanical splicing tools shall be in conformance with the tool 
manufacturer's recommendations.
    (v) An optical time domain reflectometer (OTDR) shall be used for 
testing splices. The OTDR shall be stationed at the central office or 
launch point for testing individual splices as they are made and for 
end-to-end signature tests for the fiber optic link.
    (vi) An optical power meter shall be used for end-to-end cable 
acceptance tests.
    (vii) A prerequisite for the successful completion of a fiber optic 
splicing endeavor is the presence of a talk circuit between the splicing 
technician in the splicing vehicle and the operator of the OTDR in the 
central office. The splicing technician and the OTDR operator shall have 
access to communications with each other in order to inform each other 
as to:
    (A) Which splices meet the loss objectives;
    (B) The sequence in which buffer tubes and fibers are to be selected 
for subsequent splicing operations; and
    (C) The timing required for the performance of OTDR testing to 
prevent making an OTDR test at the same time a splice is being fused.
    (7) Cable preparation. (i) Engineering work prints shall prescribe 
the cable slack needed at splice points to reach the work station inside 
the splicing vehicle. Consideration should be given to the slack 
required for future maintenance activity as well as initial construction 
activities. The required slack may be different for each splice point, 
depending on the site logistics. However, the required slack is seldom 
less than 15 meters (50 feet). The amount of slack actually used shall 
be recorded for each splice point to assist future maintenance and 
restoration efforts.
    (ii) The splice case manufacturer's recommendations concerning the 
amount of cable sheath to be removed shall be followed to facilitate 
splicing operations. The length of the sheath opening shall be 
identified with a wrap of plastic tape.
    (iii) If the cable contains a rip cord, the cable jacket shall be 
ring cut approximately 15 cm (6 in.) from the end and the 15 cm (6 in.) 
of cable jacket shall be removed to expose the rip cord. The rip cord 
shall be used to slit the jacket to the tape mark.
    (iv) If the cable does not contain a rip cord, the cable jacket 
shall be slit using a sheath splitter. No cuts shall be made into the 
cable core nor shall the buffer tubes be damaged.
    (v) If the cable contains an armor sheath, the outer jacket shall be 
opened along the slit and the jacket shall be removed exposing the armor 
sheath. The armor shall be separated at the seam and pulled from the 
cable exposing the inner jacket. The armor shall be removed making 
allowances for a shield bond connector. The inner sheath shall be slit 
using a sheath splitter or rip cord. The cable core shall not be damaged 
nor shall there be any damage to the buffer tubes. The jacket shall be 
peeled back and cut at the end of the slit. The exposed buffer tubes 
shall not be cut, kinked, or bent.
    (vi) After the cable sheath has been removed, the binder tape shall 
be removed from the cable. The cable shall not be crushed or deformed.
    (vii) The buffer tubes shall be unstranded one at a time. The buffer 
tubes shall not be kinked.

[[Page 474]]

    (viii) If the cable is equipped with a strength member, the strength 
member shall be cut to the length recommended by the splice case 
manufacturer.
    (ix) Each buffer tube shall be inspected for kinks, cuts, and flat 
spots. If damage is detected, an additional length of cable jacket shall 
be removed and all of the buffer tubes shall be cut off at the point of 
damage.
    (x) The cable preparation sequence shall be repeated for the other 
cable end.
    (8) Shield bonding and grounding. For personnel safety, the shields 
and metallic strength members of the cables to be spliced shall be 
bonded together and grounded before splicing activities are started. 
(See paragraphs (g)(4), and (g)(5)(i) through (g)(5)(iii) of this 
section for final bonding and grounding provisions).
    (9) Fiber optic color code. The standard fiber optic color code for 
buffer tubes and individual fibers shall be as shown in Table 7:

              Table 7--Fiber and Buffer Tube Identification
------------------------------------------------------------------------
     Buffer tube and fiber No.                      Color
------------------------------------------------------------------------
 1.................................  Blue.
 2.................................  Orange.
 3.................................  Green.
 4.................................  Brown.
 5.................................  Slate.
 6.................................  White.
 7.................................  Red.
 8.................................  Black.
 9.................................  Yellow.
10.................................  Violet.
11.................................  Rose.
12.................................  Aqua.
13.................................  Blue/Black Tracer.
14.................................  Orange/Black Tracer.
15.................................  Green/Black Tracer.
16.................................  Brown/Black Tracer.
17.................................  Slate/Black Tracer.
18.................................  White/Black Tracer.
19.................................  Red/Black Tracer.
20.................................  Black/Yellow Tracer.
21.................................  Yellow/Black Tracer.
22.................................  Violet/Black Tracer.
23.................................  Rose/Black Tracer.
24.................................  Aqua/Black Tracer.
------------------------------------------------------------------------

    (10) Buffer tube removal. (i) The splice case manufacturer's 
recommendation shall be followed concerning the total length of buffer 
tube to be removed. Identify the length to be removed with plastic tape.
    (ii) Experiment with a scrap buffer tube to determine the cutting 
tool adjustment required to ring cut a buffer tube without damaging the 
fibers.
    (iii) Buffer tubes shall be removed by carefully ring cutting and 
removing approximately 15 to 46 cm (6 to 18 in.) of buffer tube at a 
time. The process shall be repeated until the required length of buffer 
tube has been removed, including the tape identification marker.
    (11) Coated fiber cleaning. (i) Each coated fiber shall be cleaned. 
The cable manufacturer's recommendations shall be followed concerning 
the solvent required to clean the coated fibers. Reagent grade isopropyl 
alcohol is a commonly used cleaning solvent.
    (ii) A tissue or cotton ball shall be soaked in the recommended 
cleaning solvent and the coated fibers shall be carefully wiped one at a 
time using a clean tissue or cotton ball for each coated fiber. Caution 
shall be exercised to avoid removing the coloring agent from the fiber 
coating.
    (12) Fiber coating removal. (i) Fiber coatings shall be removed. In 
accordance with the splicing method used, the splice case manufacturer's 
recommendation shall be followed concerning the length of fiber coating 
to be removed.
    (ii) The recommended length of fiber coating shall be removed only 
on the two fibers to be spliced. Fiber coating removal shall be 
performed on a one-fiber-at-a-time basis as each splice is prepared.
    (13) Bare fiber cleaning. After the fiber coating has been removed, 
the bare fibers shall be cleaned prior to splicing. Each fiber shall be 
wiped with a clean tissue or cotton ball soaked with the cleaning 
solvent recommended by the cable manufacturer. The bare fiber shall be 
wiped one time to minimize fiber damage. Aggressive wiping of bare fiber 
shall be avoided as it lowers the fiber tensile strength.
    (14) Fiber cleaving. Cleaving tools shall be clean and have sharp 
cutting edges to minimize fiber scratches and improper cleave angles. 
Cleaving tools that are recommended by the manufacturer of the splicing 
system shall be used.
    (15) Cleaved fiber handling. The cleaved and cleaned fiber shall not 
be allowed to touch other objects and

[[Page 475]]

shall be inserted into the splicing device.
    (16) Completion of the splice. (i) In accordance with the method of 
splicing selected by the borrower, the splice shall be completed by 
either fusing the splice or by applying the mechanical connector.
    (ii) Each spliced fiber shall be routed through the organizer tray 
one at a time as splices are completed. The fibers shall be organized 
one at a time to prevent tangled spliced fibers. The splice case 
manufacturer's recommendation shall be followed concerning the splice 
tray selection.
    (17) Fiber optic testing. Fiber optic testing shall be performed in 
accordance with RUS Bulletin 345-63, ``RUS Standard for Acceptance Tests 
and Measurements of Telephone Plant,'' PC-4, (Incorporated by reference 
at Sec. 1755.97).
    (18) Cable acceptance. Installed cable shall be tested and pass the 
inventory and acceptance testing specified in the Telephone System 
Construction Contract (Labor and Materials), RUS Form 515. The tests and 
inspections shall be witnessed by the borrower's resident project 
representative.
    (f) Splice arrangements for fiber optic cables--(1) Aerial splices. 
Cable slack at aerial splices shall be stored either on the messenger 
strand, on the pole, or inside a pedestal at the base of the pole. A 
typical arrangement for the storage of slack cable at aerial splices is 
shown in Figure 9:

[[Page 476]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.010

    (2) Buried splices. Buried splices shall be installed in handholes 
to accommodate the splice case and the required splicing slack. An 
alternative to the handhole is a pedestal specifically designed for 
fiber optic splice cases. Typical arrangements for buried cable splices 
are shown in Figures 10 and 11:

[[Page 477]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.011


[[Page 478]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.012

    (3) Underground manhole splices. Underground splices shall be stored 
in manholes on cable hooks and racks fastened to the manhole wall. The 
cable slack shall be stored on cable hooks and racks as shown in Figure 
12:

[[Page 479]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.013

    (4) Central office cable entrance. (i) Filled cable or filled 
splices are not recommended for use inside central offices except in 
cable vault locations. Outside plant cable sheath and cable filling 
compound are susceptible to fire and will support combustion. Fire, 
smoke, and gases generated by these materials during burning are 
detrimental to telephone switching equipment.
    (ii) As a first choice, the outside plant fiber optic cable shall be 
spliced to an all-dielectric fire retardant cable in a cable vault with 
the all-dielectric cable extending into the central office and 
terminating inside a fiber patch panel.
    (iii) As a second choice, the outside plant cable may be spliced 
inside the central office if a flame retardant fiber optic splice case 
or a noncombustible central office splice housing equipped with 
organizer trays is used to contain the splice.
    (iv) In cases referenced in paragraphs (f)(4)(ii) and (f)(4)(iii) of 
this section, as a minimum the fire retardant all-dielectric cable used 
to provide the connection between the cable entrance splice and the 
fiber patch panel shall be listed as Communication Riser Cable (Type 
CMR) in accordance with Sections 800-50 and 800-51(b) of the 1993 
National Electrical Code.
    (v) Splices inside the central office shall be made as close as 
practicable to

[[Page 480]]

the point where the outside plant cables enter the building. Except in 
cable vault locations, outside plant cables within the central office 
shall be wrapped with fireproof tape or enclosed in noncombustible 
conduit.
    (g) Bonding and grounding fiber optic cable, copper cable, and 
copper service wire--(1) Bonding. Bonding is electrically connecting two 
or more metallic items of telephone hardware to maintain a common 
electrical potential. Bonding may involve connections to another 
utility.
    (2) Copper cable shield bond connections. (i) Cable shields shall be 
bonded at each splice location. Only RUS accepted cable shield bond 
connectors shall be used to provide bonding and grounding connections to 
metallic cable shields. The shield bond connector manufacturer's 
instructions shall be followed concerning installation and use.
    (ii)(A) Shield bonding conductors shall be either stranded or 
braided tinned copper wire equivalent to a minimum No. 6 American Wire 
Gauge (AWG) and shall be RUS accepted. The conductor connections shall 
be tinned or of a compatible bimetallic design to avoid corrosion 
problems associated with dissimilar metals. The number of shield bond 
connectors required per pair size and gauge shall be as shown in Table 
8:

         Table 8--Shield Bond Connectors per Pair Size and Gauge
------------------------------------------------------------------------
                            Pair size and gauge                 No. of
             ------------------------------------------------   shield
   19 AWG                                                        bond
                  22 AWG          24 AWG          26 AWG      connectors
------------------------------------------------------------------------
       0-25           0-100           0-150           0-200            1
      50-100        150-300         200-400         300-600            2
     150-200        400-600         600-900         900-1500           3
     300-600        900-1200       1200-2100       1800-3600           4
------------------------------------------------------------------------

    (B) It is permissible to strap across the shield bond connectors of 
several cables with a single length of braided wire. However, both ends 
of the braid shall be terminated on the pedestal ground bracket to 
provide a bonding loop. Shield bond connection methods for individual 
cables are shown in Figures 13 through 15, and the bonding of several 
cables inside a pedestal using the bonding loop is shown in Figure 16:

[[Page 481]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.014


[[Page 482]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.015


[[Page 483]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.016


[[Page 484]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.017

    (3) Buried service wire shield bond connections. Buried service wire 
shields shall be connected to the pedestal bonding and grounding system. 
Typical buried service wire installations are shown in Figures 17 and 
18. In addition to the methods referenced in Figures 17 and 18, the 
shields of buried service wires may also be connected to the pedestal 
bonding and grounding system using buried service wire bonding harnesses 
listed on Page 3.3.1, Item ``gs-b,'' of RUS Bulletin 1755I-100. RUS 
Bulletin 1755I-100 may be purchased from the

[[Page 485]]

Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402. When those harnesses are used they shall be 
installed in accordance with the manufacturer's instructions. Figures 17 
and 18 are as follows:
[GRAPHIC] [TIFF OMITTED] TR26JA95.018


[[Page 486]]


[GRAPHIC] [TIFF OMITTED] TR26JA95.019

    (4) Fiber optic cable bond connections. (i) The cable shield and 
metallic strength members shall be bonded at each splice location. Only 
RUS accepted fiber optic cable shield bond connectors shall be used to 
provide bonding connections to the metallic cable shields. The shield 
bond connector manufacturer's instructions shall be followed concerning 
installation and use.
    (ii) Shield bonding conductors shall be either stranded or braided 
tinned copper wire equivalent to a minimum No. 6 American Wire Gauge 
(AWG) and shall be RUS accepted. The conductor connections shall be 
tinned or of a compatible bimetallic design to avoid corrosion problems 
associated with dissimilar metals.
    (5) Grounding. (i) Grounding is electrically connecting metallic 
telephone hardware to a National Electrical Safety Code (NESC) 
acceptable grounding electrode. Acceptable grounding electrodes are 
defined in the Rule 99A of the NESC.

[[Page 487]]

    (ii) The conductor used for grounding metallic telephone hardware 
shall be a minimum No. 6 AWG solid, bare, copper conductor.
    (iii) For copper and fiber optic cable plant, all cable shields, all 
metallic strength members, and all metallic hardware shall be:
    (A) Grounded at each splice location to a driven grounding electrode 
(ground rod) of:
    (1) At least 1.5 meters (5 feet) in length where the local frost 
level is normally less than 0.30 meters (1 foot) deep; or
    (2) At least 2.44 meters (8 feet) in length where the local frost 
level is normally 0.30 meters (1 foot) or deeper; and
    (B) Bonded to a multi-grounded power system neutral when the splice 
is within 1.8 meters (6 feet) of access to the grounding system of the 
multi-grounded neutral system. Bonding to the multi-grounded neutral of 
a parallel power line may help to minimize telephone interference on 
long exposures with copper cable plant. Consideration, thus, should be 
given to completing such bonds, at least four (4) times each mile, when 
splices are greater than 1.8 meters (6 feet) but less than 4.6 meters 
(15 feet) from access to the multi-grounded neutral.
    (6) Bonding and grounding splice cases. (i) Splice cases are 
equipped with bonding and grounding devices to ensure that cable shields 
and metallic strength members maintain electrical continuity during and 
after cable splicing operations. The splice case manufacturer's 
recommendations shall be followed concerning the bonding and grounding 
procedures. Conductors used for bonding shall be either stranded or 
braided tinned copper wire equivalent to 6 AWG. Conductors used for 
grounding shall be a solid, bare, copper wire equivalent to minimum No. 
6 AWG.
    (ii) Buried splice cases installed in either handholes or pedestals 
shall be grounded such that the cable shield grounds are attached to a 
common ground connection that will allow the lifting of a ground on the 
cable shield in either direction to permit efficient cable locating 
procedures. As a first choice, buried grounding conductor(s) shall be 
bare. However, if two or more grounding conductors are buried in the s 
they shall be insulated to avoid shorts when a locating tone is applied.
    (iii) A typical bonding and grounding method for fiber optic splices 
is shown in Figure 19:

[[Page 488]]

[GRAPHIC] [TIFF OMITTED] TR26JA95.020

    (7) Bonding and grounding central office cable entrances. The RUS 
Telecommunications Engineering and Construction Manual (TE&CM) Section 
810 provides bonding and grounding guidance for central office cable 
entrances. Splicing operations shall not be attempted before all 
metallic cable shield and strength members are bonded and grounded.

[60 FR 5097, Jan. 26, 1995; 60 FR 9079, Feb. 16, 1995]

[[Page 489]]



Secs. 1755.201-1755.369  [Reserved]



Sec. 1755.370  RUS specification for seven wire galvanized steel strand.

    (a) RUS incorporates by reference ASTM A475-78, Standard 
Specification for Zinc-Coated Steel Wire Strand, issued May 1978. All 
seven wire galvanized steel strand purchased after April 1, 1990, for 
use on telecommunications systems financed by RUS loan funds must 
conform to this standard. This incorporation by reference was approved 
by the Director of the Federal Register in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51 on January 19, 1990). Copies of ASTM A475-78 
are available for inspection during normal business hours at the 
National Archives and Records Administration (NARA) and the Rural 
Utilities Service, Administrative Services Division, room 0175-S, U.S. 
Department of Agriculture, Washington, DC 20250, telephone 202-382-9551. 
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. Copies are available from the 
American Society for Testing and Materials, 1916 Race Street, 
Philadelphia, PA 19103, telephone 215-299-5400.
    (b) In addition to the requirements of ASTM 475-78, all coils and 
reels having Class B or C coatings shall be marked with a 3-inch wide 
and 6-inch long deep-colored stripe, green or orange, respectively, to 
identify the class of galvanized coating of the strand. This marking 
shall be applied to the exposed convolutions of the strand in the eye of 
the coils and located near the midpoint on the outside layer of strand 
on the reels. The marking shall not cover any welded joint markings.

[55 FR 1792, Jan. 19, 1990; 55 FR 3685, Feb. 2, 1990. Redesignated at 55 
FR 39397, Sept. 27, 1990, as amended at 69 FR 18803, Apr. 9, 2004]



Secs. 1755.371-1755.389  [Reserved]



Sec. 1755.390  RUS specification for filled telephone cables.

    (a) Scope. (1) This section covers the requirements for filled 
telephone cables intended for direct burial installation either by 
trenching or by direct plowing, for underground application by placement 
in a duct, or for aerial installations by attachment to a support 
strand.
    (i) The conductors are solid copper, individually insulated with an 
extruded solid insulating compound.
    (ii) The insulated conductors are twisted into pairs which are then 
stranded or oscillated to form a cylindrical core.
    (iii) For high frequency applications, the cable core may be 
separated into compartments with screening shields.
    (iv) A moisture resistant filling compound is applied to the 
stranded conductors completely covering the insulated conductors and 
filling the interstices between pairs and units.
    (v) The cable structure is completed by the application of suitable 
core wrapping material, a flooding compound, a shield or a shield/armor, 
and an overall plastic jacket.
    (2) The number of pairs and gauge size of conductors which are used 
within the RUS program are provided in the following table:

AWG                                              19     22     24     26
 
Pairs                                             6      6      6
                                                 12     12     12
                                                 18     18     18
                                                 25     25     25     25
                                                        50     50     50
                                                        75     75     75
                                                       100    100    100
                                                       150    150    150
                                                       200    200    200
                                                       300    300    300
                                                       400    400    400
                                                              600    600
                                                                     900
------------------------------------------------------------------------
Note: Cables larger in pair sizes than those shown in this table must
  meet all requirements of this section.

    (3) Screened cable, when specified, must meet all requirements of 
this section. The pair sizes of screened cables used within the RUS 
program are referenced in paragraph (e)(2)(i) of this section.
    (4) All cables sold to RUS borrowers for projects involving RUS loan 
funds under this section must be accepted by RUS Technical Standards 
Committee ``A'' (Telephone). For cables manufactured to the 
specification of this section, all design changes to an accepted design 
must be submitted for acceptance. RUS will be the sole authority on what 
constitutes a design change.

[[Page 490]]

    (5) Materials, manufacturing techniques, or cable designs not 
specifically addressed by this section may be allowed if accepted by 
RUS. Justification for acceptance of modified materials, manufacturing 
techniques, or cable designs must be provided to substantiate product 
utility and long-term stability and endurance.
    (6) The American National Standard Institute/Insulated Cable 
Engineers Association, Inc. (ANSI/ICEA) S-84-608-1988 Standard For 
Telecommunications Cable, Filled, Polyolefin Insulated, Copper Conductor 
Technical Requirements referenced throughout this section is 
incorporated by reference by RUS. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/ICEA S-84-608-1988 are 
available for inspection during normal business hours at RUS, room 2845, 
U.S. Department of Agriculture, Washington, DC 20250, or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html. Copies are available from ICEA, P. O. 
Box 440, South Yarmouth, MA 02664, telephone number (508) 394-4424.
    (7) American Society for Testing and Materials specifications (ASTM) 
A 505-87, Standard Specification for Steel, Sheet and Strip, Alloy, Hot-
Rolled and Cold-Rolled, General Requirements For; ASTM B 193-87, 
Standard Test Method for Resistivity of Electrical Conductor Materials; 
ASTM B 224-80, Standard Classification of Coppers; ASTM B 694-86, 
Standard Specification for Copper, Copper Alloy, and Copper-Clad 
Stainless Steel Sheet and Strip for Electrical Cable Shielding; ASTM D 
4565-90a, Standard Test Methods for Physical and Environmental 
Performance Properties of Insulations and Jackets for Telecommunications 
Wire and Cable; and ASTM D 4566-90, Standard Test Methods for Electrical 
Performance Properties of Insulations and Jackets for Telecommunications 
Wire and Cable referenced in this section are incorporated by reference 
by RUS. These incorporations by references were approved by the Director 
of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. Copies of the ASTM standards are available for inspection 
during normal business hours at RUS, room 2845, U.S. Department of 
Agriculture, Washington, DC 20250, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html. Copies are available from ASTM, 1916 Race Street, 
Philadelphia, PA 19103-1187, telephone number (215) 299-5585.
    (b) Conductors and conductor insulation. (1) The gauge sizes of the 
copper conductors covered by this specification must be 19, 22, 24, and 
26 American Wire Gauge (AWG).
    (2) Each conductor must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraph 2.1.
    (3) Factory joints made in conductors during the manufacturing 
process must comply with the requirements specified in ANSI/ICEA S-84-
608-1988, paragraph 2.2.
    (4) The raw materials used for conductor insulation must comply with 
the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.1 
through 3.1.3.
    (5) The finished conductor insulation must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.2.1 and 
3.3.
    (6) Insulated conductors must not have an overall diameter greater 
than 2 millimeters (mm) (0.081 inch (in.)).
    (7) A permissible overall performance level of faults in conductor 
insulation must average not greater than one fault per 12,000 conductor 
meters (40,000 conductor feet) for each gauge of conductor.
    (i) All insulated conductors must be continuously tested for 
insulation faults during the twinning operation with a method of testing 
acceptable to RUS. The length count and number of faults must be 
recorded. The information must be retained for a period of 6 months and 
be available for review by RUS when requested.

[[Page 491]]

    (ii) The voltages for determining compliance with the requirements 
of this section are as follows:

------------------------------------------------------------------------
                                                 Direct Current Voltages
                      AWG                              (kilovolts)
------------------------------------------------------------------------
19                                                                   8.0
22                                                                   6.0
24                                                                   5.0
26                                                                   4.0
------------------------------------------------------------------------

    (8) Repairs to the conductor insulation during manufacture are 
permissible. The method of repair must be accepted by RUS prior to its 
use. The repaired insulation must be capable of meeting the relevant 
electrical requirements of this section.
    (9) All repaired sections of insulation must be retested in the same 
manner as originally tested for compliance with paragraph (b)(7) of this 
section.
    (10) The colored insulating material removed from or tested on the 
conductor, from a finished cable, must meet the performance requirements 
specified in ANSI/ICEA S-84-608-1988, paragraphs 3.4.1, 3.4.2, 3.4.4, 
3.4.5, and 3.4.6.
    (c) Identification of pairs and twisting of pairs. (1) The 
insulation must be colored to identify:
    (i) The tip and ring conductor of each pair; and
    (ii) Each pair in the completed cable.
    (2) The colors to be used in the pairs in the 25 pair group, 
together with the pair numbers must be in accordance with the table 
specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
    (3) Positive identification of the tip and ring conductors of each 
pair by marking each conductor of a pair with the color of its mate is 
permissible. The method of marking must be accepted by RUS prior to its 
use.
    (4) Other methods of providing positive identification of the tip 
and ring conductors of each pair may be employed if accepted by RUS 
prior to its use.
    (5) The insulated conductors must be twisted into pairs.
    (6) In order to provide sufficiently high crosstalk isolation, the 
pair twists must be designed to enable the cable to meet the capacitance 
unbalance and crosstalk loss requirements of paragraphs (k)(5), (k)(6), 
and (k)(8) of this section.
    (7) The average length of pair twists in any pair in the finished 
cable, when measured on any 3 meter (10 foot) length, must not exceed 
the requirement specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
    (d) Forming of the cable core. (1) Twisted pairs must be assembled 
in such a way as to form a substantially cylindrical group.
    (2) When desired for lay-up reasons, the basic group may be divided 
into two or more subgroups called units.
    (3) Each group, or unit in a particular group, must be enclosed in 
bindings of the colors indicated for its particular pair count. The pair 
count, indicated by the colors of insulation, must be consecutive as 
indicated in paragraph (d)(6) of this section through units in a group.
    (4) The filling compound must be applied to the cable core in such a 
way as to provide as near a completely filled core as is commercially 
practical.
    (5) Threads and tapes used as binders must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 4.2 and 
4.2.1.
    (6) The colors of the bindings and their significance with respect 
to pair count must be as follows:

------------------------------------------------------------------------
Group
 No.                Color of Bindings                 Group Pair Count
------------------------------------------------------------------------
1      White-Blue.................................           1-25
2      White-Orange...............................          26-50
3      White-Green................................          51-75
4      White-Brown................................          76-100
5      White-Slate................................         101-125
6      Red-Blue...................................         126-150
7      Red-Orange.................................         151-175
8      Red-Green..................................         176-200
9      Red-Brown..................................         201-225
10     Red-Slate..................................         226-250
11     Black-Blue.................................         251-275
12     Black-Orange...............................         276-300
13     Black-Green................................         301-325
14     Black-Brown................................         326-350
15     Black-Slate................................         351-375
16     Yellow-Blue................................         376-400
17     Yellow-Orange..............................         401-425
18     Yellow-Green...............................         426-450
19     Yellow-Brown...............................         451-475
20     Yellow-Slate...............................         476-500
21     Violet-Blue................................         501-525
22     Violet-Orange..............................         526-550
23     Violet-Green...............................         551-575
24     Violet-Brown...............................         576-600
------------------------------------------------------------------------

    (7) The use of the white unit binder in cables of 100 pairs or less 
is optional.
    (8) When desired for manufacturing reasons, two or more 25 pair 
groups

[[Page 492]]

may be bound together with nonhygroscopic and nonwicking threads or 
tapes into a super-unit. Threads or tapes must meet the requirements 
specified in paragraph (d)(5) of this section. The group binders and the 
super-unit binders must be color coded such that the combination of the 
two binders must positively identify each 25 pair group from every other 
25 pair group in the cable. Super-unit binders must be of the color 
shown in the following table:

                        Super-Unit Binder Colors
------------------------------------------------------------------------
            Pair Numbers                         Binder Color
------------------------------------------------------------------------
1-600                                                  White
601-1200                                                 Red
1201-1800                                              Black
1801-2400                                             Yellow
2401-3000                                             Violet
------------------------------------------------------------------------

    (9) Color binders must not be missing for more than 90 meters (300 
feet) from any 25 pair group or from any subgroup used as part of a 
super-unit. At any cable cross-section, no adjacent 25 pair groups and 
no more than one subgroup of any super-unit may have missing binders. In 
no case must the total number of missing binders exceed three. Missing 
super-unit binders must not be permitted for any distance.
    (10) Any reel of cable which contains missing binders must be 
labeled indicating the colors and location of the binders involved. The 
labeling must be applied to the reel and also to the cable.
    (e) Screened cable. (1) Screened cable must be constructed such that 
a metallic, internal screen(s) must be provided to separate and provide 
sufficient isolation between the compartments to meet the requirements 
of this section.
    (2) At the option of the user or manufacturer, identified service 
pairs providing for voice order and fault location may be placed in 
screened cables.
    (i) The number of service pairs provided must be one per twenty-five 
operating pairs plus two for a cable size up to and including 400 pairs, 
subject to a minimum of four service pairs. The pair counts for screened 
cables are as follows:

                       Screened Cable Pair Counts
------------------------------------------------------------------------
   Carrier Pair Count          Service Pairs          Total Pair Count
------------------------------------------------------------------------
24                                    4                      28
50                                    4                      54
100                                   6                     106
150                                   8                     158
200                                  10                     210
300                                  14                     314
400                                  18                     418
------------------------------------------------------------------------

    (ii) The service pairs must be equally divided among the 
compartments. The color sequence must be repeated in each compartment.
    (iii) The electrical and physical characteristics of each service 
pair must meet all the requirements set forth in this section.
    (iv) The colors used for the service pairs must be in accordance 
with the requirements of paragraph (b)(5) of this section. The color 
code used for the service pairs together with the service pair number 
are shown in the following table:

                      Color Code For Service Pairs
------------------------------------------------------------------------
                                                   Color
        Service Pair No.         ---------------------------------------
                                          Tip                Ring
------------------------------------------------------------------------
1                                 White.............  Red
2                                   ''..............  Black
3                                   ''..............  Yellow
4                                   ''..............  Violet
5                                 Red...............  Black
6                                   ''..............  Yellow
7                                   ''..............  Violet
8                                 Black.............  Yellow
9                                   ''..............  Violet
------------------------------------------------------------------------

    (3) The screen tape must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraphs 5.1 through 5.4.
    (4) The screen tape must be tested for dielectric strength by 
completely removing the protective coating from one end to be used for 
grounding purposes.
    (i) Using an electrode, over a 30 centimeter (1 foot) length, apply 
a direct current voltage at the rate of rise of 500 volts/second until 
failure.
    (ii) No breakdown should occur below 8 kilovolts.
    (f) Filling compound. (1) After or during the stranding operation 
and prior to application of the core wrap, filling compound must be 
applied to the cable core. The compound must be as nearly colorless as 
is commercially feasible

[[Page 493]]

and consistent with the end product requirements and pair 
identification.
    (2) The filling compound must comply with the requirements specified 
in ANSI/ICEA S-84-608-1988, paragraphs 4.4 through 4.4.4.
    (3) The individual cable manufacturer must satisfy RUS that the 
filling compound selected for use is suitable for its intended 
application. The filling compound must be applied to the cable in such a 
manner that the cable components will not be degraded.
    (g) Core wrap. (1) The core wrap must comply with the requirements 
specified in ANSI/ICEA-S-84-608-1988, paragraph 4.3.
    (2) If required for manufacturing reasons, white or colored binders 
of nonhygroscopic and nonwicking material may be applied over the core 
and/or wrap. When used, binders must meet the requirements specified in 
paragraph (d)(5) of this section.
    (3) Sufficient filling compound must be applied to the core wrap so 
that voids or air spaces existing between the core and the inner side of 
the core wrap are minimized.
    (h) Flooding compound. (1) Sufficient flooding compound must be 
applied on all sheath interfaces so that voids and air spaces in these 
areas are minimized. When the optional armored design is used, the 
flooding compound must be applied between the core wrap and shield, 
between the shield and armor, and between the armor and the jacket so 
that voids and air spaces in these areas are minimized. The use of 
floodant over the outer metallic substrate is not required if uniform 
bonding, per paragraph (i)(7) of this section, is achieved between the 
plastic-clad metal and the jacket.
    (2) The flooding compound must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 4.5 and the jacket slip 
test requirements of appendix A, paragraph (III)(5) of this section.
    (3) The individual cable manufacturer must satisfy RUS that the 
flooding compound selected for use is acceptable for the application.
    (i) Shield and optional armor. (1) A single corrugated shield must 
be applied longitudinally over the core wrap.
    (2) For unarmored cable the shield overlap must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2. Core 
diameter is defined as the diameter under the core wrap and binding.
    (3) For cables containing the coated aluminum shield/coated steel 
armor (CACSP) sheath design, the coated aluminum shield must be applied 
in accordance with the requirements specified in ANSI/ICEA S-84-608-
1988, paragraph 6.3.2, Dual Tape Shielding System.
    (4) General requirements for application of the shielding material 
are as follows:
    (i) Successive lengths of shielding tapes may be joined during the 
manufacturing process by means of cold weld, electric weld, soldering 
with a nonacid flux, or other acceptable means.
    (ii) Shield splices must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
    (iii) The corrugations and the application process of the coated 
aluminum and copper bearing shields must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.1.
    (iv) The shielding material must be applied in such a manner as to 
enable the cable to pass the cold bend test specified in paragraph 
(l)(3) of this section.
    (5) The following is a list of acceptable materials for use as cable 
shielding. Other types of shielding materials may also be used provided 
they are accepted by RUS prior to their use.

------------------------------------------------------------------------
              Standard Cable                   Gopher Resistant Cable
------------------------------------------------------------------------
8-mil Coated Aluminum \1\                   10-mil Copper
5-mil Copper                                6-mil Copper-Clad
                                            Stainless Steel
                                            5 mil Copper-Clad
                                            Stainless Steel
                                            5 mil Copper-Clad Alloy
                                            Steel
                                            7-mil Alloy 194
                                            6-mil Alloy 194
                                            8-mil Coated Aluminum \1\
                                            and 6-mil Coated Steel \1\
------------------------------------------------------------------------
\1\ Dimensions of uncoated metal

    (i) The 8-mil aluminum tape must be plastic coated on both sides and 
must comply with the requirements of ANSI/ICEA S-84-608-1988, paragraph 
6.2.2.

[[Page 494]]

    (ii) The 5-mil copper tape must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.3.
    (iii) The 10-mil copper tape must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.4.
    (iv) The 6-mil copper clad stainless steel tape must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.5.
    (v) The 5-mil copper clad stainless steel tape must be in the fully 
annealed condition and must conform to the requirements of American 
Society for Testing and Materials (ASTM) B 694-86, with a cladding ratio 
of 16/68/16.
    (A) The electrical conductivity of the clad tape must be a minimum 
of 28 percent of the International Annealed Copper Standard (IACS) when 
measured per ASTM B 193-87.
    (B) The tape must be nominally 0.13 millimeter (0.005 inch) thick 
with a minimum thickness of 0.11 millimeter (0.0045 inch).
    (vi) The 5-mil copper clad alloy steel tape must be in the fully 
annealed condition and the copper component must conform to the 
requirements of ASTM B 224-80 and the alloy steel component must conform 
to the requirements of ASTM A 505-87, with a cladding ratio of 16/68/16.
    (A) The electrical conductivity of the copper clad alloy steel tape 
must comply with the requirement specified in paragraph (i)(5)(v)(A) of 
this section.
    (B) The thickness of the copper clad alloy steel tape must comply 
with the requirements specified in paragraph (i)(5)(v)(B) of this 
section.
    (vii) The 6-mil and 7-mil 194 copper alloy tapes must comply with 
the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.6.
    (6) The corrugation extensibility of the coated aluminum shield must 
comply with the requirements specified in ANSI/ICEA S-84-608-1988, 
paragraph 6.4.
    (7) When the jacket is bonded to the plastic coated aluminum shield, 
the bond between the jacket and shield must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.6.
    (8) A single plastic-coated steel corrugated armor must be applied 
longitudinally directly over the coated aluminum shield listed in 
paragraph (i)(5) of this section with an overlap complying with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2, 
Outer Steel Tape.
    (9) Successive lengths of steel armoring tapes may be joined during 
the manufacturing process by means of cold weld, electric weld, 
soldering with a nonacid flux, or other acceptable means. Armor splices 
must comply with the breaking strength and resistance requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
    (10) The corrugations and the application process of the coated 
steel armor must comply with the requirements specified in ANSI/ICEA S-
84-608-1988, paragraph 6.3.1.
    (i) The corrugations of the armor tape must coincide with the 
corrugations of the coated aluminum shield.
    (ii) Overlapped portions of the armor tape must be in register 
(corrugations must coincide at overlap) and in contact at the outer 
edge.
    (11) The armoring material must be so applied to enable the cable to 
pass the cold bend test as specified in paragraph (l)(3) of this 
section.
    (12) The 6-mil steel tape must be electrolytic chrome-coated steel 
(ECCS) plastic coated on both sides and must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.8.
    (13) When the jacket is bonded to the plastic-coated steel armor, 
the bond between the jacket and armor must comply with the requirement 
specified in ANSI/ICEA-S-84-608-1988, paragraph 7.2.6.
    (j) Cable jacket. (1) The jacket must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.
    (2) The raw materials used for the cable jacket must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.1.
    (3) Jacketing material removed from or tested on the cable must meet 
the performance requirements specified in ANSI/ICEA S-84-608-1988, 
paragraphs 7.2.3 and 7.2.4.
    (4) The thickness of the jacket must comply with the requirements 
specified

[[Page 495]]

in ANSI/ICEA S-84-608-1988, paragraph 7.2.2.
    (k) Electrical requirements--(1) Conductor resistance. The direct 
current resistance of any conductor in a completed cable and the average 
resistance of all conductors in a Quality Control Lot must comply with 
the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.1.
    (2) Resistance unbalance. (i) The direct current resistance 
unbalance between the two conductors of any pair in a completed cable 
and the average resistance unbalance of all pairs in a completed cable 
must comply with the requirements specified in ANSI/ICEA S-84-608-1988, 
paragraph 8.2.
    (ii) The resistance unbalance between tip and ring conductors shall 
be random with respect to the direction of unbalance. That is, the 
resistance of the tip conductors shall not be consistently higher with 
respect to the ring conductors and vice versa.
    (3) Mutual capacitance. The average mutual capacitance of all pairs 
in a completed cable and the individual mutual capacitance of any pair 
in a completed cable must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraph 8.3.
    (4) Capacitance difference. (i) The capacitance difference for 
completed cables having 75 pairs or greater must comply with the 
requirement specified in ANSI/ICEA S-84-608-1988, paragraph 8.4.
    (ii) When measuring screened cable, the inner and outer pairs must 
be selected from both sides of the screen.
    (5) Pair-to-pair capacitance unbalance--(i) Pair-to-pair. The 
capacitance unbalance as measured on the completed cable must comply 
with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 
8.5.
    (ii) Screened cable. In cables with 25 pairs or less and within each 
group of multigroup cables, the pair-to-pair capacitance unbalance 
between any two pairs in an individual compartment must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.5. The 
pair-to-pair capacitance unbalances to be considered must be:
    (A) Between pairs adjacent in a layer in an individual compartment;
    (B) Between pairs in centers of 4 pairs or less in an individual 
compartment; and
    (C) Between pairs in adjacent layers in an individual compartment 
when the number of pairs in the inner (smaller) layer is 6 or less. The 
center is counted as a layer.
    (iii) In cables with 25 pairs or less, the root-mean-square (rms) 
value must include all the pair-to-pair unbalances measured for each 
compartment separately.
    (iv) In cables containing more than 25 pairs, the rms value must 
include the pair-to-pair unbalances in the separate compartments.
    (6) Pair-to-ground capacitance unbalance--(i) Pair-to-ground. The 
capacitance unbalance as measured on the completed cable must comply 
with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 
8.6.
    (ii) When measuring pair-to-ground capacitance unbalance all pairs 
except the pair under test are grounded to the shield and/or shield/
armor except when measuring cables containing super units in which case 
all other pairs in the same super unit must be grounded to the shield.
    (iii) The screen tape must be left floating during the test.
    (iv) Pair-to-ground capacitance unbalance may vary directly with the 
length of the cable.
    (7) Attenuation. (i) For nonscreened and screened cables, the 
average attenuation of all pairs on any reel when measured at 150 and 
772 kilohertz must comply with the requirements specified in ANSI/ICEA 
S-84-608-1988, paragraph 8.7, Solid Column.
    (ii) For T1C type cables over 12 pairs, the maximum average 
attenuation of all pairs on any reel must not exceed the values listed 
below when measured at a frequency of 1576 kilohertz at or corrected to 
a temperature of 20 1  deg.C. The test must be conducted in accordance 
with ASTM D 4566-90.

------------------------------------------------------------------------
                                                         Maximum Average
                                                           Attenuation
                                                             decibel/
                          AWG                             kilometer (dB/
                                                          km) (decibel/
                                                              mile)
------------------------------------------------------------------------
19.....................................................    13.4 (21.5)
22.....................................................    18.3 (29.4)
24.....................................................    23.1 (37.2)
------------------------------------------------------------------------


[[Page 496]]

    (8) Crosstalk loss. (i) The equal level far-end power sum crosstalk 
loss (FEXT) as measured on the completed cable must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.8, FEXT 
Table.
    (ii) The near-end power sum crosstalk loss (NEXT) as measured on 
completed cable must comply with the requirements specified in ANSI/ICEA 
S-84-608-1988, paragraph 8.8, NEXT Table.
    (iii) Screened cable. (A) For screened cables the NEXT as measured 
on the completed cable must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraphs 8.9 and 8.9.1.
    (B) For T1C screened cable the NEXT as measured on the completed 
cable must comply with the requirements specified in ANSI/ICEA S-84-608-
1988, paragraphs 8.9 and 8.9.2.
    (9) Insulation resistance. The insulation resistance of each 
insulated conductor in a completed cable must comply with the 
requirement specified in ANSI/ICEA S-84-608-1988, paragraph 8.11.
    (10) High voltage test. (i) In each length of completed cable, the 
insulation between conductors must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 8.12, Solid Column.
    (ii) In each length of completed cable, the dielectric between the 
shield and/or armor and conductors in the core must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.13, 
Single Jacketed, Solid Column. In screened cable the screen tape must be 
left floating.
    (iii) Screened cable. (A) In each length of completed screened 
cable, the dielectric between the screen tape and the conductors in the 
core must comply with the requirement specified in ANSI/ICEA S-84-608-
1988, paragraph 8.14.
    (B) In this test, the cable shield and/or armor must be left 
floating.
    (11) Electrical variations. (i) Pairs in each length of cable having 
either a ground, cross, short, or open circuit condition will not be 
permitted.
    (ii) The maximum number of pairs in a cable which may vary as 
specified in paragraph (k)(11)(iii) of this section from the electrical 
parameters given in this section are listed below. These pairs may be 
excluded from the arithmetic calculation.

------------------------------------------------------------------------
                                                               Maximum
                                                              Number of
                                                              Pairs With
                     Nominal Pair Count                       Allowable
                                                              Electrical
                                                              Variation
------------------------------------------------------------------------
6-100......................................................      1
101-300....................................................      2
301-400....................................................      3
401-600....................................................      4
601 and above..............................................      6
------------------------------------------------------------------------

    (iii) Parameter variations. (A) Capacitance unbalance-to-ground. If 
the cable fails either the maximum individual pair or average 
capacitance unbalance-to-ground requirement and all individual pairs are 
3937 picofarad/kilometer (1200 picofarad/1000 feet) or less, the number 
of pairs specified in paragraph (k)(11)(ii) of this section may be 
eliminated from the average and maximum individual calculations.
    (B) Resistance unbalance. Individual pair of 7 percent for all 
gauges.
    (C) Conductor resistance, maximum. The following table shows maximum 
conductor resistance:

------------------------------------------------------------------------
                                                                 (ohms/
                        AWG                            ohms/      1000
                                                     kilometer    feet)
------------------------------------------------------------------------
19                                                      29.9      (9.1)
22                                                      60.0     (18.3)
24                                                      94.5     (28.8)
26                                                     151.6     (46.2)
------------------------------------------------------------------------
Note: RUS recognizes that in large pair count cable (600 pair and above)
  a cross, short or open circuit condition occasionally may develop in a
  pair which does not affect the performance of the other cable pairs.
  In these circumstances rejection of the entire cable may be
  economically unsound or repairs may be impractical. In such
  circumstances the manufacturer may desire to negotiate with the
  customer for acceptance of the cable. No more than 0.5 percent of the
  pairs may be involved.

    (l) Mechanical requirements--(1) Compound flow test. All cables 
manufactured in accordance with the requirements of this section must be 
capable of meeting the compound flow test specified in ANSI/ICEA S-84-
608-1988, paragraph 9.1 using a test temperature of 80 1  deg.C.
    (2) Water penetration. All cables manufactured in accordance with 
the requirements of this section must be capable of meeting the water 
penetration test specified in ANSI/ICEA S-84-608-1988, paragraph 9.2.
    (3) Cable cold bend test. All cables manufactured in accordance with 
the

[[Page 497]]

requirements of this section must be capable of meeting the cable cold 
bend test specified in ANSI/ICEA S-84-608-1988, paragraph 9.3.
    (4) Cable impact test. All cables manufactured in accordance with 
the requirements of this section must be capable of meeting the cable 
impact test specified in ANSI/ICEA S-84-608-1988, paragraph 9.4.
    (5) Jacket notch test (CACSP sheath only). All cables utilizing the 
coated aluminum/coated steel sheath (CACSP) design manufactured in 
accordance with the requirements of this section must be capable of 
meeting the jacket notch test specified in ANSI/ICEA S-84-608-1988, 
paragraph 9.5.
    (6) Cable torsion test (CACSP sheath only). All cables utilizing the 
coated aluminum/coated steel sheath (CACSP) design manufactured in 
accordance with the requirements of this section must be capable of 
meeting the cable torsion test specified in ANSI/ICEA S-84-608-1988, 
paragraph 9.6.
    (m) Sheath slitting cord (optional). (1) Sheath slitting cords may 
be used in the cable structure at the option of the manufacturer unless 
specified by the end user.
    (2) When a sheath slitting cord is used it must be nonhygroscopic 
and nonwicking, continuous throughout a length of cable and of 
sufficient strength to open the sheath without breaking the cord.
    (n) Identification marker and length marker. (1) Each length of 
cable must be identified in accordance with ANSI/ICEA S-84-608-1988, 
paragraphs 10.1 through 10.1.4. The color of the ink used for the 
initial outer jacket marking must be either white or silver.
    (2) The markings must be printed on the jacket at regular intervals 
of not more than 0.6 meter (2 feet).
    (3) The completed cable must have sequentially numbered length 
markers in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.1.5. 
The color of the ink used for the initial outer jacket marking must be 
either white or silver.
    (o) Preconnectorized cable (optional). (1) At the option of the 
manufacturer and upon request by the purchaser, cables 100 pairs and 
larger may be factory terminated in 25 pair splicing modules.
    (2) The splicing modules must meet the requirements of RUS Bulletin 
345-54, PE-52, RUS Specification for Telephone Cable Splicing Connectors 
(Incorporated by reference at Sec. 1755.97), and be accepted by RUS 
prior to their use.
    (p) Acceptance testing and extent of testing. (1) The tests 
described in appendix A of this section are intended for acceptance of 
cable designs and major modifications of accepted designs. What 
constitutes a major modification is at the discretion of RUS. These 
tests are intended to show the inherent capability of the manufacturer 
to produce cable products having long life and stability.
    (2) For initial acceptance, the manufacturer must submit:
    (i) An original signature certification that the product fully 
complies with each section of the specification;
    (ii) Qualification Test Data, per appendix A of this section;
    (iii) To periodic plant inspections;
    (iv) A certification that the product does or does not comply with 
the domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.);
    (v) Written user testimonials concerning field performance of the 
product; and
    (vi) Other nonproprietary data deemed necessary by the Chief, 
Outside Plant Branch (Telephone).
    (3) For requalification acceptance, the manufacturer must submit an 
original signature certification that the product fully complies with 
each section of the specification, excluding the Qualification Section, 
and a certification that the product does or does not comply with the 
domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.), for acceptance by August 30 of each year. The required data must 
have been gathered within 90 days of the submission. If the initial 
acceptance of a product to this specification was within 180 days of 
August 30, then requalification for that product will not be required 
for that year.
    (4) Initial and requalification acceptance requests should be 
addressed to:


[[Page 498]]


Chairman, Technical Standards Committee ``A'' (Telephone), 
Telecommunications Standards Division, Rural Utilities Service, 
Washington, DC 20250-1500.

    (5) Tests on 100 percent of completed cable. (i) The shield and/or 
armor of each length of cable must be tested for continuity in 
accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
    (ii) The screen tape of each length of screened cable must be tested 
for continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 
8.16.
    (iii) Dielectric strength between conductors and shield and/or armor 
must be tested to determine freedom from grounds in accordance with 
paragraph (k)(10)(ii) of this section.
    (iv) Dielectric strength between conductors and screen tape must be 
tested to determine freedom from grounds in accordance with paragraph 
(k)(10)(iii) of this section.
    (v) Each conductor in the completed cable must be tested for 
continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
    (vi) Dielectric strength between conductors must be tested to insure 
freedom from shorts and crosses in each length of completed cable in 
accordance with paragraph (k)(10)(i) of this section.
    (vii) Each conductor in the completed preconnectorized cable must be 
tested for continuity.
    (viii) Each length of completed preconnectorized cable must be 
tested for split pairs.
    (ix) The average mutual capacitance must be measured on all cables. 
If the average mutual capacitance for the first 100 pairs tested from 
randomly selected groups is between 50 and 53 nanofarad/kilometer (nF/
km) (80 and 85 nanofarad/mile), the remainder of the pairs need not be 
tested on the 100 percent basis (See paragraph (k)(3) of this section).
    (6) Capability tests. Tests on a quality assurance basis must be 
made as frequently as is required for each manufacturer to determine and 
maintain compliance with:
    (i) Performance requirements for conductor insulation, jacketing 
material, and filling and flooding compounds;
    (ii) Bonding properties of coated or laminated shielding and 
armoring materials and performance requirements for screen tape;
    (iii) Sequential marking and lettering;
    (iv) Capacitance difference, capacitance unbalance, crosstalk, and 
attenuation;
    (v) Insulation resistance, conductor resistance and resistance 
unbalance;
    (vi) Cable cold bend and cable impact tests;
    (vii) Water penetration and compound flow tests; and
    (viii) Jacket notch and cable torsion tests.
    (q) Summary of records of electrical and physical tests. (1) Each 
manufacturer must maintain suitable summary records for a period of at 
least 3 years of all electrical and physical tests required on completed 
cable by this section as set forth in paragraphs (p)(5) and (p)(6) of 
this section. The test data for a particular reel must be in a form that 
it may be readily available to the purchaser or to RUS upon request.
    (2) Measurements and computed values must be rounded off to the 
number of places or figures specified for the requirement according to 
ANSI/ICEA S-84-608-1988, paragraph 1.3.
    (r) Manufacturing irregularities. (1) Repairs to the shield and/or 
armor are not permitted in cable supplied to end users under this 
section.
    (2) Minor defects in jackets (defects having a dimension of 3 
millimeters (0.125 inch) or less in any direction) may be repaired by 
means of heat fusing in accordance with good commercial practices 
utilizing sheath grade compounds.
    (s) Preparation for shipment. (1) The cable must be shipped on 
reels. The diameter of the drum must be large enough to prevent damage 
to the cable from reeling or unreeling. The reels must be substantial 
and so constructed as to prevent damage to the cable during shipment and 
handling.
    (2) The thermal wrap must comply with the requirements of ANSI/ICEA 
S-84-608-1988, paragraph 10.3. When a thermal reel wrap is supplied, the 
wrap must be applied to the reel and must be suitably secured in place 
to minimize thermal exposure to the cable during

[[Page 499]]

storage and shipment. The use of the thermal reel wrap as a means of 
reel protection will be at the option of the manufacturer unless 
specified by the end user.
    (3) The outer end of the cable must be securely fastened to the reel 
head so as to prevent the cable from becoming loose in transit. The 
inner end of the cable must be securely fastened in such a way as to 
make it readily available if required for electrical testing. Spikes, 
staples, or other fastening devices which penetrate the cable jacket 
must not be used. The method of fastening the cable ends must be 
accepted by RUS prior to its use.
    (4) Each length of cable must be wound on a separate reel unless 
otherwise specified or agreed to by the purchaser.
    (5) The arbor hole must admit a spindle 63 millimeters (2.5 inches) 
in diameter without binding. Steel arbor hole liners may be used but 
must be accepted by RUS prior to their use.
    (6) Each reel must be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the cable on the reel.
    (7) Each reel must be stenciled or labeled on either one or both 
sides with the information specified in ANSI/ICEA S-84-608-1988, 
paragraph 10.4 and the RUS cable designation:

Cable Designation

BFC
Cable Construction
Pair Count
Conductor Gauge

A = Coated Aluminum Shield
C = Copper Shield
Y = Gopher Resistant Shield
X = Armored, Separate Shield
H = T1 Screened Cable
H1C = T1C Screened Cable
P = Preconnectorized
    Example: BFCXH100-22

Buried Filled Cable, Armored (w/separate shield), T1 Screened Cable, 100 
pair, 22 AWG.

    (8) When cable manufactured to the requirements of this section is 
shipped, both ends must be equipped with end caps acceptable to RUS.
    (9) When preconnectorized cables are shipped, the splicing modules 
must be protected to prevent damage during shipment and handling. The 
protection method must be acceptable to RUS and accepted prior to its 
use.
    (10) All cables ordered for use in underground duct applications 
must be equipped with a factory-installed pulling-eye on the outer end 
in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.5.2.

(The information and recordkeeping requirements of this section have 
been approved by the Office of Management and Budget (OMB) under the 
control number 0572-0059)

         Appendix A to Sec. 1755.390--Qualification Test Methods

    (I) The test procedures described in this appendix are for 
qualification of initial designs and major modification of accepted 
designs. Included in (V) of this appendix are suggested formats that may 
be used in submitting the test results to RUS.
    (II) Sample selection and preparation. (1) All testing must be 
performed on lengths removed sequentially from the same 25 pair, 22 
gauge jacketed cable. This cable must not have been exposed to 
temperatures in excess of 38  deg.C since its initial cool down after 
sheathing. The lengths specified are minimum lengths and if desirable 
from a laboratory testing standpoint longer lengths may be used.
    (a) Length A shall be 10 0.2 meters (33 0.5 feet) long and must be 
maintained at 23 3  deg.C. One length is required.
    (b) Length B shall be 12 0.2 meters (40 0.5 feet) long. Prepare 
the test sample by removing the jacket, shield or shield/armor and core 
wrap for a sufficient distance on both ends to allow the insulated 
conductors to be flared out. Remove sufficient conductor insulation so 
that appropriate electrical test connections can be made at both ends. 
Coil the sample with a diameter of 15 to 20 times its sheath diameter. 
Three lengths are required.
    (c) Length C shall be one meter (3 feet) long. Four lengths are 
required.
    (d) Length D shall be 300 millimeters (1 foot) long. Four lengths 
are required.
    (e) Length E must be 600 millimeters (2 feet) long. Four lengths are 
required.
    (f) Length F shall be 3 meters (10 feet) long and must be maintained 
at 23 3  deg.C for the duration of the test. Two lengths are required.
    (2) Data reference temperature. Unless otherwise specified, all 
measurements must be made at 23 3  deg.C.
    (III) Environmental tests--(1) Heat aging test--(a) Test samples. 
Place one sample each of lengths B, C, D and E in an oven or 
environmental chamber. The ends of Sample B must exit from the chamber 
or oven for electrical tests. Securely seal the oven exit holes.

[[Page 500]]

    (b) Sequence of tests. The samples are to be subjected to the 
following tests after conditioning:
    (i) Water Immersion Test outlined in (III)(2) of this appendix;
    (ii) Water Penetration Test outlined in (III)(3) of this appendix;
    (iii) Insulation Compression Test outlined in (III)(4) of this 
appendix; and
    (iv) Jacket Slip Strength Test outlined in (III)(5) of this 
appendix.
    (c) Initial measurements. (i) For Sample B measure the open circuit 
capacitance for each odd numbered pair at 1, 150, and 772 kilohertz, and 
the attenuation at 150 and 772 kilohertz after conditioning the sample 
at the data reference temperature for 24 hours. Calculate the average 
and standard deviation for the data of the 13 pairs on a per kilometer 
or (on a per mile) basis.
    (ii) The attenuation at 150 and 772 kilohertz may be calculated from 
open circuit admittance (Yoc) and short circuit impedance (Zsc) or may 
be obtained by direct measurement of attenuation.
    (iii) Record on suggested formats in (V) of this appendix or on 
other easily readable formats.
    (d) Heat conditioning. (i) Immediately after completing the initial 
measurements, condition the sample for 14 days at a temperature of 65 2 
 deg.C.
    (ii) At the end of this period note any exudation of cable filler. 
Measure and calculate the parameters given in (III)(1)(c) of this 
appendix. Record on suggested formats in (V) of this appendix or on 
other easily readable formats.
    (iii) Cut away and discard a one meter (3 foot) section from each 
end of length B.
    (e) Overall electrical deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning and the initial parameters in (III)(1)(c) of this appendix.
    (ii) The stability of the electrical parameters after completion of 
this test must be within the following prescribed limits:
    (A) Capacitance. The average mutual capacitance must be within 5 
percent of its original value;
    (B) The change in average mutual capacitance must be less than 5 
percent over frequency 1 to 150 kilohertz; and
    (C) Attenuation. The 150 and 772 kilohertz attenuation must not have 
increased by more than 5 percent over their original values.
    (2) Water immersion electrical test--(a) Test sample selection. The 
10 meter (33 foot) section of length B must be tested.
    (b) Test sample preparation. Prepare the sample by removing the 
jacket, shield or shield/armor, and core wrap for sufficient distance to 
allow one end to be accessed for test connections. Cut out a series of 6 
millimeter (0.25 inch) diameter holes along the test sample, at 30 
centimeters (1 foot) intervals progressing successively 90 degrees 
around the circumference of the cable. Assure that the cable core is 
exposed at each hole by slitting the core wrapper. Place the prepared 
sample in a dry vessel which when filled will maintain a one meter (3 
foot) head of water over 6 meters (20 feet) of uncoiled cable. Extend 
and fasten the ends of the cable so they will be above the water line 
and the pairs are rigidly held for the duration of the test.
    (c) Capacitance testing. Measure the initial values of mutual 
capacitance of all odd pairs in each cable at a frequency of 1 kilohertz 
before filling the vessel with water. Be sure the cable shield or 
shield/armor is grounded to the test equipment. Fill the vessels until 
there is a one meter (3 foot) head of water on the cables.
    (i) Remeasure the mutual capacitance after the cables have been 
submerged for 24 hours and again after 30 days.
    (ii) Record each sample separately on suggested formats in (V) of 
this appendix or on other easily readable formats.
    (d) Overall electrical deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning with the initial parameters in (III)(2)(c) of this 
appendix.
    (ii) The average mutual capacitance must be within 5 percent of its 
original value.
    (3) Water penetration testing. (a) A watertight closure must be 
placed over the jacket of length C. The closure must not be placed over 
the jacket so tightly that the flow of water through pre-existing voids 
of air spaces is restricted. The other end of the sample must remain 
open.
    (b) Test per Option A or Option B--(i) Option A. Weigh the sample 
and closure prior to testing. Fill the closure with water and place 
under a continuous pressure of 10 0.7 kilopascals (1.5 0.1 pounds per 
square inch gauge) for one hour. Collect the water leakage from the end 
of the test sample during the test and weigh to the nearest 0.1 gram. 
Immediately after the one hour test, seal the ends of the cable with a 
thin layer of grease and remove all visible water from the closure, 
being careful not to remove water that penetrated into the core during 
the test. Reweigh the sample and determine the weight of water that 
penetrated into the core. The weight of water that penetrated into the 
core must not exceed 8 grams.
    (ii) Option B. Fill the closure with a 0.2 gram sodium fluorscein 
per liter water solution and apply a continuous pressure 10 0.7 
kilopascals (1.5 0.1 pounds per square inch gauge) for one hour. Catch 
and weigh any water that leaks from the end of the cable during the one 
hour period. If no water leaks from the sample, carefully remove the 
water from the closure. Then carefully remove the jacket, shield or 
shield/armor and core wrap

[[Page 501]]

one at a time, examining with an ultraviolet light source for water 
penetration. After removal of the core wrap, carefully dissect the core 
and examine for water penetration within the core. Where water 
penetration is observed, measure the penetration distance. The distance 
of water penetration into the core must not exceed 127 millimeters (5.0 
inches).
    (4) Insulation compression test--(a) Test Sample D. Remove jacket, 
shield or shield/armor, and core wrap being careful not to damage the 
conductor insulation. Remove one pair from the core and carefully 
separate, wipe off core filler, and straighten the insulated conductors. 
Retwist the two insulated conductors together under sufficient tension 
to form 10 evenly spaced 360 degree twists in a length of 10 centimeters 
(4 inches).
    (b) Sample testing. Center the mid 50 millimeters (2 inches) of the 
twisted pair between 2 smooth rigid parallel metal plates that are 50 
millimeters x 50 millimeters (2 inches x 2 inches). Apply a 1.5 volt 
direct current potential between the conductors, using a light or buzzer 
to indicate electrical contact between the conductors. Apply a constant 
load of 67 newtons (l5 pound-force) on the sample for one minute and 
monitor for evidence of contact between the conductors. Record results 
on suggested formats in (V) of this appendix or on other easily readable 
formats.
    (5) Jacket slip strength test--(a) Sample selection. Test Sample E 
from (III)(1)(a) of this appendix.
    (b) Sample preparation. Prepare test sample in accordance with the 
procedures specified in ASTM D 4565-90a.
    (c) Sample conditioning and testing. Remove the sample from the 
tensile tester prior to testing and condition for one hour at 50 2 
deg.C. Test immediately in accordance with the procedures specified in 
ASTM D 4565-90a. A minimum jacket slip strength of 67 newtons (15 pound-
force) is required. Record the highest load attained.
    (6) Humidity exposure. (a) Repeat steps (III)(1)(a) through 
(III)(1)(c)(iii) of this appendix for separate set of samples B, C, D, 
and E which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, expose the test 
sample to 100 temperature cyclings. Relative humidity within the chamber 
must be maintained at 90 2 percent. One cycle consists of beginning at 
a stabilized chamber and test sample temperature of 52 1  deg.C, 
increasing the temperature to 57 1  deg.C, allowing the chamber and 
test samples to stabilize at this level, then dropping the temperature 
back to 52 1  deg.C.
    (c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this 
appendix.
    (7) Temperature cycling. (a) Repeat steps (III)(1)(a) through 
(III)(1)(c)(iii) of this appendix for separate set of samples B, C, D, 
and E which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, subject the test 
sample to the 10 cycles of temperature between a minimum of -40  deg.C 
and +60  deg.C. The test sample must be held at each temperature extreme 
for a minimum of 1\1/2\ hours during each cycle of temperature. The air 
within the temperature cycling chamber must be circulated throughout the 
duration of the cycling.
    (c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this 
appendix.
    (IV) Control sample--(1) Test samples. A separate set of lengths A, 
C, D, E, and F must have been maintained at 23 3  deg.C for at least 48 
hours before the testing.
    (2) Repeat steps (III)(2) through (III)(5)(c) of this appendix 
except use length A instead of length B.
    (3) Surge Test. (a) One length of sample F must be used to measure 
the breakdown between conductors while the other length of F must be 
used to measure the core to shield breakdown.
    (b) The samples must be capable of withstanding without damage, a 
single surge voltage of 20 kilovolts peak between conductors, and a 35 
kilovolts peak surge voltage between conductors and the shield or 
shield/armor as hereinafter described. The surge voltage must be 
developed from a capacitor discharged through a forming resistor 
connected in parallel with the dielectric of the test sample. The surge 
generator constants must be such as to produce a surge of 1.5 x 40 
microsecond wave shape.
    (c) The shape of the generated wave must be determined at a reduced 
voltage by connecting an oscilloscope across the forming resistor with 
the cable sample connected in parallel with the forming resistor. The 
capacitor bank is charged to the test voltage and then discharged 
through the forming resistor and test sample. The test sample will be 
considered to have passed the test if there is no distinct change in the 
wave shape obtained with the initial reduced voltage compared to that 
obtained after the application of the test voltage.
    (V) The following suggested formats may be used in submitting the 
test results to RUS:

[[Page 502]]



                Environmental Conditioning--------------
                          Frequency 1 kilohertz
------------------------------------------------------------------------
                                                  Capacitance
                                      ----------------------------------
             Pair Number                     nF/km (nanofarad/mile)
                                      ----------------------------------
                                            Initial           Final
------------------------------------------------------------------------
1                                      ------------      ------------
3                                      ------------      ------------
5                                      ------------      ------------
7                                      ------------      ------------
9                                      ------------      ------------
11                                     ------------      ------------
13                                     ------------      ------------
15                                     ------------      ------------
17                                     ------------      ------------
19                                     ------------      ------------
21                                     ------------      ------------
23                                     ------------      ------------
25                                     ------------      ------------
Average x                              ------------      ------------
------------------------------------------------------------------------
Overall Percent Difference in Average x --------------


                Environmental Conditioning--------------
                         Frequency 150 kilohertz
------------------------------------------------------------------------
                                    Capacitance          Attenuation
                               -----------------------------------------
                                 nF/km (nanofarad/     dB/km (decibel/
          Pair Number                  mile)                mile)
                               -----------------------------------------
                                 Initial     Final    Initial     Final
------------------------------------------------------------------------
1                               ------     ------    ------     ------
3                               ------     ------    ------     ------
5                               ------     ------    ------     ------
7                               ------     ------    ------     ------
9                               ------     ------    ------     ------
11                              ------     ------    ------     ------
13                              ------     ------    ------     ------
15                              ------     ------    ------     ------
17                              ------     ------    ------     ------
19                              ------     ------    ------     ------
21                              ------     ------    ------     ------
23                              ------     ------    ------     ------
25                              ------     ------    ------     ------
Average x                       ------     ------    ------     ------
------------------------------------------------------------------------
Overall Percent Difference in Average x        Capacitance:------------
      Conductance:------------


                Environmental Conditioning--------------
                         Frequency 772 kilohertz
------------------------------------------------------------------------
                                    Capacitance          Attenuation
                               -----------------------------------------
                                 nF/km (nanofarad/     dB/km (decibel/
          Pair Number                  mile)                mile)
                               -----------------------------------------
                                 Initial     Final    Initial     Final
------------------------------------------------------------------------
1                               ------     ------    ------     ------
3                               ------     ------    ------     ------
5                               ------     ------    ------     ------
7                               ------     ------    ------     ------
9                               ------     ------    ------     ------
11                              ------     ------    ------     ------
13                              ------     ------    ------     ------
15                              ------     ------    ------     ------
17                              ------     ------    ------     ------
19                              ------     ------    ------     ------
21                              ------     ------    ------     ------
23                              ------     ------    ------     ------
25                              ------     ------    ------     ------
Average x                       ------     ------    ------     ------
------------------------------------------------------------------------
Overall Percent Difference in Average x        Capacitance:------------
      Conductance:------------


                Environmental Conditioning--------------
                   Water Immersion Test (1 kilohertz)
------------------------------------------------------------------------
                                                Capacitance
                                  --------------------------------------
           Pair Number                     nF/km (nanofarad/mile)
                                  --------------------------------------
                                      Initial      24 Hours      Final
------------------------------------------------------------------------
1                                  ------        ------       ------
3                                  ------        ------       ------
5                                  ------        ------       ------
7                                  ------        ------       ------
9                                  ------        ------       ------
11                                 ------        ------       ------
13                                 ------        ------       ------
15                                 ------        ------       ------
17                                 ------        ------       ------
19                                 ------        ------       ------
21                                 ------        ------       ------
23                                 ------        ------       ------
25                                 ------        ------       ------
Average x                          ------        ------       ------
------------------------------------------------------------------------
Overall Percent Difference in Average x --------------


                                                                 Water Penetration Test
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Option A                                                  Option B
                                     -------------------------------------------------------------------------------------------------------------------
                                           End Leakage grams            Weight Gain grams            End Leakage grams           Penetration mm (in.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Control.............................
                                     -------------------------------------------------------------------------------------------------------------------
Heat Age............................
                                     -------------------------------------------------------------------------------------------------------------------
Humidity Exposure...................
                                     -------------------------------------------------------------------------------------------------------------------
Temperature Cycling.................
                                     -------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------


                         Insulation Compression
------------------------------------------------------------------------
                                                      Failures
------------------------------------------------------------------------
Control...................................  ----------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                    Jacket Slip Strength @ 50  deg.C
------------------------------------------------------------------------
                                               Load in newtons (pound-
                                                       force)
------------------------------------------------------------------------
Control...................................  ----------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------

[[Page 503]]

 
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                        Filler Exudation (grams)
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycle.........................  ----------------
------------------------------------------------------------------------


                         Surge Test (kilovolts)
Conductor to Conductor....................  ----------------
Shield to Conductors......................  ----------------
------------------------------------------------------------------------


[58 FR 29338, May 20, 1993; 58 FR 32749, June 11, 1993, as amended at 60 
FR 1711, Jan. 5, 1995; 69 FR 18803, Apr. 9, 2004]



Secs. 1755.391-1755.396  [Reserved]



Sec. 1755.397  RUS performance specification for line concentrators.

    (a) General. (1) This section covers general requirements for a line 
concentrator (LC) system. This system shall operate in accordance with 
the manufacturer's specifications. Reliability shall be of prime 
importance in the design, manufacture and installation of the equipment. 
The equipment shall automatically provide for:
    (i) Terminating subscriber lines at a location remote from the 
serving central office;
    (ii) Concentrating the subscriber lines over a few transmission and 
supervisory paths to the serving central office; and
    (iii) Terminating the lines at the central office without loss of 
individual identity. A subscriber connected to a line concentrator shall 
be capable of having essentially the same services as a subscriber 
connected directly to the central office equipment (COE). Intra-unit 
calling among subscribers connected to the concentrator may be provided, 
but is not required.
    (2) Industry standards, or portions thereof, referred to in this 
paragraph (a) are incorporated by reference by RUS. This incorporation 
by reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies of these 
standards are available for inspection during normal business hours at 
RUS, room 2838, U.S. Department of Agriculture, Washington, DC 20250, or 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (3) American National Standards Institute (ANSI) standards are 
available from ANSI Inc., 11 West 42nd Street, 13th floor, New York, NY 
10036, telephone 212-642-4900.
    (i) ANSI Standard S1.4-1983, Specification for Sound Level Meters, 
including Amendment S1.4A-1985.
    (ii) [Reserved]
    (4) American Society for Testing Materials (ASTM) are available from 
1916 Race Street, Philadelphia, PA 19103, telephone 215-299-5400.
    (i) ASTM Specification B33-91, Standard Specifications for Tinned 
Soft or Annealed Copper Wire for Electrical Purposes.
    (ii) [Reserved]
    (5) Bell Communications Research (Bellcore) standards are available 
from Bellcore Customer Service, 8 Corporate Place, Piscataway, NJ 08854, 
telephone 1-800-521-2673.
    (i) TR-TSY-000008, Issue 2, August 1987, Digital Interface between 
the SLC 96 Digital Loop Carrier System and a Local Digital Switch.
    (ii) Bell Communications Research (Bellcore) document TR-TSY-000057, 
Issue 1, April 1987, including Revision 1, November 1988, Functional 
Criteria for Digital Loop Carrier Systems.
    (iii) Bell Communications Research (Bellcore) Document TR-NWT-
000303, Issue 2, December 1992, including Revision 1, December 1993, 
Integrated Digital Loop Carrier System Generic Requirements, Objectives, 
and Interface.
    (6) Federal Standard H28, Screw-Thread Standards for Federal 
Services, March 31, 1978, including Change Notice 1, May 28, 1986; 
Change Notice 2, January 20, 1989; and Change Notice 3, March 12, 1990. 
Copies may be obtained from the General Services Administration, 
Specification Section, 490 East L'Enfant Plaza SW, Washington, DC 20407, 
telephone 202-755-0325.
    (7) IEEE standards are available from IEEE Service Center, 445 Hoes 
Lane,

[[Page 504]]

P.O. Box 1331, Piscataway, NJ 08854, telephone 1-800-521-2673.
    (i) IEEE Standard 455-1985, Standard Test Procedure for Measuring 
Longitudinal Balance of Telephone Equipment Operating in the Voice Band.
    (ii) [Reserved]
    (8) RUS standards are available from Publications and Directives 
Management Branch, Administrative Services Division, Rural Utilities 
Service, room 0180, South Building, U.S. Department of Agriculture, 
Washington, DC 20250-1500.
    (i) RUS Bulletin 345-50, PE-60 (Sept 1979), RUS Specification for 
Trunk Carrier Systems.
    (ii) [Reserved]
    (b) Types of requirements. (1) Unless otherwise indicated, the 
requirements listed in this section are considered to be fixed 
requirements.
    (2) The concentrator system shall communicate with standard T1 
digital transmission format at a minimum between the concentrator and 
central office terminals. Analog conversion functions at remote and 
central office terminals shall be capable of being eliminated to 
accommodate end-to-end digital transmission.
    (3) The LC shall operate properly as an integral part of the 
telephone network when connected to physical or carrier derived circuits 
and central offices meeting RUS specifications and other generally 
accepted telecommunications practices, such as Bellcore documents TR-
NWT-000303, Integrated Digital Loop Carrier System Generic Requirements, 
Objectives and Interface; TR-TSY-000008, Digital Interface between the 
SLC 96 Digital Loop Carrier System and a Local Digital Switch; and TR-
TSY-000057, Functional Criteria for Digital Loop Carrier Systems.
    (4) For RUS acceptance consideration of a LC, the manufacturer must 
certify and demonstrate that all requirements specified in this section 
are available and in compliance with this section.
    (5) Certain requirements are included in this section for features 
which may not be needed for every application. Such features are 
identifiable by the inclusion in the requirements of some such phrase as 
``when specified by the owner'' or ``as specified by the owner.'' In 
some cases where an optional feature will not be required by an owner, 
either now or in the future, a system which does not provide this 
feature shall be considered to be in compliance with the specification 
for the specific installation under consideration, but not in compliance 
with the entire specification.
    (6) The owner may properly request bids from any supplier of an RUS 
accepted LC whose system provides all the features which will be 
required for a specific installation.
    (7) When required by the owner, the supplier shall state compliance 
to the Carrier Serving Area (CSA) requirements, as stated in Bell 
Communications Research (Bellcore) Standard TR-TSY-000057, Functional 
Criteria for Digital Loop Carrier Systems.
    (c) Reliability. (1) The failure rate of printed circuit boards 
shall not exceed an average of 2.0 percent per month of all equipped 
cards in all system terminals during the first 3 months after cutover, 
and shall not exceed an average of 1.0 percent per month of all equipped 
cards in all system terminals during the second 3-month period. The 
failure rate for the equipment shall be less than 0.5 percent per month 
of all equipped cards in all system terminals after 6 months. A failure 
is considered to be the failure of a component on the PC board which 
requires it to be repaired or replaced.
    (2) The line concentrator terminal units shall be designed such that 
there will be no more than 4 hours of total outages in 20 years.
    (d) System type acceptance tests. General test results will be 
required on each system type. Any system provided in accordance with 
this section shall be capable of meeting any requirement in this section 
on a spot-check basis.
    (e) Features required. The network control equipment and peripheral 
equipment shall be comprised of solid-state and integrated circuitry 
components as far as practical and in keeping with the state-of-the-art 
and economics of the subject system.
    (f) Subscriber lines--(1) General. (i) The remote LC units shall 
operate satisfactorily with subscriber lines which meet all of the 
conditions under the bidder's specifications and all the requirements

[[Page 505]]

of this section. This section recognizes that the loop limit of the line 
concentrator is dependent upon the transmission facility between the LC 
central office termination and the LC remote unit. When voice frequency 
(physical) circuits are used, the loop limit from the COE to the 
subscriber shall be 1900 ohms (including the telephone set). When 
electronically derived circuits (carrier, lightwave, etc.) are used, the 
loop limits of the electronic system will control. The bidder shall 
identify the loop limits of the equipment to be supplied.
    (ii) There should be provisions for such types of lines as ground 
start, loop start, regular subscriber, pay stations, etc.
    (2) Dialing. (i) General. The line concentrator remote and central 
office terminal equipment shall satisfactorily transmit dialing 
information when used with subscriber dials having a speed of operation 
between 8 and 12 dial pulses per second and a break period of 55 to 65% 
of the total signaling period.
    (ii) Subscriber dial interdigital time. The remote and central 
office LC equipment shall permit satisfactory telecommunications 
operation when used with subscriber rotary dial interdigital times of 
200 milliseconds minimum, and pushbutton dialing with 50 milliseconds 
minimum.
    (iii) Subscriber line pushbutton dialing frequencies. The frequency 
pairs assigned for pushbutton dialing when provided by the central 
office shall be as listed in this paragraph (f)(2)(iii), with an 
allowable variation of 1.5 percent:

------------------------------------------------------------------------
                                        High group frequencies (Hz)
   Low group frequencies (Hz)    ---------------------------------------
                                   1209    1336    1477        1633
------------------------------------------------------------------------
697.............................       1       2       3  Spare.
770.............................       4       5       6  Spare.
852.............................       7       8       9  Spare.
941.............................       *       0  22 gauge copper 
conductor without causing a self-sustaining fire or permanently damaging 
other arrester positions. Where all cable pairs entering the housing are 
24 gauge or finer, the arresters and mountings need only 
coordinate with 24 gauge cable conductors.
    (iv) Remote terminal protectors may be mounted and arranged so that 
outside cable pairs may be terminated on the left or bottom side of 
protectors (when facing the vertical side of the MDF) or on the back 
surface of the protectors. Means for easy identification of pairs shall 
be provided.
    (v) Protectors shall have a ``dead front'' (either insulated or 
grounded) where live metal parts are not readily accessible.
    (vi) Protectors shall be provided with an accessible terminal of 
each incoming conductor which is suitable for the attachment of a 
temporary test lead. They shall also be constructed so that auxiliary 
test fixtures may be applied to open and test the subscriber's circuit 
in either direction. Terminals shall be suitable for wire wrapped 
connections or connectorized.
    (vii) If specified, each protector group shall be furnished with a 
factory assembled tip cable for splicing to the outside cable; the tip 
cable shall be 20 feet (6.1 m) in length, unless otherwise

[[Page 517]]

specified. Tip cable used shall be RUS accepted.
    (viii) Protector makes and types used shall be RUS accepted.
    (l) Power equipment--(1) General. When specified, batteries and 
charging equipment shall be supplied for the remote terminal of the line 
concentrator.
    (2) Operating voltage. (i) The nominal operating voltage of the 
central office and remote terminal shall be 48 volts dc, provided by a 
battery with the positive side tied to system ground.
    (ii) Where equipment is dc powered, it must operate satisfactorily 
over a range of 50 volts 6 volts dc.
    (iii) Where equipment is ac powered, it must operate satisfactorily 
over a range of 12010 volts or 22010 volts ac.
    (3) Batteries. (i) Unless otherwise specified by the owner, sealed 
batteries shall be supplied for the remote line concentrator terminal.
    (ii) The batteries shall have an ampere hour load capacity of no 
less than 8 busy hours. When an emergency ac supply source is available, 
the battery reserve may be reduced to 3 busy hours.
    (iii) The batteries shall be sealed when they are mounted in the 
cabinet with the concentrator equipment.
    (iv) When specified by the owner, battery heaters shall be supplied 
in a bidder-furnished housing.
    (4) Charging equipment. (i) One charger capable of carrying the full 
dc power load of the remote terminal shall be supplied unless otherwise 
specified by the owner.
    (ii) Charging shall be on a full float basis. The rectifiers shall 
be of the full wave, self-regulating, constant voltage, solid-state type 
and shall be capable of being turned on and off manually.
    (iii) When charging batteries, the voltage at the battery terminals 
shall be adjustable and shall be set at the value recommended for the 
particular battery being charged, provided it is not above the maximum 
operating voltage of the central office switching equipment. The voltage 
shall not vary more than 0.02 volt dc per cell between 10% load and 
100% load. Between 3% and 10% load, the output voltage shall not vary 
more than 0.04 volt dc per cell. Beyond full load current the output 
voltage shall drop sharply. The above output voltage shall be maintained 
with input line voltage variations of plus or minus 10 percent. 
Provision shall be made to manually change the output voltage of the 
rectifier to 2.25 volts per cell to provide an equalization charge on 
the battery.
    (iv) The charger noise, when measured with a suitable noise 
measuring set and under the rated battery capacitance and load 
conditions, shall not exceed 22 dBrnC. See Figure 7 of this section, 
Charger Noise Test as follows:

[[Page 518]]

[GRAPHIC] [TIFF OMITTED] TR29AU95.007

    (v) The charging equipment shall be provided with a means for 
indicating a failure of charging current whether due to ac power 
failure, an internal failure in the charger, or to other circumstances 
which might cause the output voltage of the charger to drop below the 
battery voltage. Where a supplementary constant current charger is used, 
an alarm shall be provided to indicate a failure of the charger.
    (vi) Audible noise developed by the charging equipment shall be kept 
to a minimum. Acoustic noise resulting from operation of the rectifier 
shall be expressed in terms of dB indicated on a sound level meter 
conforming to American National Standards Institute S1.4, and shall not 
exceed 65 dB (A-weighting) measured at any point 5 feet (1.5m) from any 
vertical surface of the rectifier.

[[Page 519]]

    (vii) The charging equipment shall be designed so that neither the 
charger nor the central office equipment is subject to damage in case 
the battery circuit is opened for any value of load within the normal 
limits.
    (5) Power panel. (i) Battery and charger control switches, dc 
voltmeters, dc ammeters, fuses and circuit breakers, supervisory and 
timer circuits shall be provided as required. Portable or panel mounted 
frequency meters or voltmeters shall be provided as specified by the 
owner.
    (ii) Power panels, cabinets and shelves, and associated wiring shall 
be designed initially to handle the line concentrator terminal when it 
reaches its ultimate capacity as specified by the owner.
    (iii) The power panel shall be of the ``dead front'' type.
    (6) Ringing equipment. The ringing system shall provide sufficient 
ringing on a bridged basis over the voltage and temperature limits of 
this section and over subscriber drops within the limits stated by the 
bidder. The ringing system shall be without operational problems such as 
bell tapping during dialing. The bidder shall state the minimum number 
(not less than two) of main station ringers that can be used for each 
ringing option available.
    (7) Interrupter equipment. The interrupter may be an integral part 
of the system or may be part of the associated central office equipment 
connected to the line concentrator central office terminal.
    (8) Special systems. Manufacturers of LC systems that operate by 
extending ringing current from the central office shall state their 
required input ringing (voltage and frequency) and the limitations on 
the connected subscriber loop.
    (m) Fusing requirements--(1) General.(i) The equipment shall be 
completely wired and equipped with fuses, trouble signals, and all 
associated equipment for the wire capacity of the frames or cabinets 
provided.
    (ii) Design precautions shall be taken to prevent the possibility of 
equipment damage arising from the insertion of an electronic package 
into the wrong connector or the removal of a package from any connector 
or improper insertion of the correct card in its connector.
    (2) Fuses. Fuses and circuit breakers shall be of an alarm and 
indicator type, except where the fuse or breaker location is indicated 
on the alarm printout. Their rating shall be designated by numerals or 
color codes on the fuse or the panel.
    (n) Trouble location and test--(1) Equipment. (i) Trouble 
indications in the system may be displayed in the form of lights on the 
equipment units or printed circuit boards.
    (ii) When required, a jack or other connector shall be provided to 
connect a fault or trouble recorder (printer or display).
    (2) Maintenance system. (i) The maintenance system shall monitor and 
maintain the system operation without interruption of call processing 
except for major failures.
    (ii) The maintenance system shall be arranged to provide the ability 
to determine trouble to an individual card, functional group of cards, 
or other equipment unit.
    (o) Spare parts. Lists of spare parts and maintenance tools as 
recommended by the bidder shall be provided. The cost of such tools and 
spare parts shall be indicated and shall not be included in the base 
price.
    (p) Drawings and printed material. (1) The bidder shall supply 
instructional material for each line concentrator system involved at the 
time of delivery of the equipment. It is not the intent of this section 
to require system documentation necessary for the repair of individual 
circuit boards.
    (2) Three complete sets of legible drawings shall be provided for 
each central office to be accessed. Each set shall include all of the 
following:
    (i) Drawings of major equipment items such as frames, with the 
location of major component items of equipment shown therein;
    (ii) Wiring diagrams indicating the specific method of wiring used 
on each item of equipment and interconnection wiring between items of 
equipment;
    (iii) Maintenace drawings covering each equipment item that contains 
replaceable parts, appropriately identifying each part by name and part 
number; and

[[Page 520]]

    (iv) Job drawings including all drawings that are individual to the 
particular line concentrator involved such as mainframe, power 
equipment, etc.
    (3) The following information shall also be furnished:
    (i) A complete index of required drawings;
    (ii) An explanation of electrical principles of operation of overall 
concentrator system;
    (iii) A list of tests which can be made with each piece of test 
equipment furnished and an explanation of the method of making each 
test;
    (iv) A sample of each form recommended for use in keeping records;
    (v) The criteria for analyzing results of tests and determining 
appropriate corrective action;
    (vi) A set of general notes on methods of isolating equipment faults 
to specific printed circuit cards in the equipment;
    (vii) A list of typical troubles which might be encountered, 
together with general indications as to probable location of each 
trouble; and
    (viii) All special line concentrator system grounding requirements.
    (4) When installation is to be done by the bidder a complete set of 
drawings shall be provided by the owner, such as floor plans, lighting, 
grounding and ac power access.
    (q) Installation and acceptance--(1) General. Paragraphs (q)(2)(i) 
through (q)(3)(xxi) of this section covers the general requirements for 
the installation of line concentrator equipment by the bidder, and 
outlines the general conditions to be met by the owner in connection 
with such installation work. The responsibilities apply in both the 
central office installation and remote terminal installations, unless 
otherwise noted.
    (2) Responsibilities of owner. The owner shall:
    (i) Allow the bidder and its employees free access to the premises 
and facilities at all hours during the progress of the installation;
    (ii) Provide access to the remote site and any other site for 
development work needed during the installation;
    (iii) Take such action as necessary to ensure that the premises are 
dry and free from dust and in such condition as not to be hazardous to 
the installation personnel or the material to be installed (not required 
when remote terminal is not installed in a building);
    (iv) Provide heat or air conditioning when required and general 
illumination in rooms in which work is to be performed or materials 
stored;
    (v) Provide suitable openings in buildings to allow material to be 
placed in position (not required when a remote terminal is not installed 
in a building);
    (vi) Provide the necessary conduit and commercial and dc-ac inverter 
output power to the locations shown on the approved floor plan drawings;
    (vii) Provide 110 volts a.c., 60 Hz commercial power equipped with a 
secondary arrester and a reasonable number of outlets for test, 
maintenance and installation equipment;
    (viii) Provide suitable openings or channels and ducts for cables 
and conductors from floor to floor and from room to room;
    (ix) Provide suitable ground leads, as designated by the bidder (not 
required when remote terminal is not installed in a building);
    (x) Provide the necessary wiring, central office ground and 
commercial power service, with a secondary arrester, to the location of 
an exterior remote terminal installation based on the voltage and load 
requirements furnished voltage and load requirements furnished by the 
bidder;
    (xi) Test at the owners expense all lines and trunks for continuity, 
leakage and loop resistance and ensure that all lines and trunks are 
suitable for operation with the central office and remote terminal 
equipment specified;
    (xii) Make alterations and repairs to buildings necessary for proper 
installation of material, except to repair damage for which the bidder 
or its employees are responsible;
    (xiii) Connect outside cable pairs on the distributing frame (those 
connected to protectors);
    (xiv) Furnish all line, class of service assignment, and party line 
assignment information to permit bidder to program the data base memory 
within a reasonable time prior to final testing;
    (xv) Release for the bidder's use, as soon as possible, such 
portions of the

[[Page 521]]

existing plant as are necessary for the proper completion of such tests 
as require coordination with existing facilities including facilities 
for T1 span lines with properly installed repeaters between the central 
office and the remote terminal installations;
    (xvi) Make prompt inspections as it deems necessary when notified by 
the bidder that the equipment, or any part thereof, is ready for 
acceptance;
    (xvii) Provide adequate fire protection apparatus at the remote 
terminal, including one or more fire extinguishers or fire extinguishing 
systems of the gaseous type, that has low toxicity and effect on 
equipment;
    (xviii) Provide necessary access ports for cable, if underfloor 
cabling is selected;
    (xix) Install equipment and accessory plant devices mounted external 
to the central office building and external to the repeater and other 
outside housings including filters, repeater housings, splicing of 
repeater cable stubs, externally mounted protective devices and other 
such accessory devices in accordance with written instructions provided 
by the bidder; and
    (xx) Make all cross connections (at the MDF or Intermediate 
Distribution Frame IDF) between the physical trunk or carrier equipment 
and the central office equipment unless otherwise specified in appendix 
A of this section.
    (3) Responsibilities of bidder. The bidder shall:
    (i) Allow the owner and its representatives access to all parts of 
the building at all times;
    (ii) Obtain the owner's permission before proceeding with any work 
necessitating cutting into or through any part of the building structure 
such as girders, beams, concrete or tile floors, partitions or ceilings 
(does not apply to the installation of lag screws, expansion bolts, and 
similar devices used for fastening equipment to floors, columns, walls, 
and ceilings);
    (iii) Be responsible for and repair all damage to the building due 
to carelessness of the bidder's workforce, exercise reasonable care to 
avoid any damage to the owner's switching equipment or other property, 
and report to the owner any damage to the building which may exist or 
may occur during its occupancy of the building;
    (iv) Consult with the owner before cutting into or through any part 
of the building structure in all cases where the fireproofing or 
moisture proofing may be impaired;
    (v) Take necessary steps to ensure that all fire fighting apparatus 
is accessible at all times and all flammable materials are kept in 
suitable places outside the building;
    (vi) Not use gasoline, benzene, alcohol, naphtha, carbon 
tetrachloride or turpentine for cleaning any part of the equipment;
    (vii) Be responsible for delivering the CO and remote terminal 
equipment to the sites where they will be needed;
    (viii) Install the equipment in accordance with the specifications 
for the line concentrator;
    (ix) Have all leads brought out to terminal blocks on the MDF (or 
IDF if stated in appendix A of this section) and have all terminal 
blocks identified and permanently labeled;
    (x) Use separate shielded type leads grounded at one end only unless 
otherwise specified by the owner or bidder or tip cables meeting RUS 
cable crosstalk requirements for carrier frequencies inside the central 
office;
    (xi) Group the cables to separate carrier frequency, voice 
frequency, signaling, and power leads;
    (xii) Make the necessary power and ground connections (location as 
shown in appendix A of this section) to the purchaser's power terminals 
and ground bus unless otherwise stated in appendix A of this section 
(ground wire shall be 6 AWG unless otherwise stated);
    (xiii) Place the battery in service in compliance with the 
recommendations of the battery manufacturer;
    (xiv) Make final charger adjustments using the manufacturer's 
recommended procedure;
    (xv) Run all jumpers, except line and trunk jumpers (those connected 
to protectors) unless otherwise specified in appendix A of this section;
    (xvi) Establish and update all data base memories with subscriber 
information as supplied by the owner until an agreed turnover time;

[[Page 522]]

    (xvii) Give the owner notice of completion of the installation at 
least one week prior to completion;
    (xviii) Permit the owner or its representative to conduct tests and 
inspections after installation has been completed in order that the 
owner may be assured the requirements for installation are met;
    (xix) Allow access, before turnover, by the owner or its 
representative, upon request, to the test equipment which is to be 
turned over as a part of the delivered equipment, to permit the checking 
of the circuit features which are being tested and to permit the 
checking of the amount of connected equipment to which the test circuits 
have access;
    (xx) Notify the owner promptly of the completion of work of the 
central office terminals, remote terminals or such portions thereof as 
are ready for inspection; and
    (xxi) Correct promptly all defects for which the bidder is 
responsible.
    (4) Information to be furnished by bidder. The bidder shall 
accompany its bid with the following information:
    (i) Two copies of the equipment list and the traffic calculations 
from which the quantities in the equipment list are determined;
    (ii) Two copies of the traffic tables from which the quantities are 
determined, if other than the Erlang B traffic tables;
    (iii) A block diagram of the line concentrator and associated 
maintenance equipment will be provided;
    (iv) A prescribed method and criteria for acceptance of the 
completed line concentrator which will be subject to review;
    (v) This special grounding requirements including the recommended 
configuration, suggested equipment and installation methods to be used 
to accomplish them;
    (vi) The special handling and equipment requirements to avoid damage 
resulting from the discharge of static electricity (see paragraph 
(j)(4)(iii) of this section) or mechanical damage during transit 
installation and testing;
    (vii) The location of technical assistance service, its availability 
and conditions for owner use and charges for the service by the bidder; 
and
    (viii) The identification of the subscriber loop limits available 
beyond the line concentrator.
    (5) Installation requirements. (i) All work shall be done in a neat, 
workmanlike manner. Equipment frames or cabinets shall be correctly 
located, carefully aligned, anchored, and firmly braced. Cables shall be 
carefully laid with sufficient radius of curvature and protected at 
corners and bends to ensure against damage from handling or vibration. 
Exterior cabinet installations for remote terminals shall be made in a 
permanent, eye-pleasing manner.
    (ii) All multiple and associated wiring shall be continuous, free 
from crosses, reverses, and grounds and shall be correctly wired at all 
points.
    (iii) An inspection shall be made by the owner or its 
representatives prior to performing operational and performance tests on 
the equipment, but after all installing operations which might disturb 
apparatus adjustments have been completed. The inspection shall be of 
such character and extent as to disclose with reasonable certainty any 
unsatisfactory condition of apparatus or equipment. During these 
inspections, or inspections for apparatus adjustments, or wire 
connections, or in testing of equipment, a sufficiently detailed 
examination shall be made throughout the portion of the equipment within 
which such condition is observed, or is likely to occur, to disclose the 
full extent of its existence, where any of the following conditions are 
observed:
    (A) Apparatus or equipment units failing to compare in quantity and 
type to that specified for the installation;
    (B) Apparatus or equipment units damaged or incomplete;
    (C) Apparatus or equipment affected by rust, corrosion or marred 
finish; and
    (D) Other adverse conditions resulting from failure to meet 
generally accepted standards of good workmanship.
    (6) Operational tests. (i) Operational tests shall be performed on 
all circuits and circuit components to ensure their proper functioning 
in accordance with appropriate explanation of the operation of the 
circuit.

[[Page 523]]

    (ii) All equipment shall be tested to ensure proper operation with 
all components connected in all possible combinations and each line 
shall be tested for proper ring, ring trip and supervision.
    (iii) All fuses shall be verified for continuity and correct rating. 
Alarm indication shall be demonstrated for each equipped fuse position. 
An already failed fuse compatible with the fuse position may be used.
    (iv) Each alarm or signal circuit shall be checked for correct 
operation.
    (v) A sufficient quantity of locally originating and incoming calls 
shall be made to demonstrate the function of the line concentrator 
including all equipped transmission paths. When intra-link calling is 
supplied, all intra-link transmission paths shall be demonstrated.
    (7) Acceptance tests and data required. (i) Data shall be supplied 
to the owner by the bidder in writing as a part of the final documents 
in closing out the contract as follows:
    (A) A detailed cross connect drawing of alarm to power board, 
central office battery to physical trunks or carrier system, wiring 
options used in terminals, channels, filters, repeaters, etc., marked in 
the owner's copy of the equipment manual or supplied separately;
    (B) The measured central office supply voltages applied to the 
equipment terminals or repeaters at the time the jack and test point 
readings are made and ac supply voltages where equipment is powered from 
commercial ac sources;
    (C) A list of all instruments, including accessories, by 
manufacturer and type number, used to obtain the data; and
    (D) The measurements at all jack or test points recommended by the 
manufacturer, including carrier frequency level measurements at all 
carrier terminals and repeaters where utilized.
    (ii) Data in the form of a checklist or other notations shall be 
supplied showing the results of the operational tests.
    (iii) The bidder shall furnish to the owner a record of the battery 
cell or multicell unit voltages measured at the completion of the 
installation of the switching system before it is placed in commercial 
service. This is not required at a site where the owner furnishes dc 
power.
    (8) Joint inspection requirements. (i) The bidder shall notify the 
owner in writing at least one week before the date the complete system 
will be ready for inspection and tests. A joint inspection shall be made 
by the bidder and the owner (or owner's engineer) to determine that the 
equipment installation is acceptable. The inspection shall include 
physical inspection, a review of acceptance test data, operational 
tests, and sample measurements.
    (A) The owner shall review the acceptance test data and compare it 
to the requirements of this section.
    (B) Sample measurements shall be made on all systems installed under 
this contract. Test methods should follow procedures described in 
paragraph (g)(5) of this section.
    (C) A check shall be made of measured test point and jack readings 
for compliance with the manufacturer's specifications. This applies also 
to channels, terminals, carrier frequency repefault locating circuits.
    (ii) In the event that the measured data or operational tests show 
that equipment fails to meet the requirements quirements of this 
section, the deficiencies are to be resolved as set forth in Article II 
of the 397 Special Equipment Contract. (Copies are available from RUS, 
room 0174, U.S. Department of Agriculture, Washington, DC 20250-1500.) 
The reports of the bidder and the owner shall be detailed as to 
deficiencies, causes, corrective action necessary, corrective action to 
be taken, completion time, etc.

(The information and recordkeeping requirements of this section have 
been approved by the Office of Management and Budget (OMB) under the 
control number 0572-0059)

    Appendix A to Sec. 1755.397--Specification for Line Concentrator 
                     Detailed Equipment Requirements

                  (Information To Be Supplied by Owner)

Telephone Company (Owner)

Name:___________________________________________________________________
Location:_______________________________________________________________

Number of LC's Required: --------
Line Concentrator Locations:

[[Page 524]]



------------------------------------------------------------------------
                                                   No. of      Central
                   Location                        Lines        Office
------------------------------------------------------------------------
                                                ...........  ...........
                                                ...........  ...........
                                                ...........  ...........
                                                ...........  ...........
------------------------------------------------------------------------

                               1. General

    1.1  Notwithstanding the bidder's equipment lists, the equipment and 
materials furnished by the bidder must meet the requirements of 
paragraphs (a) through (p) of this section, and this appendix A.
    1.2  Paragraph (a) through (p) of this section cover the minimum 
general requirements for line concentrator equipment.
    1.3  Paragraph (q) of this section covers the requirements for 
installation, inspection and testing when such service is included as 
part of the contract.
    1.4  This appendix A covers the technical data for application 
engineering and detailed equipment requirements insofar as they can be 
established by the owner. This appendix A shall be filled in by the 
owner.
    1.5  Appendix B of this section covers detailed information on the 
line concentrator equipment, information on system reliability and 
traffic capacity as proposed by the bidder. Appendix B of this section 
is to be filled in by the bidder and must be presented with the bid.

Office Name

(By Location)___________________________________________________________

LC Designation__________________________________________________________

                      2. Number of Subscriber Lines

------------------------------------------------------------------------
                                                                  Wired
                                                      Equipped    only
------------------------------------------------------------------------
Single-Party........................................  ........  ........
Pay Station (Type:--------).........................  ........  ........
Other (Describe:--------)...........................  ........  ........
      Total.........................................  ........  ........
------------------------------------------------------------------------

                           3. Loop Resistance

    3.1  Number of non-pay station lines having a loop resistance, 
including the telephone set as follows:
    3.1.1  For physical trunks between the remote and the office units, 
the loop resistance is to include the resistance of the trunk.

------------------------------------------------------------------------
                                                                No. of
                                                                lines
------------------------------------------------------------------------
1200-1900 ohms.............................................  ...........
1901-3200 ohms.............................................  ...........
3201-4500 ohms.............................................  ...........
------------------------------------------------------------------------

    3.1.2  Number of pay station lines having a loop resistance, 
excluding the telephone set, greater than:

------------------------------------------------------------------------
                                                                No. of
                                                                lines
------------------------------------------------------------------------
1200 ohms (Prepay).........................................  ...........
1000 ohms (Semi-Postpay)...................................  ...........
------------------------------------------------------------------------

    When physical trunks are used, these resistances include that of the 
facility between the CO and the remote.
    3.1.3  Range extension equipment, if required, is to be provided:

-------- By Bidder

-------- By Owner

(Quantity and Type)_____________________________________________________

________________________________________________________________________

                             4. Traffic Data

    4.1  Average combined originating and terminating hundred call 
seconds (CCS) per line in the busy hour:

------ CCS/Line. (Assume originating & terminating equal.)
    4.2  Percent Intra-Calling --------
    4.3  Total Busy Hour Calls --------

                           5. TYPE or RINGING

 
           5.1  Frequency No.               1.      2.      3.      4.
 
Frequency (Hz)..........................  ......  ......  ......  ......
Max. No. of Phones/Freq.................  ......  ......  ......  ......
 

    5.2 Minimum ringing generator capacity to be supplied shall be 
sufficient to serve -------- lines (each frequency).

                  6. Central Office Equipment Interface

    6.1  COE will be:
    6.1.1  COE Manufacturer

________________________________________________________________________

Type____________________________________________________________________

Year____________________________________________________________________

Generic_________________________________________________________________
    6.1.2 -------- See digital central office specification for the 
switchboard at -------------------- .
    6.2  Interface will be:
6.2.1  -------- Line Circuit(s)
6.2.2  -------- Direct Digital Interface
6.2.3  -------- Other (Describe)

________________________________________________________________________

________________________________________________________________________
    6.3  Mounting rack for line concentrator furnished by:

-------- Bidder

-------- Owner

(Specify width and height of rack available) (Width) (Height)
    6.4  Equipment to be installed in existing building:

-------- Yes (Attach detailed plan)

-------- No

                       7. Transmission Facilities

    7.1  Transmission facilities between the central office and remote 
terminals shall be:

[[Page 525]]

    7.1.1  Type:

-------- VF Carrier Derived Circuits

-------- Digital Span Line (DS1)

-------- Other

________________________________________________________________________

(Attach a layout of the transmission facilities between the central 
          office and the remote terminals describing transmission and 
          signaling parameters, routing and resistance where 
          applicable.)
    7.1.2  Utilizes physical plant

-------- Cable Pairs (Existing/New)

-------- Other

________________________________________________________________________
    Note: Unless otherwise stated, physical plant will be supplied by 
the owner.
    7.1.3  Terminal equipment for transmission facility to be supplied 
by:

-------- Owner

-------- Bidder
    7.1.3.1  Carrier e/w voice terminations -------- Yes -------- No

Manufacturer and type___________________________________________________
Central office voice terminations Equipped --------, Wired Only --------
    7.1.3.2  Digital span line (DS1) supplied by

-------- Owner

-------- Bidder

Manufacturer and Type___________________________________________________
    7.1.3.3  Number of repeaters (per span line) --------
    7.1.3.4  Diverse (alternate) span line routing required

-------- Yes (Describe in Item 11) -------- No
    7.1.3.5  Span line terminations only -------- Yes -------- No
    7.1.3.6  Span line power required (CO and Remote Terminals) -------- 
Yes -------- No
    7.1.3.7  Physical facility between CO and remote Loop Resistance --
------ ohms, Length -------- meters

                     8. Power Equipment Requirements

    8.1  Central Office Terminal
    8.1.1  Owner-furnished -48 volt dc power -------- Yes -------- No
    8.1.2  Other (Describe)
________________________________________________________________________
    8.1.3  Standby power is available -------- Yes -------- No
    8.2  Remote Terminal
    8.2.1  Owner-furnished -48 vdc power -------- Yes -------- No
    8.2.2  Bidder-furnished power supply -------- Yes -------- No
    8.2.3 AC power available at site:

-------- 110 vac, 60 Hz, single-phase

-------- Other (Describe in Item 11)
    8.2.4  A battery reserve of -------- busy hours shall be provided 
for this line concentrator terminal when it reaches -------- lines at 
the traffic rates specified.
    8.2.5  Batteries supplied shall be:

-------- Lead Calcium
-------- Stabilized Electrolyte
-------- Sealed Lead Acid
-------- Other (Describe in item 11)
    8.2.6  Standby power is available -------- Yes -------- No

                           9. Remote Terminal

    9.1  Mounting
    9.1.1  -------- Outside Housing (To be furnished by bidder)
    9.1.2  -------- Concrete Slab to be furnished by owner (Bidder to 
supply construction details after award.)
    9.1.3  -------- Manhole, environmentally controlled (Describe in 
Item 11)
    9.1.4  -------- Pedestal Mounting
    9.1.5  -------- Pole Mounting (Owner-furnished installed pole)
    9.1.6  -------- Prefab Building (Owner-furnished site)
    9.2  Equipment is to be installed in an existing building.

-------- Yes -------- No
(Attach detailed plan.)
    9.3  Other (Describe)
________________________________________________________________________

________________________________________________________________________

                             10. Alternates

                          11. Explanatory Notes

   Appendix B to Sec. 1755.397--Specification for Line Concentrators 
           Detailed Requirements; Bidder Supplied Information

Telephone Company (Owner)

Name:___________________________________________________________________

Location:_______________________________________________________________

Line Concentrator Equipment Locations

Central Office Terminal:________________________________________________

Remote Terminal:________________________________________________________

                               1. General

    1.1  The equipment and materials furnished by the bidder must meet 
the requirements of paragraphs (a) through (p) of this section.
    1.2  Paragraph (a) through (p) of this section cover the minimum 
general requirements for line concentrator equipment.
    1.3  Paragraph (q) of this section covers requirements for 
installation, inspection and testing when such service is included as 
part of the contract.
    1.4  Appendix A of this section covers the technical data for 
application engineering and detailed equipment requirements insofar as 
they can be established by the owner. Appendix A of this section is to 
be filled in by the owner.
    1.5  This appendix B covers detailed information on the line 
concentrator equipment, information as to system reliability and

[[Page 526]]

traffic capacity as proposed by the bidder. This appendix B shall be 
filled in by the bidder and must be presented with the bid.

                        2. Performance Objectives

    2.1  Reliability (See paragraph (c) of this section)

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.2  Busy Hour Load Capacity and Traffic Delay (See Paragraph (g) of 
this section)

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

           3. Equipment Quantities Dependent on System Design

    3.1  Transmission Facilities between the Central Office and Remote 
Terminals

------------------------------------------------------------------------
                                                  Quantity     Quantity
                     Type                         equipped    wired only
------------------------------------------------------------------------
                                                ...........  ...........
                                                ...........  ...........
                                                ...........  ...........
------------------------------------------------------------------------

                          4. Power Requirements

                      4.1  Central Office Terminal

Voltage_________________________________________________________________

Current Drain (Amps) Normal --------, Peak --------

Fuse Qty --------, Size --------, Type -------- 

Heat Dissipation (BTU/Hr.) -------- 
________________________________________________________________________

                          4.2  Remote Terminal

AC or DC________________________________________________________________

Voltage_________________________________________________________________

Current Drain (Amps) Normal --------, Peak --------

Fuse Qty --------, Size --------, Type --------

Heat Dissipation (BTU/Hr.) --------
________________________________________________________________________
    Power required for heating or cooling equipment in remote bidder-
furnished housing

________________________________________________________________________

________________________________________________________________________

                 5. Temperature and Humidity Limitations

                            5.1  Temperature

------------------------------------------------------------------------
                                                  Central
                                                   office      Remote*
------------------------------------------------------------------------
Maximum  deg.F ( deg.C).......................  ...........  ...........
Minimum  deg.F ( deg.C).......................  ...........  ...........
------------------------------------------------------------------------

                         5.2  Relative Humidity

------------------------------------------------------------------------
                                                  Central
                                                   office      Remote*
------------------------------------------------------------------------
Maximum.......................................  ...........  ...........
Minimum.......................................  ...........  ...........
------------------------------------------------------------------------
* Show conditions outside bidder-furnished housing.

                          6. Explanatory Notes

[60 FR 44729, Aug. 29, 1995, as amended at 69 FR 18803, Apr. 9, 2004]



Secs. 1755.398-1755.399  [Reserved]



Sec. 1755.400  RUS standard for acceptance tests and measurements of telecommunications plant.

    Sections 1755.400 through 1755.407 cover the requirements for 
acceptance tests and measurements on installed copper and fiber optic 
telecommunications plant and equipment.

[62 FR 23960, May 2, 1997]



Sec. 1755.401  Scope.

    (a) Acceptance tests outlined in Secs. 1755.400 through 1755.407 are 
applicable to plant constructed by contract or force account. This 
testing standard provides for the following:
    (1) Specific types of tests or measurements for the different types 
of telecommunications plant and equipment;
    (2) The method of measurement and types of measuring equipment;
    (3) The expected results and tolerances permitted to meet the 
acceptable standards and objectives;
    (4) Suggested formats for recording the results of the measurements 
and tests; and
    (5) Some probable causes of nonconformance and methods for 
corrective action, where possible.
    (b) Alternative methods of measurements that provide suitable 
alternative results shall be permitted with the concurrence of the Rural 
Utilities Service (RUS).
    (c) For the purpose of this testing standard, a ``measurement'' 
shall be defined as an evaluation where quantitative data is obtained 
(e.g., resistance in ohms, structural return loss in decibels (dB), 
etc.) and a ``test'' shall be defined as an evaluation where no 
quantitative data is obtained (e.g., a check mark indicating conformance 
is usually the result of the test).

[[Page 527]]

    (d) The sequence of tests and measurements described in this 
standard have been prepared as a guide. Variations from the sequence may 
be necessary on an individual application basis.
    (e) There is some overlap in the methods of testing shown; also, the 
extent of each phase of testing may vary on an individual basis. The 
borrower shall determine the overall plan of testing, the need and 
extent of testing, and the responsibility for each phase of testing.

[62 FR 23960, May 2, 1997]



Sec. 1755.402  Ground resistance measurements.

    (a) The resistance of the central office (CO) and the remote 
switching terminal (RST) ground shall be measured before and after it 
has been bonded to the master ground bar (MGB) where it is connected to 
the building electric service ground.
    (b) The ground resistance of electronic equipment such as span line 
repeaters, carrier terminal equipment, concentrators, etc. shall be 
measured.
    (c) Method of measurement. The connection of test equipment for the 
ground resistance measurement shall be as shown in Figure 1. Refer to 
RUS Bulletin 1751F-802, ``Electrical Protection Grounding 
Fundamentals,'' for a comprehensive discussion of ground resistance 
measurements.
    (d) Test equipment. The test equipment for making this measurement 
is shown in Figure 1 as follows:

[[Page 528]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.023

    (e) Applicable results. (1) For the CO and RST, the resistance after 
the bond has been made to the MGB electric service ground shall not 
exceed 5 ohms. Where the measured ground resistance exceeds 5 ohms, the 
borrower shall determine what additional grounding, if any, shall be 
provided.
    (2) For electronic equipment, the ground resistance shall not exceed 
25 ohms. Where the measured ground resistance exceeds 25 ohms, the 
borrower shall determine what additional grounding, if any, shall be 
provided.

[[Page 529]]

    (3) When ground resistance measurements exceed the ground resistance 
requirements of paragraphs (e)(1) and (e)(2) of this section, refer to 
RUS Bulletin 1751F-802, ``Electrical Protection Grounding 
Fundamentals,'' for suggested methods of reducing the ground resistance.
    (f) Data record. Results of the CO and RST ground resistance 
measurements shall be recorded. A suggested format similar to Format I, 
Outside Plant Acceptance Tests--Subscriber Loops, in Sec. 1755.407 or a 
format specified in the applicable construction contract may be used. 
Results of the electronic equipment ground resistance measurements shall 
be recorded. A suggested format similar to Format II, Outside Plant 
Acceptance Tests--Trunk Circuits, in Sec. 1755.407 or a format specified 
in the applicable construction contract may be used. Data showing 
approximate moisture content of the soil at the time of measurement, the 
temperature, the type of soil and a description of the test equipment 
used shall also be included.
    (g) Probable causes for nonconformance. Refer to RUS Bulletin 1751F-
802, ``Electrical Protection Grounding Fundamentals,'' and 
Telecommunications Engineering and Construction Manual (TE&CM) Section 
810, ``Electrical Protection of Electronic Analog and Digital Central 
Office Equipment,'' for possible causes of nonconformance and suggested 
methods for corrective action.

[62 FR 23960, May 2, 1997]



Sec. 1755.403  Copper cable telecommunications plant measurements.

    (a) Shield or shield/armor continuity. (1) Tests and measurements 
shall be made to ensure that cable shields or shield/armors are 
electrically continuous. There are two areas of concern. The first is 
shield or shield/armor bonding within a pedestal or splice and the 
second is shield or shield/armor continuity between pedestals or 
splices.
    (2) Measurement techniques outlined here for verification of shield 
or shield/armor continuity are applicable to buried cable plant. 
Measurements of shield continuity between splices in aerial cable plant 
should be made prior to completion of splicing. Conclusive results 
cannot be obtained on aerial plant after all bonds have been completed 
to the supporting strand, multigrounded neutral, etc.
    (3) Method of measurement. (i) The shield or shield/armor resistance 
measurements shall be made between pedestals or splices using either a 
Wheatstone bridge or a volt-ohm meter. For loaded plant, measurements 
shall be made on cable lengths that do not exceed one load section. For 
nonloaded plant, measurements shall be made on cable lengths that do not 
exceed 5,000 feet (ft) (1,524 meters (m)). All bonding wires shall be 
removed from the bonding lugs at the far end of the cable section to be 
measured. The step-by-step measurement procedure shall be as shown in 
Figure 2.
    (ii) Cable shield or shield/armor continuity within pedestals or 
splices shall be measured with a cable shield splice continuity test 
set. The step-by-step measurement procedure outlined in the 
manufacturer's operating instructions for the specific test equipment 
being used shall be followed.
    (4) Test equipment. (i) The test equipment for measuring cable 
shield or shield/armor resistance between pedestals or splices is shown 
in Figure 2 as follows:

[[Page 530]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.024

    (ii) A cable shield splice continuity tester shall be used to 
measure shield or shield/armor continuity within pedestals or splices.
    (5) Applicable results. (i) The shield or shield/armor resistance 
per 1000 ft and per kilometer (km) for cable diameters and types of 
shielding materials are given in Table 1 (English Units) and Table 2 
(Metric Units), respectively as follows:

             Table 1--Shield Resistance @ 68  deg.F (20  deg.C) Cable Diameters Versus Shield Types
                                                 [English Units]
----------------------------------------------------------------------------------------------------------------
                                                           Nominal resistance ohm/1000 ft.
   Outside diameter inches (in.)   -----------------------------------------------------------------------------
                                         A            B            C            D            E            F
----------------------------------------------------------------------------------------------------------------
0.40-0.49.........................         0.77         1.54         1.65         1.96         2.30         5.51
0.50-0.59.........................         0.64         1.28         1.37         1.63         1.91         4.58
0.60-0.69.........................         0.51         1.03         1.10         1.31         1.53         3.67
0.70-0.79.........................         0.44         0.88         0.94  ...........         1.31         3.14

[[Page 531]]

 
0.80-0.89.........................         0.38         0.77         0.82  ...........         1.14         2.74
0.90-0.99.........................         0.35         0.69         0.74  ...........         1.03         2.47
1.00-1.09.........................         0.31         0.62         0.66  ...........         0.92         2.20
1.10-1.19.........................         0.28         0.56         0.60  ...........         0.84         2.00
1.20-1.29.........................         0.26         0.51         0.55  ...........         0.77         1.84
1.30-1.39.........................         0.24         0.48         0.51  ...........         0.71         1.70
1.40-1.49.........................         0.22         0.44         0.47  ...........         0.65         1.57
1.50-1.59.........................         0.21         0.41         0.44  ...........         0.61         1.47
1.60-1.69.........................         0.19         0.38         0.41  ...........         0.57         1.37
1.70-1.79.........................         0.18         0.37         0.39  ...........         0.54         1.30
1.80-1.89.........................         0.17         0.35         0.37  ...........         0.51         1.24
1.90-1.99.........................         0.16         0.33         0.35  ...........         0.49         1.17
2.00-2.09.........................         0.15         0.31         0.33  ...........         0.46         1.10
2.10-2.19.........................         0.15         0.29         0.31  ...........         0.43         1.03
2.20-2.29.........................         0.14         0.28         0.30  ...........         0.42         1.00
2.30-2.39.........................         0.14         0.27         0.29  ...........         0.40         0.97
2.40-2.49.........................         0.13         0.25         0.27  ...........         0.38         0.90
2.50-2.59.........................         0.12         0.24         0.26  ...........         0.36         0.87
2.60-2.69.........................         0.12         0.23         0.25  ...........         0.35         0.83
2.70-2.79.........................         0.11         0.22         0.24  ...........         0.33         0.80
2.80-2.89.........................         0.11         0.22         0.24  ...........         0.33         0.80
2.90-2.99.........................         0.11         0.22         0.23  ...........         0.32         0.77
3.00-3.09.........................         0.10         0.21         0.22  ...........         0.31         0.73
3.10-3.19.........................         0.10         0.20         0.21  ...........         0.29         0.70
3.20-3.29.........................         0.10         0.20         0.21  ...........         0.29         0.70
3.30-3.39.........................         0.09         0.19         0.20  ...........         0.28         0.67
3.40-3.49.........................         0.09         0.18         0.19  ...........         0.26         0.63
3.50-3.59.........................         0.09         0.18         0.19  ...........         0.26         0.63
3.60-3.69.........................         0.08         0.17         0.18  ...........         0.25         0.60
3.70-3.79.........................         0.08         0.17         0.18  ...........         0.25         0.60
3.80-3.89.........................         0.08         0.16         0.17  ...........         0.24         0.57
3.90-3.99.........................         0.08         0.16         0.17  ...........         0.24         0.57
4.00-4.99.........................         0.07         0.15         0.16  ...........         0.22         0.53
----------------------------------------------------------------------------------------------------------------
Where: Column A-10 mil Copper shield.
Column B--5 mil Copper shield.
Column C--8 mil Coated Aluminum and 8 mil Coated Aluminum/6 mil Coated Steel shields.
Column D--7 mil Alloy 194 shield.
Column E--6 mil Alloy 194 and 6 mil Copper Clad Stainless Steel shields.
Column F--5 mil Copper Clad Stainless Steel and 5 mil Copper Clad Alloy Steel shields.


             Table 2--Shield Resistance @ 68  deg.F (20  deg.C) Cable Diameters Versus Shield Types
                                                 [Metric Units]
----------------------------------------------------------------------------------------------------------------
                                                              Nominal Resistance ohm/km
 Outside diameter millimeters (mm) -----------------------------------------------------------------------------
                                         A            B            C            D            E            F
----------------------------------------------------------------------------------------------------------------
10.2--12.5........................         2.53         5.05         5.41         6.43         7.55        18.08
12.7--15.0........................         2.10         4.20         4.49         5.35         6.27        15.03
15.2--17.5........................         1.67         3.38         3.61         4.30         5.02        12.04
17.8--20.1........................         1.44         2.89         3.08  ...........         4.30        10.30
20.3--22.6........................         1.25         2.53         2.69  ...........         3.74         8.99
22.9--25.1........................         1.15         2.26         2.43  ...........         3.38         8.10
25.4--27.7........................         1.02         2.03         2.16  ...........         3.02         7.22
27.9--30.2........................         0.92         1.84         1.97  ...........         2.76         6.56
30.5--32.8........................         0.85         1.67         1.80  ...........         2.53         6.04
33.0--35.3........................         0.79         1.57         1.67  ...........         2.33         5.58
35.6--37.8........................         0.72         1.44         1.54  ...........         2.13         5.15
38.1--40.4........................         0.69         1.34         1.44  ...........         2.00         4.82
40.6--42.9........................         0.62         1.25         1.34  ...........         1.87         4.49
43.2--45.5........................         0.59         1.21         1.28  ...........         1.77         4.26
45.7--48.0........................         0.56         1.15         1.21  ...........         1.67         4.07
48.3--50.5........................         0.52         1.08         1.15  ...........         1.61         3.84
50.8--53.1........................         0.49         1.02         1.08  ...........         1.51         3.61
53.3--55.6........................         0.49         0.95         1.02  ...........         1.41         3.38
55.9--58.2........................         0.46         0.92         0.98  ...........         1.38         3.28
58.4--60.7........................         0.46         0.89         0.95  ...........         1.31         3.18
61.0--63.2........................         0.43         0.82         0.89  ...........         1.25         2.95

[[Page 532]]

 
63.5--65.8........................         0.39         0.79         0.85  ...........         1.18         2.85
66.0--68.3........................         0.39         0.75         0.82  ...........         1.15         2.72
68.6--70.9........................         0.36         0.72         0.79  ...........         1.08         2.62
71.1--73.4........................         0.36         0.72         0.79  ...........         1.08         2.62
73.7--75.9........................         0.36         0.72         0.75  ...........         1.05         2.53
76.2--78.5........................         0.33         0.69         0.72  ...........         1.02         2.39
78.7--81.0........................         0.33         0.66         0.69  ...........         0.95         2.30
81.3--83.6........................         0.33         0.66         0.69  ...........         0.95         2.30
83.6--86.1........................         0.29         0.62         0.66  ...........         0.92         2.20
86.4--88.6........................         0.29         0.59         0.62  ...........         0.85         2.07
88.9--91.2........................         0.29         0.59         0.62  ...........         0.85         2.07
91.4--93.7........................         0.26         0.56         0.59  ...........         0.82         1.97
94.0--96.3........................         0.26         0.56         0.59  ...........         0.82         1.97
96.5--98.8........................         0.26         0.52         0.56  ...........         0.79         1.87
99.1--101.3.......................         0.26         0.52         0.56  ...........         0.79         1.87
101.6--103.9......................         0.23         0.49         0.52  ...........         0.72         1.74
----------------------------------------------------------------------------------------------------------------
Where: Column A--10 mil Copper shield.
Column B--5 mil Copper shield.
Column C--8 mil Coated Aluminum and 8 mil Coated Aluminum/6 mil Coated Steel shields.
Column D--7 mil Alloy 194 shield.
Column E--6 mil Alloy 194 and 6 mil Copper Clad Stainless Steel shields.
Column F--5 mil Copper Clad Stainless Steel and 5 mil Copper Clad Alloy Steel shields.

    (ii) All values of shield and shield/armor resistance provided in 
Tables 1 and 2 in (a)(5)(i) of this section are considered 
approximations. If the measured value corrected to 68  deg.F (20  deg.C) 
is within 30 percent (%) of the value shown in Table 1 or 2, 
the shield and shield/armor shall be assumed to be continuous.
    (iii) To correct the measured shield resistance to the reference 
temperature of 68  deg.F (20  deg.C) use the following formulae:

R68=Rt/[1+A(t-68)] for English Units
R20=Rt/[1+A(t-20)] for Metric Units

Where:

R68=Shield resistance corrected to 68  deg.F in ohms.
R20=Shield resistance corrected to 20  deg.C in ohms.
Rt=Shield resistance at measurement temperature in ohms.
A=Temperature coefficient of the shield tape.
t=Measurement temperature in  deg.F or ( deg.C).

    (iv) The temperature coefficients (A) for the shield tapes to be 
used in the formulae referenced in paragraph (a)(5)(iii) of this section 
are as follows:
    (A) 5 and 10 mil copper = 0.0021 for English units and 0.0039 for 
Metric units;
    (B) 8 mil coated aluminum and 8 mil coated aluminum/6 mil coated 
steel = 0.0022 for English units and 0.0040 for Metric units;
    (C) 5 mil copper clad stainless steel and 5 mil copper clad alloy 
steel = 0.0024 for English units and 0.0044 for Metric units;
    (D) 6 mil copper clad stainless steel = 0.0019 for English units and 
0.0035 for Metric units; and
    (E) 6 and 7 mil alloy 194 = 0.0013 for English units and 0.0024 for 
Metric units.
    (v) When utilizing shield continuity testers to measure shield and 
shield/armor continuity within pedestals or splices, refer to the 
manufacturer's published information covering the specific test 
equipment to be used and for anticipated results.
    (6) Data record.Measurement data from shield continuity tests shall 
be recorded together with anticipated Table 1 or 2 values (see paragraph 
(a)(5)(i) of this section) in an appropriate format to permit 
comparison. The recorded data shall include specific location, cable 
size, cable type, type of shield or shield/armor, if known, etc.
    (7) Probable causes for nonconformance.Among probable causes for 
nonconformance are broken or damaged

[[Page 533]]

shields or shield/armors, bad bonding harnesses, poorly connected 
bonding clamps, loose bonding lugs, etc.
    (b) Conductor continuity.After placement of all cable and wire plant 
has been completed and joined together in continuous lengths, tests 
shall be made to ascertain that all pairs are free from grounds, shorts, 
crosses, and opens, except for those pairs indicated as being defective 
by the cable manufacturer. The tests for grounds, shorts, crosses, and 
opens are not separate tests, but are inherent in other acceptance tests 
discussed in this section. The test for grounds, shorts, and crosses is 
inherent when conductor insulation resistance measurements are conducted 
per paragraph (c) of this section, while tests for opens are inherent 
when tests are conducted for loop resistance, insertion loss, noise, or 
return loss measurements, per paragraphs (d), (e), or (f) of this 
section. The borrower shall make certain that all defective pairs are 
corrected, except those noted as defective by the cable manufacturer in 
accordance with the marking provisions of the applicable cable and wire 
specifications. All defective pairs that are not corrected shall be 
reported in writing with details of the corrective measures attempted.
    (c) Dc insulation resistance (IR) measurement. (1) IR measurements 
shall be made on completed lengths of insulated cable and wire plant.
    (2) Method of measurement. (i) The IR measurement shall be made 
between each conductor and all other conductors, sheath, shield and/or 
shield/armor, and/or support wire electrically connected together and to 
the main distributing frame (MDF) ground. The measurement shall be made 
from the central office with the entire length of the cable under test 
and, where used with all protectors and load coils connected. For COs 
containing solid state arresters, the solid state arresters shall be 
removed before making the IR measurements. Field mounted voice frequency 
repeaters, where used, may be left connected for the IR test but all 
carrier frequency equipment, including carrier repeaters and terminals, 
shall be disconnected. Pairs used to feed power remote from the CO shall 
have the power disconnected and the tip and ring conductors shall be 
opened before making IR tests. All conductors shall be opened at the far 
end of the cable being measured.
    (ii) IR tests are normally made from the MDF with all CO equipment 
disconnected at the MDF, but this test may be made on new cables at 
field locations before they are spliced to existing cables. The method 
of measurement shall be as shown in Figure 3 as follows:

[[Page 534]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.025

    (iii) If the IR of the conductor cannot be measured because of 
breakdown of lightning arresters by the test voltage, the arrester units 
shall be removed and the conductor IR retested. If the IR then meets the 
minimum requirements, the conductor will be considered satisfactory. 
Immediately following the IR tests, all arrester units which have been 
removed shall be reinstalled.
    (3) Test equipment. (i) IR measurements shall be made with either an 
insulation resistance test set or a direct current (dc) bridge type 
megohmmeter.

[[Page 535]]

    (ii) The IR test set shall have an output voltage not to exceed 500 
volts dc and shall be of the hand cranked or battery operated type.
    (iii) The dc bridge type megohmmeter, which may be alternating 
current (ac) powered, shall have scales and multiplier which make it 
possible to accurately read IR from 1 megohm to 1 gigohm. The voltage 
applied to the conductors under test shall not exceed ``250 volts dc'' 
when using an instrument having adjustable test voltage levels. This 
will help to prevent breakdown of lightning arresters.
    (4) Applicable results. (i) For all new insulated cable or wire 
facilities, the expected IR levels are normally greater than 1,000 to 
2,000 megohm-mile (1,609 to 3,218 megohm-km). A value of 500 megohm-mile 
(805 megohm-km) at 68  deg.F (20  deg.C) shall be the minimum acceptable 
value of IR. IR varies inversely with the length and the temperature.
    (ii) The megohm-mile (megohm-km) value for a conductor may be 
computed by multiplying the actual scale reading in megohms on the test 
set by the length in miles (km) of the conductor under test.
    (iii) The objective insulation resistance may be determined by 
dividing 500 by the length in miles (805 by the length in km) of the 
cable or wire conductor being tested. The resulting value shall be the 
minimum acceptable meter scale reading in megohms.
    (iv) Due to the differences between various insulating materials and 
filling compounds used in manufacturing cable or wire, it is impractical 
to provide simple factors to predict the magnitude of variation in 
insulation resistance due to temperature. The variation can, however, be 
substantial for wide excursions in temperature from the ambient 
temperature of 68  deg.F (20  deg.C).
    (v) Borrowers should be certain that tip and ring IR measurements of 
each pair are approximately the same. Borrowers should also be certain 
that IR measurements are similar for cable or wire sections of similar 
length and cable or wire type. If some pairs measure significantly 
lower, borrowers should attempt to improve these pairs in accordance 
with cable manufacturer's recommendations.

    Note: Only the megohm-mile (megohm-km) requirement shall be cause 
for rejection, not individual measurement differences.

    (5) Data record.The measurement data shall be recorded. Suggested 
formats similar to Format I, Outside Plant Acceptance Tests--Subscriber 
Loops, or Format II, Outside Plant Acceptance Tests--Trunk Circuits, in 
Sec. 1755.407 or formats specified in the applicable construction 
contract may be used.
    (6) Probable causes for nonconformance.(i) When an IR measurement is 
below 500 megohm-mile (805 megohm-km), the cable or wire temperature at 
the time of testing must then be taken into consideration. If this 
temperature is well above 68  deg.F (20  deg.C), the measurement shall 
be disregarded and the cable or wire shall be remeasured at a time when 
the temperature is approximately 68  deg.F (20  deg.C). If the result is 
then 500 megohm-mile (805 megohm-km) or greater, the cable or wire shall 
be considered satisfactory.
    (ii) Should the cable or wire fail to meet the 500 megohm-mile (805 
megohm-km) requirement when the temperature is known to be approximately 
68  deg.F (20  deg.C) there is not yet justification for rejection of 
the cable or wire. Protectors, lightning arresters, etc., may be a 
source of low insulation resistance. These devices shall be removed from 
the cable or wire and the cable or wire IR measurement shall be 
repeated. If the result is acceptable, the cable or wire shall be 
considered acceptable. The removed devices which caused the low 
insulation resistance value shall be identified and replaced, if found 
defective.
    (iii) When the cable or wire alone is still found to be below the 
500 megohm-mile (805 megohm-km) requirement after completing the steps 
in paragraph (c)(6)(i) and/or paragraph (c)(6)(ii) of this section, the 
test shall be repeated to measure the cable or wire in sections to 
isolate the piece(s) of cable or wire responsible. The cable or wire 
section(s) that is found to be below the 500 megohm-mile (805 megohm-km) 
requirement shall be either repaired in accordance with the cable or 
wire manufacturer's recommended procedure or shall be replaced as 
directed by the borrower.

[[Page 536]]

    (d) Dc loop resistance and dc resistance unbalance measurement.(1) 
When specified by the borrower, dc loop resistance and dc resistance 
unbalance measurements shall be made on all cable pairs used as trunk 
circuits. The dc loop resistance and dc resistance unbalance 
measurements shall be made between CO locations. Measurements shall 
include all components of the cable path.
    (2) Dc loop resistance and dc resistance unbalance measurements 
shall be made on all cable pairs used as subscriber loop circuits when:
    (i) Specified by the borrower;
    (ii) A large number of long loops terminate at one location (similar 
to trunk circuits); or
    (iii) Circuit balance is less than 60 dB when computed from noise 
measurements as described in paragraph (e) of this section.
    (3) Dc resistance unbalance is controlled to the maximum possible 
degree by the cable specification. Allowable random unbalance is 
specified between tip and ring conductors within each reel. Further 
random patterns should occur when the cable conductor size changes. 
Cable meeting the unbalance requirements of the cable specification may 
under some conditions result in unacceptable noise levels as discussed 
in paragraph (d)(6)(iii) of this section.
    (4) Method of measurement. The method of measurement shall be as 
detailed in Figures 4 and 5.
    (5) Test equipment. The test equipment is shown in Figures 4 and 5 
as follows:

[[Page 537]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.026


[[Page 538]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.027

    (6) Applicable results. (i) The measured dc loop resistance shall be 
within 5% of the calculated dc loop resistance when corrected for 
temperature.
    (ii) The calculated dc loop resistance is computed as follows:
    (A) Multiply the length of each different gauge by the applicable 
resistance per unit length as shown in Table 3 as follows:

[[Page 539]]



           Table 3--DC Loop Resistance @ 68  deg.F (20  deg.C)
------------------------------------------------------------------------
                                                  Loop resistance
        American wire gauge (AWG)        -------------------------------
                                           ohms/1000 ft       ohms/km
------------------------------------------------------------------------
19......................................            16.1            52.8
22......................................            32.4           106.3
24......................................            51.9           170.3
26......................................            83.3           273.3
------------------------------------------------------------------------

    (B) Add the individual resistances for each gauge to give the total 
calculated dc loop resistance at a temperature of 68  deg.F (20  deg.C).
    (C) Correct the total calculated dc loop resistance at the 
temperature of 68  deg.F (20  deg.C) to the measurement temperature by 
the following formulae:

Rt=R68x[1+0.0022xt--68)] for English Units
Rt=R20x[1+0.0040x(t--20)] for Metric Units

Where:

Rt = Loop resistance at the measurement temperature in ohms.
R68 = Loop resistance at a temperature of 68  deg.F in ohms.
R20 = Loop resistance at a temperature of 20  deg.C in ohms.
t = Measurement temperature in  deg.F or ( deg.C).

    (D) Compare the calculated dc loop resistance at the measurement 
temperature to the measured dc loop resistance to determine compliance 
with the requirement specified in paragraph (d)(6)(i) of this section.
    (iii) Resistance varies directly with temperature change. For copper 
conductor cables, the dc resistance changes by 1% for every 5  deg.F 
(2.8  deg.C) change in temperature from 68  deg.F (20  deg.C).
    (iv) The dc resistance unbalance between the individual conductors 
of a pair shall not exceed that value which will result in a circuit 
balance of less than 60 dB when computed from noise measurements as 
described in paragraph (e) of this section. It is impractical to 
establish a precise limit for overall circuit dc resistance unbalance 
due to the factors controlling its contribution to circuit noise. These 
factors include location of the resistance unbalance in relation to a 
low impedance path to ground (close to the central office) and the 
magnitude of unbalance in short lengths of cable making up the total 
circuit length. The objective is to obtain the minimum unbalance 
throughout the entire circuit when it is ascertained through noise 
measurements that dc resistance unbalance may be contributing to poor 
cable balance.
    (v) Pairs with poor noise balance may be improved by reversing tip 
and ring conductors of pairs at cable splices. Where dc resistance 
unbalances are systematic over the total trunk circuit or loop circuit 
length, tip and ring reversals may be made at frequent intervals. Where 
the unbalances are concentrated in a shorter section of cable, only one 
tip and ring reversal should be required. Concentrated dc resistance 
unbalance produces maximum circuit noise when located adjacent to the 
central office. Concentrated dc resistance unbalance will contribute to 
overall circuit noise at a point approximately two-thirds (\2/3\) of the 
distance to the subscriber. All deliberate tip and ring reversals shall 
be tagged and identified to prevent plant personnel from removing the 
reversals when resplicing these connections in the future. The number of 
tip and ring reversals shall be held to a minimum.
    (vi) A systematic dc resistance unbalance can sometimes be 
accompanied by other cable parameters that are marginal. Among these are 
pair-to-pair capacitance unbalance, capacitance unbalance-to-ground, and 
150 kilohertz (kHz) crosstalk loss. Engineering judgment has to be 
applied in each case. Rejection of cable for excessive dc resistance 
unbalance shall only apply to a single reel length, or shorter.
    (7) Data record.The measurement data for dc loop resistance and dc 
resistance unbalance shall be recorded. Suggested formats similar to 
Format I for subscriber loops and Format II for trunk

[[Page 540]]

circuits in Sec. 1755.407 or formats specified in the applicable 
construction contract may be used.
    (8) Probable causes for nonconformance. Dc loop resistance and dc 
resistance unbalance are usually the result of the resistance of 
individual conductors used in the manufacture of the cable. Resistance 
unbalance can be worsened by defective splicing of the conductors 
(splicing connectors, improper crimping tool, etc.).
    (e) Subscriber loop measurement (loop checking). (1) When specified 
by the borrower, insertion loss and noise measurements shall be 
performed on subscriber loops after connection of a line circuit to the 
loop by the one person method using loop checking equipment from the 
customer access location. For this method, the central office should be 
equipped with a 900 ohm plus two microfarad quiet termination and a 
milliwatt generator having the required test frequencies; or a portable 
milliwatt generator having the desired frequencies may be used, 
especially, where several small offices are involved.
    (2) At a minimum, insertion loss and frequency response of 
subscriber loop plant shall be measured at 1,000, 1,700, 2,300, and 
2,800 Hertz (Hz). When additional testing frequencies are desired, the 
additional frequencies shall be specified in the applicable construction 
contract.
    (3) Measurements of insertion loss and noise shall be made on five 
percent or more of the pairs. A minimum of five pairs shall be tested on 
each route. Pairs shall be selected on a random basis with greater 
consideration in the selection given to the longer loops. Consideration 
shall be given to measuring a large percentage, up to 100 percent, of 
all loops.
    (4) Method of measurement--(i) Insertion loss. The step-by-step 
measurement procedure shall be as shown in Figure 6. The output level of 
the milliwatt generator tones shall be determined prior to leaving the 
CO. This shall be accomplished by dialing the milliwatt generator number 
from a spare line at the MDF and measuring with the same equipment to be 
used in the tests at customer access locations. The output levels shall 
be recorded for reference later. Insertion loss measurements shall be 
made across the tip and ring terminals of the pair under test. Figure 6 
is as follows:

[[Page 541]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.028

    (ii) Noise. The step-by-step measurement procedure shall be as shown 
in Figure 7. Prior to leaving the CO for testing, dial the 900 ohm plus 
two microfarad quiet termination from a spare pair and measure the 
termination to determine that it actually is quiet. Circuit noise 
(noise-metallic) shall be measured at the customer access location 
across the tip and ring terminals of the pair under test. Power 
influence (direct reading with loop checking equipment) shall be 
measured at the customer access location from tip and ring conductors-
to-ground (this connection is completed via the test

[[Page 542]]

unit). The power influence measurement includes the entire talking 
connection from the quiet termination to the customer. (That is, the 
power influence measurement includes all the CO equipment which normally 
makes up the connection.) Figure 7 is as follows:
[GRAPHIC] [TIFF OMITTED] TR02MY97.029

    (5) Test equipment. (i) Loop checking equipment which is available 
from several manufacturers may be used for these measurements. The 
equipment

[[Page 543]]

should have the capability of measuring loop current, insertion loss, 
circuit noise (NM) and power influence (PI). The test equipment 
manufacturer's operating instructions shall be followed.
    (ii) There should be no measurable transmission loss when testing 
through loop extenders.
    (6) Applicable results--(i) Insertion loss. (A) For D66 loaded 
cables (a specific loading scheme using a 66 millihenry inductor spaced 
nominally at 4,500 ft [1,371 m] intervals) measured at a point one-half 
section length beyond the last load point, the measured nonrepeated 
insertion loss shall be within 10% at 1000, 1700, 2300, and 2800 Hz, 
15% at 3400 Hz and 20% at 4000 Hz of the calculated insertion loss at 
the same frequencies and temperature.
    (B) For H88 loaded cables (a specific loading scheme using an 88 
millihenry inductor spaced nominally at 6,000 ft [1,829 m] intervals) 
measured at a point one-half section length beyond the last load point, 
the measured nonrepeatered insertion loss shall be within 10% at 1000, 
1700, and 2300 Hz, 15% at 2800 Hz, and 20% at 3400 Hz of the 
calculated insertion loss at the same frequencies and temperature.
    (C) For nonloaded cables, the measured insertion loss shall be 
within 10% at 1000, 1700, 2300, and 2800 Hz, 15% at 3400 Hz and 20% 
at 4000 Hz of the calculated insertion loss at the same frequencies and 
temperature.
    (D) For loaded cables, the calculated loss at each desired frequency 
shall be computed as follows:
    (1) Multiply the length in miles (km) of each different gauge in the 
loaded portion of the loop (between the office and a point one-half load 
section beyond the furthest load point) by the applicable decibel (dB)/
mile (dB/km) value shown in Table 4 or 5. This loss represents the total 
loss for each gauge in the loaded portion of the loop;
    (2) Multiply the length in miles (km) of each different gauge in the 
end section or nonloaded portion of the cable (beyond a point one-half 
load section beyond the furthest load point) by the applicable dB/mile 
(dB/km) value shown in Table 6. This loss represents the total loss for 
each gauge in the nonloaded portion of the loop; and
    (3) The total calculated insertion loss is computed by adding the 
individual losses determined in paragraphs (e)(6)(i)(D)(1) and 
(e)(6)(i)(D)(2) of this section.
    (E) For nonloaded cables, the calculated loss at each desired 
frequency shall be computed by multiplying the length in miles (km) of 
each different gauge by the applicable dB/mile (dB/km) value shown in 
Table 6 and then adding the individual losses for each gauge to 
determine the total calculated insertion loss for the nonloaded loop.
    (F) The attenuation information in Tables 4, 5, and 6 are based on a 
cable temperature of 68  deg.F (20  deg.C). Insertion loss varies 
directly with temperature. To convert measured losses for loaded cables 
to a different temperature, use the following value for copper 
conductors: For each 5  deg.F (2.8  deg.C) change in the temperature 
from 68  deg.F (20  deg.C), change the insertion loss at any frequency 
by 1%. To convert measured losses for nonloaded cables to a different 
temperature, use the following value for copper conductors: For each 10 
 deg.F (5.6  deg.C) change in the temperature from 68  deg.F (20 
deg.C), change the insertion loss at any frequency by 1%. Tables 4, 5, 
and 6 are as follows:

Table 4--Frequency Attenuation @ 68  deg.F (20  deg.C) D66 Loaded Exchange Cables 83 nanofarad (nF)/mile (52 nF/
                                                 km) (See Note)
----------------------------------------------------------------------------------------------------------------
                                                                Attenuation dB/mile (dB/km) AWG
               Frequency (Hz)                -------------------------------------------------------------------
                                                     19               22               24               26
----------------------------------------------------------------------------------------------------------------
200.........................................      0.41 (0.26)      0.67 (0.42)      0.90 (0.56)      1.21 (0.75)
400.........................................      0.43 (0.26)      0.77 (0.48)      1.09 (0.68)      1.53 (0.95)
600.........................................      0.44 (0.27)      0.80 (0.49)      1.17 (0.73)      1.70 (1.06)
800.........................................      0.44 (0.27)      0.81 (0.50)      1.21 (0.75)      1.80 (1.12)
1000........................................      0.44 (0.27)      0.82 (0.51)      1.23 (0.76)      1.86 (1.15)
1200........................................      0.45 (0.28)      0.83 (0.52)      1.24 (0.77)      1.91 (1.19)
1400........................................      0.45 (0.28)      0.83 (0.52)      1.26 (0.78)      1.94 (1.20)
1600........................................      0.45 (0.28)      0.84 (0.52)      1.26 (0.78)      1.96 (1.22)
1800........................................      0.45 (0.28)      0.84 (0.52)      1.27 (0.78)      1.98 (1.23)

[[Page 544]]

 
2000........................................      0.46 (0.29)      0.85 (0.53)      1.28 (0.79)      1.99 (1.24)
2200........................................      0.46 (0.29)      0.85 (0.53)      1.29 (0.80)      2.01 (1.25)
2400........................................      0.47 (0.29)      0.86 (0.53)      1.30 (0.81)      2.02 (1.26)
2600........................................      0.47 (0.29)      0.87 (0.54)      1.31 (0.81)      2.04 (1.27)
2800........................................      0.48 (0.30)      0.88 (0.55)      1.32 (0.82)      2.07 (1.29)
3000........................................      0.49 (0.30)      0.89 (0.55)      1.34 (0.83)      2.10 (1.30)
3200........................................      0.50 (0.31)      0.91 (0.57)      1.36 (0.84)      2.13 (1.32)
3400........................................      0.52 (0.32)      0.93 (0.58)      1.40 (0.87)      2.19 (1.36)
3600........................................      0.54 (0.34)      0.97 (0.60)      1.45 (0.90)      2.26 (1.40)
3800........................................      0.57 (0.35)      1.02 (0.63)      1.52 (0.94)      2.36 (1.47)
4000........................................      0.62 (0.38)      1.10 (0.68)      1.63 (1.01)      2.53 (1.57)
----------------------------------------------------------------------------------------------------------------
Note: Between end-section lengths of 2,250 ft (686 m) for D66 loading.


  Table 5--Frequency Attenuation @ 68  deg.F (20  deg.C) H88 Loaded Exchange Cables 83 nF/ mile (52 nF/km) (See
                                                      Note)
----------------------------------------------------------------------------------------------------------------
                                                                Attenuation dB/mile (dB/km) AWG
               Frequency (Hz)                -------------------------------------------------------------------
                                                     19               22               24               26
----------------------------------------------------------------------------------------------------------------
200.........................................      0.40 (0.25)      0.66 (0.41)      0.90 (0.56)      1.20 (0.75)
400.........................................      0.42 (0.26)      0.76 (0.47)      1.08 (0.67)      1.53 (0.95)
600.........................................      0.43 (0.27)      0.79 (0.49)      1.16 (0.72)      1.70 (1.06)
800.........................................      0.43 (0.27)      0.80 (0.50)      1.20 (0.75)      1.80 (1.12)
1000........................................      0.43 (0.27)      0.81 (0.50)      1.23 (0.76)      1.86 (1.15)
1200........................................      0.44 (0.27)      0.82 (0.51)      1.24 (0.77)      1.91 (1.19)
1400........................................      0.44 (0.28)      0.82 (0.51)      1.25 (0.78)      1.94 (1.20)
1600........................................      0.44 (0.27)      0.83 (0.52)      1.26 (0.78)      1.97 (1.22)
1800........................................      0.45 (0.28)      0.84 (0.52)      1.28 (0.79)      1.99 (1.24)
2000........................................      0.46 (0.29)      0.85 (0.53)      1.29 (0.80)      2.02 (1.26)
2200........................................      0.47 (0.29)      0.86 (0.53)      1.31 (0.81)      2.06 (1.28)
2400........................................      0.48 (0.30)      0.89 (0.55)      1.34 (0.83)      2.10 (1.30)
2600........................................      0.50 (0.31)      0.92 (0.57)      1.39 (0.86)      2.18 (1.35)
2800........................................      0.53 (0.33)      0.97 (0.60)      1.47 (0.91)      2.29 (1.42)
3000........................................      0.59 (0.37)      1.07 (0.66)      1.60 (0.99)      2.48 (1.54)
3200........................................      0.71 (0.44)      1.26 (0.78)      1.87 (1.16)      2.86 (1.78)
3400........................................      1.14 (0.71)      1.91 (1.19)      2.64 (1.64)      3.71 (2.30)
3600........................................      4.07 (2.53)      4.31 (2.68)      4.65 (2.90)      5.30 (3.29)
3800........................................      6.49 (4.03)      6.57 (4.08)      6.72 (4.18)      7.06 (4.39)
4000........................................      8.22 (5.11)      8.27 (5.14)      8.36 (5.19)      8.58 (5.33)
----------------------------------------------------------------------------------------------------------------
Note: Between end-section lengths of 3,000 ft (914 m) for H88 loading.


   Table 6--Frequency Attenuation @ 68  deg.F (20  deg.C) Nonloaded Exchange Cables 83 nF/ mile (52 nF/km) AWG
----------------------------------------------------------------------------------------------------------------
                                                                Attenuation dB/mile (dB/km) AWG
               Frequency (Hz)                -------------------------------------------------------------------
                                                     19               22               24               26
----------------------------------------------------------------------------------------------------------------
200.........................................      0.58 (0.36)      0.82 (0.51)      1.03 (0.64)      1.30 (0.81)
400.........................................      0.81 (0.51)      1.15 (0.71)      1.45 (0.90)      1.84 (1.14)
600.........................................      0.98 (0.61)      1.41 (0.87)      1.77 (1.10)      2.26 (1.40)
800.........................................      1.13 (0.70)      1.62 (1.01)      2.04 (1.27)      2.60 (1.61)
1000........................................      1.25 (0.78)      1.80 (1.12)      2.28 (1.42)      2.90 (1.80)
1200........................................      1.36 (0.84)      1.97 (1.22)      2.50 (1.55)      3.17 (1.97)
1400........................................      1.46 (0.91)      2.12 (1.32)      2.69 (1.67)      3.42 (2.12)
1600........................................      1.55 (0.96)      2.26 (1.40)      2.87 (1.78)      3.65 (2.27)
1800........................................      1.63 (1.01)      2.39 (1.48)      3.04 (1.89)      3.87 (2.40)
2000........................................      1.71 (1.06)      2.51 (1.56)      3.20 (1.99)      4.08 (2.53)
2200........................................      1.78 (1.11)      2.62 (1.63)      3.35 (2.08)      4.27 (2.65)
2400........................................      1.85 (1.15)      2.73 (1.70)      3.49 (2.17)      4.45 (2.76)
2600........................................      1.91 (1.19)      2.83 (1.76)      3.62 (2.25)      4.63 (2.88)
2800........................................      1.97 (1.22)      2.93 (1.82)      3.75 (2.33)      4.80 (2.98)
3000........................................      2.03 (1.26)      3.02 (1.88)      3.88 (2.41)      4.96 (3.08)
3200........................................      2.08 (1.29)      3.11 (1.93)      4.00 (2.48)      5.12 (3.18)
3400........................................      2.13 (1.32)      3.19 (1.98)      4.11 (2.55)      5.27 (3.27)
3600........................................      2.18 (1.35)      3.28 (2.04)      4.22 (2.62)      5.41 (3.36)

[[Page 545]]

 
3800........................................      2.22 (1.38)      3.36 (2.09)      4.33 (2.69)      5.55 (3.45)
4000........................................      2.27 (1.41)      3.43 (2.13)      4.43 (2.75)      5.69 (3.53)
----------------------------------------------------------------------------------------------------------------

    (G) For loaded subscriber loops, the 1 kHz loss shall be 
approximately 0.45 dB per 100 ohms of measured dc loop resistance. This 
loss shall be the measured loss less the net gain of any voice frequency 
repeaters in the circuit. Testing shall also be conducted to verify that 
the loss increases gradually as the frequency increases. The loss on H88 
loaded loops should be down only slightly at 2.8 kHz but drop rapidly 
above 2.8 kHz. The loss on D66 loaded loops shall be fairly constant to 
about 3.4 kHz and there shall be good response at 4.0 kHz. When voice 
frequency repeaters are in the circuit there will be some frequency 
weighting in the build-out network and the loss at the higher 
frequencies will be greater than for nonrepeatered loops.
    (H) For nonloaded subscriber loops, the 1 kHz loss shall be 
approximately 0.9 dB per 100 ohms of measured dc loop resistance. 
Testing shall also be conducted to verify that the loss is approximately 
a straight line function with no abrupt changes. The 3 kHz loss should 
be approximately 70% higher than the 1 kHz loss.
    (ii) Noise. The principal objective related to circuit noise (noise-
metallic) and the acceptance of new plant is that circuit noise levels 
be 20 dBrnc or less (decibels above reference noise, C-message weighted 
(a weighting derived from listening tests, to indicate the relative 
annoyance or speech impairment by an interfering signal of frequency (f) 
as heard through a ``500-type'' telephone set)). For most new, properly 
installed, plant construction, circuit noise will usually be 
considerably less than 20 dBrnc unless there are unusually long sections 
of telephone plant in parallel with electric power facilities and/or 
power influence of paralleling electric facilities is abnormally high. 
When circuit noise is 20 dBrnc or less, the loop plant shall be 
considered acceptable. When measured circuit noise is greater than 20 
dBrnc, loop plant shall still be considered acceptable providing circuit 
balance (power influence reading minus circuit noise readings) is 60 dB 
or greater and power influence readings are 85 dBrnc or greater. When 
circuit noise is greater than 20 dBrnc and circuit balance is less than 
60 dB and/or power influence is less than 85 dBrnc, loop plant shall not 
be considered acceptable and the loop plant shall be remedied to make 
circuit balance equal to or greater than 60 dB.
    (7) Data record. Measurement data shall be recorded. A suggested 
format similar to Format I for subscriber loops in Sec. 1755.407 or a 
format specified in the applicable construction contract may be used.
    (8) Probable causes for nonconformance--(i) Insertion loss. Some of 
the more common causes for failing to obtain the desired results may be 
due to reversed load coil windings, missing load coils, bridge taps 
between load coils, load coil spacing irregularities, excessive end 
sections, cables having high or low mutual capacitance, load coils 
having the wrong inductance, load coils inadvertently installed in 
nonloaded loops, moisture or water in cable, split pairs, and improperly 
spliced connections. The above factors can occur singularly or in 
combination. Experience to date indicates that the most common problems 
are missing load coils, reversed load coil windings or bridge taps.
    (ii) Noise. Some of the common causes for failing to obtain the 
desired results may be due to high power influence from paralleling 
electrical power systems, poor telephone circuit balance, discontinuous 
cable shields, inadequate bonding and grounding of cable shields, high 
capacitance unbalance-to-ground of the cable pairs, high dc loop 
resistance unbalance, dc loop current less than 20 milliamperes, etc. 
The

[[Page 546]]

above factors can occur singularly or in combination. See TE&CM Section 
451, Telephone Noise Measurement and Mitigation, for steps to be taken 
in reducing telecommunications line noise.
    (f) One-person open circuit measurement (subscriber loops). (1) When 
specified by the borrower, open circuit measurements shall be made on 
all loaded and nonloaded subscriber loops upon completion of the cable 
work to verify that the plant is free from major impedance 
irregularities.
    (2) For loaded loops, open circuit measurements shall be made using 
one of the following methods:
    (i) Impedance or pulse return pattern, with cable pair trace 
compared to that of an artificial line of the same length and gauge. For 
best results, a level tracer or fault locator with dual trace capability 
is required;
    (ii) Return loss using a level tracer, with cable pair compared to 
an artificial line of the same length and gauge connected in lieu of a 
Precision Balance Network (PBN). This method can be made with level 
tracers having only single trace capability; or
    (iii) Open circuit structural return loss using a level tracer. This 
method can be made with level tracer having only single trace 
capability.
    (3) Of the three methods suggested for loaded loops, the method 
specified in paragraph (f)(2)(ii) of this section is the preferred 
method because it can yield both qualitative and quantitative results. 
The methods specified in paragraphs (f)(2)(i) and (f)(2)(iii) of this 
section can be used as trouble shooting tools should irregularities be 
found during testing.
    (4) For nonloaded loops, open circuit measurements shall be made 
using the method specified in paragraph (f)(2)(i) of this section.
    (5) Method of measurement. Open circuit measurements shall be made 
at the CO on each loaded and nonloaded pair across the tip and ring 
terminals of the pair under test. All CO equipment shall be disconnected 
at the MDF for this test. For loaded loops containing voice frequency 
repeaters installed in the CO or field mounted, the open circuit 
measurement shall be made after the repeaters have been disconnected. 
Where field mounted repeaters are used, the open circuit measurement 
shall be made at the repeater location in both directions.
    (i) Impedance or pulse return pattern. The step-by-step measurement 
procedure using the impedance or pulse return pattern for loaded and 
nonloaded loops shall be as shown in Figure 8. An artificial line of the 
same makeup as the cable to be tested shall be set up. The traces of the 
impedance or pulse return pattern from the cable pair and the artificial 
line shall be compared and should be essentially identical. If the 
impedance or pulse return traces from the cable pair are different than 
the artificial line trace, cable faults are possible. When the cable 
pair trace indicates possible defects, the defects should be identified 
and located. One method of identifying and locating defects involves 
introducing faults into the artificial line until its trace is identical 
with the cable trace.
    (ii) Return loss balanced to artificial line. The step-by-step 
measurement procedure using the return loss balanced to artificial line 
for loaded loops shall be as shown in Figure 9. An artificial line of 
the same makeup as the cable to be tested shall be set up. The 
artificial line is connected to the external network terminals of the 
test set. The cable pair under test is compared to this standard. When 
defects are found, they should be identified and located by introducing 
faults into the artificial line. This is more difficult than with the 
method referenced in paragraph (f)(5)(i) of this section since this 
measurement is more sensitive to minor faults and only a single trace is 
used.
    (iii) Open circuit structural return loss using level tracer. The 
step-by-step measurement procedure using the level tracer for loaded 
loops shall be as shown in Figure 10. The cable pair is compared to a 
PBN.
    (6) Test equipment. Equipment for performing these tests is shown in 
Figures 8 through 10. For loaded loops, artificial loaded lines must be 
of the same gauge and loading scheme as the line under test. For 
nonloaded loops, artificial nonloaded lines must be of the same gauge as 
the line under test. Artificial lines should be arranged using

[[Page 547]]

switches or other quick connect arrangements to speed testing and 
troubleshooting. Figures 8 through 10 are as follows:
[GRAPHIC] [TIFF OMITTED] TR02MY97.030


[[Page 548]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.031


[[Page 549]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.032

    (7) Applicable results. (i) For loaded and nonloaded loops, the two 
traces in the pulse return pattern or impedance method (paragraph 
(f)(5)(i) of this section) shall be essentially identical. The degree of 
comparison required of the two traces is to be determined by experience.
    (ii) For loaded loops, results for return loss measurements using a 
level tracer, with artificial line, in lieu of a PBN (paragraph 
(f)(5)(ii) of this section) shall meet the following requirements:
    (A) For D66 and H88 loaded cables the structural return loss (SRL) 
values shall range between 28 and 39 dB, respectively, at the critical 
frequency of structural return loss (CFSRL) within the pass band of the 
loading system being used. The minimum SRL value for uniform gauge shall 
be 25 dB CFSRL. These SRL values apply for loaded cables of uniform 
gauge for the

[[Page 550]]

entire length of the subscriber loop circuit. Subscriber loop circuits 
shall meet the loading spacing deviations and the cable mutual 
capacitance requirements in the applicable RUS cable specifications;
    (B) For mixed gauge loaded cables the SRL values shall be 25 and 27 
dB CFSRL, respectively, and the minimum SRL value shall be 22 dB CFSRL; 
and
    (C) The two traces in the pulse return pattern should be essentially 
identical. The degree of comparison required of the two traces is 
determined by experience.
    (iii) For loaded loops, the results of open circuit structural 
return loss measurements using a level tracer (paragraph (f)(5)(iii) of 
this section) shall meet the following requirements. For D66 and H88 
loaded cables with uniform or mixed gauges, the worst value allowed for 
measured open circuit structural return loss between 1,000-3,500 Hz and 
1,000-3,000 Hz, respectively, shall be approximately 0.9 dB (round trip) 
for each 100 ohms outside plant dc loop resistance including the 
resistance of the load coils. The value of 0.9 dB per 100 ohms for the 
round trip loss remains reasonably accurate as long as:
    (A) The subscriber end section of the loaded pair under test is 
approximately 2,250 ft (685 m) for D66 loading or 3,000 ft (914 m) for 
H88 loading in length; and
    (B) The one-way 1,000 Hz loss does not exceed 10 dB.
    (iv) For loaded loops, the measured value of open circuit structural 
return loss can only be as accurate as the degree to which the dc loop 
resistance of the loaded pair under test is known. Most accurate results 
shall be obtained when the dc loop resistance is known by actual 
measurements as described in paragraph (d) of this section. Furthermore, 
where the dc loop resistance is measured at the same time as the open 
circuit structural return loss, no correction for temperature is needed 
because the loss is directly proportional to the loop resistance. Where 
it is not practical to measure the dc loop resistance, it shall be 
calculated and corrected for temperature as specified in paragraph 
(d)(6)(ii) of this section. When measuring existing plant, care shall be 
taken to verify the accuracy of the records, if they are used for the 
calculation of the dc loop resistance. For buried plant, the temperature 
correction shall be based at the normal depth of the cable in the 
ground. (Temperature can be measured by boring a hole to cable depth 
with a ground rod, placing a thermometer in the ground at the cable 
depth, and taking and averaging several readings during the course of 
the resistance measurements.) For aerial cable it shall be based on the 
temperature inside the cable sheath.
    (v) For loaded loops, the best correlation between the measured and 
the expected results shall be obtained when the cable is of one gauge, 
one size, and the far end section is approximately 2,250 ft (685 m) for 
D66 loading or 3,000 ft (914 m) for H88 loading. Mixing gauges and cable 
sizes will result in undesirable small reflections whose frequency 
characteristics and magnitude cannot be accurately predicted. In 
subscriber loop applications, cable gauge may be somewhat uniform but 
the cable pair size most likely will not be uniform as cable pair sizes 
taper off toward the customer access location and a downward adjustment 
of 1 dB of the allowed value shall be acceptable. ``Long'' end sections 
(as defined in TE&CM Section 424, ``Guideline for Telecommunications 
Subscriber Loop Plant'') lower the expected value, a further downward 
adjustment of 3 dB in the allowed value shall be acceptable.
    (vi) For loaded loops, the limiting factor when making open circuit 
structural return loss measurements is when the 1,000 Hz one-way loss of 
the loaded cable pair under test becomes 10 dB or greater; it becomes 
difficult to detect the presence of irregularities beyond the 10 dB 
point on the loop. To overcome this difficulty, loaded loops having a 
one-way loss at 1,000 Hz greater than 10 dB shall be opened at some 
convenient point (such as a pedestal or ready access enclosure) and loss 
measurements at the individual portions measuring less than 10 dB one-
way shall be made separately. When field mounted voice frequency 
repeaters are used, the measurement shall be made at the repeater 
location in both directions.
    (8) Data record.(i) When performing a pulse return pattern or 
impedance open

[[Page 551]]

circuit measurement on loaded and nonloaded loops, a ``check mark'' 
indicating that the pair tests good or an ``X'' indicating that the pair 
does not test good shall be recorded in the SRL column. A suggested 
format similar to Format I for subscriber loops in Sec. 1755.407 or a 
format specified in the applicable construction contract may be used.
    (ii) When performing open circuit return loss measurements using the 
return loss balanced to an artificial line or return loss using a level 
tracer on loaded loops, the value of the poorest (lowest numerical 
value) SRL and its frequency in the proper column between 1,000 and 
3,500 Hz for D66 loading or between 1,000 and 3,000 Hz for H88 loading 
shall be recorded. A suggested format similar to Format I for subscriber 
loops in Sec. 1755.407 or a format specified in the applicable 
construction contract may be used.
    (9) Probable causes for nonconformance. Some of the more common 
causes for failing to obtain the desired results may be due to reversed 
load coil windings, missing load coils, bridge taps between load coils, 
load coil spacing irregularities, excessive end sections, cables having 
high or low mutual capacitance, load coils inadvertently installed in 
nonloaded loops, moisture or water in the cable, load coils having the 
wrong inductance, split pairs, and improperly spliced connectors. The 
above can occur singularly or in combination. Experience to date 
indicates that the most common problems are missing load coils, reversed 
load coil windings or bridge taps.
    (g) Cable insertion loss measurement (carrier frequencies). (1) When 
specified by the borrower, carrier frequency insertion loss measurements 
shall be made on cable pairs used for T1, T1C, and/or station carrier 
systems. Carrier frequency insertion loss shall be made on a minimum of 
three pairs. Select at least one pair near the outside of the core unit 
layup. If the three measured pairs are within 10% of the calculated loss 
in dB corrected for temperature, no further testing is necessary. If any 
of the measured pairs of a section are not within 10% of the calculated 
loss in dB, all pairs in that section used for carrier transmission 
shall be measured.
    (2) Method of measurement. The step-by-step method of measurement 
shall be as shown in Figure 11.
    (3) Test equipment. The test equipment is shown in Figure 11 as 
follows:

[[Page 552]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.033

    (4) Applicable results. (i) The highest frequency to be measured is 
determined by the type of carrier system. For T1 type carrier, the 
highest frequency is normally 772 kHz. For T1C type carrier, the highest 
frequency is normally 1576 kHz. The highest frequency to be measured for 
station carrier is 140 kHz.
    (ii) The measured insertion loss of the cable shall be within 10% 
of the calculated loss in dB when the loss is corrected for temperature.
    (iii) The calculated insertion loss is computed as follows:

[[Page 553]]

    (A) Multiply the length of each different gauge by the applicable dB 
per unit length as shown in Table 7 or 8 as follows:

               Table 7--Cable Attenuation @ 68  deg.F (20  deg.C) Filled Cables--Solid Insulation
----------------------------------------------------------------------------------------------------------------
               Frequency (kHz)                              Attenuation dB/mile (dB/km) Gauge (AWG)
----------------------------------------------------------------------------------------------------------------
                                                     19               22               24               26
----------------------------------------------------------------------------------------------------------------
10..........................................        2.8 (1.7)        4.8 (2.9)        6.4 (3.9)        8.5 (5.3)
20..........................................        3.2 (2.0)        5.8 (3.6)        8.2 (5.1)       11.2 (6.9)
40..........................................        3.6 (2.2)        6.5 (4.0)        9.6 (6.0)       13.9 (8.6)
60..........................................        4.0 (2.5)        6.9 (4.2)       10.3 (6.4)       15.2 (9.4)
80..........................................        4.5 (2.8)        7.3 (4.5)       10.7 (6.6)       16.0 (9.9)
100.........................................        4.9 (3.0)        7.7 (4.7)       11.1 (6.8)      16.5 (10.2)
112.........................................        5.2 (3.2)        8.0 (4.9)       11.3 (7.0)      16.8 (10.5)
120.........................................        5.4 (3.3)        8.1 (5.0)       11.5 (7.1)      17.0 (10.6)
140.........................................        5.8 (3.6)        8.6 (5.3)       11.9 (7.4)      17.4 (10.8)
160.........................................        6.2 (3.8)        9.0 (5.6)       12.3 (7.6)      17.8 (11.1)
180.........................................        6.6 (4.1)        9.5 (5.9)       12.7 (7.9)      18.2 (11.3)
200.........................................        7.0 (4.3)       10.0 (6.2)       13.2 (8.2)      18.6 (11.5)
300.........................................        8.7 (5.4)       12.2 (7.5)       15.4 (9.6)      20.6 (12.8)
400.........................................       10.0 (6.2)       14.1 (8.8)      17.7 (11.0)      22.9 (14.2)
500.........................................       11.2 (6.9)       15.9 (9.8)      19.8 (12.3)      25.2 (15.6)
600.........................................       12.2 (7.5)      17.5 (10.9)      21.8 (13.6)      27.4 (17.0)
700.........................................       13.2 (8.2)      19.0 (11.8)      23.6 (14.7)      29.6 (18.4)
772.........................................       13.8 (8.5)      19.9 (12.4)      24.8 (15.4)      31.4 (19.5)
800.........................................       14.2 (8.8)      20.1 (12.5)      27.4 (17.1)      31.7 (19.7)
900.........................................       14.8 (9.2)      21.6 (13.4)      29.0 (18.0)      33.8 (21.0)
1000........................................       15.8 (9.8)      22.7 (14.1)      31.1 (19.3)      35.9 (22.3)
1100........................................      16.4 (10.2)      23.8 (14.8)      32.7 (20.3)      38.0 (23.6)
1200........................................      17.4 (10.8)      24.8 (15.4)      34.3 (21.3)      40.0 (24.9)
1300........................................      17.9 (11.1)      25.9 (16.1)      35.4 (22.0)      41.7 (25.9)
1400........................................      19.0 (11.8)      26.9 (16.7)      37.0 (23.0)      43.3 (26.9)
1500........................................      19.5 (12.1)      28.0 (17.4)      38.0 (23.6)      44.3 (27.6)
1576........................................      20.1 (12.4)      29.0 (18.0)      39.0 (24.3)      44.4 (28.2)
----------------------------------------------------------------------------------------------------------------


              Table 8--Cable Attenuation @ 68  deg.F (20  deg.C) Filled Cables--Expanded Insulation
----------------------------------------------------------------------------------------------------------------
                                                            Attenuation dB/mile (dB/km) Gauge (AWG)
               Frequency (kHz)               -------------------------------------------------------------------
                                                     19               22               24               26
----------------------------------------------------------------------------------------------------------------
10..........................................        3.0 (1.8)        4.9 (3.0)        6.5 (4.0)        8.6 (5.3)
20..........................................        3.5 (2.1)        6.0 (4.1)        8.5 (5.2)       11.5 (7.1)
40..........................................        4.0 (2.5)        7.0 (4.3)       10.2 (6.3)       14.4 (8.9)
60..........................................        4.5 (2.8)        7.5 (4.6)       11.1 (6.8)       16.0 (9.9)
80..........................................        5.2 (3.3)        7.9 (4.9)       11.3 (6.9)      16.2 (10.1)
100.........................................        5.8 (3.6)        8.4 (5.2)       11.6 (7.2)      16.4 (10.2)
112.........................................        6.0 (3.8)        8.8 (5.4)       11.9 (7.4)      16.6 (10.3)
120.........................................        6.2 (3.9)        9.0 (5.6)       12.1 (7.5)      16.9 (10.5)
140.........................................        6.6 (4.1)        9.5 (5.9)       12.7 (7.9)      17.2 (10.7)
160.........................................        6.9 (4.3)       10.0 (6.2)       13.2 (8.2)      17.4 (10.8)
180.........................................        7.4 (4.6)       10.6 (6.6)       13.7 (8.5)      17.9 (11.1)
200.........................................        7.9 (4.9)       11.1 (6.9)       14.2 (8.8)      18.5 (11.5)
300.........................................        9.5 (5.9)       13.2 (8.2)      16.8 (10.5)      21.6 (13.4)
400.........................................       11.1 (6.9)       15.3 (9.5)      19.5 (12.1)      24.3 (15.1)
500.........................................       12.1 (7.5)      17.9 (11.1)      22.2 (13.8)      27.4 (17.1)
600.........................................       13.7 (8.5)      19.5 (12.1)      24.3 (15.1)      29.6 (18.4)
700.........................................       14.8 (9.2)      21.1 (13.1)      26.4 (16.4)      32.2 (20.0)
772.........................................       15.3 (9.5)      21.6 (13.4)      27.4 (17.1)     33.8 (21.90)
800.........................................       15.8 (9.8)      22.2 (13.8)      28.0 (17.4)      34.4 (21.3)
900.........................................      17.0 (10.5)      23.8 (14.8)      29.6 (18.4)      36.4 (22.6)
1000........................................      17.4 (10.8)      24.8 (15.4)      31.1 (19.3)      38.5 (23.9)
1100........................................      17.9 (11.1)      26.4 (16.4)      33.3 (20.7)      40.6 (25.3)
1200........................................      19.0 (11.8)       27.4 (17.1      34.3 (21.3)      42.2 (26.2)
1300........................................      19.5 (12.1)      28.5 (17.7)      35.9 (22.3)      43.8 (27.2)
1400........................................       20.1 (12.5      29.6 (18.4)      37.0 (23.0)      45.9 (28.5)
1500........................................      20.6 (12.8)      30.6 (19.0)      38.5 (23.9)      47.5 (29.5)
1576........................................      21.6 (13.4)      31.1 (19.3)      39.1 (24.3)      48.6 (30.2)
----------------------------------------------------------------------------------------------------------------


[[Page 554]]

    (B) Add the individual losses for each gauge to give the total 
calculated insertion loss at a temperature of 68  deg.F (20  deg.C);
    (C) Correct the total calculated insertion loss at the temperature 
of 68  deg.F (20  deg.C) to the measurement temperature by the following 
formulae:

At=A68x[1+0.0012x(t-68)] for English Units
At=A20x[1+0.0022x(t--20)] for Metric Units

Where:

At=Insertion loss at the measurement temperature in dB.
A68=Insertion loss at a temperature of 68  deg.F in dB.
A20=Insertion loss at a temperature of 20  deg.C in dB.
t=Measurement temperature in  deg.F or ( deg.C); and

    (D) Compare the calculated insertion loss at the measurement 
temperature to the measured insertion loss to determine compliance with 
the requirement specified in paragraph (g)(4)(ii) of this section. 
(Note: Attenuation varies directly with temperature. For each 10  deg.F 
(5.6  deg.C) change in temperature increase or decrease the attenuation 
by 1%.)
    (iv) If the measured value exceeds the 10% allowable variation, the 
cause shall be determined and corrective action shall be taken to remedy 
the problem.
    (5) Data record. Results of carrier frequency insertion loss 
measurements for station, T1, and/or T1C type carrier shall be recorded. 
Suggested formats similar to Format III, Outside Plant Acceptance 
Tests--T1 or T1C Carrier Pairs, and Format IV, Outside Plant Acceptance 
Tests--Station Carrier Pairs, in Sec. 1755.407 or formats specified in 
the applicable construction contract may be used.
    (6) Probable causes for nonconformance. If the measured loss is low, 
the cable records are likely to be in error. If the measured loss is 
high, there may be bridge taps, load coils or voice frequency build-out 
capacitors connected to the cable pairs or the cable records may be in 
error. Figures 12 and 13 are examples that show the effects of bridge 
taps and load coils in the carrier path. Figures 12 and 13 are as 
follows:

[[Page 555]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.034


[[Page 556]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.035


[62 FR 23962, May 2, 1997]



Sec. 1755.404  Fiber optic cable telecommunications plant measurements.

    (a) Armor continuity. (1) Tests and measurements shall be made to 
ensure that the armor of fiber optic cables is continuous. There are two 
areas of concern. The first is armor bonding within a splice and the 
second is armor continuity between splices.
    (2) Measurement techniques outlined here for verification of armor 
continuity are applicable to buried fiber optic cable plant. 
Measurements of armor continuity between splices in aerial, armored, 
fiber optic cable should be made prior to completion of splicing. 
Conclusive results cannot be obtained on aerial plant after all bonds 
have been completed to the supporting strand, multigrounded neutral, 
etc.
    (3) Method of measurement. Armor continuity within splices shall be 
measured with a cable shield splice

[[Page 557]]

continuity test set. The step-by-step measurement procedure outlined in 
the manufacturer's operating instructions for the specific test 
equipment being used shall be followed.
    (4) Test equipment. A cable shield splice continuity tester shall be 
used to measure armor continuity within splices.
    (5) Applicable results. When utilizing shield continuity testers to 
measure armor continuity within splices, refer to the manufacturer's 
published information covering the specific test equipment to be used 
and for anticipated results.
    (6) Data record. Measurement data from armor continuity tests shall 
be recorded together with anticipated values in an appropriate format to 
permit comparison. The recorded data shall include specific location, 
cable size, and cable type, if known, etc.
    (7) Probable causes for nonconformance. Among probable causes for 
nonconformance are broken or damaged armors, bad bonding harnesses, 
poorly connected bonding clamps, loose bonding lugs, etc.
    (b) Fiber optic splice loss measurement. (1) After placement of all 
fiber optic cable plant has been completed and spliced together to form 
a continuous optical link between end termination points, splice loss 
measurements shall be performed on all field and central office splice 
points.
    (2) Method of measurement. (i) Field splice loss measurements shall 
be made between the end termination points at 1310 and/or 1550 
nanometers for single mode fibers and in accordance with Figure 14. Two 
splice loss measurements shall be made between the end termination 
points. The first measurement shall be from termination point A to 
termination point B. The second measurement shall be from termination 
point B to termination point A.
    (ii) CO splice loss measurements shall be made at 1310 and/or 1550 
nanometers for single mode fibers and in accordance with Figure 15. Two 
splice loss measurements shall be made between the end termination 
points. The first measurement shall be from termination point A to 
termination point B. The second measurement shall be from termination 
point B to termination point A.
    (3) Test equipment. The test equipment is shown in Figures 14 and 
15. The optical time domain reflectometer (OTDR) used for the testing 
should have dual wave length capability. Figures 14 and 15 are as 
follows:

[[Page 558]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.036


[[Page 559]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.037

    (4) Applicable results. (i) The splice loss for each single mode 
field splice shall be the bi-directional average of the two OTDR 
readings. To calculate the actual splice loss, substitute the OTDR 
readings maintaining the sign of the loss (+) or apparent gain (-) into 
the following equation:

[[Page 560]]

[GRAPHIC] [TIFF OMITTED] TN07MY97.000

    (ii) When specified in the applicable construction contract, the 
splice loss of each field splice at 1310 and/or 1550 nanometers shall 
not exceed the limit specified in the contract.
    (iii) When no limit is specified in the applicable construction 
contract, the splice loss of each field splice shall not exceed 0.2 dB 
at 1310 and/or 1550 nanometers.
    (iv) The splice loss for each single mode CO splice shall be the bi-
directional average of the two OTDR reading. To calculate actual splice 
loss, substitute the OTDR reading, maintaining the sign of the loss (+) 
or apparent gain (-), into the equation specified in paragraph (b)(4)(i) 
of this section.
    (v) When specified in the applicable construction contract, the 
splice loss of each central office splice at 1310 and/or 1550 nanometers 
shall not exceed the limit specified in the contract.
    (vi) When no limit is specified in the applicable construction 
contract, the splice loss of each central office splice shall not exceed 
1.2 dB at 1310 and/or 1550 nanometers.
    (5) Data record. The measurement data shall be recorded. A suggested 
format similar to Format V, Outside Plant Acceptance Test--Fiber Optic 
Telecommunications Plant, in Sec. 1755.407 or a format specified in the 
applicable construction contract may be used.
    (6) Probable causes for nonconformance. When the results of the 
splice loss measurements exceed the specified limits the following 
factors should be checked:
    (i) Proper end preparation of the fibers;
    (ii) End separation between the fiber ends;
    (iii) Lateral misalignment of fiber cores;
    (iv) Angular misalignment of fiber cores;
    (v) Fresnel reflection;
    (vi) Contamination between fiber ends;
    (vii) Core deformation; or
    (viii) Mode-field diameter mismatch.
    (c) End-to-end attenuation measurement. (1) After placement of all 
fiber optic cable plant has been completed and spliced together to form 
a continuous optical link between end termination points, end-to-end 
attenuation measurements shall be performed on each optical fiber within 
the cable.
    (2) Method of measurement. For single mode fibers, the end-to-end 
attenuation measurements of each optical fiber at 1310 and/or 1550 
nanometers in each direction between end termination points shall be 
performed in accordance with Figure 16.
    (3) Test equipment. The test equipment is shown in Figure 16 as 
follows:

[[Page 561]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.038

    (4) Applicable results. The end-to-end attenuation of each single 
mode optical fiber at 1310 and/or 1550 nanometers shall not exceed the 
limits specified in the applicable construction contract.
    (5) Data record. The measurement data shall be recorded. A suggested 
format similar to Format V for fiber optic telecommunications plant in 
Sec. 1755.407 or on a format specified in the applicable construction 
contract may be used.
    (6) Probable causes for nonconformance. Failure of each optical 
fiber to meet the end-to-end attenuation limit could be attributed to 
the following:
    (i) Excessive field or central office splice loss;
    (ii) Excessive cable attenuation; or

[[Page 562]]

    (iii) Damage to the fiber optic cable during installation.
    (d) End-to-end fiber signature measurement. (1) After placement of 
all fiber optic cable plant has been completed and spliced together to 
form a continuous optical link between end termination points, end-to-
end fiber signature testing shall be performed on each optical fiber 
within the cable.
    (2) Method of measurement. For single mode fibers, the end-to-end 
fiber signature measurement of each optical fiber in each direction 
shall be performed between end termination points at 1310 and/or 1550 
nanometers in accordance with Figure 17.
    (3) Test equipment. The test equipment is shown in Figure 17 as 
follows:

[[Page 563]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.039

    (4) Applicable results. The appearance of each optical fiber between 
end termination points.
    (5) Data record. Plot the trace of each optical fiber and retain as 
a permanent record for future comparison if needed.
    (6) Probable causes for nonconformance. None.

[62 FR 23989, May 2, 1997; 62 FR 25017, May 7, 1997]

[[Page 564]]



Sec. 1755.405  Voiceband data transmission measurements.

    (a) The data transmission measurements listed in this section shall 
be used to determine the acceptability of trunk and nonloaded subscriber 
loop circuits for data modem transmission.
    (b) Signal-to-C notched noise (S/CNN) measurement. (1) When 
specified by the borrower, S/CNN measurements shall be made on trunk 
circuits and nonloaded subscriber loops. For trunk circuits, the 
measurement shall be made between CO locations. For nonloaded subscriber 
loops, the measurement shall be made from the CO to the station 
protector of the NID at the customer's access location.
    (2) S/CNN is the logarithmic ratio expressed in dB of a 1,004 Hz 
holding tone signal compared to the C-message weighted noise level. S/
CNN is one of the most important transmission parameters affecting the 
performance of data transmission because proper modem operation requires 
low noise relative to received power level. Since modulated carriers are 
used in data communication systems, noise measurements need to be 
performed with power on the connection to activate equipment having 
signal-level-dependent noise sources. For 4 kHz channels, a 1,004 Hz 
holding tone is used to activate the signal-dependent equipment on the 
channel or connection.
    (3) Method of measurement. The S/CNN measurement shall be made using 
a 1,004 Hz holding tone at -13 dBm0 (decibels relative to one milliwatt, 
referred to a zero transmission level point) and performed in accordance 
with American National Standards Institute (ANSI) T1.506-1990, American 
National Standard for Telecommunications--Network Performance--
Transmission Specifications for Switched Exchange Access Network 
including supplement ANSI T1.506a-1992, and American National Standards 
Institute/Institute of Electrical and Electronics Engineers (ANSI/IEEE) 
743-1984, IEEE Standard Methods and Equipment for Measuring the 
Transmission Characteristics of Analog Voice Frequency Circuits. The 
ANSI T1.506-1990, American National Standard for Telecommunications--
Network Performance--Transmission Specifications for Switched Exchange 
Access Network is incorporated by reference in accordance with 5 U.S.C. 
522(a) and 1 CFR part 51. Copies of ANSI T1.506-1990 are available for 
inspection during normal business hours at RUS, room 2845, U.S. 
Department of Agriculture, STOP 1598, Washington, DC 20250-1598, or at 
the National Archives and Records Administration (NARA). For information 
on the availability of this material at NARA, call 202-741-6030, or go 
to: http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html. Copies are available from ANSI, 
Customer Service, 11 West 42nd Street, New York, New York 10036, 
telephone number (212) 642-4900. The ANSI/IEEE 743-1984, IEEE Standard 
Methods and Equipment for Measuring the Transmission Characteristics of 
Analog Voice Frequency Circuits is incorporated by reference in 
accordance with 5 U.S.C. 522(a) and 1 CFR part 51. Copies of ANSI/IEEE 
743-1984 are available for inspection during normal business hours at 
RUS, room 2845, U.S. Department of Agriculture, STOP 1598, Washington, 
DC 20250-1598, or at the National Archives and Records Administration. 
Copies are available from ANSI, Customer Service, 11 West 42nd Street, 
New York, New York 10036, telephone number (212) 642-4900.
    (4) Test equipment. The equipment for performing the measurement 
shall be in accordance with ANSI/IEEE 743-1984.
    (5) Applicable results. The S/CNN for both trunk and nonloaded 
subscriber loop circuits shall not be less than 31 dB.
    (6) Data record. The measurement data shall be recorded. Suggested 
formats similar to Format VI, Voiceband Data Transmission Tests--
Nonloaded Subscriber Loops, and Format VII, Voiceband Data Transmission 
Tests--Trunk Circuits, in Sec. 1755.407 or formats specified in the 
applicable construction contract may be used.
    (7) Probable causes for nonconformance. Some of the causes for 
failing to obtain the desired results may be due to excessive harmonic 
distortion, quantizing noise, phase and amplitude jitter, and loss in 
digital pads used for level settings.
    (c) Signal-to-intermodulation distortion (S/IMD) measurement. (1) 
When specified

[[Page 565]]

by the borrower, S/IMD measurements shall be made on trunk circuits and 
nonloaded subscriber loops. For trunk circuits, the measurement shall be 
made between CO locations. For nonloaded subscriber loops, the 
measurement shall be made from the CO to the station protector of the 
NID at the customer's access location.
    (2) S/IMD is a measure of the distortion produced by extraneous 
frequency cross products, known as intermodulation products, when a 
multi-tone tone signal is applied to a system.
    (3) Intermodulation distortion (IMD) is caused by system 
nonlinearities acting upon the harmonic frequencies produced from an 
input of multiple tones. The products resulting from IMD can be more 
damaging than noise in terms of producing data transmission errors.
    (4) IMD is measured as a signal to distortion ratio and is expressed 
as the logarithmic ratio in dB of the composite power of four resulting 
test frequencies to the total power of specific higher order distortion 
products that are produced. The higher order products are measured at 
both the 2nd order and 3rd order and are designated R2 and R3, 
respectively. The four frequency testing for IMD is produced with four 
tones of 857, 863, 1,372, and 1,388 Hz input at a composite power level 
of -13 dBm0.
    (5) Method of measurement. The S/IMD measurement shall be performed 
in accordance with ANSI T1.506-1990 and ANSI/IEEE 743-1984.
    (6) Test equipment. The equipment for performing the measurement 
shall be in accordance with ANSI/IEEE 743-1984.
    (7) Applicable results. The 2nd order (R2) S/IMD for both trunk and 
nonloaded subscriber loop circuits shall not be less than 40 dB. The 3rd 
order (R3) S/IMD for both trunk and nonloaded subscriber loop circuits 
shall not be less than 40 dB.
    (8) Data record. The measurement data shall be recorded. Suggested 
formats similar to Format VI for nonloaded subscriber loops and Format 
VII for trunk circuits in Sec. 1755.407 or formats specified in the 
applicable construction contract may be used.
    (9) Probable causes for nonconformance. Some of the causes for 
failing to obtain the desired results may be due to channel 
nonlinearities, such as compression and clipping, which cause harmonic 
and intermodulation distortion in a voiceband signal.
    (d) Envelope delay distortion (EDD) measurement. (1) When specified 
by the borrower, EDD measurements shall be made on trunk circuits and 
nonloaded subscriber loops. For trunk circuits, the measurement shall be 
made between CO locations. For nonloaded subscriber loops, the 
measurement shall be made from the CO to the station protector of the 
NID at the customer's access location.
    (2) EDD is a measure of the linearity or uniformity of the phase 
versus frequency characteristics of a transmission facility. EDD is also 
known as relative envelope delay (RED).
    (3) EDD is specifically defined as the delay relative to the 
envelope delay at the reference frequency of 1,704 Hz. EDD is typically 
measured at two frequencies, one low and one high in the voiceband. The 
low frequency measurement is made at 604 Hz. The high frequency 
measurement is made at 2,804 Hz.
    (4) Method of measurement. The EDD measurement shall be performed in 
accordance with ANSI T1.506-1990 and ANSI/IEEE 743-1984.
    (5) Test equipment. The equipment for performing the measurement 
shall be in accordance with ANSI/IEEE 743-1984.
    (6) Applicable results. The EDD for both trunk and nonloaded 
subscriber loop circuits at the low frequency of 604 Hz shall not exceed 
1,500 microseconds. The EDD for both trunk and nonloaded subscriber loop 
circuits at the high frequency of 2,804 Hz shall not exceed 1,000 
microseconds.
    (7) Data record. The measurement data shall be recorded. Suggested 
formats similar to Format VI for nonloaded subscriber loops and Format 
VII for trunk circuits in Sec. 1755.407 or formats specified in the 
applicable construction contract may be used.
    (8) Probable causes for nonconformance. Some of the causes for 
failing to obtain the desired results may be due to nonlinearity of the 
phase versus frequency

[[Page 566]]

characteristic of the transmission facility. This nonlinear phase versus 
frequency characteristic of the transmission facility causes the various 
frequency components to travel at different transit times which results 
in successively transmitted data pulses to overlap at the receive end. 
The overlapping of the pulses at the receive end results in distortion 
of the received signal. Excessive EDD on the transmission facility may 
be reduced using data modems with equalization or by conditioning the 
transmission line.
    (e) Amplitude jitter (AJ) measurement. (1) When specified by the 
borrower, AJ measurements shall be made on trunk circuits and nonloaded 
subscriber loops. For trunk circuits, the measurement shall be made 
between CO locations. For nonloaded subscriber loops, the measurement 
shall be made from the CO to the station protector of the NID at the 
customer's access location.
    (2) AJ is any fluctuation in the peak amplitude value of a fixed 
tone signal at 1,004 Hz from its nominal value. AJ is expressed in peak 
percent amplitude modulation.
    (3) AJ is measured in two separate frequency bands, 4-300 Hz and 20-
300 Hz. The 4-300 Hz band is important for modems employing echo 
canceling capabilities. The 20-300 Hz band is used for modems that do 
not employ echo cancelers.
    (4) Amplitude modulation can affect the error performance of 
voiceband data modems. The measurement of amplitude jitter indicates the 
total effect on the amplitude of the holding tone of incidental 
amplitude modulation and other sources including quantizing and message 
noise, impulse noise, gain hits, phase jitter, and additive tones such 
as single-frequency interference.
    (5) Method of measurement. The AJ measurement shall be performed in 
accordance with ANSI T1.506-1990 and ANSI/IEEE 743-1984.
    (6) Test equipment. The equipment for performing the measurement 
shall be in accordance with ANSI/IEEE 743-1984.
    (7) Applicable results. The AJ for both trunk and nonloaded 
subscriber loop circuits in the 4-300 Hz frequency band shall not exceed 
6%. The AJ for both trunk and nonloaded subscriber loop circuits in the 
20-300 Hz frequency band shall not exceed 5%.
    (8) Data record. The measurement data shall be recorded. Suggested 
formats similar to Format VI for nonloaded subscriber loops and Format 
VII for trunk circuits in Sec. 1755.407 or formats specified in the 
applicable construction contract may be used.
    (9) Probable causes for nonconformance. Some of the causes for 
failing to obtain the desired results may be due to excessive S/CNN, 
impulse noise, and phase jitter.
    (f) Phase jitter (PJ) measurement. (1) When specified by the 
borrower, PJ measurements shall be made on trunk circuits and nonloaded 
subscriber loops. For trunk circuits, the measurement shall be made 
between CO locations. For nonloaded subscriber loops, the measurement 
shall be made from the CO to the station protector of the NID at the 
customer's access location.
    (2) PJ is any fluctuation in the zero crossings of a fixed tone 
signal (usually 1,004 Hz) from their nominal position in time within the 
voiceband. PJ is expressed in terms of either degrees peak-to-peak 
( deg. p-p) or in terms of a Unit Interval (UI). One UI is equal to 
360 deg. p-p.
    (3) PJ measurements are typically performed in two nominal frequency 
bands. The frequency bands are 20-300 Hz band and either the 2-300 Hz 
band or the 4-300 Hz band. The 20-300 Hz band is important to all phase-
detecting modems. The 4-300 Hz band or the 2-300 Hz band is important 
for modems employing echo canceling capabilities.
    (4) Phase jitter can affect the error performance of voiceband data 
modems that use phase detection techniques. The measurement of phase 
jitter indicates the total effect on the holding tone of incidental 
phase modulation and other sources including quantizing and message 
noise, impulse noise, phase hits, additive tones such as single-
frequency interference, and digital timing jitter.
    (5) Method of measurement. The PJ measurement shall be performed in 
accordance with ANSI T1.506-1990 and ANSI/IEEE 743-1984.
    (6) Test equipment. The equipment for performing the measurement 
shall be in accordance with ANSI/IEEE 743-1984.

[[Page 567]]

    (7) Applicable results. The PJ for both trunk and nonloaded 
subscriber loop circuits in the 4-300 Hz frequency band shall not exceed 
6.5 deg. p-p. The PJ for both trunk and nonloaded subscriber loop 
circuits in the 20-300 Hz frequency band shall not exceed 10.0 deg. p-p.
    (8) Data record. The measurement data shall be recorded. Suggested 
formats similar to Format VI for nonloaded subscriber loops and Format 
VII for trunk circuits in Sec. 1755.407 or formats specified in the 
applicable construction contract may be used.
    (9) Probable causes for nonconformance. Some of the causes for 
failing to obtain the desired results may be due to excessive S/CNN, 
impulse noise, and amplitude jitter.
    (g) Impulse noise measurement. (1) When specified by the borrower, 
impulse noise measurements shall be made on trunk circuits and nonloaded 
subscriber loops. For trunk circuits, the measurement shall be made 
between CO locations. For nonloaded subscriber loops, the measurement 
shall be made from the CO to the station protector of the NID at the 
customer's access location.
    (2) Impulse noise is a measure of the presence of unusually large 
noise excursions of short duration that are beyond the normal background 
noise levels on a facility. Impulse noise is typically measured by 
counting the number of occurrences beyond a particular noise reference 
threshold in a given time interval. The noise reference level is C-
message weighted.
    (3) Method of measurement. The impulse noise measurement shall be 
performed using a 1,004 Hz tone at -13 dBm0 and in accordance with ANSI 
T1.506-1990 and ANSI/IEEE 743-1984.
    (4) Test equipment. The equipment for performing the measurement 
shall be in accordance with ANSI/IEEE 743-1984.
    (5) Applicable results. The impulse noise for both trunk and 
nonloaded subscriber loop circuits shall not exceed 65 dBrnC0 (decibels 
relative to one picowatt reference noise level, measured with C-message 
frequency weighting, referred to a zero transmission level point). The 
impulse noise requirement shall be based upon a maximum of 5 counts in a 
5 minute period at equal to or greater than the indicated noise 
thresholds.
    (6) Data record. The measurement data shall be recorded. Suggested 
formats similar to Format VI for nonloaded subscriber loops and Format 
VII for trunk circuits in Sec. 1755.407 or formats specified in the 
applicable construction contract may be used.
    (7) Probable causes for nonconformance. Some of the causes for 
failing to obtain the desired results may be due to excessive transient 
signals originating from the various switching operations.

[62 FR 23996, May 2, 1997, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.406  Shield or armor ground resistance measurements.

    (a) Shield or armor ground resistance measurements shall be made on 
completed lengths of copper cable and wire plant and fiber optic cable 
plant.
    (b) Method of measurement. (1) The shield or armor ground resistance 
measurement shall be made between the copper cable and wire shield and 
ground and between the fiber optic cable armor and ground, respectively. 
The measurement shall be made either on cable and wire lengths before 
splicing and before any ground connections are made to the cable or wire 
shields or armors. Optionally, the measurement may be made on cable and 
wire lengths after splicing, but all ground connections must be removed 
from the section under test.
    (2) The method of measurement using either an insulation resistance 
test set or a dc bridge type megohmmeter shall be as shown in Figure 18 
as follows:

[[Page 568]]

[GRAPHIC] [TIFF OMITTED] TR02MY97.040

    (c) Test equipment. (1) The shield or armor ground resistance 
measurements may be made using an insulation resistance test set, a dc 
bridge type megohmmeter, or a commercially available fault locator.
    (2) The insulation resistance test set should have an output voltage 
not to exceed 500 volts dc and may be hand cranked or battery operated.
    (3) The dc bridge type megohmmeter, which may be ac powered, should 
have

[[Page 569]]

scales and multipliers which make it possible to accurately read 
resistance values of 50,000 ohms to 10 megohms. The voltage that is 
applied to the shield or armor during the test should not be less than 
``250 volts dc'' nor greater than ``1,000 volts dc'' when using an 
instrument having adjustable test voltage levels.
    (4) Commercially available fault locators may be used in lieu of the 
above equipment, if the devices are capable of detecting faults having 
resistance values of 50,000 ohms to 10 megohms. Operation of the devices 
and method of locating the faults should be in accordance with 
manufacturer's instructions.
    (d) Applicable results. (1) For all new copper cable and wire 
facilities and all new fiber optic cable facilities, the shield or armor 
ground resistance levels normally exceed 1 megohm-mile (1.6 megohm-km) 
at 68  deg.F (20  deg.C). A value of 100,000 ohm-mile (161,000 ohm-km) 
at 68  deg.F (20  deg.C) shall be the minimum acceptable value of the 
shield or armor ground resistance.
    (2) Shield or armor ground resistance varies inversely with length 
and temperature. In addition other factors which may affect readings 
could be soil conditions, faulty test equipment and incorrect test 
procedures.
    (3) For the resistance test method and dc bridge type megohmmeter, 
the ohm-mile (ohm-km) value for the shield or armor ground resistance 
shall be computed by multiplying the actual scale reading in ohms on the 
test set by the length in miles (km) of the cable or wire under test.
    (4)(i) The objective shield or armor ground resistance may be 
determined by dividing 100,000 by the length in miles (161,000 by the 
length in km) of the cable or wire under test. The resulting value is 
the minimum acceptable meter scale reading in ohms. Examples for 
paragraphs (d)(3) and (d)(4) of this section are as follows:

Equation 1. Test Set: Scale Reading * Length = Resistance-Length
75,000 ohms * 3 miles = 225,000 ohm-mile
(75,000 ohms * 4.9 km = 367,000 ohm-km)

Equation 2. 100,000 ohm-mile / Length = Minimum Acceptable Meter Scale 
Reading
100,000 ohm-mile / 3 miles = 33,333 ohms
(161,000 ohm-km / 4.9 km = 32,857 ohms)

    (ii) Since the 33,333 ohms (32,857 ohms) is the minimum acceptable 
meter scale reading and the meter scale reading was 75,000 ohms, the 
cable is considered to have met the 100,000 ohm-mile (161,000 ohm-km) 
requirement.
    (5) Due to the differences between various jacketing materials used 
in manufacturing cable or wire and to varying soil conditions, it is 
impractical to provide simple factors to predict the magnitude of 
variation in shield or armor to ground resistance due to temperature. 
The variations can, however, be substantial for wide excursions in 
temperature from the ambient temperature of 68  deg.F (20  deg.C).
    (e) Data record. The data shall be corrected to the length 
requirement of ohm-mile (ohm-km) and a temperature of 68  deg.F (20 
deg.C) and shall be recorded on a form specified in the applicable 
construction contract.
    (f) Probable causes for nonconformance. (1) When results of 
resistance measurements are below the 100,000 ohm-mile (161,000 ohm-km) 
requirement at 68  deg.F (20  deg.C), the jacket temperature, soil 
conditions, test equipment and method shall be reviewed before the cable 
or wire is considered a failure. If the temperature is approximately 68 
deg.F (20  deg.C) and soil conditions are acceptable, and a reading of 
less than 100,000 ohm-mile (161,000 ohm-km) is indicated, check the 
calibration of the equipment; as well as, the test method. If the 
equipment was found to be out of calibration, recalibrate the equipment 
and remeasure the cable or wire. If the temperature was 86  deg.F (30 
deg.C) or higher, the cable or wire shall be remeasured at a time when 
the temperature is approximately 68  deg.F (20  deg.C). If the test was 
performed in unusually wet soil, the cable or wire shall be retested 
after the soil has reached normal conditions. If after completion of the 
above steps, the resistance value of 100,000 ohm-mile (161,000 ohm-km) 
or greater is obtained, the cable or wire shall be considered 
acceptable.
    (2) When the resistance value of the cable or wire is still found to 
be below 100,000 ohm-mile (161,000 ohm-km) requirement after completion 
of the steps listed in paragraph (f)(1) of this

[[Page 570]]

section, the fault shall be isolated by performing shield or armor 
ground resistance measurements on individual cable or wire sections.
    (3) Once the fault or faults have been isolated, the cable or wire 
jacket shall be repaired in accordance with Sec. 1755.200, RUS Standard 
for Splicing Copper and Fiber Optic Cables or the entire cable or wire 
section may be replaced at the request of the borrower.

[62 FR 23998, May 2, 1997]



Sec. 1755.407  Data formats.

    The following suggested formats listed in this section may be used 
for recording the test data:
[GRAPHIC] [TIFF OMITTED] TR02MY97.041


[[Page 571]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.042


[[Page 572]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.043


[[Page 573]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.044


[[Page 574]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.045


[[Page 575]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.046


[[Page 576]]


[GRAPHIC] [TIFF OMITTED] TR02MY97.047


[62 FR 24000, May 2, 1997]



Secs. 1755.408-1755.499  [Reserved]



Sec. 1755.500  RUS standard for service installations at customers 
access locations.

    (a) Sections 1755.501 through 1755.510 cover service installations 
at permanent or mobile home customer access locations. Sections 1755.501 
through 1755.510 do not cover service installations at customer access 
locations associated with boat yards or marinas.
    (b) Service installations for customer access locations in boat 
yards or marinas shall be performed in accordance with Article 800, 
Communications Circuits, of the American National Standards Institute/
National Fire Protection Association (ANSI/NFPA) 70-1999, National 
Electrical Code [supreg] (NEC [supreg]). The National Electrical Code 
[supreg] and NEC [supreg] are registered trademarks of the National Fire 
Protection Association, Inc., Quincy, MA 02269. The ANSI/NFPA 70-

[[Page 577]]

1999, NEC [supreg] is incorporated by reference in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies are available from NFPA, 1 
Batterymarch Park, P.O. Box 9101, Quincy, Massachusetts 02269-9101, 
telephone number 1 (800) 344-3555. Copies of ANSI/NFPA 70-1999, NEC 
[supreg], are available for inspection during normal business hours at 
Rural Utilities Service (RUS), room 2905, U.S. Department of 
Agriculture, 1400 Independence Avenue, SW., STOP 1598, Washington, DC 
20250-1598, or at the National Archives and Records Administration 
(NARA). For information on the availability of this material at NARA, 
call 202-741-6030, or go to: http://www.archives.gov/federal--register/
code--of--federal--regulations/ibr--locations.html.

[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.501  Definitions applicable to Secs. 1755.501 through 1755.510.

    For the purpose of this section and Secs. 1755.502 through 1755.510, 
the following terms are defined as follows:
    American National Standards Institute (ANSI). A private sector 
standards coordinating body which serves as the United States source and 
information center for all American National Standards.
    Ampacity. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: The 
current, in amperes, that a conductor can carry continuously under the 
conditions of use without exceeding its temperature rating. (Reprinted 
with permission from NFPA 70-1999, the National Electrical Code 
[supreg], Copyright [copy] 1998, National Fire Protection 
Association, Quincy, MA 02269. This reprinted material is not the 
complete and official position of the National Fire Protection 
Association, on the referenced subject which is represented only by the 
standard in its entirety.) The National Electrical Code [supreg] and NEC 
[supreg] are registered trademarks of the National Fire Protection 
Association, Inc., Quincy, MA 02269. The ANSI/NFPA 70-1999, NEC 
[supreg], is incorporated by reference in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. Copies are available from NFPA, 1 Batterymarch 
Park, P.O. Box 9101, Quincy, Massachusetts 02269-9101, telephone number 
1 (800) 344-3555. Copies of ANSI/NFPA 70-1999, NEC [supreg], are 
available for inspection during normal business hours at RUS, room 2905, 
U.S. Department of Agriculture, 1400 Independence Avenue, SW., STOP 
1598, Washington, DC 20250-1598, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html.
    AWG. American Wire Gauge.
    BET. Building entrance terminal.
    Bonding (Bonded). As defined in the ANSI/NFPA 70-1999, NEC [supreg]: 
The permanent joining of metallic parts to form an electrically 
conductive path that will ensure electrical continuity and the capacity 
to conduct safely any current likely to be imposed. (Reprinted with 
permission from NFPA 70-1999, the National Electrical Code [supreg], 
Copyright [copy] 1998, National Fire Protection Association, 
Quincy, MA 02269. This reprinted material is not the complete and 
official position of the National Fire Protection Association, on the 
referenced subject which is represented only by the standard in its 
entirety.)
    Bonding harness wire. A reliable electrical conductor purposefully 
connected between metal parts which are required to be electrically 
connected (bonded) to one another to ensure the metal parts are at 
similar electrical potential.
    Building entrance terminal (BET). A BET is comprised of a housing 
suitable for indoor and outdoor installation which contains quick-
connect or binding post terminals for terminating both 
telecommunications service cable conductors and inside wiring cable 
conductors. The BET also includes primary station protectors and a means 
of terminating the metallic shields of service entrance cables.
    Demarcation point (DP). As defined in the Federal Communications 
Commission (FCC) rules in 47 CFR part 68: The point of demarcation or 
interconnection between telecommunications company communications 
facilities and terminal equipment, protective apparatus, or wiring at a 
subscriber's premises. Carrier-installed facilities at, or constituting, 
the demarcation point

[[Page 578]]

shall consist of wire or a jack conforming to subpart F of 47 CFR part 
68. ``Premises'' as used herein generally means a dwelling unit, other 
building or a legal unit of real property such as a lot on which a 
dwelling unit is located, as determined by the telecommunications 
company's reasonable and nondiscriminatory standard operating practices. 
The ``minimum point of entry'' as used herein shall be either the 
closest practicable point to where the wiring crosses a property line or 
the closest practicable point to where the wiring enters a multiunit 
building or buildings. The telecommunications company's reasonable and 
nondiscriminatory standard operating practices shall determine which 
shall apply. The telecommunications company is not precluded from 
establishing reasonable clarifications of multiunit premises for 
determining which shall apply. Multiunit premises include, but are not 
limited to, residential, commercial, shopping center, and campus 
situations.
    (1) Single unit installations. For single unit installations 
existing as of August 13, 1990, and installations installed after that 
date, the demarcation point shall be a point within 12 inches (in.) (305 
millimeters (mm)) of the primary protector, where there is no protector, 
within 12 in. (305 mm) of where the telecommunications wire enters the 
customer's premises.
    (2) Multiunit installations. (i) In multiunit premises existing as 
of August 13, 1990, the demarcation point shall be determined in 
accordance with the local carrier's reasonable and nondiscriminatory 
standard operating practices. Provided, however, that where there are 
multiple demarcation points within the multiunit premises, a demarcation 
point for a customer shall not be further inside the customer's premises 
than a point 12 in. (305 mm) from where the wiring enters the customer's 
premises.
    (ii) In multiunit premises in which wiring is installed after August 
13, 1990, including additions, modifications, and rearrangements of 
wiring existing prior to that date, the telecommunications company may 
establish a reasonable and nondiscriminatory practice of placing the 
demarcation point at the minimum point of entry. If the 
telecommunications company does not elect to establish a practice of 
placing the demarcation point at the minimum point of entry, the 
multiunit premises owner shall determine the location of the demarcation 
point or points. The multiunit premises owner shall determine whether 
there shall be a single demarcation point for all customers or separate 
such locations for each customer. Provided, however, that where there 
are multiple demarcation points within the multiunit premises, a 
demarcation point for a customer shall not be further inside the 
customer's premises than a point 12 in. (305 mm) from where the wiring 
enters the customer's premises.
    DP. Demarcation point.
    Eligible country. Any country that applies with respect to the 
United States an agreement ensuring reciprocal access for United States 
products and services and United States suppliers to the markets of that 
country, as determined by the United States Trade Representative.
    FCC. Federal Communications Commission.
    Fuse link. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: A fine 
gauge section of wire or cable that serves as a fuse (that is, open-
circuits to interrupt the current should it become excessive) that 
coordinates with the telecommunications cable and wire plant, and 
protective devices. (Reprinted with permission from NFPA 70-1999, the 
National Electrical Code [supreg], Copyright [copy] 1998, 
National Fire Protection Association, Quincy, MA 02269. This reprinted 
material is not the complete and official position of the National Fire 
Protection Association, on the referenced subject which is represented 
only by the standard in its entirety.)
    Grounding conductor. As defined in the ANSI/NFPA 70-1999, NEC 
[supreg]: A conductor used to connect equipment or the grounded circuit 
of a wiring system to a grounding electrode or electrodes. (Reprinted 
with permission from NFPA 70-1999, the National Electrical Code 
[supreg], Copyright [copy] 1998, National Fire Protection 
Association, Quincy, MA 02269. This reprinted material is not the 
complete and official position of the National Fire Protection 
Association, on

[[Page 579]]

the referenced subject which is represented only by the standard in its 
entirety.)
    Listed. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: 
Equipment, materials, or services included in a list published by an 
organization that is acceptable to the authority having jurisdiction and 
concerned with evaluation of products or services, that maintains 
periodic inspection of production of listed equipment or materials or 
periodic evaluation of services, and whose listing states that either 
the equipment, material, or services meets identified standards or has 
been tested and found suitable for a specified purpose. (Reprinted with 
permission from NFPA 70-1999, the National Electrical Code [supreg], 
Copyright [copy] 1998, National Fire Protection Association, 
Quincy, MA 02269. This reprinted material is not the complete and 
official position of the National Fire Protection Association, on the 
referenced subject which is represented only by the standard in its 
entirety.)
    Manufactured home. As defined in the ANSI/NFPA 70-1999, NEC 
[supreg]: A factory-assembled structure or structures that bears a label 
identifying it as a manufactured home that is transportable in one or 
more sections, that is built on a permanent chassis and designed to be 
used as a dwelling with or without a permanent foundation where 
connected to the required utilities, and includes the plumbing, heating, 
air conditioning, and electric systems contained therein. Unless 
otherwise indicated, the term ``mobile home'' includes manufactured 
homes. Fine Print Note (FPN) No. 1: See the applicable building code for 
definition of the term permanent foundation. FPN No. 2: See 24 CFR part 
3280, Manufactured Home Construction and Safety Standards, of the 
Federal Department of Housing and Urban Development for additional 
information on the definition. (Reprinted with permission from NFPA 70-
1999, the National Electrical Code [supreg], Copyright [copy] 
1998, National Fire Protection Association, Quincy, MA 02269. This 
reprinted material is not the complete and official position of the 
National Fire Protection Association, on the referenced subject which is 
represented only by the standard in its entirety.)
    Mobile home. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: A 
factory-assembled structure or structures transportable in one or more 
sections that is built on a permanent chassis and designed to be used as 
a dwelling without a permanent foundation where connected to the 
required utilities, and includes the plumbing, heating, air-
conditioning, and electric systems contained therein. Unless otherwise 
indicated, the term ``mobile home'' includes manufactured homes. 
(Reprinted with permission from NFPA 70-1999, the National Electrical 
Code [supreg], Copyright [copy] 1998, National Fire 
Protection Association, Quincy, MA 02269. This reprinted material is not 
the complete and official position of the National Fire Protection 
Association, on the referenced subject which is represented only by the 
standard in its entirety.)
    Motor home. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: A 
vehicular unit designed to provide temporary living quarters for 
recreational, camping, or travel use built on or permanently attached to 
a self-propelled motor vehicle chassis or on a chassis cab or van that 
is an integral part of the completed vehicle. (Reprinted with permission 
from NFPA 70-1999, the National Electrical Code [supreg], Copyright 
[copy] 1998, National Fire Protection Association, Quincy, MA 
02269. This reprinted material is not the complete and official position 
of the National Fire Protection Association, on the referenced subject 
which is represented only by the standard in its entirety.)
    Network interface device (NID). A NID is comprised of a housing 
suitable for outdoor installation which contains a compartment 
accessible by only telecommunications employees which includes a primary 
station protector and the means for terminating telecommunications 
service wire conductors and metallic shields, and a compartment 
accessible by customers which includes an RJ-11 plug and jack of the 
type specified in the FCC rules in 47 CFR part 68.
    NID. Network interface device.
    Primary station protector. An assembly which complies with RUS 
Bulletin 345-39, RUS Specification for Telephone

[[Page 580]]

Station Protectors. Copies of RUS Bulletin 345-39 are available upon 
request from RUS, U.S. Department of Agriculture (USDA), 1400 
Independence Avenue, SW., STOP 1522, Washington, DC 20250-1522, FAX 
(202) 720-4120.
    Qualified Installer. A person who has extensive installation 
experience, complete knowledge and understanding of RUS Bulletin 1751F-
805, Electrical Protection At Customer Locations; RUS Bulletin 1753F-153 
(RUS Form 515d), Specifications and Drawings for Service Installations 
at Customer Access Locations, and applicable portions of the ANSI/NFPA 
70-1999, NEC [supreg], and ANSI/IEEE C2-1997, NESC. Copies of RUS 
Bulletins 1751F-805 and 1753F-153 are available upon request from RUS/
USDA, 1400 Independence Avenue, SW., STOP 1522, Washington, DC 20250-
1522, FAX (202) 720-4120.
    Recreational vehicle. As defined in the ANSI/NFPA 70-1999, NEC 
[supreg]: A vehicular-type unit primarily designed as temporary living 
quarters for recreational, camping, or travel use, which either has its 
own motive power or is mounted on or drawn by another vehicle. The basic 
entities are: travel trailer, camping trailer, truck camper, and motor 
home. (Reprinted with permission from NFPA 70-1999, the National 
Electrical Code [supreg], Copyright [copy] 1998, National 
Fire Protection Association, Quincy, MA 02269. This reprinted material 
is not the complete and official position of the National Fire 
Protection Association, on the referenced subject which is represented 
only by the standard in its entirety.)
    RUS. Rural Utilities Service.
    RUS accepted (material and equipment). Equipment which RUS has 
reviewed and determined that:
    (1) Final assembly or manufacture of the equipment is completed in 
the United States, its territories and possessions, or in an eligible 
country;
    (2) The cost of components within the material or equipment 
manufactured in the United States, its territories and possessions, or 
in an eligible country is more than 50 percent of the total cost of all 
components used in the material or equipment; and
    (3) The material or equipment is suitable for use on systems of RUS 
telecommunications borrowers.
    RUS technically accepted (material and equipment). Equipment which 
RUS has reviewed and determined that the material or equipment is 
suitable for use on systems of RUS telecommunications borrowers but the 
material or equipment does not satisfy both paragraphs (1) and (2) of 
this definition:
    (1) Final assembly or manufacture of the equipment is not completed 
in the United States, its territories and possessions, or in an eligible 
country; and
    (2) The cost of components within the material or equipment 
manufactured in the United States, its territories and possessions, or 
in an eligible country is 50 percent or less than the total cost of all 
components used in the material or equipment.
    SEA. Service entrance aerial.
    SEB. Service entrance buried.
    Travel trailer. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: A 
vehicular unit, mounted on wheels, designed to provide temporary living 
quarters for recreational, camping, or travel use, of such size and 
weight as not to require special highway movement permits when towed by 
a motorized vehicle, and of gross trailer area less than 320 square feet 
(29.7 square meters). (Reprinted with permission from NFPA 70-1999, the 
National Electrical Code [supreg], Copyright [copy] 1998, 
National Fire Protection Association, Quincy, MA 02269. This reprinted 
material is not the complete and official position of the National Fire 
Protection Association, on the referenced subject which is represented 
only by the standard in its entirety.)
    Truck camper. As defined in the ANSI/NFPA 70-1999, NEC [supreg]: A 
portable unit constructed to provide temporary living quarters for 
recreational, travel or camping use, consisting of a roof, floor, and 
sides, designed to be loaded onto and unloaded from the bed of a pick-up 
truck. (Reprinted with permission from NFPA 70-1999, the National 
Electrical Code [supreg], Copyright [copy] 1998, National 
Fire Protection Association, Quincy, MA 02269. This reprinted material 
is not the complete and official position of the National Fire 
Protection Association, on the referenced subject which is

[[Page 581]]

represented only by the standard in its entirety.)

[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.502  Scope.

    (a) Sections 1755.503 through 1755.510 cover approved methods of 
making service installations at customer access locations in 
telecommunications systems of RUS borrowers.
    (b) Requirements in Secs. 1755.503 through 1755.510 cover facilities 
of the type described in the FCC rules in 47 CFR part 68 for one and 
multi-party customer owned premises wiring.

[66 FR 43317, Aug. 17, 2001]



Sec. 1755.503  General.

    (a) For the purposes of this section and Secs. 1755.504 through 
1755.510, a NID shall be as defined in Sec. 1755.501 and shall contain 
both a fuseless primary station protector and a modular plug and jack 
for each conductor pair, up to a maximum of 11 pairs, and shall be 
provided by the telecommunications company and used by customers.
    (b) For the purposes of this section and Secs. 1755.504 through 
1755.510, BET shall be as defined in Sec. 1755.501 and shall contain 
both primary station protectors and connector terminals for each 
conductor pair, of 12 or more pairs, and shall be provided by the 
telecommunications company and used by customers. The primary station 
protectors may be either fuseless or fused.
    (c) The requirements provided in this section and Secs. 1755.504 
through 1755.510 have been designed to coordinate with the provisions of 
the ANSI/NFPA 70-1999, NEC [supreg], and the American National Standards 
Institute/Institute of Electrical and Electronics Engineers, Inc. (ANSI/
IEEE) C2-1997, National Electrical Safety Code (NESC). The National 
Electrical Code [supreg] and NEC [supreg] are registered trademarks of 
the National Fire Protection Association, Inc., Quincy, MA 02269. The 
ANSI/NFPA 70-1999, NEC [supreg], and the ANSI/IEEE C2-1997, NESC, are 
incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. Copies of ANSI/NFPA 70-1999, NEC [supreg], are available from 
NFPA, 1 Batterymarch Park, P.O. Box 9101, Quincy, Massachusetts 02269-
9101, telephone number 1 (800) 344-3555. Copies of ANSI/IEEE C2-1997, 
NESC, are available from IEEE Service Center, 455 Hoes Lane, Piscataway, 
New Jersey 08854, telephone number 1 (800) 678-4333. Copies of the ANSI/
NFPA 70-1999, NEC [supreg], and the ANSI/IEEE C2-1997, NESC, are 
available for inspection during normal business hours at RUS, room 2905, 
U.S. Department of Agriculture, 1400 Independence Avenue, SW., STOP 
1598, Washington, DC 20250-1598, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html. 
Most state and local authorities require that utility construction 
comply with either the ANSI/NFPA 70-1999, NEC [supreg], and ANSI/IEEE 
C2-1997, NESC, or some earlier editions of the ANSI/NFPA 70, NEC 
[supreg], and ANSI/IEEE C2, NESC. Some authorities have their own more 
stringent codes which may or may not be embellishments of the ANSI/NFPA 
70, NEC [supreg], and ANSI/IEEE C2, NESC.
    (d) RUS borrowers shall make certain that all construction financed 
with RUS loan funds comply with:
    (1) The provisions of this section and Secs. 1755.504 through 
1755.510 and the ANSI/NFPA 70-1999, NEC [supreg], and ANSI/IEEE C2-1997, 
NESC codes, or any more stringent local codes; or
    (2) The provisions of this section and Secs. 1755.504 through 
1755.510 with borrower added adjustments to bring construction into 
compliance with any more stringent local codes.
    (e) This section and Secs. 1755.504 through 1755.510 are intended 
primarily for the installer who will perform the work. It assumes that 
decisions regarding the selection of grounding electrodes, locations, 
and types of equipment have been made by the RUS borrower or the 
engineer delegated by the RUS borrower.
    (f) Only a qualified installer as defined in Sec. 1755.501 shall be 
assigned to make installations without advance planning and without 
direct supervision.
    (g) This section and Secs. 1755.504 through 1755.509 contain 
information which is normally not provided on the

[[Page 582]]

construction drawings which are included in Sec. 1755.510.
    (h) All work shall be conducted in a careful and professional 
manner. Service wire and cable shall not be trampled on, run over by 
vehicles, pulled over or around abrasive objects or otherwise subjected 
to abuse.
    (i) When situations not covered by this section and Secs. 1755.504 
through 1755.510 arise, the RUS borrower or the engineer delegated by 
the borrower, shall specify the installation procedure to be used. The 
requirements of paragraph (j) of this section shall be complied with in 
every installation.
    (j) NIDs, BETs, and fused primary station protectors shall be 
installed and grounded to meet the requirements of the ANSI/NFPA 70-
1999, NEC [supreg], or local laws or ordinances, whichever are more 
stringent.
    (k) Battery polarity and conductor identification shall be 
maintained throughout the system as indicated on construction drawings 
815 and 815-1 contained in Sec. 1755.510. Color codes and other means of 
conductor identification of buried and aerial service wires shall 
conform to the requirements of this section and Secs. 1755.504 through 
1755.510.
    (l) All materials for which RUS makes acceptance determinations, 
such as service wires and cables, ground rods, ground rod clamps, etc., 
used in service entrance installations shall be RUS accepted or RUS 
technically accepted. Borrowers shall require contractors to obtain the 
borrower's approval before RUS technically accepted materials are to be 
used in service entrance installations. Borrower's shall also ensure 
that the cost of the RUS technically accepted materials are at least 6 
percent less than the cost of equivalent RUS accepted materials, as 
specified in ``Buy American'' Requirement of the Rural Electrification 
Act of 1938, as amended (7 U.S.C. 903 note). Materials used in service 
entrance installations which are of the type which RUS does not make 
acceptance determinations shall be of a suitable quality for their 
intended application as determined by the RUS borrower or the engineer 
delegated by the RUS borrower.
    (m) On completion of an installation, borrowers shall require the 
installer to make all applicable tests required by Secs. 1755.400 
through 1755.407, RUS standard for acceptance tests and measurements of 
telecommunications plant.

[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.504  Demarcation point.

    (a) The demarcation point (DP) provides the physical and electrical 
interface between the telecommunications company's facilities and the 
customer's premises wiring.
    (b) The Federal Communications Commission (FCC) rules in 47 CFR part 
68 require telecommunications providers to establish a ``DP'' which 
marks a separation of the provider's facilities from the customer's 
(owned) premises wiring and equipment.
    (c) RUS borrowers shall observe the FCC DP requirement by installing 
NIDs, BETs, or fused primary station protectors when required by section 
800-30(a)(2) of ANSI/NFPA 70-1999, NEC [supreg], at all new or 
significantly modified customer access locations which are financed with 
RUS loan funds. The National Electrical Code [supreg] and NEC [supreg] 
are registered trademarks of the National Fire Protection Association, 
Inc., Quincy, MA 02269. The ANSI/NFPA 70-1999, NEC [supreg], is 
incorporated by reference in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. Copies are available from NFPA, 1 Batterymarch Park, P. O. Box 
9101, Quincy, Massachusetts 02269-9101, telephone number 1 (800) 344-
3555. Copies of ANSI/NFPA 70-1999, NEC [supreg], are available for 
inspection during normal business hours at RUS, room 2905, U.S. 
Department of Agriculture, 1400 Independence Avenue, SW., STOP 1598, 
Washington, DC 20250-1598, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html.
    (d) For all customer access locations of less than 12 pairs, RUS 
borrowers shall establish DPs by using either NIDs or fused primary 
station protectors when required by section 800-

[[Page 583]]

30(a)(2) of ANSI/NFPA 70-1999, NEC [supreg]. For customer access 
locations of 12 pairs or greater, RUS borrowers shall establish DPs 
using either NIDs, BETs, or fused primary station protectors when 
required by section 800-30(a)(2) of ANSI/NFPA 70-1999, NEC [supreg].

[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.505  Buried services.

    (a) Buried services of two or three pairs shall consist of Service 
Entrance Buried (SEB) assembly units, in accordance with RUS Bulletin 
1753F-153 (RUS Form 515d), Specifications and Drawings for Service 
Installations at Customer Access Locations. The wire used for buried 
services shall conform to the requirements of Sec. 1755.860, RUS 
specification for filled buried wires, and shall be RUS accepted or RUS 
technically accepted. The conductor size for two and three pair buried 
service wires shall be 22 American Wire Gauge (AWG). Copies of RUS 
Bulletin 1753F-153 are available upon request from RUS/USDA, 1400 
Independence Avenue, SW., STOP 1522, Washington, DC 20250-1522, FAX 
(202) 690-2268.
    (b) Buried services of six or more pairs shall be RUS accepted or 
RUS technically accepted 22 AWG filled buried cable conforming to the 
requirements of Sec. 1755.390, RUS specification for filled telephone 
cables.
    (c) Buried service wire or cable shall be terminated in buried plant 
housings using either splicing connectors or filled terminal blocks in 
accordance with the applicable paragraphs of Sec. 1755.200, RUS standard 
for splicing copper and fiber optic cables.
    (d) Buried service wire or cable shall be identified at buried plant 
housings in accordance with construction drawing 958 contained in 
Sec. 1755.510.
    (e) Buried service wire or cable shall be installed up to the 
building in the same general manner as buried exchange cable but in 
addition must meet the following requirements:
    (1) Light weight lawn plows or trenchers shall be used;
    (2) The shortest feasible route commensurate with the requirements 
of Sec. 1755.508(i), (j), and (k), and paragraph (f)(1) of this section 
shall be followed;
    (3) Buried service wire or cable shall be plowed or trenched to a 
depth of 12 in. (305 mm) or greater where practicable in soil, 36 in. 
(914 mm) in ditches, or 3 in. (76 mm) in rock. Depths shall be measured 
from the top of the wire or cable to the surface of the ground or rock;
    (4) In the case of a layer of soil over rock either the minimum 
depth in rock measured to the surface of the rock, or the minimum depth 
in soil measured to the surface of the soil may be used; and
    (5) Where adequate advance planning has been done, burial of 
telecommunications services jointly with electric power services may be 
feasible. If a decision has been reached by management to provide joint 
occupancy services, the services may be installed using the 
recommendations in RUS Bulletin 1751F-640, ``Design of Buried Plant--
Physical Considerations.'' Copies of RUS Bulletin 1751F-640 are 
available upon request from RUS/USDA, 1400 Independence Avenue, SW., 
STOP 1522, Washington, DC 20250-1522, FAX (202) 720-4120.
    (f) Buried service wire or cable shall be installed on or in 
buildings as follows:
    (1) Each buried service wire or cable shall contact the building as 
close to the NID, BET, or fused primary station protector as 
practicable. Service wire or cable runs on buildings shall normally 
consist of a single vertical run held to the minimum practical length. 
Horizontal and diagonal runs shall not be permitted.
    (2) Buried service wire or cable shall be located so as to avoid 
damage from lawn mowers, animals, gardening operations, etc.
    (3) Buried service wire or cable shall be installed against a 
foundation wall or pillar to provide adequate support and mechanical 
protection.
    (4) Where it is likely that the service wire or cable shall be 
subjected to mechanical damage, the wire or cable shall be enclosed in a 
guard in accordance with assembly unit drawing BM83 contained in 
Sec. 1755.510.
    (5) The first above-ground attachment for a buried service wire or 
cable, unless it is enclosed in a guard, shall not be more than 4 in. 
(100 mm) above final grade.

[[Page 584]]

    (6) Uninsulated attachment devices may be used to attach buried 
service wire and cable to masonry and other types of noncombustible 
buildings and on any type of building if fuseless primary station 
protectors incorporated in NIDs or BETs are used and installations fully 
comply with section 800-30(a)(1) of ANSI/NFPA 70-1999, NEC [supreg]. The 
National Electrical Code [supreg] and NEC [supreg] are registered 
trademarks of the National Fire Protection Association, Inc., Quincy, MA 
02269. The ANSI/NFPA 70-1999, NEC [supreg], is incorporated by reference 
in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies are 
available from NFPA, 1 Batterymarch Park, P.O. Box 9101, Quincy, 
Massachusetts 02269-9101, telephone number 1(800)344-3555. Copies of 
ANSI/NFPA 70-1999, NEC [supreg], are available for inspection during 
normal business hours at RUS, room 2905, U.S. Department of Agriculture, 
1400 Independence Avenue, SW., STOP 1598, Washington, DC 20250-1598, or 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (7) Insulated attachments shall be used to separate service wires or 
cables from woodwork where section 800-30(a)(2) of ANSI/NFPA 70-1999, 
NEC [supreg] requiring the use of fused primary station protectors must 
be observed.
    (8) Minimum separation between buried service wire or cable and 
other facilities shall be as listed in Table 1, as follows:

 Table 1--Minimum Separation for Telecommunications Wires and Cables on
                             or in Buildings
------------------------------------------------------------------------
                                                  Minimum clearance in.
                                                         [mm] 1,2
        Foreign facility or obstruction             telecommunications
                                                    company's wires or
                                                          cables
------------------------------------------------------------------------
Electric supply wire including neutral and
 grounding conductors:
    Open.......................................                  4 [102]
    In conduit.................................                 2 [50.8]
Radio and television antennas, Lead-in and                       4 [102]
 grounding conductors..........................
Lightning rods and lightning conductors........            \3\ 72 [1830]
All foreign grounding conductors except                         2 [50.8]
 lightning rod ground conductors...............
Neon signs and associated wiring...............                  6 [150]
Metallic objects--pipes (gas, cold water, oil,              \4\ 2 [50.8]
 sewer) and structures.........................
Wires or cables of another communications                      2 [50.8]
 system........................................
------------------------------------------------------------------------
\1\ If minimum separation cannot be obtained, nonshielded wire and cable
  facilities shall be protected with either porcelain tubes or flexible
  tubing as modified by Notes (3) and (4) of this table.
\2\ Separation applies to crossings and parallel runs.
\3\ If this separation cannot be obtained, bond the telecommunications
  grounding conductors or grounding electrode to the lightning rod
  grounding conductor or grounding electrode with at least a Number
  (No.) 6 AWG copper, insulated, ground wire. With this provision a
  minimum separation of 4 in. (100 mm) is acceptable but this provision
  must not be utilized if the separation cited in this table can be
  maintained.
\4\ Increase to a minimum of 3 in. (75 mm) separation from steam or hot
  water pipes, heating ducts, and other heat sources.

    (9) Wire and cable attachments to buildings for outside mounted 
NIDS, BETs, or fused primary station protectors shall be in accordance 
with construction drawing 962 contained in Sec. 1755.510.
    (10) Appropriate devices for attaching service wire or cable on or 
in buildings vary with the type of building construction and the wire or 
cable size. Figures 1 and 2 illustrate various types of anchoring 
devices and their applications. The size and type of fastening device 
for the wire or cable size and type of surface shall be in accordance 
with the manufacturer's recommendation; Figures 1 and 2 are as follows:

[[Page 585]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.001


[[Page 586]]


[GRAPHIC] [TIFF OMITTED] TR17AU01.002

    (11) Experience indicates that there are objections from many owners 
of buildings covered with aluminum or vinyl siding to the drilling of 
holes in the siding for the attachment of wires or cables, and NIDs, 
BETs, or fused primary station protectors. It is, therefore, important 
to obtain permission from the owner before drilling holes in such 
siding.
    (12) If the NID, BET, or fused primary station protector must be 
mounted inside (not recommended by RUS), the service entrance into the 
building shall be installed in accordance with section 800-12(c) of 
ANSI/NFPA 70-1999, NEC [supreg]. After pulling-in the wire or cable, the

[[Page 587]]

free space around the cable or wire shall be carefully sealed both 
outside and inside with a duct sealer that has RUS acceptance or RUS 
technical acceptance.
    (13) If the customer requests an all buried installation for an 
alarm system or objects to above-ground facilities because of appearance 
and one-party service is involved, the entrance hole shall be made below 
grade as shown in sketch C of construction drawing 510-2 contained in 
Sec. 1755.510. Care shall be exercised to prevent damage to the building 
foundation. The hole shall be sealed as specified in paragraph (f)(12) 
of this section. The installation shall comply with all the requirements 
of section 800-12(c) of ANSI/NFPA 70-1999, NEC [supreg].
    (g) When the NID, BET, or fused primary station protector is to be 
installed inside the building, the installation shall comply with 
section 800-12(c) of ANSI/NFPA 70-1999, NEC [supreg], and the outside 
plant wire or cable shall preferably be installed in a rigid metal or 
intermediate metal conduit that is grounded to an electrode in 
accordance with section 800-40(b) of ANSI/NFPA 70-1999, NEC [supreg], as 
shown in sketch A of Figure 3 in paragraph (h)(2) of this section. The 
shield of the outside plant wire or cable shall be bonded to the 
grounding terminal of the NID, BET, or fused primary station protector 
which in turn shall be connected to the closest, existing, and 
accessible grounding electrode, of the electrodes cited in section 800-
40(b) of ANSI/NFPA 70-1999, NEC [supreg].
    (h) An inside NID, BET, or fused primary station protector 
installation may also be made without use of a rigid metal or 
intermediate metal conduit provided that the ingress of the outside 
plant wire or cable complies with section 800-12(c) of ANSI/NFPA 70-
1999, NEC [supreg], and provided either of the following are observed:
    (1) The NID, BET, or fused primary station protector is located as 
close as practicable to the point where the outside plant wire or cable 
emerges through an exterior wall. The length of outside plant wire or 
cable exposed within the building shall be as short as practicable but 
in no case shall it be longer than 50 feet (ft) (15.2 meters (m)) in 
accordance with the allowable exception No. 3 of section 800-50 of ANSI/
NFPA 70-1999, NEC [supreg]. See sketch B of Figure 3 in paragraph (h)(2) 
of this section. The shield of the outside plant wire or cable shall be 
bonded to the grounding terminal of the NID, BET, or fused primary 
station protector which in turn shall be connected to the closest, 
existing and accessible grounding electrode, of the electrodes cited in 
section 800-40(b) of ANSI/NFPA 70-1999, NEC [supreg] (Fine print Note 
No. 2 of ANSI/NFPA 70-1999, NEC [supreg], section 800-50, warns that the 
full 50 ft (15.2 m) may not be authorized for outside unlisted cable 
(not in a metal or intermediate metal conduit) within a building if it 
is practicable to place the NID, BET, or fused primary station protector 
closer than 50 ft (15.2 m) to the cable entrance point, e.g., if there 
is an acceptable and accessible grounding electrode of the type cited in 
section 800-40(b) of ANSI/NFPA 70-1999, NEC [supreg], anywhere along the 
proposed routing of the outside cable within the building); or
    (2) Where the NID, BET, or fused primary station protector must be 
located within the building remote from the entrance point and the 
entrance point of the outside plant wire or cable cannot be designed to 
be closer to the NID, BET, or fused primary station protector location, 
the outside plant wire or cable shall be spliced, as close as 
practicable to the point where the outside plant wire or cable emerges 
through an outside wall, to an inside wiring cable that is ``Listed'' as 
being suitable for the purpose in accordance with part E of article 800 
of ANSI/NFPA 70-1999, NEC [supreg]. The length of outside plant wire or 
cable exposed within the building shall be as short as practicable but 
in no case shall it be longer than 50 ft (15.2 m) in accordance with the 
allowable exception No. 3 of section 800-50 of ANSI/NFPA 70-1999, NEC 
[supreg]. See sketch C of Figure 3. The shield of the outside plant wire 
or cable shall be bonded to the grounding terminal of the NID, BET, or 
fused primary station protector which in turn shall be connected to the 
closest, existing, and accessible grounding electrode, of the electrodes 
cited in section 800-40(b) of ANSI/NFPA 70-1999, NEC [supreg] (Fine 
print Note No. 2 of the ANSI/NFPA 70-1999, NEC [supreg], section 800-50, 
warns that the

[[Page 588]]

full 50 ft (15.2 m) may not be authorized for outside unlisted cable 
(not in a metal or intermediate metal conduit) if it is practicable to 
place the NID, BET, or fused primary station protector closer than 50 ft 
(15.2 m) to the cable entrance point, e.g., if there is an acceptable 
and accessible grounding electrode of the type cited in section 800-
40(b) of ANSI/NFPA 70-1999, NEC [supreg], anywhere along the proposed 
routing of the outside cable within the building). Figure 3 is as 
follows:
[GRAPHIC] [TIFF OMITTED] TR17AU01.003


[[Page 589]]


    (i) The polarity of buried wire or cable ``tip'' and ``ring'' 
conductors shall be maintained by making the connections in accordance 
with Table 2, as follows:

                    Table 2--Color Codes For Tip And Ring Connections of Inside Wiring Cable
----------------------------------------------------------------------------------------------------------------
                                                     Tip                                    Ring
                                 -------------------------------------------------------------------------------
              Pair                                                                                   Color of
                                  Color of insulation    Color of marking   Color of insulation      marking
----------------------------------------------------------------------------------------------------------------
1...............................  White..............  Blue...............  Blue...............  White
2...............................  White..............  Orange.............  Orange.............  White
3...............................  White..............  Green..............  Green..............  White
4...............................  White..............  Brown..............  Brown..............  White
5...............................  White..............  Slate..............  Slate..............  White
6...............................  Red................  Blue...............  Blue...............  Red
7...............................  Red................  Orange.............  Orange.............  Red
8...............................  Red................  Green..............  Green..............  Red
9...............................  Red................  Brown..............  Brown..............  Red
10..............................  Red................  Slate..............  Slate..............  Red
11..............................  Black..............  Blue...............  Blue...............  Black
12..............................  Black..............  Orange.............  Orange.............  Black
13..............................  Black..............  Green..............  Green..............  Black
14..............................  Black..............  Brown..............  Brown..............  Black
15..............................  Black..............  Slate..............  Slate..............  Black
16..............................  Yellow.............  Blue...............  Blue...............  Yellow
17..............................  Yellow.............  Orange.............  Orange.............  Yellow
18..............................  Yellow.............  Green..............  Green..............  Yellow
19..............................  Yellow.............  Brown..............  Brown..............  Yellow
20..............................  Yellow.............  Slate..............  Slate..............  Yellow
21..............................  Violet.............  Blue...............  Blue...............  Violet
22..............................  Violet.............  Orange.............  Orange.............  Violet
23..............................  Violet.............  Green..............  Green..............  Violet
24..............................  Violet.............  Brown..............  Brown..............  Violet
25..............................  Violet.............  Slate..............  Slate..............  Violet
----------------------------------------------------------------------------------------------------------------


[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.506  Aerial wire services.

    (a) Aerial services of one through six pairs shall consist of 
Service Entrance Aerial (SEA) assembly units, in accordance with RUS 
Bulletin 1753F-153 (RUS Form 515d), Specifications and Drawings for 
Service Installations at Customer Access Locations. The wire used for 
aerial services shall conform to the requirements of Secs. 1755.700 
through 1755.704, RUS specification for aerial service wires, and shall 
be RUS accepted or RUS technically accepted. Copies of RUS Bulletin 
1753F-153 are available upon request from RUS/USDA, 1400 Independence 
Avenue, SW., STOP 1522, Washington, DC 20250-1522, FAX (202) 720-4120.
    (b) If aerial wire services are to be connected to aerial cable 
pairs, the NIDs or fused primary station protectors and grounds shall be 
installed and connected before the aerial service wires are attached to 
the customer's structure.
    (c) Kinks or splices shall not be permitted in aerial service wire 
spans.
    (d) Aerial service wires shall be run in accordance with the 
construction drawings contained in Sec. 1755.510 and shall conform to 
all clearance requirements of the ANSI/NFPA 70-1999, NEC [supreg], and 
ANSI/IEEE C2-1997, NESC, or local laws or ordinances, whichever are the 
most stringent. The National Electrical Code [supreg] and NEC [supreg] 
are registered trademarks of the National Fire Protection Association, 
Inc., Quincy, MA 02269. The ANSI/NFPA 70-1999, NEC [supreg], and ANSI/
IEEE C2-1997, NESC, are incorporated by reference in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/NFPA 70-1999, NEC 
[supreg], are available from NFPA, 1 Batterymarch Park, P.O. Box 9101, 
Quincy, Massachusetts 02269-9101, telephone number 1 (800) 344-3555. 
Copies of ANSI/IEEE C2-1997, NESC, are available from IEEE Service 
Center, 455 Hoes Lane, Piscataway, New Jersey 08854, telephone number 1 
(800) 678-4333. Copies of ANSI/NFPA 70-1999, NEC [supreg], and ANSI/IEEE 
C2-1997, NESC, are

[[Page 590]]

available for inspection during normal business hours at RUS, room 2905, 
U.S. Department of Agriculture, 1400 Independence Avenue, SW., STOP 
1598, Washington, DC 20250-1598, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html.
    (e) Aerial service wire shall be installed using the maximum 
practicable sag consistent with the required ground clearance and good 
construction practices. In no event shall the minimum sags be less than 
the values shown on construction drawing 505 contained in Sec. 1755.510 
for various span lengths and loading areas provided. Span lengths shall 
not exceed 250 ft (76 m).
    (f) To reduce vibration and galloping, aerial service wire shall be 
twisted one complete turn for each 10 ft (3 m) of span length at the 
time of installation.
    (g) The methods of attaching aerial service wires at poles shall be 
as illustrated in construction drawings 503-2 and 504 contained in 
Sec. 1755.510.
    (h) Horizontal and vertical climbing spaces on poles used jointly 
with power circuits shall be provided in conformance with the 
requirements of Rule 236 of ANSI/IEEE C2-1997, NESC.
    (i) Not more than four aerial service wires shall be distributed 
from any one \7/16\ in. (10 mm) drive hook, or more than two aerial 
service wires from any one \5/16\ in. (8 mm) drive hook. Aerial service 
wires and drive hooks shall be arranged so that the load does not pull 
the drive hook out of the pole. When more than one drive hook is 
required, the drive hooks shall be staggered with a minimum separation 
of 1 in. (25.4 mm) horizontally on centers and 1.5 in. (40 mm) 
vertically on centers. If drive hooks are placed within 3 in. (76 mm) of 
the top of the pole and on the opposite side of the pole's 
circumference, a vertical separation of at least 3 in. (76 mm) shall be 
provided. A drive hook shall not be placed on the top of a pole or stub 
pole.
    (j) When connecting aerial service wires to cable pairs at 
terminals, sufficient slack shall be provided so that each aerial 
service wire shall reach any binding post position as shown on 
construction drawing 312-1 contained in Sec. 1755.510.
    (k) Aerial service wire attachments on utility poles and the manner 
of placing bridle rings and entering cable terminals shall be as shown 
on construction drawing 503-2 contained in Sec. 1755.510.
    (l) Not more than two conductors shall be connected to any terminal 
binding post. Where it is necessary to bridge more than two aerial 
service wires at the same closure, the aerial service wires shall be 
terminated in aerial service wire terminals connected in parallel with a 
No. 20 AWG bridle wire which shall be terminated on the binding posts of 
the filled terminal block.
    (m) Where aerial service wire is attached to aerial plastic cable, 
it shall be brought directly into a ready-access closure and shall be 
terminated on the binding posts of the filled terminal block as shown on 
construction drawing 503-2 contained in Sec. 1755.510.
    (n) The conductor of copper coated steel reinforced aerial service 
wires identified by tracer ridges shall be used as the ring (negative 
battery) conductor of the pair, and shall normally be connected to the 
right or lower binding post of a pair on filled terminal blocks and NIDs 
or fused primary station protectors.
    (o) Nonmetallic reinforced aerial service wire pair identification. 
(1) The tip and ring conductors of nonmetallic reinforced aerial service 
wires shall be identified in accordance with Table 3, as follows:

     Table 3--Nonmetallic Reinforced Aerial Service Wire Color Code
------------------------------------------------------------------------
                                             Conductor color
          Pair number           ----------------------------------------
                                           Tip                 Ring
------------------------------------------------------------------------
1..............................  White/Blue or White....  Blue
2..............................  White/Orange or White..  Orange
3..............................  White/Green or White...  Green

[[Page 591]]

 
4..............................  White/Brown or White...  Brown
5..............................  White/Slate or White...  Slate
6..............................  Red/Blue or Red........  Blue
------------------------------------------------------------------------

    (2) The ring (negative battery) conductor of the pair shall normally 
be connected to the right or lower binding post of a pair on filled 
terminal blocks and NIDs or fused primary station protectors.
    (p) When it is necessary to avoid intervening obstacles between a 
pole and a building, span clamp attachments shall be used to support the 
aerial service wires at points between the poles that are supporting the 
cable on the suspension strand as indicated by construction drawings 
501-1 and 501-2 contained in Sec. 1755.510.
    (q) Aerial service wire strung from pole to pole shall be placed 
entirely below or entirely above any existing wire or cable. When 
adequate ground clearance can be obtained, preference shall be given to 
placing aerial service wire below wire and cable.
    (r) When more than one aerial service wire is installed from pole to 
pole, the first aerial service wire shall be sagged in accordance with 
construction drawing 505 contained in Sec. 1755.510. Succeeding aerial 
service wires shall be sagged with 2 in. (50.8 mm) more sag for each 
aerial service wire.
    (s) Aerial service wire spans from pole lines to buildings shall 
follow the shortest feasible route commensurate with the requirements of 
paragraph (t) of this section and shall be sagged in accordance with 
construction drawing 505 contained in Sec. 1755.510. The route shall 
avoid trees and other obstructions to the extent practicable. Where 
trees cannot be avoided, tree trimming permission shall be obtained from 
the owner or the owner's representative, and all limbs and foliage 
within 2 ft (600 mm) of the finally sagged wire shall be removed. If 
tree trimming permission cannot be obtained, the matter shall be 
referred to the borrower for resolution before proceeding with the 
installation.
    (t) Aerial service wires shall contact buildings as closely as 
practicable at a point directly above the NID, or fused primary station 
protector. Generally, horizontal drop wire runs on buildings shall not 
exceed 20 ft (6 m). The warning given in Sec. 1755.505(f)(11) regarding 
drilling holes in aluminum and vinyl siding applies also to attaching 
aerial service wires.
    (u) The point of the first building attachment shall be located so 
that the aerial service wire will be clear of roof drainage points.
    (v) Where practicable, aerial service wires shall pass under 
electrical guys, power distribution secondaries and services, tree 
limbs, etc.
    (w) Aerial service wire shall not pass in front of windows or 
immediately above doors.
    (x) Aerial service wires shall be routed so as to have a minimum 
clearance of 2 ft (600 mm) from any part of a short wave, ham radio, 
etc. antenna mast and a television antenna mast in its normal vertical 
position and of the possible region through which it sweeps when being 
lowered to a horizontal position.
    (y) Aerial service wires shall be installed such that all clearances 
and separations comply with either section 237 of ANSI/IEEE C2-1997, 
NESC, or ANSI/NFPA 70-1999, NEC [supreg], or local laws or ordinances, 
whichever is the most stringent.
    (z) Aerial service wire attachments to buildings shall be as 
follows:
    (1) First attachments on buildings shall be made in accordance with 
construction drawings 506, 507, or 508-1 contained in Sec. 1755.510, as 
applicable;
    (2) Intermediate attachments on buildings shall be made in 
accordance with construction drawings 510 or 510-1 contained in 
Sec. 1755.510; and
    (3) Uninsulated attachments shall be permitted to be used as 
follows:

[[Page 592]]

    (i) Wherever NIDS are used as permitted by section 800-30(a)(1) of 
the ANSI/NFPA 70-1999, NEC [supreg]; and
    (ii) On masonry and other types of nonflammable buildings.
    (aa) Insulated attachments shall be used on wooden frame, metallic 
siding and other types of combustible buildings where fused primary 
station protectors are used, as required by section 800-30(a)(2) of 
ANSI/NFPA 70-1999, NEC [supreg].
    (bb) Aerial service wire runs on buildings shall be attached 
vertically and horizontally in a neat and most inconspicuous possible 
manner. See construction drawing 513 contained in Sec. 1755.510. 
Horizontal runs on buildings are undesirable and shall be kept to a 
minimum. Diagonal runs shall not be made.
    (cc) Aerial service wire runs on buildings shall be located so as 
not to be subjected to damage from passing vehicles, pedestrians, or 
livestock.
    (dd) Minimum separation between aerial service wires and other 
facilities on or in buildings shall be in accordance with 
Sec. 1755.505(f)(8), Table 1.
    (ee) Appropriate devices for attaching aerial service wires to 
buildings vary with the type of building construction and with the type 
of customer access location equipment. Table 4 lists various types of 
attachments and their application with respect to construction, customer 
access location equipment, and proper mounting devices. Construction 
drawings 506 through 513 contained in Sec. 1755.510 illustrate 
requirements with respect to various angles of service wire contacts and 
uses of various attachments. Table 4 is as follows:

[[Page 593]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.004

    Notes: 1. Screw dimensions are minimum. Where appropriate, either or 
both dimensions shall be increased. All wood screws for exterior use 
shall be stainless steel. All other exterior metal devices shall be 
stainless steel, zinc coated steel, silicon bronze, or corrosion 
resistant aluminum alloy.
    2. Toggle bolt dimensions are minimum. Where appropriate, either or 
both dimensions shall be increased.
    3. All devices should be attached to studding.
    4. Screw-type devices shall be secured by means of expansion-type 
anchors. Equivalent manual or machine-driven devices may be used. Where 
toggle bolts are specified equivalent devices may be used.
    5. Pilot holes shall be provided for screws and bridle rings in 
shingles and dropsiding.
    6. Attachment device not applicable.

[[Page 594]]

    7. Attachment device applicable but no separate fastening device 
required.
    8. To convert English units to Metric units use 1 in. = 25.4 mm.

    (ff) Fastener spacings for vertical and horizontal runs on frame or 
masonry buildings shall not be more than 6 ft (2 m) apart. Fasteners 
should be spaced close enough to prevent the aerial service wire from 
``slapping'' against the building during windy conditions.
    (gg) When it is necessary to pass behind or around obstructions such 
as downspouts and vertical conduits, the aerial service wire shall be 
supported firmly with attachment devices placed not more than 6 in. (152 
mm) from the obstruction as illustrated in Figures 4 and 5 of paragraph 
(hh) of this section. Preferably, the aerial service wire should be 
routed behind obstructions to minimize the possibility of mechanical 
damage to the aerial service wire in the event repair work to the 
obstruction is required.
    (hh) When passing around building projections of masonry or wood or 
around corners, aerial service wires shall be installed as illustrated 
in Figures 5 and 6. Figures 4, 5, and 6 are as follows:

[[Page 595]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.005


[[Page 596]]


[GRAPHIC] [TIFF OMITTED] TR17AU01.006


[[Page 597]]


[GRAPHIC] [TIFF OMITTED] TR17AU01.007

    (ii) In areas where ice and snow conditions are severe, aerial 
service wires shall be located so that ice and snow falling from the 
roof will not strike the wires. However, where aerial service wires must 
pass under the sloping part of the roof, first attachments shall be made 
as close as practicable to the eaves.
    (jj) If two aerial service wire spans are required to the same 
building, the first attachment shall be such that both aerial service 
wires can be attached at the same attachment device. Refer to 
construction drawing 508-1 contained in Sec. 1755.510. Where more than 
two aerial service wires are required, additional attachment devices

[[Page 598]]

in the same general location on the building shall be used.
    (kk) When two or more aerial service wire runs are required on the 
same building they shall share the same type of attachment devices.
    (ll) Aerial service wire entrances to buildings shall conform to 
sketch B of construction drawing 510-2 contained in Sec. 1755.510, 
unless the entrance is made through a conduit.
    (mm) When the aerial service wire approaches the entrance hole from 
above, a 1.5 in. (40 mm) minimum drip loop shall be formed in accordance 
with sketch B of construction drawing 510-2 contained in Sec. 1755.510.
    (nn) If an entrance conduit which slopes upward from outside to 
inside is available and suitably located, it shall be used for the 
aerial service wire entrance.

[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.507  Aerial cable services.

    (a) Where more than six pairs are needed initially, and where an 
aerial service is necessary, the service shall consist of 22 AWG filled 
aerial cable of a pair size adequate for the ultimate anticipated 
service needs of the building. The cable shall comply with the 
requirements of Sec. 1755.390, RUS specification for filled telephone 
cables, and shall be RUS accepted or RUS technically accepted.
    (b) Aerial cable services shall be constructed in accordance with 
specific installation specifications prepared by the RUS borrower or the 
engineer delegated by the borrower.
    (c) Unless otherwise specified in the installation specifications, 
aerial cable service installations shall meet the following 
requirements:
    (1) Strand supported lashed construction shall be used.
    (2) Where practicable a \5/16\ in. (8 mm) utility grade strand and 
automatic clamps shall be used in slack spans to avoid damage to the 
building.
    (3) Construction on poles shall comply with applicable construction 
drawings for regular line construction. Aerial service cable shall be 
spliced to the main cable in accordance with Sec. 1755.200, RUS standard 
for splicing copper and fiber optic cables.
    (4) Where practicable, aerial cable shall pass under electrical 
guys, distribution secondaries, and services.
    (5) The suspension strand shall be attached to the building by wall 
brackets as indicated in Figure 7 as follows:

[[Page 599]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.008

    (i) If taut spans are necessary, appropriate size strand may be used 
if the pull is in line with one wall of the building, or within 20 
degrees of being in line as illustrated in sketch A of Figure 7. If the 
angle of pull is greater than 20 degrees from the building, the wall 
bracket shall be reinforced against pullout by an arrangement equivalent 
to sketch B of Figure 7. Taut spans may be strung using the 
recommendations in RUS Bulletin 1751F-630, Design of Aerial Plant. The 
same tension as would be used in normal line construction so as not to 
exceed 60 percent of the breaking strength of the strand under maximum 
loading shall be used. Taut spans shall

[[Page 600]]

not exceed 100 ft (30.5 m) in length and the cable weight shall not 
exceed 1 pound/foot (lb/ft) [1.5 kilogram/meter (kg/m)] except when 
equivalent combinations of greater span lengths with cable weight less 
than 1 lb/ft (1.5 kg/m) are permissible. Copies of RUS Bulletin 1751F-
630 are available upon request from RUS/USDA, 1400 Independence Avenue, 
SW., STOP 1522, Washington, DC 20250-1522, FAX (202) 720-4120.
    (ii) When an attachment must be made to the face of a building wall 
away from a corner, a ``U'' type wall bracket shall be used as indicated 
in sketch C of Figure 7. Only slack span construction with \5/16\ in. (8 
mm) utility grade strand shall be permitted in this situation. The bail 
of the automatic clamp shall be protected by a wire rope thimble.
    (6) Aerial cable shall be located on the rear or side of the 
building and shall be run only in a horizontal or a vertical direction. 
The cable route shall be selected so as to avoid building projections 
and obstructions to the extent practicable.
    (7) Cable attachment devices shall be located on solid masonry or on 
studs of wood frame buildings. Cable attachment devices may be installed 
on sheet surface materials only when such materials are reinforced with 
a backing material which allows penetration and firm holding of the 
attachment devices through the backing material.
    (8) The minimum separation on or in buildings between cable and 
other facilities shall be as indicated in Sec. 1755.505(f)(8), Table 1.
    (9) On horizontal runs, cable clamps shall be placed so that the 
attachment is below the cable. On vertical runs, cable clamps shall be 
placed so that the attachment is on the same side as horizontal runs. 
Cable clamps shall be placed on the inside of cable bends.
    (10) On horizontal runs, cable clamps shall be placed not more than 
16 in. (400 mm) apart for cable diameters equal to or greater than 1 in. 
(25.4 mm) and 24 in. (600 mm) apart for cable diameters less than 1 in. 
(25.4 mm).
    (11) On vertical runs, cable clamps shall be approximately 24 in. 
(600 mm) apart for all sizes of cable.
    (12) For the cable entrance, holes shall be bored slightly larger in 
diameter than the cable and shall slope upward from outside to inside. A 
duct sealer having RUS acceptance or RUS technical acceptance shall be 
applied to both ends of the hole after the cable is pulled in.
    (13) Section 1755.505(g) and (h) shall also apply to aerial cable 
services.

[66 FR 43317, Aug. 17, 2001]



Sec. 1755.508  Customer access location protection.

    (a) All customer access locations shall be protected.
    (b) Customer access location protection shall consist of installing 
the telecommunications facilities with proper clearances and insulation 
from other facilities, providing primary voltage limiting protection, 
fuse links, NIDs, BETs, or fused primary station protectors, if 
required, and adequate bonding and grounding.
    (c) All NIDs shall be RUS accepted or RUS technically accepted or 
the RUS borrower shall obtain RUS regional office approval on a case by 
case basis as applicable.
    (d) All BETs shall be RUS accepted or RUS technically accepted.
    (e) All fused primary station protectors shall be RUS accepted or 
RUS technically accepted.
    (f) NIDs, BETs, or fused primary station protectors shall be mounted 
outside for all applications except for those described in paragraphs 
(g)(1) through (g)(3) of this section.
    (g) NIDs, BETs, or fused primary station protectors may be mounted 
inside when:
    (1) Large buildings are to be served and the customer requests an 
inside installation;
    (2) Buried alarm circuits are requested by the subscriber; or
    (3) The customer requests an all buried installation for appearance 
or to prevent the drilling of holes in aluminum or vinyl siding.
    (h) Outside mounted NIDs, BETs, or fused primary station protectors 
shall be easily accessible and shall be located between 3 to 5 ft (1 to 
1.5 m) above final grade.
    (i) The locations of NIDs, BETs, or fused primary station protectors 
shall be selected with emphasis on utilizing the shortest primary 
station protector

[[Page 601]]

grounding conductor practicable and on grounding of the 
telecommunications primary station protector to the electric service 
grounding system established at the building served utilizing electrodes 
(c) through (g) cited in section 800-40(b)(1) of ANSI/NFPA 70-1999, NEC 
[supreg]. The National Electrical Code [supreg] and NEC [supreg] are 
registered trademarks of the National Fire Protection Association, Inc., 
Quincy, MA 02269. The ANSI/NFPA 70-1999, NEC [supreg], is incorporated 
by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
Copies are available from NFPA, 1 Batterymarch Park, P. O. Box 9101, 
Quincy, Massachusetts 02269-9101, telephone number 1 (800) 344-3555. 
Copies of ANSI/NFPA 70-1999, NEC [supreg], are available for inspection 
during normal business hours at RUS, room 2905, U.S. Department of 
Agriculture, 1400 Independence Avenue, SW., STOP 1598, Washington, DC 
20250-1598, or at the National Archives and Records Administration 
(NARA). For information on the availability of this material at NARA, 
call 202-741-6030, or go to: http://www.archives.gov/federal--register/
code--of--federal--regulations/ibr--locations.html.
    (j) If access to the building electric service grounding system, as 
referenced in paragraph (i) of this section, is not possible or is not 
reasonable (telecommunications primary station protector grounding 
conductor will be longer than 10 ft (3 m)), the NID, BET, or fused 
primary station protector shall be located as close as practicable to 
electrodes (a) or (b) cited in section 800-40(b)(1) of ANSI/NFPA 70-
1999, NEC [supreg].
    (k) In addition, the NID, BET, or fused primary station protector 
shall be located in, on, or immediately adjacent to the structure or 
building to be served as close as practicable to the point at which the 
telecommunications service wire attaches to the building, making sure 
that the telecommunications primary station protector grounding 
conductor is connected to the closest, existing, and accessible 
electrode, of the electrodes cited in paragraph (i) or (j) of this 
section.
    (l) For the preferred customer access location installation, the 
ANSI/NFPA 70-1999, NEC [supreg], permits the telecommunications 
grounding conductor to be connected to the metallic conduit, service 
equipment closure, or electric grounding conductor as shown in Figure 8 
of paragraph (l)(2) of this section.
    (1) Connections to metallic conduits shall be made by ground straps 
clamped over a portion of the conduit that has been cleaned by sanding 
down to bare metal.
    (2) Connections to metallic service equipment closures shall be made 
by attaching a connector which is listed for the purpose by some 
organization acceptable to the local authority (State, county, etc.) per 
article 100 of ANSI/NFPA 70-1999, NEC [supreg], definition for 
``Listed'' (for example connectors listed for the purpose by 
Underwriters Laboratories (UL)). Figure 8 is as follows:

[[Page 602]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.009

    (m) Where it is not possible to accomplish the objective of 
paragraphs (i), (j), and (k) of this section, interior metallic pipes 
may be used to the maximum practicable extent to gain access to the 
electric service ground as shown in Figure 9. Note that the water pipe 
in Figure 9 is electrically continuous between electric and 
telecommunications bonds to the cold water pipe and it is used only as a 
portion of a bonding conductor and, therefore, does not have to be 
``acceptable'' as a ground electrode but may be floating (isolated from 
ground by a plastic pipe section). ANSI/NFPA 70-1999, NEC [supreg], 
requires that metal piping be used as a bonding conductor in this manner 
only when

[[Page 603]]

the connectors to the pipe are within 1.5 m (5 ft) of where the pipe 
enters the premises. This is not the preferred installation. The RUS 
preferred installation has the telecommunications primary station 
protector grounded directly to an accessible location near the power 
grounding system. See paragraph (l) of this section. Figure 9 is as 
follows:
[GRAPHIC] [TIFF OMITTED] TR17AU01.010


[[Page 604]]


    (n) Where the telecommunications premises system at a customer's 
access location is grounded to a separate electrode (of any type) this 
telecommunications grounding electrode must be bonded to the electric 
grounding system with a No. 6 AWG or larger copper insulated grounding 
conductor. Bonding of separate electrodes is a requirement of the ANSI/
NFPA 70-1999, NEC [supreg].
    (o) The NID, BET, or fused primary station protector pair size shall 
be selected for the number of lines anticipated within five years.
    (p) When lightning damage is considered probable or customer access 
locations are remote from the borrower's headquarters, use of maximum 
duty gas tube primary station protectors incorporated in NIDs, BETs, or 
fused primary station protectors should be considered. (See RUS TE&CM 
823, Electrical Protection by Use of Gas Tube Arresters). Copies of RUS 
TE&CM 823 are available upon request from RUS/USDA, 1400 Independence 
Avenue, SW., STOP 1522, Washington, DC 20250-1522, FAX (202) 720-4120.
    (q) NIDs or BETs incorporating fuseless station protectors shall 
always be used in preference to fused station protectors or BETs 
incorporating fused protectors, when in the judgment of the RUS borrower 
or the engineer delegated by the RUS borrower, the requirements of ANSI/
NFPA 70-1999, NEC [supreg], for fuseless station protectors can be met.
    (r) A fuse link consisting of a copper conductor two gauges (AWG) 
finer (numerically higher) conductivity than the aerial service wire 
shall be provided between the cable and aerial service wire where NIDs 
or BETs incorporating fuseless station protectors are used. Thus for a 
22 AWG drop, a fuse link of No. 24 AWG or finer copper wire shall be 
provided. If the cable circuit is No. 24 gauge or finer, the cable 
conductors serve as the fuse link for the 22 AWG aerial service wire and 
no separate fuse link is necessary. (Note: The fuse link or the 
facilities serving as the fuse link must be located between the 
telecommunications facilities that are exposed to possible power cross 
and the customer drop where there is no exposure to possible power 
cross.)
    (s) RUS's buried plant practices require buried main line plant to 
be protected against power contacts to aerial plant extensions and 
aerial inserts by No. 24 AWG fuse links at every buried-aerial junction.
    (t) In aerial cable plant, fuse links are usually provided by No. 24 
AWG leads on filled terminal blocks regardless of the gauge of the cable 
conductors. This practice is acceptable if the ampacity of the aerial 
service wire is sufficiently higher than the fuse link's ampacity.
    (u) The grounding and bonding of each NID, BET, or fused primary 
station protector shall be selected by consulting paragraphs (i) through 
(n) of this section. The ``first choice'' assembly unit shall be 
selected whenever the prevailing conditions make its use practicable. 
The NID, BET, or fused primary station protector assembly unit selected 
shall be installed in accordance with the appropriate construction 
drawing specified in RUS Bulletin 1753F-153 (RUS Form 515d), 
Specifications and Drawings for Service Installations at Customer Access 
Locations (Incorporated by reference at Sec. 1755.97). Copies of RUS 
Bulletin 1753F-153 are available upon request from RUS/USDA, 1400 
Independence Avenue, SW., STOP 1522, Washington, DC 20250-1522, FAX 
(202) 720-4120.
    (v) The minimum size grounding conductor that can be used with a 
single NID; a group of NIDs; a multipair NID; fused protector; or BET 
shall be in accordance Table 5, as follows:

       Table 5--Grounding Conductor Size Versus Number of Circuits
------------------------------------------------------------------------
                                            Number of circuits
  Minimum grounding conductor   ----------------------------------------
              size                Fuseless (carbon
                                    or gas tube)            Fused
------------------------------------------------------------------------
12 AWG, copper,         1 to 2............  1 to 3.
 insulated.
10 AWG, copper,         3 to 5............  4 to 7.
 insulated.
6 AWG, copper,          6 or more.........  8 or more.
 insulated.
------------------------------------------------------------------------


[[Page 605]]

    (w) Grounding conductor runs between the NID, BET, or fused station 
protector and the ground electrode shall conform to the following:
    (1) The shortest, most direct route practicable shall be used;
    (2) Sharp bends in the grounding conductor shall be avoided during 
installation;
    (3) No splices shall be made in the grounding conductor;
    (4) Grounding conductors shall not be fished through walls, under 
floors, or placed in bridle rings or any metal conduit unless the 
grounding conductor is bonded to the conductor at both ends of the 
metallic conduit;
    (5) Grounding conductor runs from an outside mounted NID, BET, or 
fused station protector to an inside ground electrode shall use the same 
entrance as the station wire; and
    (6) Grounding conductor runs from an outside mounted NID, BET, or 
fused station protector to an outside ground electrode at the building 
shall be attached to the exterior surface of the building or buried. If 
buried, the grounding conductor shall be either plowed or trenched to a 
minimum depth of 12 in. (300 mm). When trenched, the trenches shall be 
as close to the side of the building as practicable, backfilled, and 
tamped to restore the earth to its original condition.
    (x) Telecommunications grounding connectors shall be RUS accepted or 
RUS technically accepted. Grounding and bonding conductors shall be made 
of copper. Where the grounding and bonding conductors must be connected 
to aluminum electric service grounding conductors, bimetal grounding 
connectors shall be used.
    (y) Grounding conductor attachments shall conform to the following:
    (1) Galvanized nails or clamps, or nickel-copper alloy staples shall 
be used for grounding conductor attachments in accordance with Table 6 
in paragraph (y)(3) of this section;
    (2) Grounding conductors, station or buried service wires in 
parallel runs may share the same fastening device when the device is 
specifically designed for two wires. See Table 6 in paragraph (y)(3) of 
this section for station wire and grounding conductor fasteners; and
    (3) Grounding conductor fasteners shall be placed 12 to 18 in. (300 
to 450 mm) apart on straight runs and 2 to 4 in. (50.8 to 100 mm) apart 
at corners and at bends. Table 6 is as follows:

[[Page 606]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.011

    Notes: 1. Screw dimensions are minimum. Where appropriate, either or 
both dimensions shall be increased. All wood screws for exterior use 
shall be stainless steel. All other exterior metal devices shall be 
stainless steel, zinc coated steel, silicon bronze, or corrosion 
resistant aluminum alloy.
    2. Toggle bolt dimensions are minimum. Where appropriate, either or 
both dimensions shall be increased.
    3. Wall screw anchors may be used in wall board, plaster or tile 
walls. Screws and nails in masonry shall be secured by means of 
expansions type anchors. Equivalent manual or machine-driven devices may 
be used. Where toggle bolts are specified, equivalent devices may be 
used.
    4. Lead holes shall be drilled for screws, nails, and bridle rings 
in shingles and dropsiding.

[[Page 607]]

    5. Sheet metal screws shall be used except where toggle bolts are 
required. Where wood sheathing under sheet metal siding is encountered, 
the sheet metal may be drilled or punched and a wood screw used.
    6. Machine-driven staples of nickel-copper composition may be used 
for exterior wiring.
    7. Galvanized clamps and wiring nails may be used for exterior and 
interior wiring. Enameled clamps shall be used for interior wiring only. 
Where toggle bolts or equivalent devices require holes in the structure 
larger than the clamp being fastened, a suitable washer of sufficient 
size to cover the hole must be used under the clamp.
    8. Double clamp may be used where two 22 AWG station wires, 
two 12 AWG grounding conductors, or one 22 AWG station 
wire and one 12 grounding conductor parallels one another.
    9. For converting English units to Metric units use 1 in. = 25.4 mm.

    (z) Grounding conductors shall be separated from non-
telecommunications company wires in accordance with section 800-12(b) of 
ANSI/NFPA 70-1999, NEC [supreg].
    (aa) Grounding conductors run through metal conduits shall be bonded 
to the conduit at each end. RUS accepted and RUS technically accepted 
pipe type ground clamps and grounding connectors shall be used for 
bonding.
    (bb) Where NID, BET, or fused station protector assembly units 
require grounding conductor connections to pipe systems, the following 
apply:
    (1) The connection shall be made to a cold water pipe of an 
operating water system;
    (2) The connection point shall be preferably inside the building;
    (3) Allow a minimum of 6 in. (152 mm) between the last fastener and 
the point where the grounding conductor first touches the water pipe;
    (4) Leave 2 in. (50.8 mm) of slack in the grounding conductor to 
avoid breaking the conductor at the terminating point. Tape the 
grounding conductor to the pipe where possible to avoid movement. In no 
case, shall the grounding conductor be coiled or wrapped around the 
pipe;
    (5) The pipe shall be cleaned with fine sand paper to make a good 
electrical connection. Care should be taken to avoid damaging the pipe 
while cleaning it;
    (6) Attach the pipe grounding conductor connector to the cleaned 
area of pipe and tighten. Care shall be exercised to avoid deforming, 
crushing, or otherwise damaging the pipe. A simple continuity check with 
an ohmmeter between the connector and the pipe will indicate whether or 
not a good electrical contact has been made. Set the ohmmeter to ``Rx1'' 
scale to ensure that a low resistance contact is made;
    (7) A warning tag shall be attached to the ground clamp with the 
following or equivalent statement: ``Call the telecommunications company 
if this connector or grounding conductor is loose or must be removed;'' 
and
    (8) When the water pipe is used, the ANSI/NFPA 70-1999, NEC 
[supreg], requires that metal piping be used as a bonding conductor in 
this manner only when the connections to the pipe are within 5 ft (1.5 
m) of where the pipe enters the premises.
    (cc) Bonding conductors shall consist of either copper or tinned 
copper insulated wires of appropriate sizes.
    (1) Bonding conductors shall be run and attached in the same manner 
as grounding conductors.
    (2) Attaching and terminating devices for bonding conductors shall 
be adequate for the size of wire involved. The No. 6 AWG copper 
insulated conductor or larger shall not be terminated by bending it 
around a threaded stud.
    (dd) Where NID, BET, or fused station protector assembly units 
require a driven ground rod the following shall apply to the ground rod 
installation:
    (1) Locate the ground rod at least 1 ft (300 mm) from buildings, 
poles, trees and other obstruction;
    (2) Ground rods shall not be installed within 6 ft (2 m) of electric 
service ground rods (Note: This minimum separation is provided to avoid 
mutual impedance effects of multiple grounding electrodes that will 
deleteriously degrade the effective impedance-to-earth if grounding 
electrodes are installed any closer than 6 ft (2 m) to one another. This 
requirement is included for cases where the telecommunications company 
is not allowed, for some reason, to observe the RUS preferred grounding 
method of attaching the primary protector grounding conductor directly 
to an accessible point on the

[[Page 608]]

building electric service grounding system. RUS believes that if the 
primary protector location can be sited within 6 ft (2 m) of the 
electric service ground rod then the electric service ground rod could 
be used as the preferred telecommunications grounding electrode and a 
separate telecommunications ground rod is unnecessary);
    (3) A hole, 15 in. (350 mm) deep and 6 in. (150 mm) in diameter, 
shall be dug at the location where the ground rod is to be driven;
    (4) Where ``slip-on'' type ground rod clamps are used instead of 
``clamp-around'' type clamps, the ground rod clamps shall be placed onto 
the rod prior to driving the rod into the ground (Note there should be 
one clamp for the NID, BET, or fused station protector grounding 
conductor and one clamp for the conductor required to bond the 
telecommunications ground rod to the electric grounding system). 
However, the clamp shall not be tightened until the rod is completely 
driven. The end of the rod shall be placed in the bottom of the hole and 
the rod shall be aligned vertically adjacent to one wall of the hole 
prior to driving. The rod shall be driven until its tip is 12 in. (300 
mm) below final grade. The grounding conductor shall then be attached, 
the clamp shall be tightened, and hole backfilled. Clamps employed in 
this manner shall be suitable for direct burial and shall be RUS 
accepted or RUS technically accepted; and
    (5) Where rods are manually driven, a large number of blows from a 
light hammer (4 lbs (1.8 kg)) shall be used instead of heavy 
sledgehammer type blows. This should keep the rod from bending.
    (ee) Terminations on fuseless primary station protectors 
incorporated in NIDs and on fused primary station protectors shall be as 
shown in Figures 10, 11, 12, and 13 of paragraph (ee)(1) of this 
section, Figure 14 of paragraph (ee)(4) of this section, and Figure 15 
of paragraph (ee)(6) of this section. The inner jackets of buried 
service wires and outer jackets of cables used as service drops shall be 
extended into the NID or the fused primary station protector. A 10 in. 
(250 mm) length of each spare wire shall be left in NIDs or fused 
primary station protectors. The spare wires shall be coiled up neatly 
and stored in the NID or fused primary station protector housing.
    (1) The shields of buried service wires may be connected to the 
ground binding post using RUS accepted or RUS technically accepted 
buried service shield bond connectors as shown in Figure 10 for NIDs and 
Figure 11 for fused primary station protectors. RUS accepted or RUS 
technically accepted buried service wire harness wires designed for 
customer access location installations may also be used for terminating 
buried service wire shields to the ground binding post of the NID as 
shown in Figure 12 and Figure 13 for fused primary station protectors. 
Figures 10 through 13 are as follows:

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[[Page 612]]


[GRAPHIC] [TIFF OMITTED] TR17AU01.015

    (2) On buried service drops and aerial service drops of more than 6 
pairs using RUS accepted or RUS technically accepted cables, the shields 
shall be terminated with a RUS accepted or RUS technically accepted 
cable shield bonding connector and extended to the ground binding post 
of the NID, BET, or fused primary station protector with an RUS accepted 
or RUS technically accepted bonding harness wire. The installation of 
the shield bond connector and bonding harness wire shall be in 
accordance with the manufacturer's instructions.
    (3) The shield and other conductors at the fuseless primary station 
protector incorporated in the NID shall be

[[Page 613]]

terminated as shown on Figure 14 in paragraph (ee)(4) of this section. 
The pronged or cupped washer shall be placed above the shield. The 
grounding conductor shall be placed around the post on top of the 
pronged or cupped washer. A flat washer shall be placed above the 
grounding conductor.
    (4) The station wire signaling ground conductor, if required, shall 
be placed above the first flat washer and beneath the second flat washer 
as indicated in Figure 14 as follows:
[GRAPHIC] [TIFF OMITTED] TR17AU01.016


[[Page 614]]


    (5) The shield and other conductors at the fused primary station 
protector shall be terminated as shown on Figure 15 in paragraph (ee)(6) 
of this section. The pronged or cupped washer shall be placed above the 
shield. The grounding conductor shall be placed around the post on top 
of the pronged or cupped washer. A flat washer shall be placed above the 
grounding conductor.
    (6) The station wire signaling ground conductor, if required, shall 
be placed above the first flat washer and beneath the second flat washer 
as indicated in Figure 15 as follows:
[GRAPHIC] [TIFF OMITTED] TR17AU01.017


[[Page 615]]


    (7) Indoor NIDs or BETs that are equipped with ``Quick Connect'' 
type terminals shall not have more than one wire connected per clip. No. 
19 AWG copper and No. 18 AWG copper covered-steel reinforced aerial 
service wire conductors shall not be connected to quick connect 
terminals. Nonmetallic reinforced aerial service wire using No. 22 AWG 
copper conductors may be connected to the quick connect terminals.
    (8) Tip and ring connections and other connections in multipair NIDs 
or BETs shall be as indicated in Figure 16 as follows:
[GRAPHIC] [TIFF OMITTED] TR17AU01.018


[[Page 616]]


    (ff) System polarity and conductor identification shall be 
maintained in NIDs, BETs, or fused primary station protectors in 
accordance with construction drawings 815 and 815-1 contained in 
Sec. 1755.510.

[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.509  Mobile homes.

    (a) Customer access location installations at mobile homes shall be 
treated the same whether the homes are mounted on permanent foundations 
or temporary foundations and shall be installed as specified in 
Secs. 1755.500 through 1755.510. For the purpose of this section, mobile 
homes include manufactured homes, motor homes, truck campers, travel 
trailers, and all forms of recreational vehicles. Customer access 
location installations at mobile homes can be considerably different 
than customer access location installations at regular homes and 
borrowers shall be certain that the two types of installations are 
properly applied.
    (b) The method of customer access location installation prescribed 
by the ANSI/NFPA 70-1999, NEC [supreg] for a mobile home depends on how 
the electric power is installed at the mobile home and it can involve 
considerable judgment on the part of the telecommunications installer. 
The National Electrical Code [supreg] and NEC [supreg] are registered 
trademarks of the National Fire Protection Association, Inc., Quincy, MA 
02269. The ANSI/NFPA 70-1999, NEC [supreg], is incorporated by reference 
in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies are 
available from NFPA, 1 Batterymarch Park, P. O. Box 9101, Quincy, 
Massachusetts 02269-9101, telephone number 1 (800) 344-3555. Copies of 
ANSI/NFPA 70-1999, NEC [supreg], are available for inspection during 
normal business hours at RUS, room 2905, U.S. Department of Agriculture, 
1400 Independence Avenue, SW., STOP 1598, Washington, DC 20250-1598, or 
at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. The ANSI/NFPA 70-1999, NEC 
[supreg], requires primary station protectors to be located where 
specific acceptable grounding electrodes exist. The ANSI/NFPA 70-1999, 
NEC [supreg], allows station protector installations to be at the 
location of the power meter or the electric disconnecting means 
apparatus serving the mobile home providing these electric facilities 
are installed in the manner specifically defined by the ANSI/NFPA 70-
1999, NEC [supreg]. The ANSI/NFPA 70-1999, NEC [supreg], requires the 
station protectors to be installed at the nearest of a number of other 
meticulously defined ANSI/NFPA 70-1999, NEC [supreg], acceptable 
electrodes where the protector cannot be installed at the power meter or 
the electric disconnecting means apparatus serving the mobile home. The 
provisions can be confusing.
    (c) NIDs shall be installed at mobile homes as follows:
    (1) Where the mobile home electric service equipment (power meter, 
etc.,) or the electric service disconnecting means associated with the 
mobile home is located within 35 ft (10.7 m) of the exterior wall of the 
mobile homes it serves, the NID shall be installed in accordance with 
Figure 17 as follows:

[[Page 617]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.019

    (2) Where the mobile home electric service equipment (power meter, 
etc.,) or the electric service disconnecting means associated with the 
mobile home is located more than 35 ft (10.7 m) from the exterior wall 
of the mobile homes it serves, the NID shall be installed in accordance 
with Figure 18 as follows:

[[Page 618]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.020

    (d) The service wire and station wire shall be terminated in the NID 
in accordance with Figure 19 in paragraph (e) of this section.
    (e) Installation of the station wire and grounding conductor at the 
mobile home shall be in accordance with Figure 20. Figures 19 and 20 are 
as follows:

[[Page 619]]

[GRAPHIC] [TIFF OMITTED] TR17AU01.021


[[Page 620]]


[GRAPHIC] [TIFF OMITTED] TR17AU01.022


[66 FR 43317, Aug. 17, 2001, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.510  Construction and assembly unit drawings.

    (a) The construction and assembly unit drawings in this section 
shall be used by borrowers to assist the installer in making the 
customer access location installations.
    (b) The asterisks appearing on the construction drawings indicate 
that the items are no longer listed in the RUS Informational Publication 
(IP) 344-2, ``List of Materials Acceptable for Use on Telecommunications 
Systems of RUS Borrowers.'' RUS IP 344-2 can

[[Page 621]]

be obtained from the Superintendent of Documents, P. O. Box 371954, 
Pittsburgh, PA 15250-7954, telephone number (202) 512-1800.
    (c) Drawings BM50, BM83, 312-1, 501-1, 501-2, 503-2, 504, 505, 506, 
507, 508-1, 510, 510-1, 510-2, 513, 815, 815-1, 958, and 962 are as 
follows:
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[[Page 639]]


[GRAPHIC] [TIFF OMITTED] TR17AU01.041


[66 FR 43327, Aug. 17, 2001]



Secs. 1755.511-1755.521  [Reserved]



Sec. 1755.522  RUS general specification for digital, stored program 
controlled central office equipment.

    (a) General. (1) This section covers general requirements for a 
digital telephone central office switching system, which is fully 
electronic and controlled by stored program processors. A digital 
switching system transfers information which is digitally encoded from 
any input port to a temporarily addressed exit port. The information may 
enter

[[Page 640]]

the system in either analog or digital form and may or may not be 
converted to analog at the exit port depending on the facility beyond. 
The switching system shall operate properly as an integral part of the 
telephone network when connected to physical and carrier derived 
circuits meeting RUS specifications and other generally accepted 
telecommunications practices.
    (2) The output of a digital-to-digital port shall be Pulse Code 
Modulation (PCM), encoded in eight-bit words using the mu-255 encoding 
law and D3 encoding format, and arranged to interface with a T1 span 
line.
    (3) American National Standards Institute (ANSI) Standard S1.4-1983, 
Specification for Sound Level Meters, is incorporated by reference by 
RUS. This includes S1.4A-1985 that is also incorporated by reference. 
This incorporation by reference was approved by the Director of the 
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
Copies may be obtained from ANSI Inc., 11 West 42nd Street, 13th Floor, 
New York, NY 10036, telephone 212-642-4900. Copies may be inspected 
during normal business hours at RUS, room 2838-S, U.S. Department of 
Agriculture, Washington, DC 20250, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html.
    (4) American Society for Testing Materials (ASTM) Specification B 
33-91, Standard Specification for Tinned Soft or Annealed Copper Wire 
for Electrical Purposes, is incorporated by reference by RUS. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
may be obtained from ASTM, 1916 Race Street, Philadelphia, PA, telephone 
215-299-5400. Copies may be inspected during normal business hours at 
RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250, 
or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (5) Bell Communications Research (Bellcore) document SR-TSV-002275, 
BOC Notes on the LEC Networks--1990, March 1991, is incorporated by 
reference by RUS. This incorporation by reference was approved by the 
Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 
1 CFR Part 51. Copies may be obtained from Bellcore Customer Service, 60 
New England Avenue, Piscataway, NJ 08854, telephone 1-800-521-2673. 
Copies may be inspected during normal business hours at RUS, room 2838-
S, U.S. Department of Agriculture, Washington, DC 20250, or at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    (6) Bellcore TR-TSY-000508, Automatic Message Accounting, July 1987, 
is incorporated by reference by RUS. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from Bellcore 
Customer Service, 60 New England Avenue, Piscataway, NJ 08854, telephone 
1-800-521-2673. Copies may be inspected during normal business hours at 
RUS, room 2838-S, U.S. Department of Agriculture, Washington, DC 20250, 
or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (7) Federal Standard H28, Screw-Thread Standards for Federal 
Services, March 31, 1978, is incorporated by reference by RUS. This 
includes: Change Notice 1, Federal Standard, Screw-Thread Standards for 
Federal Services, May 28, 1986; Change Notice 2, Federal Standard, 
Screw-Thread Standards for Federal Services, January 20, 1989; and 
Change Notice 3, Federal Standard, Screw-Thread Standards for Federal

[[Page 641]]

Services, March 12, 1990. This incorporation by reference was approved 
by the Director of the Federal Register in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. Copies may be obtained from the General 
Services Administration, Specification Section, 490 East L'Enfant Plaza 
SW, Washington, DC 20407, telephone 202-755-0325. Copies may be 
inspected during normal business hours at RUS, room 2838-S, U.S. 
Department of Agriculture, Washington, DC 20250, or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    (8) Institute of Electrical and Electronics Engineers (IEEE) Std 
455-1985, IEEE Standard Test Procedure for Measuring Longitudinal 
Balance of Telephone Equipment Operating in the Voice Band, is 
incorporated by reference by RUS. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from IEEE 
Service Center, 445 Hoes Lane, P. O. Box 1331, Piscataway, NJ 08854, 
telephone (201) 981-0060. Copies may be inspected during normal business 
hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, 
DC 20250, or at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (9) Institute of Electrical and Electronics Engineers (IEEE) Std 
730-1989, IEEE Standard for Software Quality Assurance Plans, is 
incorporated by reference by RUS. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies may be obtained from IEEE 
Service Center, 445 Hoes Lane, P. O. Box 1331, Piscataway, NJ 08854, 
telephone (201) 981-0060. Copies may be inspected during normal business 
hours at RUS, room 2838-S, U.S. Department of Agriculture, Washington, 
DC 20250, or at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (10) RUS Bulletin 345-50, PE-60, RUS Specification for Trunk Carrier 
Systems, September 1979, is incorporated by reference by RUS. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies 
may be obtained from the Rural Utilities Service, Administrative 
Services Division, room 0175-S, Washington, DC 20250. The bulletin may 
be inspected at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html.
    (11) RUS Bulletin 345-55, PE-61, Central Office Loop Extenders and 
Loop Extender Voice Frequency Repeater Combinations, December 1973, is 
incorporated by reference by RUS. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552 (a) and 1 CFR part 51. Copies may be obtained from the Rural 
Utilities Service, Administrative Services Division, room 0175-S, 
Washington, DC 20250. The bulletin may be inspected at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    (12) RUS Bulletin 345-87, PE-87, RUS Specification for Terminating 
(TIP) Cable, December 1983, is incorporated by reference RUS. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552 (a) and 1 CFR part 51. Copies 
may be obtained from the Rural Utilities Service, Administrative 
Services Division, room

[[Page 642]]

0175-S, Washington, DC 20250. The bulletin may be inspected at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html.
    (b) Reliability. (1) Quality control and burn-in procedures shall be 
sufficient so the failure rate of printed circuit boards does not exceed 
an average of 1.0 percent per month of all equipped cards in the central 
office during the first three months after cutover, and an average of 
0.5 percent per month of all equipped cards in the central office during 
any 6-month period thereafter. A failure is considered to be the failure 
of a component on the PC board which requires it to be repaired or 
replaced.
    (2) The central office switching system shall be designed such that 
the expected individual line downtime does not exceed 30 minutes per 
year. This is the interval that the customer is out of service as a 
result of all failure types, excluding dispatch and travel time, i.e., 
hardware, software, and procedural errors.
    (3) The central office switching system shall be designed such that 
there will be no more than 1 hour of total outages in 20 years, 
excluding dispatch and travel time for unattended offices.
    (c) System type acceptance tests. (1) System type acceptance tests 
(general acceptance tests) are performed for the purpose of determining 
whether or not a type of switching system should be added or retained as 
an RUS accepted system. While general acceptance tests will be required 
on each system type, they will not be expected to cover every 
requirement in this section. However, any installation of a system 
provided in accordance with this section shall be capable of meeting any 
requirement in this section on a spot-check basis.
    (2) A ``completed call'' test shall be made part of these system 
type acceptance tests. There shall be no more than two in 10,000 locally 
originating and incoming calls misdirected, unsuccessfully terminated, 
prematurely disconnected or otherwise failing as a result of equipment 
malfunction and/or equipment failures, or as a result of transients, 
noise or design deficiencies. This test shall be made with a load box 
with no less than 10 lines access and 10 subscriber numbers for 
completion, or equivalent, with no other traffic in the system. If there 
is a failure in the equipment during this test, the cause shall be 
repaired and the test restarted at zero calls.
    (3) System type acceptance testing applies basically to factory type 
testing, and not to owner acceptance testing for individual 
installations. The overall installed and operating system shall also 
meet these requirements, except for unusual circumstances or where 
specifically excluded by this or other RUS requirements.
    (d) Types of requirements. (1) Unless otherwise indicated, the 
requirements listed in this section are fixed requirements.
    (2) Optional requirements are those which may not be needed for 
every office and are identifiable by a phrase such as, ``when specified 
by the owner,'' or, ``as specified by the owner.''
    (3) In some cases where an optional feature specified in paragraph 
(e) of this section will not be required by an owner, either now or in 
the future, a system which does not provide this feature will be 
considered to be in compliance with this section for the specific 
installation under consideration, but not in compliance with the entire 
section.
    (4) The owner may request bids from any RUS accepted supplier whose 
system provides all the features which will be required for a specific 
installation.
    (5) The Application Guide, RUS TE&CM 322, provides information about 
the economic and service factors involved in all optional features, as 
well as instructions for the completion of appendices A and B of this 
section.
    (e) General requirements. (1) The equipment shall provide for 
terminating and automatically interconnecting subscriber lines and 
trunks in response to dial pulses (or pushbutton dialing signals, if 
specified) without the aid of an operator.

[[Page 643]]

    (2) Complete flexibility shall be provided for assigning any 
subscriber directory number to any central office line equipment by the 
use of internal programmed memory. Thus, any subscriber line and/or 
directory number may be moved to another terminal to distribute traffic 
loads, if the line equipment hardware is compatible with the service 
provided.
    (3) The system shall be arranged to interface with interexchange 
carrier trunks and networks using single digit or multi-digit access 
codes. The system shall be equipped to handle at least 20-digit 
subscriber dialed numbers. All subscriber directory numbers in the 
office shall be seven-digit numbers.
    (4) The network and the control equipment shall be comprised of 
solid-state and integrated circuitry components. Peripheral equipment 
shall be comprised of solid-state and integrated circuitry components as 
far as practical and consistent with the state-of-the-art and economics 
of the subject system.
    (5) The basic switching system shall include the provision of 
software programming and necessary hardware, including memory, for 
optional custom calling services such as call waiting, call forwarding, 
three-way calling, and abbreviated dialing. It shall be possible to 
provide these services to any individual line (single-party) subscriber. 
The addition of these services shall not reduce the anticipated ultimate 
engineered line, trunk, and traffic capacity of the switching system as 
specified in appendix A of this section.
    (6) The requirements in this specification apply only to single 
party lines. Although only single frequency ringing is required, other 
types may be requested in appendix A of this section.
    (7) Provision shall be made for local automatic message accounting 
(LAMA), and for traffic service position system (TSPS) trunks, or 
equivalent, to the operator's office when required either initially or 
in the future.
    (8) Tandem switching features shall be provided if specified in 
appendix A of this section.
    (9) The system shall be arranged to serve a minimum of eight All 
Number Calling (ANC) office codes per office, with discrimination on 
terminating calls by trunk group, numbering plan, or programmed memory 
and class mark, if specified in appendix A of this section.
    (10) Busy hour load handling capacity is an important feature when 
an office approaches capacity. The delays which may occur in call 
completion during busy hour periods may prove to be excessive in some 
system designs. Accordingly, each bidder shall provide, in appendix C of 
this section, data satisfactory to RUS regarding the busy hour load 
handling capacity and traffic delays of the system.
    (11) Provision shall be made for hotel-motel arrangements, as 
required by the owner, to permit the operation of message registers at 
the subscriber's premises to record local outdial calls by guests (see 
Item 10.5, appendix A of this section).
    (12) Provision shall be made to identify the calling line or 
incoming trunk on nuisance calls (see paragraph (g)(10) of this section 
for details).
    (13) Full access from every subscriber line to every interoffice 
trunk shall be provided.
    (14) Facilities shall be provided to implement service orders, make 
traffic studies, and perform switching and transmission tests by means 
of remote control devices if such operations are specified in Items 11.2 
and 11.3 of appendix A of this section.
    (15) Provision shall be made for the addition of facilities to 
record all subscriber originated calls based on dialed directory number, 
time of day, and duration of conversation. They shall be such that the 
additional equipment (if any is required) may be added to an in-service 
system without interruption of service and a minimum of equipment, 
wiring and software modifications.
    (16) The system shall be capable of distributed switching operation 
where groups of subscriber lines can be remotely located from the 
central office. The remotely situated units are known as ``Remote 
Switching Terminals'' (RST's) (see paragraph (w) of this section). This 
does not eliminate the use of pair gain devices such as direct digitally 
connected concentrators, regular concentrators or subscriber carrier 
equipment, where specifically ordered by the owner and its engineer.

[[Page 644]]

    (17) The switching system shall have means to synchronize its clock 
with switches above it in the network hierarchy, when specified by the 
owner in item 3, appendix A of this section (see paragraph (j) of this 
section).
    (18) Consistent with system arrangements and ease of maintenance, 
space shall be provided on the floor plan for an orderly layout of 
future equipment bays that will be required for anticipated traffic when 
the office reaches its ultimate size. Readily accessible terminals shall 
be provided for connection to interbay and frame cables to future bays. 
All cables, interbay and intrabay (excluding power), if technically 
feasible, shall be terminated at both ends by use of connectors.
    (19) When specified in appendix A of this section, the system shall 
be capable of processing emergency calls to a 911 service bureau 
connected either by a group of one-way 911 lines or a trunk group.
    (i) It shall be possible to reach the service bureau by dialing 911, 
1+911, or a 7-digit number.
    (ii) The system shall select an idle 911 line or trunk.
    (iii) The system shall provide usual ringing and ringback signal 
until the called 911 line answers.
    (iv) If the calling line goes on-hook first, the system shall hold 
the connection from the called 911 line and return steady low tone to 
the service bureau. The system shall then begin a 45-minute timeout, 
after which the calling line is disconnected and an alarm message is 
printed on a TTY. If the calling line goes off-hook before timeout, the 
system shall reestablish the conversation path.
    (v) If the calling line does not disconnect, the service bureau 
attendant shall have the ability to force a disconnect of the 
established connection with the calling party.
    (vi) When the 911 call is answered, the equipment shall be arranged 
so that coin lines are not charged for the call. Similarly, if some form 
of local call charging is used, there shall be no charge for the 911 
call.
    (vii) If the 911 service bureau is holding a calling line, it shall 
be possible for the 911 line to cause the equipment to ring back the 
calling line. This is done by providing a flash of on-hook signal from 
the 911 line lasting from 200 to 1,100 milliseconds. The signal to the 
calling line shall be ringing current if the line is on-hook, or 
receiver off-hook (ROH) tone if the line is off-hook.
    (viii) Calls shall not be originated from the service bureau via the 
dedicated 911 lines. If an attempt is made to originate a call, it shall 
receive reorder tone. After 6 minutes, the system shall print an alarm 
message.
    (ix) If 911 calls pass through intermediate switching, the forced-
hold control, emergency ringback, and calling line status monitoring 
capabilities are lost.
    (f) Line circuit requirements--(1) General. (i) The range of direct 
current (dc) resistances of subscriber loops, measured from the main 
frame in the central office and including the telephone set shall be at 
least 0-1900 ohms without loop extension and 1900-3600 ohms with loop 
extenders, or equivalent. The range when using extension equipment may 
be significantly reduced for straight line ringers. These limits apply 
under maximum adverse environmental and manufacturing variation 
tolerance conditions. Central office voltage shall be stabilized at a 
value necessary to provide at least a nominal 21 milliamperes current 
with a nontreated loop of at least 1900 ohms. Minimum loop insulation 
resistance without loop extenders shall be 25,000 ohms between 
conductors or from either conductor or both conductors in parallel to 
ground. Loop insulation resistance for loop extension devices may be 
100,000 ohms minimum between conductors or from either conductor or both 
conductors in parallel to ground.
    (ii) In addition to operating on nonloaded cable pairs and 
subscriber carrier, the equipment shall function properly with D-66 and 
H-88 loaded cable pairs, including any provisions the equipment must 
control for the purposes of proper transmission.
    (2) Dialing--(i) Subscriber dial speed. The line equipment and 
central office equipment (COE) in tandem shall operate satisfactorily 
when used with subscriber dials having a speed of operation between 
eight and twelve impulses per second and a break period of

[[Page 645]]

55 to 65 percent of the total impulse period.
    (ii) Subscriber dial interdigital time. The line equipment and 
central office equipment shall operate satisfactorily with subscriber 
rotary dial interdigital times of 200 milliseconds minimum, and with 
pushbutton dialing interdigital times of 50 milliseconds minimum.
    (iii) Subscriber line pushbutton dialing frequencies. (A) The 
frequency pairs assigned for pushbutton dialing shall be as follows, 
with an allowable variation of 1.5 percent:

------------------------------------------------------------------------
                                        High Group Frequencies (Hz)
    Low Group Frequencies (Hz)    --------------------------------------
                                   1209  1336  1477          1633
------------------------------------------------------------------------
697..............................    1     2     3   Spare
770..............................    4     5     6   Spare
852..............................    7     8     9   Spare
941..............................    *     0   -6 (7 Hz @ 
1.544 MHz);
    (ii) A minimum stability of 3.7 x 10-7/day upon loss of 
all frequency references; and
    (iii) A ``Pull-In Range'' for the capability of synchronizing to a 
clock with accuracy of 4.6 x 10 -6.
    (3) The access tandem central office system clock shall be a Stratum 
2 clock with:
    (i) A minimum long-term accuracy of 1.6 x 10-8 (0.025 
Hz @ 1.544 MHz);
    (ii) A minimum stability of 1 x 10-10/day upon loss of 
all frequency references; and
    (iii) A ``Pull-In Range'' for the capability of synchronization to a 
clock with accuracy of 1.6 x 10-8.
    (k) Switched access service arrangements--(1) General. The equipment 
shall be capable of providing Feature Group A, Feature Group B, Feature 
Group C, and Feature Group D switched access service arrangements, as 
described in Bellcore document SR-TSV-002275, BOC Notes on the LEC 
Networks--1990, section 6 and section 15, including arrangements for 
automatic number identification (ANI).
    (2) Operation. (i) All equipment shall be arranged for Feature Group 
A (Line Side Connection).
    (ii) All equipment shall be arranged for Feature Group B given that 
appendix A of this section requires the equipment of the necessary 
trunks (Trunk Side Connection).
    (iii) The equipment shall be arranged for Feature Group C on the 
trunk groups specified in appendix A of this section. Even though 
appendix A of this section specifies Feature Group D or some other trunk 
group, it shall be possible through software commands available to the 
owner to use Feature Group C signaling protocols on a trunk group basis 
until such time that the trunk group in question converts to Feature 
Group D signaling protocols.
    (iv) The equipment shall be arranged for Feature Group D on the 
trunk groups specified in appendix A of this section.
    (v) Calls originating from coin lines toward switched access service 
shall be arranged either to provide signaling protocols for TSPS, or in 
the absence of TSPS-type service, such calls shall be blocked.
    (vi) The equipment shall be arranged for forwarding routing 
information, calling party identification, and called party numbers in 
the proper feature group protocols, by trunk group as specified in 
appendix A of this section.

[[Page 651]]

    (vii) The equipment shall be arranged for AMA data collection as 
specified in appendix A of this section by trunk group. Unless otherwise 
specified by the owner, the equipment shall be arranged to collect the 
billing data in the Bellcore AMA format as described in Bellcore 
document TR-TSY-000508, Automatic Message Accounting.
    (viii) If specified in Item 9.4, appendix A of this section, the 
equipment shall be arranged to store the billing data in a pollable 
system. If specified in Item 9.5, appendix A of this section, equipment 
shall be furnished to poll the pollable systems associated with the 
contract.
    (l) Fusing and protection requirements--(1) General. (i) The 
equipment shall be completely wired and equipped with fuses, trouble 
signals, and arranged for printout of fault conditions, with all 
associated equipment for the wired capacity of the frames or cabinets 
provided.
    (ii) Design precautions shall be taken to prevent the possibility of 
equipment damage arising from the insertion of an electronic package 
into the wrong connector, the removal of a package from any connector, 
or the improper insertion of the correct card in its connector.
    (2) Fuses. Fuses and circuit breakers shall be of an alarm and 
indicator type, except where the fuses or breaker location is indicated 
on the alarm printout. Their rating shall be designated by numerals or 
color code on the fuse panel, where feasible.
    (3) Components. (i) Insofar as possible, all components shall be 
capable of being continuously energized at rated voltage without 
injurious results. Insofar as possible, design precautions shall be 
taken to prevent damage to other equipment and components when a 
particular component fails.
    (ii) Printed circuit boards or similar equipment employing 
electronic components shall be self-protecting against external grounds 
applied to the connector terminals, where feasible. Board components and 
coatings applied to finished products shall be of such material or 
treated so they will not support combustion.
    (iii) Every precaution shall be taken to protect electrostatically 
sensitive components from damage during handling. This shall include 
written instructions and recommendations (see Item 6.1,h of appendix C 
of this section).
    (m) Switching network requirements--(1) The network. (i) All 
networks shall be comprised of solid-state components.
    (ii) The switching network shall employ time division digital 
switching and be compatible for connection to D3 type PCM channel banks 
without conversion to analog.
    (iii) Equipment shall be available as required to connect analog 
lines and trunks, analog or digital service circuits, digital carriers 
to RST's, D3 channel banks or other digital switching units.
    (2) Network quantity. Where the number of stages in the switching 
network and their control varies with the capacity of the system, 
sufficient equipment and wiring shall be supplied initially in order 
that there will be no service interruptions when additions are made up 
to the ultimate capacity as specified in appendix A of this section. 
This does not imply the necessity of supplying empty cabinets unless 
this is the only way the necessary wiring can be accomplished.
    (n) Stored program control (SPC) equipment requirements. (1) The 
system shall provide redundancy in call processing such that the failure 
of a call processing unit does not degrade the call processing 
capabilities of the switching system nor result in the loss of 
established calls.
    (2) Programs shall be modular, flexible and structured. In the 
interest of more dependable and more easily read programs, it is 
desirable to use a language which is more person-oriented leaving the 
detailed machine-oriented problems to a compiler program. Quality 
assurance of all software programs shall be in accordance with IEEE Std 
730-1989, IEEE Standard for Software Quality Assurance Plans, or 
equivalent.
    (3) The office administration program shall have checks within it to

[[Page 652]]

prevent failure due to erroneous or inconsistent input data. It shall 
safeguard against the possibility of upsetting machine performance with 
improper instructions or information. In addition, modular structure 
shall allow the use of a variety of human-engineered service order 
formats. Service changes may be performed remotely if so desired. 
Average machine time for service change shall be 15 seconds or less. 
Service changes shall not be registered in permanent memory until 
verified. The access to the service change shall not have access to 
generic program.
    (4) The switching system shall be able to offer, by request, at 
least the following printouts of its routine stored data for 
administrative purposes:
    (i) A list of all assigned directory numbers, in numerical order, 
with their assigned class of service and line terminal numbers;
    (ii) A list of all directory numbers, in numerical order, associated 
with a class of service;
    (iii) A list of all unassigned line terminals;
    (iv) Traffic data in proper form for separation studies in 
accordance with the revenue separations procedures current at the time 
of the contract;
    (v) All lines on lockout;
    (vi) All lines assigned to intercept;
    (vii) All available (unassigned) directory numbers in the working 
thousands group; and
    (viii) A list of equipment busied out for maintenance.
    (5) The printouts in paragraph (n)(4) of this section may be delayed 
to times of light traffic.
    (6) Maintenance diagnostics shall be performed by a fault 
recognition system utilizing both software and hardware, each being used 
where they are most effective for maintenance and reliability. In the 
economic interests of providing early and efficient fault detection and 
accurate pinpointing of faulty areas, it is desirable to have a 
comprehensive person-machine interface supported by extensive automatic 
fault detection and analysis, involving diagnostic software for fault 
resolution and automatic recovery mechanisms to maintain continuous 
service. Maintenance messages may be channeled to a remote maintenance 
center if so desired.
    (7) Information in memory, having no requirement for changes to be 
introduced in the maintenance or operation of the system, may be stored 
in memory devices such as programmable read-only memory (PROM) or other 
devices that cannot be reprogrammed in the field.
    (o) Maintenance facilities--(1) Alarm features, including alarm 
sending. (i) The equipment shall be arranged to provide audible and 
visual alarms indicating fuse operation or other circuit malfunctions 
resulting from component failure, crosses or open wiring, or any other 
conditions affecting service which can be detected economically.
    (ii) The alarms shall be classified in accordance with their effect 
on the system.
    (A) Catastrophic alarms demand immediate attention and require 
notification of the highest level of supervisory personnel. Conditions 
such as loss of service, loss of one or more remote line switches or 
line concentrators connected through Direct Digital Interface, loss of 
network control, and loss of computer program in all processors shall 
produce catastrophic alarms.
    (B) Major alarms demand rapid action. Conditions such as loss of one 
or more groups of subscribers or trunk ports, blown fuses for common 
groups of channels, loss of control to groups of channels, failure of 
one or both redundant units, and total loss of battery charging current 
for more than 15 minutes shall produce major alarms.
    (C) Minor alarms indicate nonemergency conditions which cause 
degraded service or fault conditions which causes the system to operate 
within less-than-optimum performance. Conditions discovered in automatic 
routining which have not shown in the operation of the equipment but 
require attention and cumulative line lockout (level adjustable) are 
examples of minor alarm conditions.
    (iii) When the office is arranged for unattended operation, 
facilities shall be provided for extending the alarm indications to an 
attended point.
    (iv) When the use of a separate outside plant facility for alarm 
sending is

[[Page 653]]

specified, the nature of the alarm may be indicated to the distant point 
by machine printout or other display device.
    (v) When alarm sending is accomplished over a regular operator 
office trunk, the operator shall be apprised that the call is an alarm 
indication by a distinctive tone, as specified by the owner in appendix 
A of this section. It shall be possible for the operator to determine at 
any time the presence of a trouble condition by dialing a number set 
aside for that purpose. This number shall also be accessible from lines 
classmarked for this feature.
    (vi) When the alarm sending circuit seizes an interoffice operator 
trunk, the operator must dial the alarm checking code over another trunk 
before the first trunk can be released except where the alarm condition 
has disappeared first.
    (vii) The alarm sending circuit shall have access to two or more 
trunks if the trunks are used for subscriber traffic.
    (viii) An alarm indication of higher priority shall supersede an 
original alarm indication and reseize an interoffice operator trunk.
    (ix) In any group of offices purchased under one contract, the same 
codes shall be used in each office for alarm checking and test.
    (x) When the alarm checking number is dialed, the alarm indications 
received shall be as follows:
    (A) Catastrophic alarm--No tone.
    (B) Major alarm--Continuous busy tone 60 IPM, unless alarm is 
overridden.
    (C) Minor alarm--Continuous 1-ring code ringback tone, unless alarm 
is overridden.
    (D) No trouble--Continuous 2-ring code ringback tone, unless alarm 
is overridden.
    (xi) Audible and visual local alarms and transmitted alarms shall be 
provided as follows:

------------------------------------------------------------------------
                                                  Delay Interval
------------------------------------------------------------------------
                                          Local
             Classification              Alarms     Alarms Transmitted
------------------------------------------------------------------------
Catastrophic                                0                          0
Major                                       0                      0 \1\
Minor                                       0                  0-30 Min.
------------------------------------------------------------------------
\1\Except no charge alarm delayed 15 minutes.

    (xii) The central office alarm circuits shall be arranged to provide 
optional wiring to transmit either a minor alarm or a major alarm and a 
printout to accommodate various types of trunk and subscriber carrier 
systems, microwave, mobile radio, other transmission systems, and 
environmental protection systems with different priorities when a set of 
contacts is closed in the equipment of such systems and the alarm 
checking code is dialed. The alarm relay shall be furnished by the 
supplier of the carrier multiplex and/or mobile radio equipment. The 
option or options shall be specified by the owner.
    (2) Trouble location and test. (i) Equipment. (A) A maintenance 
center shall be provided with a fault recorder (printer and/or display) 
for troubles. Here, system and sub-system visual trouble indications are 
shown for maintenance aid.
    (B) The fault recorder shall provide a permanent or semi-permanent 
record of the circuit elements involved whenever a trouble is 
encountered. It shall be arranged to recognize an existing fault 
condition and not cause multiple printouts of the same fault, except 
during test routine.
    (ii) Maintenance system. (A) The maintenance system shall monitor 
and maintain the system operation without interruption of call 
processing, except for major failures.
    (B) The maintenance system shall provide both specialized 
maintenance hardware circuits and an extensive software package to 
enable maintenance to determine trouble to an individual card or 
functional group of cards.
    (C) Maintenance programs may be both on-line and off-line. On-line 
maintenance programs are activated by system errors and shall be 
scheduled to execute call tests during low traffic periods and periodic 
hardware tests at specific time intervals. Programs shall provide 
diagnostic tools for the maintenance personnel and be initiated by them.
    (D) Scheduled periodic hardware tests shall automatically detect 
faults and alert maintenance personnel via alarm or appropriate input/
output device(s) at local and/or remote locations.

[[Page 654]]

    (E) Facilities shall be provided so that test calls can be set up 
using pre-selected items of switching equipment.
    (F) The maintenance personnel shall be able to make tests to 
determine if every trunk and every item of switching equipment are 
functioning properly. Also, it shall be possible to make each trunk and 
each SPC equipment, or part thereof, busy to service calls. Where 
possible, equipment which is made busy to service calls shall still be 
accessible for test calls.
    (iii) Outside plant and subscriber stations. (A) A subscriber loop 
test set or equivalent shall be provided either as a separate set or as 
a part of the maintenance center, as specified in item 11.2 of appendix 
A of this section. This circuit shall include a high resistance volt-ohm 
meter, wiring to tip and ring terminals to permit a portable wheatstone 
bridge to be used, an operator's telephone circuit, a dial circuit (and 
pushbutton dialing keys, if specified), outgoing trunks to dial 
equipment for access to lines under test without use of the main 
distributing frame (MDF) test shoe and the necessary test keys. No dry 
cell batteries shall be accepted for test potentials. Circuits shall be 
designed so that alternating current (ac) induction on the line will 
have no effect on dc measurements. All functions shall be under control 
of lever or pushbutton keys. As a minimum the test system shall:
    (1) Test for bridged foreign electromotive force (EMF);
    (2) Test for regular line battery;
    (3) Test for booster battery voltage and polarity using the test 
shoe;
    (4) Test for open circuits, short, tip ground, and ring ground;
    (5) Test for tip or ring negative potential;
    (6) Test for capacitance of a subscriber's line;
    (7) Supply talking battery to the line with and without booster 
battery;
    (8) Ring the subscriber through the test access circuit or through a 
test shoe;
    (9) Test in and out of the central office; and
    (10) Supply a reverse polarity key for voltage readings, except when 
positive or negative values are displayed directly.
    (B) An acceptable arrangement for making the tests shown in 
paragraph (o)(2)(iii)(A) of this section is to have them under software 
control with results displayed at one of the system's I/O ports.
    (C) A howler circuit for maintenance purposes, if ordered by the 
owner, shall have output tones which do not interfere with the 
pushbutton or multifrequency signaling tones. The harmonics of the 
output tones shall be attenuated at least 26 dB below the fundamental 
frequency for all load conditions. The frequency stability shall be 2 
percent or less for all output tones when the unit is operated in the 
specified load and environmental range. It shall be possible to vary the 
output voltage (power) of the howler circuit. It shall remove tone and 
restore the line to service when the telephone instrument receiver is 
placed on-hook. The frequency of the output shall be chosen to be 
distinctive and urgent in order to attract the subscriber's attention to 
an off-hook situation.
    (D) When a dial speed test facility is specified by the owner, it 
shall be accessed by dialing a special code and shall return to the 
calling station readily identifiable signals to indicate that the dial 
speed is slow, normal, or fast.
    (E) When the office is arranged for pushbutton dialing, optional 
facilities shall be provided for testing the pushbutton dialing 
equipment at the subscriber station.
    (F) When a system for testing subscriber lines in remote offices 
from a test position in a centrally located office is specified by the 
owner, it shall be capable of working with all the central offices and 
RST's in the remote areas. This testing equipment shall preferably be 
solid-state with a minimum of electromechanical devices and shall 
operate from central office battery. It shall be capable of working over 
any voice grade telephone circuit and shall not require a dedicated 
trunk. There shall be no interference to or from ``in-band'' voice 
channel tones. When used over a network, the verification or access 
shall be guarded to prevent unauthorized access by subscribers. Access 
to this system shall only be available to the test operator in all 
cases.

[[Page 655]]

    (3) Transmission testing. (i) When transmission test circuits are 
specified in Item 11.3 of appendix A of this section, they shall permit 
testing of trunks by a distant office without any assistance in the 
local dial office. Analog test ports shall meet appropriate trunk 
requirements. If Centralized Automatic Reporting on Trunks (CAROT), or 
equivalent, is to be used, the equipment at the end office shall comply 
with Bellcore document SR-TSV-002275, BOC Notes on the LEC Networks--
1990, section 8, Item 2.
    (ii) Transmission test circuits are available with a variety of 
options. These include single frequency and multifrequency tone 
generators with one or more generator output terminals, quiet 
terminations, and loop around test arrangements for both one-way and 
two-way trunks.
    (iii) Where multifrequency generators are used, they are usually 
arranged to provide a minimum of three frequencies. With some equipment, 
up to seven additional frequencies may be provided if needed. No 
industry standardization of test frequencies is as yet provided. 
Therefore, it is important that the selection of frequencies, the order 
in which they are applied and the time interval for application of each 
frequency be agreed upon by the connecting company and the RUS borrower 
and listed in appendix A of this section in those situations where 
connecting companies request the installation of multifrequency 
generators in borrowers' central offices.
    (iv) The milliwatt generator shall be solid-state and generate the 
analog or digital equivalent of 1004 Hz. The milliwatt generator shall 
be assigned to a 4-wire analog test port or be digitally generated. All 
2-wire and 4-wire voice frequency ports are at a nominal 0 dBm0 level. 
The level of the 1004 Hz tone generator shall appear at outgoing 2-wire 
and 4-wire ports at 0 dBm 0.5 dB. For direct digital connections, the 
encoded output shall be the digital equivalent of a 0 dBm0 0.5 dB 
signal.
    (v) Reference tone generators can be used individually or they can 
be part of a loop around test arrangement. If both single frequency and 
multifrequency reference tone generators are to be provided, only one 
can be arranged as part of a loop around test. Where a loop around 
arrangement is provided, the generator output can be obtained by dialing 
singly one of the two line terminals. By dialing the other line terminal 
singly, usually a 900 ohm resistor in series with a 2.16 microfarad 
capacitor is connected to the circuit under test to act as a ``quiet 
termination'' for noise measurements and other tests. Whenever both line 
terminals are held simultaneously, both the milliwatt supply and the 
quiet termination shall be lifted off and a ``loop around'' condition 
established. This permits the overall loss to be determined from the 
distant office by going out over one trunk, looping around in the end 
office and returning over the other trunk. The insertion loss of this 
test arrangement when used in a loop around configuration should not 
exceed 0.1 dB at the frequencies specified for the milliwatt supply. 
Unless otherwise specified, continuous off-hook supervision is to be 
provided on both line terminals to prevent collusive calling without 
charge. It will be permissible to accomplish the quiet termination by 
opening the 4-wire path internally and to accomplish the loop around by 
digital switching.
    (vi) Provision shall be made so that the milliwatt supply can be 
manually patched to circuits.
    (vii) Test jack access shall be provided for all interoffice trunks 
of the voice frequency type. The jack access shall be properly 
designated for line, drop, monitor, and signaling leads plus any other 
jacks as requested by the owner. This may be accomplished by a set of 
jacks located at the maintenance center which have access to each trunk 
on a switching basis.
    (p) Traffic--(1) General engineering guidelines. (i) The Traffic 
Table, based on the Erlang Lost-Calls-Cleared Formula, shall be used for 
determining the quantity of intraoffice paths, registers, and senders 
where full availability conditions apply. The following table shows the 
traffic capacity in CCS for 1 to 200 trunks at nine grades of service.

[[Page 656]]



                                                                                          Traffic Table
                                                                              Full Availability for Random Traffic
                                                                                       Lost-Calls-Cleared
                                                                                Offered Traffic Expressed in CCS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 Number of
   Trunks          B-.001             .002              .005               .01               .02               .05               .1                .2                .5         Number of Trunks
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
          1  0................  0...............  0...............  0...............  1...............  2...............  4...............  9...............  36..............  1
          2  2................  3...............  4...............  5...............  8...............  14..............  22..............  36..............  98..............  2
          3  7................  9...............  13..............  17..............  22..............  32..............  46..............  69..............  165.............  3
          4  16...............  19..............  25..............  31..............  39..............  55..............  74..............  106.............  234.............  4
          5  27...............  32..............  41..............  49..............  60..............  80..............  104.............  144.............  304.............  5
 
          6  41...............  48..............  58..............  69..............  82..............  107.............  135.............  184.............  374.............  6
          7  57...............  65..............  78..............  90..............  106.............  135.............  168.............  224.............  445.............  7
          8  74...............  83..............  98..............  113.............  131.............  163.............  202.............  265.............  516.............  8
          9  92...............  103.............  120.............  136.............  156.............  193.............  236.............  307.............  586.............  9
         10  111..............  123.............  143.............  161.............  183.............  224.............  270.............  348.............  656.............  10
 
         11  131..............  145.............  166.............  186.............  210.............  255.............  306.............  391.............  729.............  11
         12  152..............  167.............  190.............  212.............  238.............  286.............  341.............  433.............  801.............  12
         13  174..............  190.............  215.............  238.............  266.............  318.............  377.............  476.............  872.............  13
         14  196..............  213.............  240.............  265.............  295.............  350.............  413.............  519.............  944.............  14
         15  219..............  237.............  266.............  292.............  324.............  383.............  449.............  562.............  1015............  15
 
         16  242..............  261.............  292.............  320.............  354.............  415.............  486.............  605.............  1087............  16
         17  266..............  286.............  318.............  347.............  384.............  449.............  523.............  648.............  1158............  17
         18  290..............  311.............  345.............  376.............  414.............  482.............  560.............  692.............  1230............  18
         19  314..............  337.............  372.............  404.............  444.............  515.............  597.............  735.............  1302............  19
         20  339..............  363.............  399.............  433.............  474.............  549.............  634.............  779.............  1374............  20
 
         21  364..............  388.............  427.............  462.............  505.............  583.............  671.............  823.............  1445............  21
         22  389..............  415.............  455.............  491.............  536.............  617.............  709.............  866.............  1517............  22
         23  415..............  441.............  483.............  521.............  567.............  651.............  747.............  910.............  1589............  23
         24  441..............  468.............  511.............  551.............  599.............  685.............  784.............  954.............  1661............  24
         25  467..............  495.............  540.............  580.............  630.............  720.............  822.............  998.............  1733............  25
 
         26  493..............  523.............  568.............  611.............  662.............  754.............  860.............  1042............  1805............  26
         27  520..............  550.............  598.............  641.............  693.............  788.............  898.............  1086............  1876............  27
         28  546..............  578.............  627.............  671.............  725.............  823.............  936.............  1130............  1948............  28
         29  573..............  606.............  656.............  702.............  757.............  858.............  974.............  1174............  2020............  29
         30  600..............  634.............  685.............  732.............  789.............  893.............  1012............  1218............  2092............  30
 
         31  628..............  662.............  715.............  763.............  822.............  928.............  1050............  1263............  2164............  31
         32  655..............  690.............  744.............  794.............  854.............  963.............  1089............  1307............  2236............  32
         33  683..............  719.............  774.............  825.............  887.............  998.............  1127............  1351............  2308............  33
         34  711..............  747.............  804.............  856.............  919.............  1033............  1165............  1395............  2380............  34
         35  739..............  776.............  834.............  887.............  951.............  1068............  1203............  1439............  2452............  35
 
         36  767..............  805.............  864.............  918.............  984.............  1104............  1242............  1484............  2524............  36
         37  795..............  834.............  895.............  950.............  1017............  1139............  1281............  1528............  2595............  37
         38  823..............  863.............  925.............  981.............  1050............  1174............  1319............  1572............  2667............  38
         39  851..............  892.............  955.............  1013............  1083............  1210............  1358............  1617............  2739............  39
         40  880..............  922.............  986.............  1044............  1116............  1246............  1396............  1661............  2811............  40
 
         41  909..............  951.............  1016............  1076............  1149............  1281............  1435............  1706............  2883............  41
         42  937..............  980.............  1047............  1108............  1182............  1317............  1474............  1750............  2955............  42
         43  966..............  1010............  1078............  1140............  1215............  1352............  1512............  1795............  3027............  43
         44  995..............  1040............  1109............  1171............  1248............  1388............  1551............  1839............  3099............  44
         45  1024.............  1070............  1140............  1203............  1282............  1424............  1590............  1884............  3171............  45
 
         46  1053.............  1099............  1171............  1236............  1315............  1459............  1629............  1928............  3243............  46
         47  1083.............  1129............  1202............  1268............  1349............  1495............  1668............  1973............  3315............  47
         48  1112.............  1159............  1233............  1300............  1382............  1531............  1706............  2017............  3387............  48
         49  1141.............  1189............  1264............  1332............  1416............  1567............  1745............  2062............  3459............  49
         50  1170.............  1220............  1295............  1364............  1449............  1603............  1784............  2106............  3531............  50
 
         51  1200.............  1250............  1327............  1397............  1483............  1639............  1823............  2151............  3603............  51
         52  1229.............  1280............  1358............  1429............  1516............  1675............  1862............  2195............  3675............  52
         53  1259.............  1310............  1390............  1462............  1550............  1711............  1901............  2240............  3747............  53
         54  1289.............  1341............  1421............  1494............  1584............  1747............  1940............  2285............  3819............  54
         55  1319.............  1371............  1453............  1527............  1618............  1783............  1979............  2329............  3891............  55
 
         56  1349.............  1402............  1484............  1559............  1652............  1819............  2018............  2374............  3962............  56
         57  1378.............  1432............  1516............  1592............  1686............  1856............  2057............  2418............  4034............  57
         58  1408.............  1463............  1548............  1625............  1719............  1892............  2096............  2463............  4106............  58
         59  1439.............  1494............  1579............  1657............  1753............  1928............  2136............  2508............  4178............  59
         60  1468.............  1525............  1611............  1690............  1787............  1965............  2174............  2552............  4250............  60
 
         61  1499.............  1556............  1643............  1723............  1821............  2001............  2214............  2597............  4322............  61

[[Page 657]]

 
         62  1529.............  1587............  1675............  1756............  1855............  2037............  2253............  2642............  4394............  62
         63  1559.............  1617............  1707............  1789............  1889............  2073............  2292............  2687............  4466............  63
         64  1590.............  1648............  1739............  1822............  1923............  2110............  2331............  2731............  4538............  64
         65  1620.............  1679............  1771............  1855............  1958............  2146............  2370............  2776............  4610............  65
 
         66  1650.............  1710............  1803............  1888............  1992............  2182............  2409............  2821............  4682............  66
         67  1681.............  1742............  1835............  1921............  2026............  2219............  2449............  2865............  4754............  67
         68  1711.............  1773............  1867............  1954............  2060............  2255............  2488............  2910............  4826............  68
         69  1742.............  1804............  1900............  1987............  2094............  2291............  2527............  2955............  4898............  69
         70  1773.............  1835............  1932............  2020............  2129............  2328............  2566............  3000............  4970............  70
 
         71  1803.............  1867............  1964............  2053............  2163............  2364............  2606............  3044............  5042............  71
         72  1834.............  1898............  1997............  2087............  2197............  2401............  2645............  3089............  5114............  72
         73  1865.............  1929............  2029............  2120............  2232............  2438............  2684............  3134............  5186............  73
         74  1895.............  1961............  2061............  2153............  2266............  2474............  2723............  3178............  5258............  74
         75  1926.............  1992............  2093............  2186............  2300............  2511............  2763............  3223............  5330............  75
 
         76  1957.............  2024............  2126............  2219............  2335............  2547............  2802............  3268............  5402............  76
         77  1988.............  2055............  2159............  2253............  2369............  2584............  2841............  3313............  5474............  77
         78  2019.............  2087............  2191............  2286............  2404............  2620............  2881............  3357............  5546............  78
         79  2050.............  2118............  2223............  2319............  2438............  2657............  2920............  3402............  5618............  79
         80  2081.............  2150............  2256............  2353............  2473............  2694............  2959............  3447............  5690............  80
 
         81  2112.............  2182............  2289............  2386............  2507............  2730............  2999............  3492............  5762............  81
         82  2143.............  2213............  2321............  2420............  2542............  2767............  3038............  3537............  5834............  82
         83  2174.............  2245............  2354............  2453............  2577............  2803............  3077............  3581............  5906............  83
         84  2206.............  2277............  2386............  2487............  2611............  2840............  3117............  3626............  5977............  84
         85  2237.............  2309............  2419............  2521............  2646............  2877............  3156............  3671............  6049............  85
 
         86  2268.............  2340............  2452............  2554............  2680............  2913............  3196............  3716............  6121............  86
         87  2299.............  2372............  2485............  2588............  2715............  2950............  3235............  3761............  6193............  87
         88  2331.............  2404............  2517............  2621............  2750............  2987............  3275............  3805............  6265............  88
         89  2362.............  2436............  2550............  2655............  2784............  3024............  3314............  3850............  6337............  89
         90  2393.............  2468............  2583............  2688............  2819............  3060............  3353............  3895............  6409............  90
 
         91  2425.............  2500............  2616............  2722............  2854............  3097............  3393............  3940............  6481............  91
         92  2456.............  2532............  2649............  2756............  2889............  3134............  3432............  3984............  6553............  92
         93  2488.............  2564............  2682............  2790............  2923............  3171............  3471............  4029............  6625............  93
         94  2519.............  2596............  2715............  2823............  2958............  3208............  3511............  4074............  6697............  94
         95  2551.............  2628............  2748............  2857............  2993............  3244............  3551............  4119............  6769............  95
 
         96  2582.............  2660............  2781............  2891............  3028............  3281............  3590............  4164............  6841............  96
         97  2614.............  2692............  2814............  2925............  3063............  3318............  3630............  4209............  6913............  97
         98  2645.............  2724............  2847............  2958............  3097............  3355............  3669............  4253............  6985............  98
         99  2677.............  2757............  2880............  2992............  3132............  3392............  3708............  4298............  7057............  99
        100  2709.............  2789............  2913............  3026............  3167............  3429............  3748............  4343............  7129............  100
 
        105  2867.............  2950............  3078............  3196............  3342............  3613............  3946............  4567............  7489............  105
        110  3027.............  3112............  3244............  3366............  3516............  3798............  4143............  4792............  7849............  110
        115  3186.............  3275............  3411............  3536............  3691............  3983............  4341............  5016............  8209............  115
        120  3347.............  3437............  3578............  3707............  3867............  4168............  4539............  5241............  8569............  120
        125  3507.............  3601............  3745............  3878............  4043............  4353............  4737............  5465............  8929............  125
 
        130  3669.............  3765............  3912............  4049............  4219............  4539............  4935............  5689............  9289............  130
        135  3830.............  3929............  4081............  4221............  4395............  4724............  5133............  5914............  9649............  135
        140  3992.............  4093............  4249............  4392............  4571............  4910............  5332............  6138............  10009...........  140
        145  4155.............  4258............  4418............  4564............  4748............  5095............  5530............  6363............  10369...........  145
        150  4318.............  4423............  4586............  4737............  4925............  5282............  5728............  6587............  10729...........  150
 
        155  4481.............  4589............  4755............  4909............  5102............  5467............  5927............  6812............  11089...........  155
        160  4644.............  4755............  4925............  5082............  5279............  5654............  6125............  7037............  11449...........  160
        165  4808.............  4920............  5094............  5255............  5457............  5840............  6324............  7261............  11809...........  165
        170  4972.............  5087............  5264............  5428............  5634............  6026............  6523............  7486............  12169...........  170
        175  5137.............  5253............  5434............  5602............  5811............  6213............  6722............  7710............  12529...........  175
 
        180  5301.............  5420............  5604............  5775............  5989............  6399............  6920............  7935............  12889...........  180
        185  5466.............  5587............  5775............  5949............  6167............  6586............  7119............  8160............  13249...........  185
        190  5631.............  5754............  5945............  6123............  6345............  6773............  7318............  8384............  13609...........  190
        195  5797.............  5922............  6116............  6296............  6524............  6960............  7517............  8609............  13969...........  195
        200  5962.............  6089............  6287............  6471............  6702............  7146............  7716............  8834............  14329...........  200
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 658]]

    (ii) The traffic capacity for all interoffice trunks shall be based 
on full availability, even though the distant office itself is not 
engineered to provide full availability access.
    (iii) The Traffic Table may also be used to determine the 
approximate traffic capacity of high-usage intertoll trunks. The traffic 
offered to high-usage groups may be read at B.10, signifying that 10 
percent of the traffic overflows to the alternate route. This 
approximates the HU12 table used by AT&T.
    (iv) In reading the trunk quantity from the table, the higher 
quantity shall be used when the CCS load is three or more CCS over the 
lower quantity. For example, the number of trunks justified for 294 CCS 
at B.005 is 16, but for 295 CCS 17 trunks are justified.
    (v) Limited availability is not permitted.
    (vi) The traffic capacity in the following table should be used for 
small trunk groups such as pay station, special service trunks, 
intercept, and PBX trunks, unless otherwise specified in appendix A of 
this section:

------------------------------------------------------------------------
            Number of Circuits                     Permissible CCS
------------------------------------------------------------------------
1                                           10
2                                           20
3                                           30
4                                           40
------------------------------------------------------------------------

    (vii) The percentage of lines equipped for pushbutton dialing is to 
be used to determine the number of tone receivers. Local registers, if 
required, shall be supplied on the basis of all dial pulse.
    (2) Grade of service. (i) Grade of service specifies the expected 
performance when there are adequate service facilities for an assumed 
volume of traffic. It is expressed as a portion of the total traffic 
during a busy hour that cannot be terminated immediately or within a 
predetermined time period due to congestion. This places responsibility 
on the traffic engineers to specify facilities which will be entirely 
satisfactory to the users and which can be equipped at a price which 
will be accepted as reasonable.
    (ii) The number of calls encountering dial tone delay in excess of 3 
seconds, measured over the busy hour of the four high-consecutive week 
(4HW) period, shall not be more than 1.5 percent.
    (iii) The average post dialing delay objective for an intraoffice 
call shall not exceed 1 second. This includes all connect, operate, and 
translation time.
    (iv) The line to line (intraoffice) network matching loss objective 
shall be 0.02 or less.
    (v) The blocking probabilities related to trunks include both 
``mismatch'' probability and probability of ``all trunks busy.'' It is 
likely that the ``mismatch'' will be negligible in that many digital 
central offices have essentially nonblocking switching characteristics. 
The objectives for trunk connections are as follows:
    (A) Subscriber to outgoing trunk objective 0.01 or less;
    (B) Incoming trunk to subscriber objective 0.02 or less; and
    (C) Local trunk tandem objective 0.01 or less.
    (vi) Groups of common service circuits are to be engineered 
utilizing the full availability traffic tables that appear in paragraph 
(p)(1)(i) of this section at the following stipulated probabilities:
    (A) Outgoing trunks to 2/6 MF or dial pulse senders at B.001;
    (B) Incoming trunks to 2/6 MF receivers at B.001;
    (C) Incoming nondelay dial trunks to receivers at B.001; and
    (D) Incoming trunks with start dial at B.01.
    (vii) Remote Switching Terminals (RST's) shall meet the same grade 
of service objectives as the host.
    (3) Holding times. For the purpose of estimating the quantity of 
common control circuits, the following average holding times may be 
used. These holding times are conservative and represent the average 
effective and ineffective call. If these holding times are to be used, 
it must be so stated in appendix A of this section.
    (i) The following average call holding times (HT) may be used.

[[Page 659]]



------------------------------------------------------------------------
                        Type of Call                         HT--Seconds
------------------------------------------------------------------------
Intraoffice                                                          120
EAS                                                                  150
Special Service, Intercept, Verification                              60
Toll, CLR                                                            300
Toll, S-S                                                             24
Toll, PPCS                                                           270
------------------------------------------------------------------------

    (ii) The following average subscriber dialing holding times may be 
used (times used to dial digits do not include machine time).

------------------------------------------------------------------------
                                               Digits    DP   Pushbutton
                                               Dialed   Sec. Sec.
------------------------------------------------------------------------
Operator, Non-Pay Station                         1      4.7       3.4
Special Service                                   3      7.7       5.0
Local                                             7     13.7       8.2
EAS                                               7     13.7       8.2
DDD: 1/0+7                                        8     15.2       9.0
DDD: 1/0+10                                      11     19.7      11.4
Dialing Time Per Digit                            -      1.5       0.8
Dial Tone Response                                -      3.2       2.6
------------------------------------------------------------------------

    (iii) The following average incoming register holding times may be 
used (times for digit registrations do not include machine time).

------------------------------------------------------------------------
                                                  Basic
                                            -----------------
                                             Holding          Additional
                                               Time   Digits   Per Digit
                                              (Sec.)
------------------------------------------------------------------------
MF Receiver from:
  No. 5 Crossbar--Non-LAMA.................      1.4       4       0.14
  No. 5 Crossbar--LAMA.....................      2.3       4       0.14
  Crossbar Tandem & 4A Toll................      3.1       4       0.14
  No. 1 ESS................................      1.4       4       0.14
Key Pulsing Switchboard                          5.2       4       0.60
 
DP Receivers--10 PPS from:
  SxS......................................      6.0       4        1.5
  Dialing Switchboard......................      6.6       4        1.3
  4A Toll..................................      5.6   5 \1\          -
  Crossbar Tandem..........................      4.9       4        1.2
------------------------------------------------------------------------
\1\No reduction for fewer digits.

    (iv) The following average sender holding times may be used (does 
not include machine setup and release time).

------------------------------------------------------------------------
                                                  Basic
                                            -----------------
                                             Holding          Additional
                                               Time   Digits   Per Digit
                                              (Sec.)
------------------------------------------------------------------------
MF Senders:
  No. 5 Crossbar...........................      1.5       4       0.14
  Crossbar Tandem & 4A Toll \1\............      2.0       4       0.14
  TSP/TSPS.................................      2.4       7       0.14
  SxS--CAMA, Called Number.................      3.7       7       0.14
  SxS--CAMA, Calling Number................      1.3       7          -
 
DP Senders--10 PPS:
  With Overlap Pulsing \2\.................      9.1   Up to        1.8
                                                           6
  Without Overlap Pulsing..................      4.6       4        1.2
------------------------------------------------------------------------
\1\Add 1.3 seconds for ANI outpulsing on special toll (0+) calls and on
  DDD calls if AMA is not provided.
 
\2\Assumes overlap outpulsing starting on receiving of third digit;
  applies only to calls handled on direct trunk groups.

    (4) Traffic data requirements. (i) Traffic measurements are composed 
of primarily two types--counts and usage. The following types of traffic 
data recording are required:
    (A) Peg count registers shall be incremented when a successful 
network connection is established to a particular circuit group such as 
trunks, senders, digital receivers, etc.
    (B) Overflow count registers shall be incremented when access to a 
particular circuit group is denied due to all resource busy condition.
    (C) Network blockage count registers shall be incremented due to an 
unavailability of a path in an access or switching matrix network.
    (D) Usage measurements of the length of time associated with a 
particular setup event or network connection shall be made. Usage data 
measurements are normally collected by scanning circuit groups resources 
every 10 or 100 seconds to determine busy/idle states. Measurements are 
accumulated and read directly in CCS (hundred call seconds).
    (E) Service delay measurements shall provide percentage counts of 
the calls for a particular service that are delayed beyond a specified 
interval of time, e.g., calls not receiving dial tone within 3 seconds 
after call origination.
    (ii) Traffic data shall be stored in electronic storage registers or 
block of memory consisting of one or more traffic counters for each item 
to be measured. The registers listed in paragraph (p)(4)(i) of this 
section shall be associated with the interoffice trunks, switching 
network and central control equipment in such a manner that the register 
readings can be used to determine the traffic load and flow to, from and 
within the system. Two-way

[[Page 660]]

trunks shall be metered to indicate inward and outward seizures. The 
bidder shall indicate what registers are to be supplied and their 
purpose.
    (iii) The measured data shall be shown on a printout. It should be 
possible to have local or remote printout, or both. Arrangement shall be 
made for automatic data printout on command for 15-, 30-, or 60-minute 
intervals as required, and be arranged for automatic start-stop and in 
accordance with revenue separation procedures current at the time of 
contract.
    (iv) All traffic records shall have dates and times and office 
identification.
    (q) Transmission--(1) General. The transmission characteristics will 
be governed by the fact that the switching matrix will be based on 
digital operation. Unless otherwise stated, the requirements are in 
terms of analog measurements made from Main Distributing Frame (MDF) to 
MDF terminals, excluding cabling loss.
    (2) Impedance. For the purpose of this section, the nominal input 
impedance of analog ports in an end office shall be 900 ohms for 2-wire 
ports and 600 ohms for 4-wire ports. Where the connecting facility or 
equipment is other than this impedance, suitable impedance matching 
shall be provided by the bidder when specified by the owner.
    (3) Insertion loss. The insertion loss in both directions of 
transmission at 1004 Hz shall meet the following requirements when 
measured with a 0 dBm input signal at 900 ohms (or 600 ohms, when 
required) at a temperature of 77  deg.F 9  deg.F (25  deg.C 5  deg.C).
    (i) Trunk-to-trunk or trunk-to-line. The loss shall be set between 0 
and 0.5 dB for 2-wire to 2-wire, 2-wire to 4-wire, or 4-wire to 4-wire 
voice frequency connections.
    (ii) Line-to-line. The loss shall be set between 0 and 2 dB.
    (iii) Direct digital interface. On a direct digital interface, the 
loss through the office shall be adjusted to the proper level in the 
receive side.
    (iv) Stability. The long-term allowable variation in loss through 
the office shall be 0.5 dB from the loss specified by the bidder.
    (4) Frequency response (loss relative to 1004 hz) shall meet the 
following requirements.
    (i) Trunk-to-trunk.

------------------------------------------------------------------------
                                           Loss at 0 dBm0 Input \1\
------------------------------------------------------------------------
           Frequency (Hz)             2-Wire to 2-Wire  4-Wire to 4-Wire
------------------------------------------------------------------------
60                                   20 dB Min. \2\     16 dB Min. \2\
200                                  0 to 5 dB          0 to 3 dB
300-3000                             -0.5 dB to 1 dB    -0.3 to +0.3 dB
3300                                 1.5 dB Max.        1.5 dB Max.
3400                                 0 to 3 dB          0 to 3 dB
------------------------------------------------------------------------
\1\(-) means less loss and (+) means more loss.
 
\2\Transmit End

    (ii) Line-to-line.

------------------------------------------------------------------------
               Frequency (Hz)                  Loss at 0 dBm0 Input \1\
------------------------------------------------------------------------
60                                            20 dB Min. \2\
300                                           -1 to +3 dB
600-2400                                      1 dB
3200                                          -1 to +3 dB
------------------------------------------------------------------------
\1\(-) means less loss and (+) means more loss.
 
\2\Transmit End

    (iii) Trunk-to-line. The trunk-to-line frequency response 
requirements shall be a compromise between those values specified in 
paragraphs (q)(4)(i) and (q)(4)(ii) of this section.
    (5) Overload level. The overload level at 900 ohm impedance shall be 
+3 dBm0.
    (6) Gain tracking (linearity) shall meet the following requirements.

------------------------------------------------------------------------
            Input Signal Level \1\               Maximum Gain Deviation
------------------------------------------------------------------------
+3 to -37 dBm0                                 0.5 dB
-37 to -50 dBm0                                1 dB
------------------------------------------------------------------------
\1\1004 Hz reference at 0 dBm0.

    (7) Return loss. (i) The specified return loss values are determined 
by the service and type of port at the measuring (near) end. Two-wire 
ports are measured (near end) at 900 ohms in series with 2.16 
microfarads and 4-wire ports are measured at 600 ohms resistive.
    (ii) Far end test terminations shall be as follows:
    (A) Loaded line circuit--1650 ohms in parallel with the series 
combination of .005 microfarads and 100 ohms;
    (B) Nonloaded line circuit--800 ohms in parallel with the series 
combination of .05 microfarads and 100 ohms;
    (C) Special service line circuit including electronic lines and 
carrier lines--900 ohms in series with 2.16 microfarads;

[[Page 661]]

    (D) Two-wire trunk--900 ohms in series with 2.16 microfarads; and
    (E) Four-wire trunk--600 ohms.
    (iii) For trunk-to-trunk (2-wire or 4-wire) connections the echo 
return loss (ERL) shall be 27 dB, minimum and the singing return loss 
(SRL) shall be 20 dB, minimum low and 23 dB, minimum high.
    (iv) For trunk-to-line (2-wire or 4-wire) connections the ERL shall 
be 24 dB, minimum and the SRL shall be 17 dB, minimum low and 20 dB, 
minimum high.
    (v) For line-to-line or line-to-trunk (2-wire or 4-wire) connections 
the ERL shall be 18 dB, minimum and the SRL shall be 12 dB, minimum low 
and 15 dB, minimum high.
    (8) Longitudinal balance. The minimum longitudinal balance, with dc 
loop currents of 20 to 70 mA, shall be 60 dB at all frequencies between 
60 and 2000 Hz, 55 dB at 2700 Hz and 50 dB at 3400 Hz. The method of 
measurement shall be as specified in the IEEE Std 455-1985, IEEE 
Standard Test Procedure for Measuring Longitudinal Balance of Telephone 
Equipment Operating in the Voice Band. Source voltage level shall be 10 
volts root-mean-square (rms).
    (9) 60 hz longitudinal current immunity. Under test conditions with 
60 Hz, the system noise shall be no greater than 23 dBrnC0 as measured 
using the configuration in Figure 1.

       Figure 1--Measuring the Effects of Low Frequency Induction
[GRAPHIC] [TIFF OMITTED] TC14NO91.091

Notes:
1. 900 ohm termination, C-message weighting, hold coil off
2. SNC Noise Choke 35 W, or equivalent
3. Test at 0.020 Adc and 0.070 Adc
4. 2 0.001 microfarad, 150 Vdc

    (10) Steady noise (idle channel at 900 ohms impedance) measured on a 
terminated call shall be 23 dBrnC0 maximum

[[Page 662]]

and average 18 dBrnC0 or less. The 3K Hz Flat noise should be less than 
35 dBrnC0 as an objective.
    (11) Impulse noise. The central office switching equipment shall be 
capable of meeting an impulse noise limit of not more than five counts 
exceeding 54 dBrnC0 voice band weighted in a 5-minute period on six such 
measurements made during the busy hour. A Northeast Electronics Company 
TTS 4002 Impulse Noise Counter, Wilcom T194C, Hewlett Packard 4945, or 
equivalent, should be used for the measurements. The measurement shall 
be made by establishing a normal connection from the noise counter 
through the switching equipment in its off-hook condition to a quiet 
termination of 900 ohms impedance. Office battery and signaling circuit 
wiring shall be suitably segregated from voice and carrier circuit 
wiring, and frame talking battery filters provided, if and as required, 
in order to meet these impulse noise limits.
    (12) Crosstalk coupling. Worst case equal level crosstalk is to be 
75 dB minimum in the range 200-3400 Hz. This is to be measured between 
any two paths through the system connecting a 0 dBm0 level tone to the 
disturbing pair.
    (13) Quantizing distortion. (i) The switching system shall meet the 
following requirements.

------------------------------------------------------------------------
                                                   Minimum Signal to
     Input Level (dBm0) 1004 or 1020 Hz        Distortion with C-Message
                                                       Weighting
------------------------------------------------------------------------
0 to -30                                      33 dB
-30 to -40                                    27 dB
-40 to -45                                    22 dB
------------------------------------------------------------------------

    (ii) Due to the possible loss of the least significant bit on direct 
digital connections, a signal to distortion degradation of up to 2 dB 
may be allowed where adequately justified by the bidder.
    (14) Absolute delay. The absolute one-way delay through the 
switching system, excluding delays associated with RST switching, shall 
not exceed 1000 microseconds analog-to-analog measured at 1800 Hz.
    (15) Envelope delay distortion. On any properly established 
connection, the envelope delay distortion shall not exceed the following 
limits.

------------------------------------------------------------------------
           Frequency Range (Hz)                     Microseconds
------------------------------------------------------------------------
1000 to 2600                                190
800 to 2800                                 350
600 to 3000                                 500
400 to 3200                                 700
------------------------------------------------------------------------

    (16) Digital error rate. The digital switching system shall not 
introduce an error into digital connections which is worse than one 
error in 10\8\ bits averaged over a 5-minute period.
    (17) Battery noise. Noise across battery at power board distribution 
bus terminals shall not exceed 35 dBrnC during the busy hour.
    (18) Radio and television interference. The central office switching 
equipment shall be designed and installed so that radiation of high 
frequency noise will be limited so as not to interfere with radio and 
television receivers.
    (r) Timing intervals--(1) Type of equipment required. The equipment 
for providing the specified timing intervals shall be solid-state.
    (2) Tolerance. Where a range of time is specified as minimum and 
maximum, the lower limits shall be considered as controlling and the 
variation between this minimum and the actual maximum shall be kept as 
small as practicable. In no case shall the quoted upper limit be 
exceeded.
    (3) Permanent signal timing. Lockout shall occur after an interval 
of 20 to 30 seconds after receipt of dial tone if a ``permanent'' 
condition occurs prior to the transmission of dial pulses or pushbutton 
dialing signals. This interval may be reduced appreciably during periods 
of heavy traffic.
    (4) Partial dial timing. Partial dial timing shall be within 15 to 
37 seconds. This timing may be reduced appreciably during periods of 
heavy traffic.
    (5) Charge delay timing. Charge delay timing shall be within 2 
seconds.
    (6) Called party disconnect timing. Timed disconnect of a 
terminating path under control of the called party shall be 10 to 32 
seconds.
    (7) Timing intervals for signals involved in distance dialing. 
Timing intervals shall be provided to meet the requirements for distance 
dialing equipment, which have been established in Bellcore document SR-
TSV-002275, BOC Notes on the LEC Networks--1990.

[[Page 663]]

Some of the more important times which this document specifies are for:
    (i) Disconnect signal;
    (ii) Wink signal;
    (iii) Start dialing signal;
    (iv) Pulse delay signal;
    (v) Go signal;
    (vi) Digit timing; and
    (vii) Sender, register, and link attachment timing.
    (s) Power requirements and equipment--(1) Operating voltage. The 
nominal operating voltage of the central office shall be 48 volts dc, 
provided by a battery with the positive side tied to system ground.
    (2) Batteries. (i) When battery cells of the lead antimony type are 
specified, the pasted plate type shall be considered adequate.
    (ii) When lead calcium cells are specified, no cell shall differ 
from the average voltage of the string of fully charged cells by more 
than 0.03 volt when measured at a charging rate in amperes equivalent 
to 10 percent of the ampere hour capacity of the cells. Similarly, when 
cells are fully charged and floating between 2.30 and 2.33 volts per 
cell, the cell voltage of any cell in a given string shall not differ 
more than 0.03 volt from the average. These requirements are for test 
purposes only and do not apply to operating conditions.
    (iii) Voltage readings shall be corrected by a temperature 
coefficient of 0.0033 volt per degree F (0.006 per degree C), whenever 
temperature variations exist between cells in a given string. This 
correction factor shall also be applied when comparing cell voltages 
taken at different times and at different temperatures. The correction 
factor shall be added to the measured voltage when the temperature is 
above 77  deg.F (25  deg.C) and subtracted when the temperature is below 
77  deg.F (25  deg.C).
    (iv) The specific gravity readings of lead antimony cells at full 
charge shall be 1.210 .010 at 77  deg.F (25  deg.C) at maximum 
electrolyte height.
    (v) When counter cells are supplied by the bidder, they shall be the 
dry counter electromotive force (CEMF) type.
    (vi) When lead antimony batteries are specified, they shall be 
designed to last a minimum of 10 years when maintained on a full float 
operation between 2.15 and 2.17 volts per cell. When lead calcium 
batteries are specified, they shall be designed to last a minimum of 20 
years when maintained on full float operation between 2.17 and 2.25 
volts per cell. The battery shall be clearly designated as ``antimony'' 
or ``calcium'' by means of stencils, decals or other devices.
    (vii) Each battery cell shall be equipped with an explosion control 
device.
    (viii) The battery size shall be calculated in accordance with 
standard procedures. The battery in no case shall have a reserve 
capacity in ampere hours less than four times the current capacity of 
the largest charger.
    (3) Charging equipment. (i) Charging shall be on a full float basis. 
The rectifiers shall be of the full wave, self-regulating, constant 
voltage, solid-state type and shall be capable of being turned on and 
off manually.
    (ii) When charging batteries, the voltage at the battery terminals 
shall be adjustable and shall be set at the value recommended for the 
particular battery being charged, providing it is not above the maximum 
operating voltage of the switching system equipment. The voltage shall 
not vary more than plus or minus 0.02 volt per cell between 10 percent 
load and 100 percent load. Between 3 percent and 10 percent load, the 
output voltage shall not vary more than plus or minus 0.04 volt per 
cell. Beyond full load current, the output voltage shall drop sharply. 
The output voltage shall be maintained with the line voltage variations 
of plus or minus 10 percent. Provision shall be made to change the 
output voltage of the rectifier manually to 2.25 volts per cell to 
provide an equalization charge on the battery.
    (iii) The charger noise shall not exceed 22 dBrnC when measured with 
a suitable noise measuring set and under the rated battery capacitance 
and load conditions as determined in Figure 2.

[[Page 664]]

                      Figure 2--Charger Noise Test
[GRAPHIC] [TIFF OMITTED] TR01JA93.386

The manufacturer may elect to eliminate the capacitor C from the 
measurement.

    A. Capacitance in [micro]F = 30,000 [micro]F per ampere-hour per 
cell. For example, 25 cells at 100 ampere-hour would be equivalent to a 
capacitance of:

    (30,000 x 100)/25 = 120,000 [micro]F

    B. The value of the resistive load R is determined by the nominal 
battery voltage in volts divided by the full load rating in amperes. For 
example, for a 48 volt battery and a full load current of 24 amperes, 
the load resistance R is 48/24 = 2 ohms of appropriate power handling 
capacity.

    (iv) The charging equipment shall indicate a failure of charging 
current, whether due to ac power failure, an internal failure in the 
charger, or to other circumstances which might cause the output voltage 
of the charger to drop below the battery voltage. Where a supplementary 
constant current charger is used, an alarm shall be provided to indicate 
a failure of the charger.
    (v) Audible noise developed by the charging equipment shall be kept 
to a minimum. Acoustic noise resulting from operation of the rectifier 
shall be expressed in terms of dB indicated on a sound level meter 
conforming to ANSI S1.4-1983, Specification for Sound Level Meters, and 
shall not exceed 65 dB (A-weighting) measured at any point 5 feet (152.4 
cm) from any vertical surface of the rectifier.
    (vi) The charging equipment shall be designed so that neither the 
charger nor the central office switching equipment is subject to damage 
in case the battery circuit is opened for any value of load within the 
normal limits.
    (vii) The charging equipment shall have a capacity to meet the 
requirements of central office size and special requirements of the 
owner in appendix A of this section.
    (viii) Minimum equipment requirement for chargers is one of the 
following:
    (A) Two chargers either capable of carrying the full office load as 
specified in Item 12 of appendix A of this section; or
    (B) Three chargers each capable of carrying half the office load as 
specified in Item 12 of appendix A of this section.
    (4) Miscellaneous voltage supplies. (i) Any power supply required 
for voltages other than the primary battery voltage shall be provided by 
either a solid-state dc-to-dc converter or dc-to-ac inverter,

[[Page 665]]

operating from the central office battery or from a separate battery and 
charger. These power supplies shall meet the noise limit specified for 
chargers in paragraph (s)(3)(iii) of this section, except the capacitor 
``C'' shall be eliminated and the resistive load ``R'' shall be 
determined by the nominal output voltage in volts divided by the full 
load current rating in amperes. This requirement does not preclude the 
use of commercial ac power to operate input/output devices.
    (ii) Power converters required for the purpose of providing various 
operating voltages to printed circuit boards or similar equipment 
employing electronic components shall be provided in duplicate with each 
unit capable of immediately assuming the full operating load upon 
failure of a unit. An exception to the duplicate power converter 
requirement permits nonduplicated power converter(s) to be utilized 
where there is full compliance with the following criteria.
    (A) The failure of any single nonduplicated power converter shall 
not reduce the grade of service of common control and service circuits 
to any individual line or trunk by more than 50 percent.
    (B) The failure of any single nonduplicated power converter shall 
not reduce the traffic carrying capacity of any interoffice trunk group 
by more than 50 percent.
    (C) In central office switching systems of 400 or more equipped 
lines, any single nonduplicated power converter failure shall not cause 
a complete loss of service to more than 100 equipped lines.
    (D) In central office switching systems of less than 400 equipped 
lines, any single nonduplicated power converter failure shall not cause 
a complete loss of service to more than 25 percent of the total equipped 
lines.
    (5) Ringing generators. Ringing generators supplied on an ancillary 
basis shall be selected from RUS Bulletin 1755I-100, List of Materials 
Acceptable for Use on Telephone Systems of RUS Borrowers. Regardless of 
whether the ringing is generated on an ancillary basis or is generated 
integrally to the switching system, the ringing equipment shall meet the 
requirements of this section.
    (i) Ringing equipment provisioning. (A) Redundant ringing equipment 
shall be provided. There shall be automatic transfer to the redundant 
equipment within the period of one ringing cycle, in case of failure of 
the equipment in use (either regular or standby). Automatic transfer 
shall not take place under any other conditions. Manual transfer in each 
direction shall be provided.
    (B) An exception to the redundant ringing equipment requirement 
permits nonredundant ringing equipment to be utilized where there is 
full compliance with the following service criteria.
    (1) In a central office switching system of 400 or more equipped 
lines, a single nonduplicated ringing source failure shall not cause the 
complete loss of ringing capability to more than 100 lines.
    (2) In a central office switching system of less than 400 equipped 
lines, a single nonredundant ringing source failure shall not cause the 
complete loss of ringing capability to more than 25 percent of the total 
equipped lines.
    (ii) Output voltage. (A) The ringing generators shall have an output 
voltage which approximates a sine wave and, as a minimum, shall be 
suitable for ringing straight-line ringers. Although not a requirement 
for RUS listing, decimonic, synchromonic, or harmonic ringing may also 
be specified in appendix A of this section.
    (B) The ringing generator shall obtain its energy from the nominal 
48-volt office battery.
    (C) The output of each generator shall have three or more voltage 
taps or a single tap with associated variable control. Taps or control 
shall be easily accessible as installed in the field. Software control 
of ringing generator outputs via I/O devices may be provided in lieu of 
taps. The taps, or equivalent, shall be designated L, M, and H. The 
variable control shall have a locking device to prevent accidental 
readjustment. The outputs at the terminals of the generators with a 
voltage input of 52.1 volts and rated full resistive load shall be as 
follows for the ringing frequencies provided:

[[Page 666]]



------------------------------------------------------------------------
                                                     Output Volts rms
                                                    (Tolerance 3 Volts)
              Frequency Range (Hz)               -----------------------
                                                     L       M       H
------------------------------------------------------------------------
16\2/3\ through 20..............................      90     105     120
21 through 30...................................      95     110     120
31 through 42...................................     100     115     130
43 through 54...................................     110     125     140
------------------------------------------------------------------------

    (D) No voltages in excess of the values in column H of the table in 
paragraph (s)(5)(ii)(C) of this section shall be provided at the output 
taps. Additional intermediate and/or lower taps may be provided without 
restriction.
    (iii) Voltage regulation. (A) The output voltage for resistive, 
capacitive power factor of 0.8, and inductive power factor of 0.5 loads 
from no load to full rated output with 52.1 volts input battery shall 
not vary more than 3 percent from the output voltage measured at \1/2\ 
rated output, 1.0 power factor with 52.1 volts dc input applied.
    (B) The output voltage for resistive, capacitive power factor of 
0.8, and inductive power factor of 0.5 from no load to full rated output 
with input battery variations between 48-56 volts dc shall not vary more 
than 10 percent from the output voltage measured at \1/2\ rated output 
and 1.0 power factor with 52.1 volts dc input applied.
    (C) The output voltage for resistive, capacitive power factor of 
0.8, and inductive power factor of 0.5 loads from no load to full rated 
output and with input battery variations between 44-56 volts dc shall 
not vary more than +10/-15 percent from the output voltage measured at 
\1/2\ rated output and 1.0 power factor with 52.1 volts dc input 
applied.
    (iv) Cross ringing. Unwanted voltage caused by harmonic distortion 
or intermodulation distortion shall not exceed 15 volts rms when 
measured within 5 Hz of any other assigned ringing frequency under any 
condition of load or input battery specified by paragraph (s)(5)(iii) of 
this section.
    (v) Frequency stability. At ambient temperature of 70  deg. 5 
deg.F (21  deg. 0.3  deg.C), for any combination of capacitive power 
factor of 0.8, inductive power factor of 0.5, and resistive loads with 
variations in input battery ranging from 44 to 56 volts, the output 
frequency shall not vary more than 1/3 Hz or 1 percent, whichever is 
less stringent. At temperatures between 15  deg.F (4  deg.C) to 130 
deg.F (54  deg.C), and for any combination of resistive load and 
variations in input battery ranging from 44-56 volts, the output 
frequency shall not vary more than 1/3 Hz or 1 percent, whichever is 
less stringent.
    (vi) Self-protection on overloads. The ringing generator equipment 
shall be capable of withstanding a short circuit across any pair of 
output terminals for a period of 5 minutes without fuse operation or 
damage.
    (6) Interrupter equipment. (i) The interrupter shall be an integral 
part of the switching system and shall be controlled by any call 
processor or equivalent.
    (ii) The ringing cycle provided by the interrupter equipment shall 
not exceed 6 seconds in length. The ringing period shall be 2 seconds.
    (7) Power panels. (i) Battery and charger control switches, dc 
voltmeters, dc ammeters, fuses and circuit breakers, supervisory and 
timer circuits shall be provided as required. Voltmeters shall be 
provided as specified by the owner.
    (ii) Portable or panel mounted frequency meters shall be provided as 
specified by the owner unless the system is equipped to measure actual 
ringing generator voltage and frequency outputs internally. If the 
system is equipped to make such measurements and print the results, the 
bidder is not required to provide a frequency meter.
    (iii) Power panels, cabinets and shelves, and associated wiring 
shall be designed initially to handle the exchange when it reaches its 
ultimate capacity as specified by the owner.
    (iv) The power panel shall be of the ``dead front'' type.
    (t) Main distributing frames. (1) The main distributing frame shall 
provide terminals for terminating all incoming cable pairs. Arresters 
shall be provided for all incoming cable pairs, or for a smaller number 
of pairs if specified, provided an acceptable means of temporarily 
grounding all terminated pairs which are not equipped with arresters is 
furnished.
    (2) The current carrying capacity of each arrester and its 
associated mounting shall coordinate with a 22 gauge

[[Page 667]]

copper conductor without causing a self-sustaining fire or permanently 
damaging other arrester positions. Where all cable pairs entering the 
central office are 24 gauge or finer, the arresters and 
mountings need only coordinate with 24 gauge cable conductors. 
Item 13 of appendix A of this section designates the gauge of the cable 
conductors serving the host office. Item 7 of appendix B of this section 
designates the gauge of the cable conductors serving the RST(s).
    (3) Central office protectors shall be mounted and arranged so that 
outside cable pairs may be terminated on the left side of protectors 
(when facing the vertical side of the MDF) or on the back surface of the 
protectors. Means for easy identification of pairs shall be provided.
    (4) Protectors shall have a ``dead front'' (either insulated or 
grounded) whereby live metal parts are not readily accessible.
    (5) Protectors shall be provided with an accessible terminal of each 
incoming conductor which is suitable for the attachment of a temporary 
test lead. They shall also be constructed so that auxiliary test 
fixtures may be applied to open and test the subscriber's circuit in 
either direction. Terminals shall be tinned or plated and shall be 
suitable for wire wrapped, insulation displacement or connectorized 
connections.
    (6) If specified in appendix A of this section, each protector group 
shall be furnished with a factory assembled tip cable for splicing to 
the entrance cable; the tip cable to be 20 feet (610 cm) in length 
unless otherwise specified. Factory assembled tip cable shall be 
22 gauge and selected from RUS Bulletin 1755I-100, List of 
Materials Acceptable for Use on Telephone Systems of RUS Borrowers. Tip 
cable requirements are provided in RUS Bulletin 345-87, PE-87, RUS 
Specification for Terminating (TIP) Cable. Cables having other kinds of 
insulation and jackets which have equivalent resistance to fire and 
which produce less smoke and toxic fumes may be used if specifically 
approved by RUS.
    (7) Protectors shall be mounted on vertical supports, with centers 
not exceeding 9 inches (22.9 cm). The space between protector units 
shall be adequate for terminating conductors.
    (8) Cable supporting framework shall be provided between the cable 
entrance and the MDF when overhead cable entrance is specified in Item 
14.3.3 of appendix A of this section.
    (9) The main distributing frame shall be equipped with a copper 
ground bus bar having the conductivity of a 6 American Wire 
Gauge (AWG) copper conductor or a greater conductivity, or may consist 
of another metal if specifically approved, provided it has adequate 
cross-sectional area to provide conductivity equivalent to, or better 
than, bare copper. A guardrail or equivalent shall also be furnished.
    (10) Other features not specified in paragraph (t) of this section 
may be required at the option of the owner, if checked in Item 13.4 of 
appendix A of this section.
    (11) Main frame protector makes and types shall be selected only 
from RUS Bulletin 1755I-100, List of Materials Acceptable for Use on 
Telephone Systems of RUS Borrowers. Protectors shall be capable of easy 
removal.
    (u) Electrical protection--(1) Surge protection. (i) Adequate 
electrical protection of central office switching equipment shall be 
included in the design of the system. The characteristics and 
application of protection devices shall be such that they enable the 
central office switching equipment to withstand, without damage or 
excessive protector maintenance, the dielectric stresses and currents 
that are produced in line-to-ground and tip-to-ring circuits through the 
equipment as a result of induced or conducted lightning or power system 
fault-related surges. All wire terminals connected to outside plant wire 
or cable pairs shall be protected from voltage and current surges.
    (ii) Central office switching equipment shall pass laboratory tests, 
simulating the hostile electrical environment, before being placed in 
the field for the purpose of obtaining field experience. There are five 
basic types of laboratory tests which shall be applied to exposed 
terminals in an effort to determine if the equipment will survive. 
Figure 3 summarizes these tests and the minimum acceptable levels of 
protection for equipment to pass them.

[[Page 668]]



                             Figure 3--Summary of Electrical Requirements and Tests
----------------------------------------------------------------------------------------------------------------
                                                                                    No. of
                                    Application    Peak Voltage      Surge      Applications &
              Test                   Criteria       or Current     Waveshape      Max. Time         Comments
                                                                                   Between
----------------------------------------------------------------------------------------------------------------
Current Surge                     Low Impedance   500A or        10x1000       5 each Polarity
                                   Paths Exposed   Lesser         [micro]s      at 1 minute
                                   to Surges       Current (See                 intervals
                                                   Fig. 5)
 
60 Hz Current Carrying            High or Low     10A rms or     11 Cycles of  3 each Polarity
                                   Impedance       Lesser         60 Hz         at 1 minute
                                   paths Exposed   Current (See   (0.183        intervals
                                   to Surges       Fig. 6)        Sec.)
 
AC Power Service Surge Voltage    AC Power        2500V or +3    1.2x50        5 each Polarity  AC arrester, if
                                   Service         [sigma]        [micro]s      at 1 minute      used, must be
                                   Connection      clamping V                   intervals        removed.
                                                   of arrester                                   Communications
                                                   employed at                                   line arresters,
                                                   10kV/                                         if used, remain
                                                   [micro]s                                      in place.
 
Voltage Surge                     High Impedance  1000V or +3    10x000        Same             All primary
                                   Paths Exposed   [sigma] dc     [micro]s                       arresters, if
                                   to Surges       breakdown of                                  used, must be
                                                   arrester                                      removed.
                                                   employed
 
Arrester Response Delay           Paths           +3 [sigma]     100V/         Same             Same
                                   protected by    breakdown of   [micro]s
                                   arresters,      arrester       rise decay
                                   such as gas     employed at    to 1/2 V.
                                   tubes, with     100V/          in tube's
                                   breakdown       [micro]s of    delay time
                                   dependent on    rise
                                   V. rate of
                                   rise.
----------------------------------------------------------------------------------------------------------------

    (iii) Two categories of surge tests. (A) Current surge tests 
simulate the stress to which a relatively low impedance path may be 
subjected before main frame protectors break down. Paths with a 100 Hz 
impedance of 50 ohms or less shall be subjected to current surges, 
employing a 10 x 1000 microseconds waveshape as defined in Figure 4. For 
the purpose of determining this impedance, arresters which are mounted 
within the equipment are to be considered zero impedance. The crest 
current shall not exceed 500A; however, depending on the impedance of 
the test specimen this value of current may be lower. The crest current 
through the sample, multiplied by the sample's 100 Hz impedance, shall 
not exceed 1000 volts (V). Where sample impedance is less than two ohms, 
crest current shall be limited to 500A as shown in Figure 5.

[[Page 669]]

                Figure 4--Explanation of Surge Waveshape
[GRAPHIC] [TIFF OMITTED] TC14NO91.087

    Surge Waveshape is defined as follows:
    Rise Time x Time to Decay to Half Crest Value
    (For example, 10 x 1000 [micro]s)
Notes:

    T1 = Time to determine the rate of rise. The rate of rise 
is determined as the slope between 10% and 90% of peak voltage or 
current.
    T2 = Time to 50% of peak voltage (decay to half value).

[[Page 670]]

                Figure 5--Explanation of Surge Waveshape
[GRAPHIC] [TIFF OMITTED] TC14NO91.088

VL = Not to exceed 1000V
VB = Charging Voltage
Z100 = Test Specimen Impedance to be measured at 100 Hz.
RP = Parallel Resistance (Waveshape)
RS = Series Resistance (Current Limiting)

------------------------------------------------------------------------
       Z100              RS                RP                 VB
------------------------------------------------------------------------
0                         5            [infin]                2500
1                         4            [infin]                2500
2                         3            [infin]                2500
3                         2            [infin]                1670
4                         1            [infin]                1250
5                         0            [infin]                1000
7.5                       0                 15                1000
10                        0                 10                1000
15                        0                7.5                1000
20                        0                6.7                1000
25                        0               6.25                1000
30                        0                  6                1000
40                        0                5.7                1000
50                        0                5.5                1000
------------------------------------------------------------------------

    (B) Sixty Hertz (60 Hz) current-carrying tests should be applied to 
simulate an ac power fault which is conducted to the unit over the cable 
pairs. The test should be limited to 10 amperes rms at 60 Hz for a 
period of 11 cycles (0.1835 seconds) and should be applied 
longitudinally from line to ground (see Figures 3 and 6 of this 
section).

[[Page 671]]

                   Figure 6--60 Hz Current Surge Test
[GRAPHIC] [TIFF OMITTED] TC14NO91.089

V--700 Volts RMS (Approximately 1000V Peak).
Z60--Test specimen impedance to be measured at 60 Hz.
RS--Series Resistance (current limiting) in each side of 
          line. (Source impedance never less than 50 [ohm] 
          longitudinal.)

------------------------------------------------------------------------
                  Z60 Hz                                 RS
------------------------------------------------------------------------
0                                           140
10                                          120
20                                          100
50                                          100
Over 50                                     100
------------------------------------------------------------------------

    (C) AC power service surge voltage tests should be applied to the 
power input terminals of ac powered devices to simulate switching surges 
or lightning-induced transients on the ac power system. The test shall 
employ a 1.2 x 50 microseconds waveshape with a crest voltage of 2500V. 
Communications line protectors may be left in place for this test. 
Borrowers are urged to install commercially available surge protectors 
at the ac service entrance as part of their COE building program.
    (D) Voltage surge tests simulate the voltage stress to which a 
relatively high impedance path may be subjected before primary 
protectors break down and protect the circuit. To assure coordination 
with the primary protection while reducing testing to the minimum, 
voltage surge tests should be conducted at a 1000 volts with primary 
arresters removed for devices protected by carbon blocks, or the +3 
sigma dc breakdown of other primary arresters. Surge waveshape should be 
10 x 1000 microseconds.
    (E) Arrester response delay tests are designed to stress the 
equipment in a manner similar to that caused by the delayed breakdown of 
gap type arresters when subjected to rapidly rising voltages. Arresters 
shall be removed for these tests, the peak surge voltage should be the 
+3 sigma breakdown of the arrester in question on a voltage rising at 
100V per microsecond and the time for the surge to decay to half voltage 
shall equal at least the delay time of the tube, as explained in Figure 
7.

[[Page 672]]

          Figure 7--Explanation of Arrester Response Delay Time
[GRAPHIC] [TIFF OMITTED] TC14NO91.090

The delay time is that period of time when the potential across an 
arrester exceeds its dc firing level.

    (iv) Five applications of each polarity for the surge tests and 
three for the 60 Hz Current Carrying Test are the minimum required. All 
tests should be conducted with not more than 1 minute between 
consecutive applications in each series of three or five to a specific 
configuration so that heating effects will be cumulative. As not all 
tests are required in every application, nonapplicable tests should be 
omitted. Tests should be conducted in the following sequence.
    (A) Current Impulse Test.
    (B) Sixty Hertz (60 Hz) Current Carrying Test.
    (C) AC Power Service Impulse Voltage Test.
    (D) Voltage Impulse Test.
    (E) Arrester Response Delay Test.
    (v) Tests should be applied between each of the following terminal 
combinations for all line operating conditions.
    (A) Line tip to ring.
    (B) Line ring to ground.
    (C) Line tip to ground.
    (D) Line tip to ring tied together to ground.
    (2) Extraordinary surge protection. A central office or RST may be 
located in an area where ground conditions prevent the reasonable 
economic achievement of a low resistance to ground and/or there exists a 
greater than average probability of surge damage. Such an unusually 
hostile operating environment shall be recognized and taken into 
consideration by the bidder in the engineering and specification of the 
central office switching system and line protection. This subject of 
operating environment, ground conditions, etc., should be discussed at 
the time of technical presentation to assure the owner that adequate 
system protection will be provided by the bidder.
    (3) Dielectric strength. Arresters shall be removed for all 
dielectric strength tests. The duration of all dielectric strength tests 
shall be at least 1 second. The applied potential shall equal or exceed 
the +3 sigma dc breakdown voltage of the arrester, provided by the

[[Page 673]]

COE manufacturer. Direct current potentials shall be applied between all 
line terminals and equipment chassis and between these terminals and 
grounded equipment housings in all instances where the circuitry is dc 
open circuit from the chassis, or connected to the chassis through a 
capacitor.
    (4) Insulation resistance. Following the dielectric tests, the 
insulation resistance of the installed electrical circuits between wires 
and ground, with the normal equipment grounds removed, shall not be less 
than 10 megohms at 500 volts dc at approximately room temperature (68 
deg.F (20  deg.C)) and at a relative humidity of approximately 50 
percent. The measurement shall be made after the meter stabilizes, 
unless the requirement is met sooner. Arresters shall be removed for 
these tests.
    (5) Self-protection. (i) All components shall be of the self-
protecting type, capable of being continuously energized at rated 
voltage without injurious results.
    (ii) The unit equipment shall not be permanently damaged by 
accidental short circuits of any duration across either the central 
office side tip and ring or the line side tip and ring. A test is to be 
made with the unit energized at the highest recommended voltages.
    (6) Static discharge. Assemblies subject to damage by static 
discharge shall be identified and special handling instructions shall be 
supplied.
    (v) Miscellaneous--(1) Office wire. All office wire shall be of soft 
annealed tinned copper wire meeting the requirements of ASTM 
Specification B 33-91, Standard Specification for Tinned Soft or 
Annealed Copper Wire for Electrical Purposes, and of suitable cross-
section to provide safe current carrying capacity and mechanical 
strength. The insulation of installed wire, connected to its equipment 
and frames, shall be capable of withstanding the same insulation 
resistance and dielectric strength requirements as given in paragraphs 
(u)(3) and (u)(4) of this section at a temperature of 120  deg.F (49 
deg.C) and a relative humidity of 90 percent.
    (2) Wire wrapped terminals. These terminals are preferred and where 
used shall be of a material suitable for wire wrapping. The connections 
to them shall be made with a wire wrapping tool with the following 
minimum number of successive nonoverlapping turns of bare tinned copper 
wire in contact with each terminal.
    (i) 6 Turns of 30 Gauge.
    (ii) 6 Turns of 26 Gauge.
    (iii) 6 Turns of 24 Gauge.
    (iv) 5 Turns of 22 Gauge.
    (3) Protection against corrosion. All metal parts of equipment 
frames, distributing frames, cable supporting framework, and other 
exposed metal parts shall be constructed of corrosion resistant 
materials or materials plated or painted to render them adequately 
corrosion resistant.
    (4) Screws and bolts. Screw threads for all threaded securing 
devices shall be of American National Standard form in accordance with 
Federal Standard H28, Screw-Thread Standards for Federal Services, 
unless exceptions are granted to the manufacturer of the switching 
equipment. All bolts, nuts, screws, and washers shall be of nickel-
copper alloy, steel, brass or bronze.
    (5) Temperature and humidity range. The supplier shall furnish the 
operating temperature and humidity ranges of the equipment being 
provided in order that adequate heating and cooling may be supplied (see 
Items 5.2.1 and 5.2.2 of appendix C of this section).
    (6) Stenciling. Equipment units and terminal jacks shall be 
adequately designated and numbered. They shall be stenciled so that 
identification of equipment units and leads for testing or traffic 
analysis can be made without unnecessary reference to prints or 
descriptive literature.
    (7) Equipment frame design. For newly designed systems, 
consideration should be given to the desirability of providing frames 
which can be installed in rooms of normal ceiling height [up to 10 feet 
(305 cm)]. Where feasible, frames and equipment units shall be designed 
for ready portability and high salvage value.
    (8) Quantity of equipment bays. Consistent with system arrangements 
and ease of maintenance, space shall be provided on the floor plan for 
an orderly layout of future equipment bays that will be required for 
anticipated traffic when the office reaches its ultimate size. Readily 
accessible terminals

[[Page 674]]

shall be provided for connection to interbay and frame cables to future 
bays. All cables, interbay and intrabay (excluding power), if 
technically feasible, shall be terminated at both ends by use of 
connectors.
    (w) Remote switching terminal (RST)--(1) General. The RST is a 
remotely located digital switching terminal which is placed at a 
subordinate wire center for subscriber lines and is a part of the host 
central office from a switching standpoint, and has hardware 
interchangeable with the host office, except for items that are 
applicable only to RST control and associated peripheral equipment. This 
does not preclude the use of existing in-service remote units on a new 
or upgraded host central office of the latest series generic or release.
    (2) Span line. The RST is to be connected to the host central office 
via a means compatible with T1 type span lines using a DS-1 interface. 
This connection will be for control supervision and subscriber 
communication. The RUS equipment specification for a span line is PE-60.
    (3) Switching. (i) The RST may have its switching functions 
controlled either by the host central office stored program control 
processors or by local subordinate processors which communicate with the 
host office processors.
    (ii) As long as the connecting span line is intact, the subscribers 
served by the RST shall have all features, traffic capacity, and 
services including busy verification, available to all other subscribers 
in the system.
    (iii) The RST shall have available an emergency call processing 
option which permits calling among all subscribers and from subscribers 
to emergency numbers within the RST if control link connections to the 
host central office are severed or otherwise disabled. The RST shall be 
capable of rerouting normally used emergency numbers, such as 911, to 
predetermined line terminations in this emergency stand-alone operating 
condition. This RST emergency call processing option shall be provided 
only when specified by the owner in Item 6.1 of appendix B of this 
section.
    (4) Subscriber line test. (i) Means shall be available on an 
optional basis to the maintenance personnel to make subscriber line 
tests from a common location for all subscriber lines including the RST.
    (ii) If tests in paragraph (w)(4)(i) of this section are not 
requested by the owner for a particular installation, a subscriber loop 
test set (see paragraph (o)(2)(iii)(A) of this section) shall be 
supplied at the RST with a means to access all lines.
    (5) Housing. When housed in a building supplied by the owner, a 
complete floor plan including ceiling height, power outlets, cable 
entrances, equipment entry and travel, type of construction, and other 
pertinent dimensions shall be supplied with this section.
    (6) Power--(i) Chargers. A single charger meeting the requirements 
of paragraph (s)(3) of this section (with the exception of paragraph 
(s)(3)(viii) of this section) is required. An additional charger capable 
of carrying the full load or a combination of three chargers each 
capable of carrying half the load shall be supplied if redundant 
chargers are specified in appendix B of this section.
    (ii) Ringing equipment provisioning. (A) Ringing sources shall be 
supplied in duplicate.
    (B) An exception to the duplicated ringing source requirement 
permits nonduplicated ringing source(s) to be utilized where there is 
full compliance with the following service criteria.
    (1) In a remote switching terminal (RST) of 400 or more equipped 
lines, a single nonduplicated ringing source failure shall not cause the 
complete loss of ringing capability to more than 100 lines.
    (2) In a remote switching terminal (RST) of less than 400 equipped 
lines, a single nonredundant ringing source failure shall not cause the 
complete loss of ringing capability to more than 25 percent of the total 
equipped lines.
    (iii) Power converter. (A) Power converters required for the purpose 
of providing various operating voltages to printed circuit boards or 
similar equipment employing electronic components shall be provided in 
duplicate with each unit capable of immediately assuming the full 
operating load upon failure of a unit.

[[Page 675]]

    (B) An exception to the duplicate power converter requirement 
permits nonduplicated power converter(s) to be utilized where there is 
full compliance with the following criteria.
    (1) The failure of any single nonduplicated power converter shall 
not reduce the grade of service of common control and service circuits 
to any individual line or trunk by more than 50 percent.
    (2) The failure of any single nonduplicated power converter shall 
not reduce the traffic carrying capacity of any trunk group or service 
links to a host office by more than 50 percent.
    (3) In a remote switching terminal (RST) of 400 or more equipped 
lines, any single nonduplicated power converter failure shall not cause 
a complete loss of service to more than 100 equipped lines.
    (4) In a remote switching terminal (RST) of less than 400 equipped 
lines, any single nonduplicated power converter failure shall not cause 
a complete loss of service to more than 25 percent of the total equipped 
lines.
    (7) Alarm. Sufficient system alarm points shall be provided from the 
RST to report conditions to the host alarm system.
    (x) Responsibilities of the bidder--(1) Central office layout. (i) 
The successful bidder shall furnish tentative floor plan layout drawings 
showing the arrangement of the equipment and the dimensions of major 
equipment units. These drawings shall include minimum door dimensions 
and ceiling heights required for installation, maintenance and 
ventilation. If requested by the owner, the floor plan shall be such 
that the battery, charger, power board, main distributing frame and wire 
chief's test equipment are isolated from the other equipment by a 
partition.
    (ii) The layout drawings shall also show provision for the ultimate 
capacity of the central office as specified by the owner.
    (iii) After approval by the owner of the tentative floor plan, and 
within 10 calendar days after approval of the contract by the 
Administrator, the owner shall furnish the bidder the necessary data on 
the actual floor plan. Within 20 calendar days after receiving the 
necessary building data, the bidder shall then supply floor plan 
drawings showing exact locations of all equipment, both initial and 
ultimate, including points where connection to commercial power are 
required, with voltage and wattage indicated at each point. Within 20 
calendar days after receiving the floor plan drawings from the bidder, 
the owner shall approve these drawings or take the necessary steps to 
have the drawings changed to meet his approval. The layout planning must 
be so coordinated between the owner and the bidder as not to delay the 
scheduled equipment installation date.
    (2) Shipment of main distributing frame (MDF). The bidder shall ship 
the MDF equipment, with all necessary instructions to permit its 
installation by the owner, at the time requested by the owner in 
writing, provided such time is not earlier than 90 days prior to the 
date specified for the shipment of the rest of the central office 
equipment. If the owner or the owner's agent installs the main 
distributing frame, the owner shall assume the responsibility and the 
expense of proper installation according to information furnished by the 
bidder.
    (3) Drawings and printed material. (i) The bidder shall supply 
instructional material for each exchange involved at the time of 
delivery of the equipment. It is not the intent of this section to 
require system documentation necessary for the repair of individual 
circuit boards. The bidder shall supply three complete sets of legible 
drawings, each set to include all of the following drawings and 
documentation:
    (A) A floor plan showing exact dimensions and location of each 
equipment frame or item to a convenient scale;
    (B) A block schematic drawing showing the various equipment 
components in the system, and their identifying circuit number (e.g., 
MDF, line circuits, memory, trunks, etc.);
    (C) Drawings of major equipment items such as frames, with the 
location of major component items of equipment shown;
    (D) Individual functional drawings for electrical circuits in the 
system;

[[Page 676]]

    (E) A detailed description of the operation of each circuit down to 
a circuit package level;
    (F) Wiring diagrams indicating the specific method of wiring used on 
each item of equipment and interconnection wiring between items of 
equipment;
    (G) Sufficient software documentation to maintain and service the 
system, including drawings showing principal aspects of the software 
architecture;
    (H) Individual maintenance drawings covering each equipment item 
that contains replaceable parts, appropriately identifying each part by 
name and part number, or, complete ordering instructions for all 
replaceable parts if individual item drawings are not provided; and
    (I) Job drawings including all drawings that are individual to the 
particular office involved, such as main frame, power panel, test board, 
etc.
    (ii) The following information shall also be furnished:
    (A) Complete index of the required drawings;
    (B) Explanation of electrical principles of operation of the overall 
switching system;
    (C) List of tests which can be performed with each piece of test 
equipment furnished, and explanation of the method of performing each 
test;
    (D) Sample of each form recommended for use in keeping records of 
tests;
    (E) Criteria for analyzing results of tests and determining 
appropriate corrective action;
    (F) General notes on the methods of isolating equipment faults to 
specific printed circuit cards in the equipment;
    (G) List of typical troubles which might be encountered, together 
with general indications as to the probable location of each trouble;
    (H) Special office grounding requirements;
    (I) A site specific central office ground system acceptance 
checklist that is consistent with industry practice; and
    (J) A site specific layout of the master ground bar (MGB) showing 
assignment of P, A, N, and I equipment areas.
    (4) Distributing frame wire. The bidder shall provide sufficient 
tinned copper conductor distributing frame wire for the initial 
installation. The insulation of this wire shall be such that it will not 
support combustion. The insulation shall have good abrasion resistance 
and cut-through properties, exhibit good solder heat resistance, and be 
suitable for wire wrap connections or insulation displacement 
connections.
    (5) Technical assistance service. A technical assistance service 
shall be made available to assist the owner and its maintenance 
personnel on a 24-hour, 7 days a week basis. There is to be assistance 
available for both hardware and software problems. The necessary 
interface devices shall be supplied by the bidder.
    (6) Spare parts. (i) The spare parts bid price shall be based upon 
the required quantities of spares shown in Item 6.2 of appendix C of 
this section, and shall be added to the base bid for comparison purposes 
in awarding the bid. It is the supplier's responsibility to provide all 
spares required by this section. If the supplier neglects to list 
certain spare parts in Item 6.2 of appendix C of this section, but they 
are necessary to comply with this section, they shall be provided by the 
supplier at no additional cost to the owner.
    (A) ``Units'' are defined as user replaceable components used in the 
central office equipment. ``Spare Parts'' are direct replacements for 
units. Spare parts are necessary for the maintenance and diagnostic 
operations where the suspected faulty unit may be removed and a spare 
part substituted in anticipation that the trouble will be cleared.
    (B) Examples of units for which spare parts should be furnished are 
printed circuit cards; circuit pack assemblies; fuses; and power 
supplies.
    (C) Spare parts are not required as part of this addendum for items 
such as connectorized cables, nuts, bolts, and similar hardware; nor for 
items which can be obtained from sources other than the bidder such as 
battery cells, chargers, powerboards, magnetic tape transport 
assemblies, disk drives, ringing machines, recorded announcement 
machines, loop extenders and voice frequency repeaters, fire bars, 
teletypewriters, and video monitors.

[[Page 677]]

    (D) When 100 or more like units are used in the hosts and RST's to 
be bid, the quantity of spares to be furnished is determined by 
multiplying the total number of like units in the contract by .05 or 
.03, as applicable, and rounding off to the next lowest integer. For 
example, 119 Class 1 units require five spares; 120 require six.
    (E) When alternates are required, the price of the spare parts for 
the alternates shall be included with the price of the alternate.
    (F) For equipment in which the line cards consist of a number of 
plug-in ``daughter'' boards on a ``mother'' board, the line card is 
defined as the ``daughter'' board unit. In a similar manner for those 
designs which have line cards backed up by a ``control card,'' the 
``control card'' is not, by definition, a line card.
    (G) The quantities of spare parts determined in paragraph (x)(6)(vi) 
of this section are a minimum quantity. The bidder may add quantities of 
spare parts to bring the number of spare parts up to the bidder's list 
of spare parts necessary for proper operation in the field.
    (ii) A Class 1 unit does not have automatic transfer to a redundant 
or standby pool of identical units, and provides any function for 24 or 
more lines or trunks or for all trunks in a group. Nonredundant digital 
trunk interfaces are included in this category.
    (iii) A Class 2 unit has automatic transfer to a redundant or 
standby pool of identical units, and provides any function for 24 or 
more lines or trunks or for all trunks in a group. Redundant digital 
trunk interfaces and units of a redundant stored program processor are 
included in this category.
    (iv) A Class 3 unit does not have automatic transfer to a redundant 
or standby pool of identical units and provides any function for no more 
than 23 lines or trunks or for less than all trunks in a group. 
Nonredundant analog trunks are included in this category. Excluded from 
this category are line cards, which are in Class 4.
    (v) A Class 4 unit has automatic transfer to a redundant or standby 
pool of identical units and provides any function for no more than 23 
lines or trunks or for less than all trunks in a group. Also, any line 
cards are in Class 4.
    (vi) The spare parts for all of the hosts and the RST's included in 
this contract shall be provided as follows:

------------------------------------------------------------------------
Quantity of Units used in the CO's & RST's To Be Bid   Required Quantity
----------------------------------------------------- of Spares By Class
                                                            of Unit
                Class ---                 -------------------
                                                       1    2    3    4
------------------------------------------------------------------------
1 through 9                                             1    1    0    0
10 through 24                                           2    2    1    0
25 through 49                                           3    2    2    0
50 through 99                                           4    3    2    0
100 or More                                            5%   3%   3%    0
------------------------------------------------------------------------

    (vii) As a part of the response to the bid, the supplier shall 
furnish a list of units used by class and a list of spare parts to be 
furnished with this contract. This list shall be placed in Item 6.2 of 
appendix C of this section for only one of the host specifications 
included in the entire contract.
    (7) Environmental requirements. The bidder shall specify the 
environmental conditions necessary for safe storage and satisfactory 
operation of the equipment being bid. If requested, the bidder shall 
assist the owner in planning how to provide the necessary environment 
for the equipment.
    (8) Unit costs for cost separation purposes. The successful bidder 
shall present a cost breakdown of the central office equipment on a 
discrete element basis 90 days after installation completion. This shall 
include the various frames, switching and transmission components, and 
software.
    (9) Single-point grounding system acceptance. Qualified 
representatives of the central office system supplier and the owner are 
to conduct a thorough joint acceptance audit of the grounding system 
prior to the central office being placed into service. A grounding 
system acceptance checklist provided by RUS, which is consistent with 
standard industry practice, will be used in conducting this audit. All 
required grounding system corrections are to be made prior to placing 
the central office system into full service operation. The successful 
completion of this grounding system audit will constitute an acceptance 
on the part of both parties, the owner and the central office supplier 
(refer to paragraph (y)(5) of this

[[Page 678]]

section, and appendix D of this section).
    (y) Installation. The following responsibilities apply to the 
central office equipment installation and Remote Switching Terminal 
(RST) installations, unless otherwise noted.
    (1) Responsibilities of owner. The owner shall:
    (i) Allow the bidder and its employees free access to the premises 
and facilities at all hours during the progress of the installation;
    (ii) Take such action as necessary to ensure that the premises are 
dry and free from dust and in such condition as not to be hazardous to 
the installation personnel or the material to be installed (not required 
for an RST installed in a self-contained environmentally controlled 
cabinet);
    (iii) Provide heat or air conditioning when required and general 
illumination in rooms in which work is to be performed or materials 
stored (not required for an RST installed in a self-contained 
environmentally controlled cabinet);
    (iv) Provide suitable openings in buildings to allow material to be 
placed in position (not required for an RST installed in a self-
contained environmentally controlled cabinet);
    (v) Provide the necessary conduit and commercial and dc-ac inverter 
output power to the locations shown on the approved floor plan drawings; 
provide 120 volts, 60 Hz commercial power equipped with a secondary 
arrester and a reasonable number of outlets for test, maintenance and 
installation equipment; provide suitable openings or channels and ducts 
for cables and conductors, from floor to floor and from room to room; 
provide an acceptable central office grounding system and at a ground 
resistance level that is reasonable for office site conditions (not 
required for an RST installed in a self-contained environmentally 
controlled cabinet);
    (vi) Provide the necessary wiring, central office grade ground and 
commercial power service, with a secondary arrester, to the location of 
an exterior RST installation based on the voltage and load requirements 
furnished by the bidder;
    (vii) Test at the owner's own expense all lines and trunks for 
continuity, leakage and loop resistance and ensure that all lines and 
trunks are suitable for operation with the central office equipment 
specified;
    (viii) Make alterations and repairs to buildings necessary for 
proper installation of material, except to repair damage for which the 
bidder or its employees are responsible;
    (ix) Connect outside cable pairs on the distributing frame and run 
all line and trunk jumpers (those connected to protectors);
    (x) Furnish all trunk, line, and party assignment information to 
permit the bidder to program the data base memory within a reasonable 
time prior to final testing;
    (xi) Release for the bidder's use such portions of the existing 
plant as are necessary for the proper completion of such tests as 
require coordination with existing facilities including facilities for 
T1 span lines with properly installed repeaters between the central 
office and the RST installations;
    (xii) Make prompt inspections as it deems necessary when notified by 
the bidder that the equipment, or any part of the equipment, is ready 
for acceptance;
    (xiii) Provide and install adequate fire protection apparatus, 
including one or more fire extinguishers or fire extinguishing systems 
of the gaseous type that has low toxicity and effect on equipment; and
    (xiv) Provide necessary access ports for cable, if underfloor cable 
is selected.
    (2) Responsibilities of bidder. The bidder shall:
    (i) Allow the owner and its representatives access to all parts of 
the buildings at all times during the installation;
    (ii) Obtain the owner's permission before cutting into or through 
any part of the building structure such as girders, beams, concrete or 
tile floors, partitions or ceilings (not applicable to the installation 
of lag screws, expansion bolts, and similar devices used for fastening 
equipment to floors, columns, walls and ceilings);
    (iii) Be responsible for reporting to the owner any damage to the 
building

[[Page 679]]

which may exist or may occur during its occupancy of the building, 
repairing all damage to the building due to carelessness of the bidder's 
workforce, and exercising reasonable care to avoid any damage to the 
owner's property;
    (iv) Consult with the owner before cutting into or through any part 
of the building structure where the fireproofing or moisture proofing 
may be impaired;
    (v) Take necessary steps to ensure that all fire fighting apparatus 
is accessible at all times and all flammable materials are kept in 
suitable places outside the building;
    (vi) Not use gasoline, benzene, alcohol, naphtha, carbon 
tetrachloride or turpentine for cleaning any part of the equipment;
    (vii) Install the equipment in accordance with the specifications 
for the office;
    (viii) Run all jumpers, except line and trunk jumpers (those 
connected to protectors);
    (ix) Establish and update all data base memories with subscriber and 
trunk information as supplied by the owner until an agreed turnover 
time;
    (x) Give the owner notice of completion of the installation at least 
1 week prior to completion;
    (xi) Permit the owner or its representative to conduct tests and 
inspections after installation has been completed in order that the 
owner may be assured that the requirements for installation are met;
    (xii) Allow access, before turnover, by the owner or its 
representative, upon request, to the test equipment which is to be 
turned over as a part of the office equipment, to permit the checking of 
the circuit features which are being tested and to permit the checking 
of the amount of connected equipment to which the test circuits have 
access;
    (xiii) Make final charger adjustments using the manufacturer's 
recommended procedure;
    (xiv) Notify the owner promptly of the completion of work of the 
central office, or such portions as are ready for inspection;
    (xv) Correct promptly all defects for which the bidder is 
responsible;
    (xvi) Provide the owner with one set of marked prints, or strapping 
prints, showing which of the various options and figures are in use on 
each switching system as specified in paragraph (x)(3)(i) of this 
section;
    (xvii) Place the battery in service in compliance with the 
recommendations of the battery manufacturer; and
    (xviii) Furnish the owner with a record of the cell voltages and 
specific gravity readings made at the completion of the installation of 
the switching system and before it is placed in commercial service.
    (3) Installation requirements. (i) All work shall be done in a neat, 
workmanlike manner. Equipment frames or cabinets shall be correctly 
located, carefully aligned, anchored and firmly braced. Cables shall be 
carefully laid with sufficient radius of curvature and protected at 
corners and bends to ensure against damage from handling or vibration. 
Exterior cabinet installations for RST's shall be made in a permanent, 
eye-pleasing manner.
    (ii) All multiple and associated wiring shall be continuous, free 
from crosses, reverses and grounds and shall be correctly wired at all 
points.
    (iii) An inspection shall be made by the owner or its 
representatives prior to performing operational and performance tests on 
the equipment. However, this inspection shall be made after all 
installing operations which might disturb apparatus adjustments have 
been completed. The inspection shall be of such character and extent as 
to disclose with reasonable certainty any unsatisfactory condition of 
apparatus or equipment. During these inspections, or inspections for 
apparatus adjustments, or soldering, or in testing of equipment, a 
sufficiently detailed examination shall be made throughout the portion 
of the equipment within which such condition is observed, or is likely 
to occur, to disclose the full extent of its existence, where any of the 
following conditions are observed:
    (A) Apparatus or equipment units failing to compare in quantity and 
code with that specified for the installation;
    (B) Apparatus or equipment units damaged or incomplete;
    (C) Apparatus or equipment affected by rust, corrosion or marred 
finish; or

[[Page 680]]

    (D) Other adverse conditions resulting from failure to meet 
generally accepted standards of good workmanship.
    (4) Operational test requirements. (i) Operational tests shall be 
performed on all circuits and circuit components to ensure their proper 
functioning in accordance with appropriate applicable documents supplied 
by the bidder.
    (ii) A sufficient quantity of overall tests shall be made to ensure 
proper operation of all specified features.
    (iii) A sufficient quantity of locally originating and incoming 
calls shall be made to prove the switching system can accept and process 
calls to completion.
    (5) Grounding system audit. (i) A grounding system audit shall be 
performed to ensure that a viable single-point grounding system is in 
place prior to the time the switching system is placed into full service 
operation. It is suggested that such an audit be conducted at the time 
the switching system is ready for turnover to the owner.
    (ii) This single-point grounding system audit is to be conducted by 
authorized representatives of the supplier and owner, and with the RUS 
general field representative participating at his discretion.
    (iii) The single-point grounding system audit is to be conducted 
using the checklist contained in appendix D of this section.
    (iv) Appendix D of this section shall be the principal single-point 
grounding system audit guideline document. A supplemental checklist may 
be prepared and provided by the switching system supplier which 
recognizes unique grounding requirements related to their particular 
switching system. The scope of this supplier checklist is to be confined 
to unique and specific switching system requirements only. Acceptable 
supplier supplemental grounding checklist must have prior approval of 
and be on file with the Central Office Equipment Branch of the 
Telecommunications Standards Division of RUS.
    (v) It is the responsibility of the central office supplier to 
ensure that the grounding system evaluation criteria contained in the 
combination of the appendix D checklist of this section and their 
optional supplemental checklist adequately fulfill requirements for 
warranty coverage.
    (vi) All deficiencies in the single-point grounding system are to be 
corrected prior to the switching system being placed into full service 
operation. Exceptions are permitted only by mutual agreement of the 
owner and supplier and with written approval of the RUS general field 
representative.
    (vii) The acceptance statement facesheet of the audit checklist in 
appendix D of this section shall be signed by authorized representatives 
of the supplier and owner to indicate mutual approval of the single-
point grounding system. Copies of all completed grounding system audit 
documents are to be provided to the supplier, owner and appropriate RUS 
telephone program regional offices.

(The information and recordkeeping requirements of this section have 
been approved by the Office of Management and Budget (OMB) under the 
control number 0572-0059)

 Appendix A to Sec. 1755.522--Specification for Digital, Stored Program 
    Controlled Central Office Equipment Detailed Requirements (Host)

                  (Information To Be Supplied by Owner)

Telephone Company Name__________________________________________________

________________________________________________________________________

Location

________________________________________________________________________

Central Office Name (By Location)

Town____________________________________________________________________

County__________________________________________________________________

State___________________________________________________________________

-------- Attended

-------- Unattended

-------- Remotes

                               1. General

    1.1  Notwithstanding the bidder's equipment lists, the equipment and 
materials furnished by the bidder must meet the requirements of 
paragraphs (a) through (x), Appendix A and Appendix B of Sec. 1755.522.
    1.2  Paragraphs (a) through (x) of Sec. 1755.522 cover the minimum 
general requirements for digital, stored program controlled central 
office switching equipment.
    1.3  Paragraph (y) of Sec. 1755.522 covers requirements for 
installation, inspection, and testing when such service is included as 
part of the contract.

[[Page 681]]

    1.4  Appendices A and B of Sec. 1755.522 cover the technical data 
for application engineering and detailed equipment requirements insofar 
as they can be established by the owner. These appendices are to be 
filled in by the owner.
    1.5  Appendix C of Sec. 1755.522 covers detailed information on the 
switching network equipment and the common control equipment, and 
information as to system reliability and heavy traffic delays as 
proposed by the bidder. This appendix is to be filled in by the bidder 
and must be presented with the bid.
    1.6  Appendix D of Sec. 1755.522 is the single-point grounding 
system audit checklist.

                           2. Numbering Scheme

    2.1  This office shall be arranged to serve the following area and 
office code(s):
________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    If more than one code is to be served, discrimination shall be 
determined by the following:

Number Translation ----
Separate Trunk Groups ----
Both (Explain in Item 16, Appendix A) ----

    2.2  This office shall be arranged to provide EAS service to the 
following:

------------------------------------------------------------------------
  Connecting office        Code        Connecting office        Code
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
------------------------------------------------------------------------


    2.2.1  Seven digits shall be dialed for all local and EAS calls.
    2.3  Additional dialing procedures to be provided include the 
following:

------------------------------------------------------------------------
                        Feature                             Required
------------------------------------------------------------------------
Station Paid Toll (Including Coin):
           Home Numbering Plan Area (HNPA):
    ``1'' + 7 Digits..................................    --------------
    ``1'' + 10 Digits.................................    --------------
    Other (Explain in Item 16, Appendix A)............    --------------
  Foreign Numbering Plan Area (FNPA):
    ``1'' + 10 Digits.................................    --------------
    Other (Explain in Item 16, Appendix A)............    --------------
------------------------------------------------------------------------


    10XXX Dialing to Interexchange Carriers:

------------------------------------------------------------------------
               Name                              Access code
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 
------------------------------------------------------------------------
------------------------------------------------------------------------


------------------------------------------------------------------------
                           Feature                             Required
------------------------------------------------------------------------
Person, Special (Including Coin):
  HNPA--``0'' + 7 Digits....................................
                                                             -----------
  ``0'' + 10 Digits.........................................
                                                             -----------
  FNPA ``0'' + 10 Digits....................................
                                                             -----------
  Other (Explain in Item 16, Appendix A)....................
                                                             -----------
Directory Assistance:
  HNPA Local--411...........................................
                                                             -----------
  ``1'' + 411...............................................
                                                             -----------
  HNPA Toll ``1'' + 555-1212................................
                                                             -----------
  FNPA Toll ``1'' + NPA + 555-1212..........................
                                                             -----------
IDDD:
  Operator Serviced 01......................................
                                                             -----------
  Station-Station 011.......................................
                                                             -----------
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                              No. to be
                    Other service codes                         dialed
------------------------------------------------------------------------
Wire Chief.................................................
                                                            ------------
Repair Service.............................................
                                                            ------------
Business Office............................................
                                                            ------------
Emergency Calls to 911 Lines...............................
                                                            ------------
Emergency Calls to 911 Trunks..............................
                                                            ------------
Time.......................................................
                                                            ------------
Weather....................................................
                                                            ------------
100 Test Line..............................................
                                                            ------------
102 Test Line..............................................
                                                            ------------
105 Test Line..............................................
                                                            ------------
Other (Explain in Item 16, Appendix A).....................
                                                            ------------
------------------------------------------------------------------------

    2.4  Assistance calls are answered: (Check appropriate items)
    2.4.1  At the operator office in ----------------
    2.4.1.1  By means of the regular interoffice toll trunks --------
    2.4.1.2  By means of the regular interoffice EAS trunks --------
    2.4.1.3  By means of a separate special service trunk group --------
    2.4.1.4  Locally --------
    Explain:

[[Page 682]]

                             3. Office Clock

    3.1  This office is to be slave clock synchronized with another 
office:

    -------- Yes    -------- No

(Explain details in Appendix A, Item 16 if ``Yes''.)

    3.2  This office is to be a master clock office to provide 
synchronization timing for other offices:

    -------- Yes    -------- No

(Explain details in Appendix A, Item 16 if ``Yes''.)

                     4. Interoffice Trunking Diagram

    4.1  A sketch showing relative location of exchanges, RST's, and 
number of circuits shall be included, also the office and area codes of 
the direct trunk points. The diagram should indicate whether toll or EAS 
trunk groups are ``High Usage'' or ``Final.'' Alternate routes should be 
included. Indicate whether the trunk termination is direct digital or 
analog.

                      5. Translator Function Chart

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         First route                          Alternate routes
                                                                           -----------------------------------------------------------------------------
                                                                             Translator            Send             Translator            Send
                Called point                        Subscriber dials           action   --------------------------    action   -------------------------
                                                                           -------------                          -------------
                                                                              Deletes      Prefixes                  Deletes      Prefixes
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Line Circuit Requirements (Includes all lines associated with RST's.)

                                               6.1  Types of Lines
----------------------------------------------------------------------------------------------------------------
                                               No. of lines
                                -----------------------------------------                     Total No. of lines
                                                      both local and EAS   No. of EAS areas        required
                                  Local service only        service
----------------------------------------------------------------------------------------------------------------
6.1.1  Individual--Flat Rate...  ------------         ------------        ------------        ------------
6.1.2  Individual--Message Rate  ------------         ------------        ------------        ------------
6.1.3  Pay Station.............  ------------         ------------        ------------        ------------
6.1.4  Telephone Company         ------------         ------------        ------------        ------------
 Official Lines.
6.1.5  Wire Chief..............  ------------         ------------        ------------        ------------
6.1.6  911 Emergency Service     ------------         ------------        ------------        ------------
 Bureau Lines.
6.1.7  Number Hunting PBX        ------------         ------------        ------------        ------------
 Groups:.


----------------------------------------------------------------------------------------------------------------
                                                        Type              No. of lines
 No. of                                       ---------------------------------------------
 lines     No. of     Direct in   Restricted                                        Both      No. of   Total No.
   in      groups      dial *     service at     Ground       Loop      Local    local and  EAS areas   of lines
 group                                COE         start      start     service      EAS                 required
                                                                         only     service
------   ------      ------      ------        ------      ------     ------     ------     ------     ------
------   ------      ------      ------        ------      ------     ------     ------     ------     ------
------   ------      ------      ------        ------      ------     ------     ------     ------     ------
------   ------      ------      ------        ------      ------     ------     ------     ------     ------
------   ------      ------      ------        ------      ------     ------     ------     ------     ------
----------------------------------------------------------------------------------------------------------------
* Furnish translation information under Item 5.

    6.1.8  WATS Lines (Give details in Appendix A, Item 16)
    Number of Inward WATS Lines --------
    Number of Outward WATS Lines --------
6.1.9  Special Lines Required -------- (Explain in Item 16, Appendix A)
6.1.10  Total Number of Lines Required
    Host ------ (Incl. DDI Concentrator Lines)
    RST 1 ------
    RST 2 ------
    RST 3 ------
    Total ------
6.1.11  Total Director Numbers Required ------
    (Including RST's) (see Item 7.1, Appendix A)
6.1.12  Pay Station
    Type ------------
    New ----    Reused ----
    (Describe in Item 16, Appendix A)

[[Page 683]]

6.1.13  Line Concentrator
6.1.13.1  Supplied by Owner (see Item 16, Appendix A, for details)
    ---- Yes    ---- No
6.1.13.2  Supplied by Bidder (If ``Yes'', attach REA Form 397g, 
          Performance Specification for Line Concentrators)
    ---- Yes    ---- No
    6.2.  Data on Lines Required Range Extension
6.2.1  Number of non-pay station lines having a loop resistance, 
          including the telephone set, as follows:

                                                     No. of lines
1901-3200 ohms.............................  ------
3201-3600 ohms.............................  ------
 

6.2.2  Number of pay station lines having loop resistance, excluding the 
          telephone set, greater than:

                                                     No. of lines
1200 ohms (For Prepay).....................  ------
1000 ohms (For Semi-Postpay Operation).....  ------
 

6.2.3  Range extension equipment is to be provided:
6.2.3.1  Loop Extenders: Total Quantity ------
    By Bidder--Quantity ------
    By Owner--Quantity ------
    (Explain in Item 16, Appendix A)
6.2.3.2  VF Repeaters: Total Quantity ------
    By Bidder--Quantity ------
    (Bidder must have information on loading and cable size.)
    By Owner--Quantity ------
    (Explain in Item 16, Appendix A)
6.2.3.3  Range extension may be furnished as an extended range line 
          circuit at the option of the supplier. If this option is used, 
          the quantities of loop extenders and VF repeaters will be 
          different from the quantities listed above (see Item 6.1,a, 
          Appendix C).
    ---- Yes    ---- No

        7. Traffic Data-Line Originating and Terminating Traffic

    7.1  Originating Line Traffic--Estimated per Busy Hour (Includes all 
Lines Associated With RST's):

----------------------------------------------------------------------------------------------------------------
                                   (a) CCS per Main     (b) No. of Main                          No. of Lines
                                       Station             Stations         (axb) Total CCS      Required \1\
----------------------------------------------------------------------------------------------------------------
Ind.--Res......................  ----------           ----------          ----------          ----------
Ind.--Bus......................  ----------           ----------          ----------          ----------
Special Lines..................  ----------           ----------          ----------          ----------
Pay Station....................  ----------           ----------          ----------          ----------
Telco Official.................  ----------           ----------          ----------          ----------
Wire Chief.....................  ----------           ----------          ----------          ----------
No. Htg. or PBX................  ----------(\2\)      ----------(\3\)     ----------          ----------
WATS...........................  ----------           ----------          ----------          ----------
Data Service...................  ----------           ----------          ----------          ----------
911 Emerg. Service.............  ----------           ----------          ----------          ----------
  Total........................  ...................  ----------          ----------          ----------(\4\)
                                                     -----------------------------------------------------------
                                 ...................          (c)                 (d)                 (e)
----------------------------------------------------------------------------------------------------------------
\1\ See Appendix A, Item 6.1.
\2\ This figure is the CCS per PBX trunk.
\3\ This figure is the number of PBX trunks.
\4\ This is the total number of line equipments required. The number to be provided will be determined by the
  equipment design of the system of the selected bidder. See Appendix C, Item 3.1.1.2.

    7.2  Average Originating CCS per Line per Busy Hour
    (d)/(e)=----/ ----=---- CCS/Line
    This office shall be engineered to handle an initial average 
originating busy hour traffic of ---- CCS per line. It is anticipated 
that the average originating busy hour traffic will increase to ---- CCS 
per line.
    Originating Traffic Attributed to Host Only ---- CCS/Line
7.3  Terminating Traffic--Estimated CCS per Busy Hour
    It is assumed that the total CCS for terminating traffic is the same 
as for originating traffic. Since digital switch networks are on a 
terminal per line basis, the terminating CCS per line will be the same 
as the originating CCS per line as shown in Item 7.2, Appendix A.
    Terminating Traffic Attributed to Host Only ---- CCS/Line
7.4  Percent of Pushbutton Lines ----
7.5  Anticipated Ultimate Capacity (20 years)
7.5.1  Subscriber Lines
    Host -------- (Incl. DDI Concentrator Lines)
    RST 1 --------
    RST 2 --------
    RST 3 --------
    Total --------

[[Page 684]]

                      8. Trunk Circuit Requirements

    8.1  Interoffice Trunking

                                          8.1.1  Trunking Requirements
 
 
----------------------------------------------------------------------------------------------------------------
1. Connecting Office........................................  ...........  ...........  ...........  ...........
2. Use of Trunk.............................................  ...........  ...........  ...........  ...........
3. Trk. Grp. Ntwk. Connection \1\...........................  ...........  ...........  ...........  ...........
4. Quantity Equipped........................................  ...........  ...........  ...........  ...........
5. Ultimate % Growth........................................  ...........  ...........  ...........  ...........
6. CCS Capacity.............................................  ...........  ...........  ...........  ...........
7. Direction................................................  ...........  ...........  ...........  ...........
8. No. Digits Dialed........................................  ...........  ...........  ...........  ...........
9. No. Digits Outpulsed.....................................  ...........  ...........  ...........  ...........
10. No. Digits Inpulsed.....................................  ...........  ...........  ...........  ...........
11. Type Signaling..........................................  ...........  ...........  ...........  ...........
12. Type Pulsing............................................  ...........  ...........  ...........  ...........
13. Carrier Type (2-Wire)...................................  ...........  ...........  ...........  ...........
14. Carrier Type (4-Wire)...................................  ...........  ...........  ...........  ...........
15. Physical................................................  ...........  ...........  ...........  ...........
16. Repeat Coils \2\........................................  ...........  ...........  ...........  ...........
17. DX Signaling Set........................................  ...........  ...........  ...........  ...........
18. Other Type Signaling....................................  ...........  ...........  ...........  ...........
19. Delay Dial..............................................  ...........  ...........  ...........  ...........
20. Direct Digital Interface................................  ...........  ...........  ...........  ...........
21. a. Feature Group B......................................  ...........  ...........  ...........  ...........
    b. Feature Group C......................................  ...........  ...........  ...........  ...........
    c. Feature Group D......................................  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------
\1\ Designation of trunk group network connection involves the following categories:
IC--Direct Inter-LATA Connecting Trunk=(IC/POP)
TC--Tandem Connecting Trunks
IT--Intertandem Connecting Trunks
IL--Intra-LATA Connecting Trunks
TIC--Tandem Inter-LATA Connecting Trunks
Misc.--Intercept, Busy Verification, etc.
\2\ Omit repeating coils for carrier derived trunks.

    8.1.2  Pads for 4-Wire Carrier (7dB and 16dB)

Total Quantity ------
By Bidder Quantity ------
By Owner Quantity ------

    Refer to the attached information regarding connecting company trunk 
circuit drawing numbers and name of manufacturer.
    8.2  Switched Traffic Data
    8.2.1  Originating Traffic

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           No. of digits    Sender sig.
                          Type                                  CCS         H.T. secs.          BHC         out-pulsed         mode           Remarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
Toll ``0''-\1\..........................................  ..............  ..............  ..............  ..............  ..............  ..............
Toll ``0''+7 \1,2\......................................  ..............  ..............  ..............  ..............  ..............  ..............
Toll ``0''+10 \1,2\.....................................  ..............  ..............  ..............  ..............  ..............  ..............
Toll S-S ``1''+7 \2\....................................  ..............  ..............  ..............  ..............  ..............  ..............
Toll S-S ``1''+10 \2\...................................  ..............  ..............  ..............  ..............  ..............  ..............
Toll Other..............................................  ..............  ..............  ..............  ..............  ..............  ..............
Special Service.........................................  ..............  ..............  ..............  ..............  ..............  ..............
Intercept...............................................  ..............  ..............  ..............  ..............  ..............  ..............
Intraoffice.............................................  ..............  ..............  ..............         XXXXXXX         XXXXXXX  ..............
EAS.....................................................  ..............  ..............  ..............  ..............  ..............  ..............
EAS.....................................................  ..............  ..............  ..............  ..............  ..............  ..............
EAS.....................................................  ..............  ..............  ..............  ..............  ..............  ..............
Tandem..................................................  ..............  ..............  ..............  ..............  ..............  ..............
Tandem..................................................  ..............  ..............  ..............  ..............  ..............  ..............
Tandem..................................................  ..............  ..............  ..............  ..............  ..............  ..............
911 Emerg. Service......................................  ..............  ..............  ..............  ..............  ..............  ..............
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ PPCS traffic assumed to be divided 20 percent ``0''- and 80 percent ``0''+ if unknown.
\2\ Toll calls assumed to be divided two-thirds 7 digits and one-third 10 digits.


[[Page 685]]

Busy Hour Attempts=BHC Total x 1.4=----
    8.2.2  Terminating Traffic

----------------------------------------------------------------------------------------------------------------
                                                                              No. of
               Type                     CCS       H.T. secs.      BHC         digits      Receiver     Remarks
                                                                             inpulsed    sig. mode
----------------------------------------------------------------------------------------------------------------
Toll Compl........................  ...........  ...........  ...........  ...........  ...........  ...........
Test & Ver........................  ...........  ...........  ...........  ...........  ...........  ...........
Intraoffice.......................  ...........  ...........  ...........  ...........  ...........  ...........
EAS...............................  ...........  ...........  ...........  ...........  ...........  ...........
EAS...............................  ...........  ...........  ...........  ...........  ...........  ...........
EAS...............................  ...........  ...........  ...........  ...........  ...........  ...........
Tandem............................  ...........  ...........  ...........  ...........  ...........  ...........
Tandem............................  ...........  ...........  ...........  ...........  ...........  ...........
Tandem............................  ...........  ...........  ...........  ...........  ...........  ...........
                                   -----------------------------------------------------------------------------
    Total.........................  ...........  ...........  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------

                    9. Checklist of Features Required

9.1  Alternate Routing...........................................  .....
(Explain in Item 16, Appendix A)
9.2  Data Service................................................  .....
(Explain in Item 16, Appendix A)
9.3  This office shall be:
9.3.1  End Office Only...........................................  .....
9.3.2  End Office and Intermediate Tandem........................  .....
(Explain in Item 16, Appendix A)
9.3.3  End Office and Access Tandem..............................  .....
(Explain in Item 16, Appendix A)
 

    9.4  Billing Data

----------------------------------------------------------------------------------------------------------------
                                                                            Send ANI       Store billing data
                                                                         feature group -------------------------
                                                            Trunk group ---------------                Pollable
                                                                          B    C    D    AMA system     system
----------------------------------------------------------------------------------------------------------------
9.4.1  This office only...................................  ...........  ...  ...  ...  ...........  ...........
9.4.2  Trunks from Tributaries............................  ...........  ...  ...  ...  ...........  ...........
----------------------------------------------------------------------------------------------------------------
9.4.3  Local Message Detail Recording:
----------------------------------------------------------------------------------------------------------------

    9.5  Pollable Systems
    9.5.1  Polling device to be provided on this contract

---- Required
---- Not Required

(Provide details in Item 16, Appendix A)

    9.5.2  Pollable system to be backed up by tape or disc standby
---- Required
---- Not Required

                             9.6  AMA Format

    9.6.1  Bellcore Format
---- Required
---- Not Required
(Provide details in Item 16, Appendix A)

                  10. Miscellaneous Operating Features

10.1  Busy Verification
10.1.1  By dedicated trunk from toll operator: ----
10.1.1.1  One-Way, Inward ----
10.1.1.2  Two-Way (Busy verification inward, intercept outward) ----
10.1.2  By prefix digit over intertoll trunk ----

    (Indicate digit(s) dialed) ----
10.1.3  Access by Switchman
10.1.3.1  Dedicated Trunk ----
10.1.3.2  Multiple of Operator Trunk ----
10.2  Intercept Facilities
10.2.1  Vacant code, disconnected number, and unassigned number 
          intercept shall be: (Check One)
    By recorded announcement:
    Without cut-through to operator ----
    With cut-through to operator ----
    By operator ----
10.2.2  Changed number intercept shall be: (Check One)
    By recorded announcement:
    Without cut-through to operator ----
    With cut-through to operator ----
    By operator ----
    By automatic intercept system (AIS) in distant office ----
10.2.3  Method of Reaching Operator, if required:
    Separate trunk group ----
    Regular interoffice toll trunks with idle trunk selecting over at 
least three trunks when three or more toll trunks are equipped ----
10.2.4  Number of separate intercept trunk circuits ----
10.3  Line Load Control
10.3.1  Line load control facilities are:
    ---- Required    ---- Not Required
    (Explain in Item 16, Appendix A)
10.4  Service Observing Facilities

[[Page 686]]

10.4.1  Service observing facilities are:
    ---- Required    ---- Not Required
    (Explain in Item 16, Appendix A)
10.5  Hotel-Motel Arrangements
10.5.1  Hotel-motel arrangements for operation of message registers at 
          the subscriber's premises are:
    ---- Required    ---- Not Required
    (Explain in Item 16, Appendix A)
10.5.1.1  How are message registers to be activated?
    Line Reversal ----
    Third Wire ----
    Other ----
    (Explain in Item 16, Appendix A)
10.6  Nailed-Up Connections
    ---- Required    ---- Not Required
    (Explain in Item 16, Appendix A)
10.7  Vertical Services: (RST Lines are Included)

 
                                                     Initially                             Ultimate
 
10.7.1  Call Waiting--No. of Lines....  ------------                         ------------
10.7.2  Call Forwarding--No. of Lines.  ------------                         ------------
        ---- Local    ---- Remote
        (Explain in Item 16, Appendix
         A).
10.7.3  Abbreviated Dialing No. of      ------------                         ------------
 Lines.
        No. of Codes per Line ---- for
         ---- Lines
        No. of Codes per Line ---- for
         ---- Lines
10.7.4  Three-Way Calling--No. of       ------------                         ------------
 Lines.
        CCS Per Line..................  ------------                         ------------
 

10.7.5  Other ----
    (Explain in Item 16, Appendix A)

                  11. Maintenance Facility Requirements

    11.1  Alarm Signals
    11.1.1  Handled locally ----
Explain in Detail:______________________________________________________
________________________________________________________________________
________________________________________________________________________
    11.1.2  Transmitted to attended point
    11.1.2.1  Via operator office trunks ----
    11.1.2.2  Via printout or other display service ----
Explain in Detail:______________________________________________________
________________________________________________________________________
________________________________________________________________________
    11.1.2.3  Type of tone to operator
    11.1.2.3.1  Distinctive tone (see (i)(2)(ix) of Sec. 1755.522) ----
    11.1.2.3.2  Other
Explain in Detail:______________________________________________________
________________________________________________________________________
________________________________________________________________________
    11.1.3  Alarm checking signals for carrier and mobile radio systems

 
 
 
11.1.3.1  Minor Alarm..............................................  ...
11.1.3.2  Major Alarm..............................................  ...
11.1.3.3  Terminals for both.......................................  ...
11.2  Trouble Location and Test
11.2.1  Outside plant and stations (check desired items)
11.2.1.1  Subscriber's loop test circuit:
11.2.1.1.1  As part of the maintenance center......................  ...
11.2.1.1.2  Separately.............................................  ...
11.2.1.2  Remote test set (Explain in Item 16, Appendix A).........  ...
11.2.1.3  Dial speed test circuit (Explain in Item 16, Appendix A).  ...
11.2.1.4  Pushbutton dialing test circuit..........................  ...
11.2.1.5  Howler (per (o)(2)(iii)(C) of Sec.1755.522)............  ...
11.2.1.6  Hand test sets, number required ---- (Explain in Item 16,
 Appendix A).......................................................
 

    11.3  Transmission Tests
    11.3.1  Furnish reference tone
Yes ----
No ----

------------------------------------------------------------------------
                                                  Time interval for
  Frequencies and order in which applied         application of each
                                                      frequency
------------------------------------------------------------------------
---- Hz...................................  ---- Seconds
---- Hz...................................  ---- Seconds
---- Hz...................................  ---- Seconds
---- Hz...................................  ---- Seconds
------------------------------------------------------------------------

11.3.2  Test Lines
11.3.2.1  Test Line 100 ----
11.3.2.2  Test Line 102 ----
11.3.2.3  Test Line 104 ----
11.3.2.4  Test Line 105 ----
(Explain in Item 16, Appendix A)
11.3.2.5  Test Line 107 ----
11.3.2.6  Remote Office Test Line ----
(Explain in Item 16, Appendix A)
    11.4  Line Testing
    11.4.1  Automatic line insulation testing
Yes ----
No ----
    11.4.2  Owner supplied equipment
Yes ----
No ----
    11.4.2.1  Vendor supplied interface only
Yes ----
No ----
    If supplied by owner, explain in Item 16, Appendix A, including 
manufacturer, model, location.
    11.5  Remote Control

[[Page 687]]

    11.5.1  Remote control of the system shall be provided.

Yes ----
No ----

    If required, explain in Item 16, Appendix A, including number, type 
and location.

           12. Power Equipment Requirements (Host Office Only)

    12.1  Central Office Battery
    12.1.1  A battery reserve of ---- busy hours shall be provided for 
this office when it reaches ---- lines at the ultimate anticipated 
traffic rates specified in Item 7.2, Appendix A.

    12.1.1.1  The owner will furnish a standby generator, permanently 
installed in this office, with capacity sufficient to power air 
conditioning equipment required for cooling of the central office 
equipment and to maintain an adequate dc supply in the event of a 
failure of the commercial ac supply.

Yes ----
No ----

    12.1.2  Type of battery: (Check One)
Lead Calcium ----
Lead Antimony ----

    12.1.3  Voltmeter (portable 3-60-150 volt scale, 1% accuracy) shall 
be furnished.

Yes ----
No ----

    12.1.4  Hydrometer in a hydrometer holder with glass or plastic drop 
cup shall be furnished.

Yes ----
No ----2112.1.5  Type of battery rack required: (Check One)

Two Tier ----
Other ----
Explain:

    12.1.6  Special equipment power requirements (carrier, voice 
frequency repeaters, etc.). Drain in amperes ----
    12.1.6.1  Supply all necessary equipment to provide the following 
48-volt battery taps:

------------------------------------------------------------------------
                                              Fuse (or circuit breaker)
            Number of circuits                          size
------------------------------------------------------------------------
                                            ............................
                                            ............................
                                            ............................
                                            ............................
------------------------------------------------------------------------

    12.2  Charging Equipment
    12.2.1  Charging equipment shall be provided capable of charging the 
office battery on a full float basis when the office reaches ---- lines 
at the ultimate anticipated traffic rates specified in Item 7.2, 
Appendix A.
    12.2.2  Charger input rating shall be:

------------------------------------------------------------------------
                                                 3-Phase Connection:
------------------------------------------------------------------------
Voltage ----                                3-Wire ----
Phase ----                                  4-Wire ----
Frequency ----                              Delta ----
 
                                            Y ----
------------------------------------------------------------------------

    12.3  Ringing Equipment
    12.3.1  Solid-state ringing equipment in accordance with paragraph 
(s)(5)(i) of Sec. 1755.522 shall be provided for generating the 
frequencies specified by check marks in the following table. Ringing 
generator sets serving the entire office shall each be sized to carry 
the full office ringing load when the office size reaches ---- lines at 
the ultimate anticipated traffic rates specified in Item 7.2, Appendix 
A.
    12.3.2  Ringing frequencies to be supplied:

------------------------------------------------------------------------
                                                                Maximum
                                              Frequency         No. of
                                                in Hz         telephones
------------------------------------------------------------------------
Single Frequency............................         20  ...  ..........
Decimonic...................................         20  ...  ..........
                                                     30  ...  ..........
                                                     40  ...  ..........
                                                     50  ...  ..........
Harmonic....................................    16\2/3\  ...  ..........
                                                     25  ...  ..........
                                                33\1/3\  ...  ..........
                                                     50  ...  ..........
Synchromonic................................         20  ...  ..........
                                                     30  ...  ..........
                                                     42  ...  ..........
                                                     54  ...  ..........
------------------------------------------------------------------------

    12.3.3  Furnish frequency meter (accurate within 1.3 Hz) and 
voltmeter (5% accuracy) for ringing measurements (see paragraph 
(s)(7)(ii) of Sec. 1755.522). Check One:

Panel Mounted ----
Portable ----
Not Required ----

    12.4  Power Board

    The power panel and associated wiring shall be of ample size to meet 
the load requirements when this office reaches ---- lines at the 
ultimate anticipated traffic rates specified in Item 7.2, Appendix A.

         13. Distributing Frame Requirements (Host Office Only)

13.1  Total number of outside plant cable pairs to be terminated...  ...
13.1.1  Gauge of outside plant cable pairs.........................  ...
13.2  Number of outside plant cable pairs to be protected..........  ...
13.3  Number of additional protector pair units to be provided on    ...
 MDF...............................................................
 

Explain:
    13.4  Main Frame Details
    Is present MDF to be reused?
Yes ----
No ----
    If ``Yes,'' Type ----
    Reused protectors are:

[[Page 688]]

---- (Mfgr.)
---- (Type)
    13.4.1  Number of pairs of arrester units (switching equipment) ----
    13.4.2  Number of pairs of gas tube arrester units (special 
equipment) ----
    13.4.2.1  Gas tubes to be:
---- light,
---- medium,
---- heavy,
---- max. duty units
    13.4.2.2  Fail shorted/low breakdown failure mode required
Yes ----
No ----
    13.4.2.3  Breakdown voltage of gas tube arresters ----
    13.4.3  Number of terminated pairs to be grounded ----
    13.4.4  Factory assembled tip cable
Yes ----
No ----
    13.4.4.1  Tip cable length [if other than 20 feet (610 cm)]
----
    13.4.4.2  Tip cable formed
Up ----
Down ----
    13.4.5  Pairs per vertical ----
    13.4.6  Height of vertical ---- feet ---- inches

       14. Building and Floor Plan Information (Host Office Only)

    14.1  Equipment is to be installed in an existing building (Attach 
detailed plan.) ----
    14.2  A new building is planned ----
    14.2.1  Tentative plan (Note to Engineer: Show sketch without 
dimensions.)
    14.3  Detailed Arrangements
    14.3.1  Partition required (to isolate space containing battery, 
charger, power board, test panel, main distributing frame and 
subscriber's loop test circuit (wire chief's test desk) from that of the 
remaining equipment).
Yes ----
No ----
    14.3.2  Vestibule required
Yes ----
No ----
    14.3.3  Cable entrance
Overhead----
Underground ----
    14.3.4  Additional floor space will be required for the following 
equipment which is being furnished by the owner or by the connecting 
company:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
    14.3.5  The office will be arranged for
Overhead Interbay Cabling ----
Underfloor (Computer Room Type) Interbay Cabling ----
    14.3.6  Is earthquake bracing required?
Yes ----
No ----
    (If ``Yes,'' explain zone and criteria used for zone in Item 16, 
Appendix A.)
    14.3.7  Office ground will be ---- ohms or less (Refer to Item 4.6.3 
of RUS TE&CM 810.)
    14.3.8  The office is considered to be in the following category for 
lightning damage probability based on the Figure 1 map of RUS TE&CM 823 
(see paragraph (u)(2) of 1755.522).
---- Very High
---- Higher than Average
---- Average
---- Lower than Average
---- Very Low
    14.3.9  The following is additional information regarding operating 
environment conditions which should be considered in determining system 
protection requirements (tower in vicinity, high exposure, etc.):

                         15. Alternate Requests

    16. Explanatory Notes (Include a detailed description of any 
equipment to be reused, or otherwise supplied by the owner, loop 
extenders, subscriber carrier, VF repeaters, etc.)

 Appendix B to 7 CFR 1755.522--Detailed Information on Remote Switching 
                            Terminals (RST's)

(Complete One Form For Each RST)

1. Number of Subscriber Lines (These lines included in totals in Item 6, 
                              Appendix A).

    1.1  Single-Party: -------- Flat Rate -------- Message Rate.
    1.2  Semi-Postpay Pay Station --------.
    1.3  Prepay Pay Station --------.
    1.4  PABX Lines -------- Loop Start-------- Ground Start -------- 
Restricted at Office -------- Other --------
(Describe in Item 12, Appendix B)

    1.5  Number of lines to be pushbutton ----------------
    1.6  911 Emergency Lines --------
    1.7  Anticipated ultimate capacity (20-Year) --------

                               2. Traffic

    2.1  Originating traffic per line--CCS/BH: -------- Initial -------- 
Ultimate.
    2.2  Terminating traffic per line--CCS/BH: -------- Initial -------- 
Ultimate
    2.2.1  Terminating will be made equal to originating if it is not 
known to be different.

                      3. Subscriber Loop Resistance

    3.1  Number of subscriber lines having loop resistance, including 
the telephone set of:

No. of Lines
    1501-1900 Ohms ----------
    1901-3200 Ohms --------

[[Page 689]]

    3.2  Number of pay station lines having loop resistance, excluding 
the telephone set, greater than:

No. of Lines
    1200 Ohms (For Prepay) ------------
    1000 Ohms (For Semi-Post Pay Operation) ----------.

                           4. Range Extension

    4.1  If no standby power is available at the site, loop extenders 
may be required on 1501 to 1900 ohms loops.
    4.2  Loop extenders: Total Quantity ---------- By Bidder--Quantity 
-------- By Owner--Quantity
(Explain in Item 12, Appendix B)
4.3  VF repeaters: Total Quantity ---------- By Bidder--Quantity ------
---- By Owner--Quantity ----------.

(Explain in Item 12, Appendix B)

                             5. Power Supply

    5.1  Power Board.
    5.1.1  The power board and associated wiring shall be of ample size 
to meet the load requirements when this RST reaches -------- lines at 
the ultimate anticipated traffic rates specified in Item 2, Appendix B.
    5.2  Charger input rating shall be: Voltage ---------- Phase ------
---- Frequency ----------
3-Phase Connection:
    3-Wire ----------
    4-Wire ----------
    Delta ----------
    Y----------
    5.2.1  Charger shall be capable of charging the RST battery on a 
full float basis when the RST reaches -------- lines at ultimate traffic 
rate specified in Item 2, Appendix B.
    5.2.2  Charger shall be redundant --------.
    5.3  Battery reserve shall be -------- busy hours when the RST 
reaches -------- lines at the ultimate anticipated traffic specified in 
Item 2, Appendix B.
    5.4  Standby power is available.  Yes ------ No ------.
    5.5  Special equipment power requirements -------- amps.
    5.6  Ringing.
    5.6.1  Type of Ringing.

  5.6.2  Frequency No.......................     1.     2.     3.     4.
  Frequency HZ..............................  .....  .....  .....  .....
  Max. No. Phones/Frequency.................  .....  .....  .....  .....
 

    5.6.3  Wattage to be sized for -------- lines.
    5.6.4  Frequency Meter (see Item 12.3.3, Appendix A). Panel Mounted 
------ Not Required ------.

                         6. Emergency Operation

    6.1  If path to central office is opened, the RST shall be able to 
complete calls between subscribers in its own system: Yes ------ No ----
--
    Further requirements should be listed under Item 12, Appendix B.

                 7. RST Distribution Frame Requirements

    7.1  Total number of outside plant cable pairs to be terminated ----
--.
    7.1.1  Gauge of outside plant cable pairs --------.
    7.2  Number of outside plant cable pairs to be protected --------.
    7.3  Number of additional protector pair units to be provided on MDF 
--------.
    Explain:
    7.4  Main Frame Details
    7.4.1  Present MDF to be reused  Yes------ No------.
    If ``Yes'', Type --------.
    Reused protectors are: -------- (Mfr.) -------- (Type).
    7.4.2  Number of pairs of arrester units (switching equipment) ----
----.
    7.4.3  Number of pairs of gas tube arrester units (special 
equipment) --------.
    7.4.3.1  Gas tubes to be: ------ light, ------ medium, ------ heavy, 
------ maximum duty units.
    7.4.3.2 Fail  shorted/low breakdown failure mode required  Yes ----
-- No ------.
    7.4.3.3  Breakdown voltage of gas tube arresters --------.
    7.4.4  Number of terminated pairs to be grounded --------.
    7.4.5  Factory assembled tip cable  Yes ------ No ------.
    7.4.5.1  Tip cable length [if other than 20 feet (610 cm)] ------.
    7.4.5.2  Tip cable formed  Up ------ Down ------.
    7.4.6  Pairs per vertical --------.
    7.4.7  Height of vertical -------- feet -------- inches.

                 8. Building and Floor Plan Information

    8.1  RST to be mounted in building ------.
    8.1.1  Earthquake bracing required  Yes ------ No ------ (see Item 
14.3.6, Appendix A).
    8.1.2  Supply building floor plan.
    8.2  RST to be mounted in cabinet out of doors ------.
    8.2.1  Cabinet to be mounted ------ on pole ------ on ground.

                         9. Subscriber Line Test

    9.1  Remote testing of subscriber lines is required  Yes ------ No 
------.
    9.2  Subscriber loop test set ------.

                  10. Span Lines to Host Central Office

    10.1  To be supplied by Owner ------.
    10.2  To be supplied by Bidder ------.
    10.2.1  When the bidder is to supply the span lines, an RUS Form 
397b, Trunk Carrier

[[Page 690]]

Systems, with the applicable parts completed must be attached with a 
physical layout of the span line.

                      11. Grounding Considerations

    11.1  The RST ground will be ------ ohms or less. (Refer to Item 
4.6.3 of RUS TE&CM 810.)
    11.2  This RST is considered to be in the following category for 
lightning damage probability based on the Figure 1 map of RUS TE&CM 
823.-------- Very High -------- Higher than Average -------- Average --
------ Lower than Average -------- Very Low
    11.3  The following is additional information regarding operating 
environment conditions which should be considered in determining system 
protection requirements (tower in vicinity, high exposure, etc.):

                          12. Explanatory Notes

Appendix C to 7 CFR 1755.522--Specifications for Digital, Stored Program 
   Controlled Central Office Equipment Detailed Requirements--Bidder 
                          Supplied Information

Telephone Company
Name____________________________________________________________________
Location

________________________________________________________________________

________________________________________________________________________

Central Office Name (By Location)

Town ----------
County ---------- State ------
________________________________________________________________________
    Attended ------  Unattended ------

                               1. General

    1.1  The equipment and materials furnished by the bidder must meet 
the requirements of paragraphs (a) through (x), Appendix A, and Appendix 
B of Sec. 1755.522.
    1.2  Paragraphs (a) through (x) of Sec. 1755.522 cover the minimum 
general requirements for digital, stored program controlled central 
office switching equipment.
    1.3  Paragraph (y) of Sec. 1755.522 covers requirements for 
installation, inspection, and testing when such service is included as 
part of the contract.
    1.4  Appendices A and B of Sec. 1755.522 cover the technical data 
for application engineering and detailed equipment requirements insofar 
as they can be established by the owner. These appendices are to be 
filled in by the owner.
    1.5  Appendix C of Sec. 1755.522 covers detailed information on the 
switching network equipment and the stored program controlled equipment, 
and information as to system reliability and heavy traffic delays as 
proposed by the bidder. This appendix is to be filled in by the bidder 
and must be presented with the bid.
    1.6  Appendix D of Sec. 1755.522 is the single-point grounding 
system audit checklist.

                        2. Performance Objectives

    2.1  Reliability (see paragraph (b) of Sec. 1755.522).
________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.2  Busy Hour Load Capacity and Traffic Delay (see paragraph 
(e)(10) of Sec. 1755.522. Describe basis for traffic analysis).
________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

           3. Equipment Quantities Dependent on System Design

    3.1  Switch Frames and Circuits.
    3.1.1  Number of Lines.
    3.1.1.1  The number of lines to be provided shall include the number 
required for the termination of subscriber lines, Item 7, Appendix A, 
plus the number required for routine testing plus any additional to meet 
the minimum switch increment of the selected system.
    3.1.1.2  The number of lines provided for this office will be ------
    3.1.2  Number of Ports Used for Trunks
    3.1.2.1  The number of trunk ports to be provided shall be based on 
the trunk quantities required (Item 8, Appendix A) as modified by the 
minimum increment of the selected system. Provision shall be made for at 
least 5 percent additional inlet and outlet ports over those required 
initially. The additional ports shall be used for connecting additional 
trunks that may be required in the future.
    3.1.2.2  The number of trunk ports provided for this office will be 
------------
    3.1.3  Number of Subscriber Directory Numbers
3.1.3.1  The number of directory numbers provided shall be based on the 
          total directory numbers required (Item 6.1.11, appendix A), as 
          modified by the memory increment of the proposed system.
    3.1.3.2  The number of subscriber directory numbers provided for 
this office will be ------------

                                 4. RST

    4.1  Information for RST's must be supplied for each RST to be 
furnished.
    4.2  Number of line terminals for this RST will be ------------ .
    4.3  Number of span line terminations to the central office being 
supplied ------------ .

[[Page 691]]

    4.4  If the emergency operation option is required, it will provide 
the following service when connection to the main office is severed:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    4.5  The ac power drain at the remote end will be:

Initial ------------  Ultimate ------------  Voltage: Single-Phase ----
--------  Three-Phase ------------
    4.6  Special environmental requirements for the remote end:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

                                5. Power

    5.1  AC Power Drain Watts

Initial ------------  Ultimate ------------
    5.2  Heat Dissipation Watts

Provide the initial and ultimate equipment dissipation for each 
equipment room.
    5.2.1  Operating Temperature Range

Minimum ------------  Maximum ------------
    5.2.2  Operating Humidity Range

Minimum ------------  Maximum ------------

           6. Additional Information to be Furnished by Bidder

    6.1  The bidder shall accompany its bid with the following 
information:
    a. Two copies of the equipment list and the calculations from which 
the quantities in the equipment list are determined;
    b. Two copies of the traffic tables from which the quantities are 
determined, other than the full availability tables shown in paragraph 
(p)(1)(i) of Sec. 1755.522;
    c. Two copies of detailed switching diagram showing the traffic on 
each route, the grade of service, the quantity of circuits, and main 
distributing frames;
    d. Block diagram of stored program control and associated 
maintenance equipment;
    e. A prescribed method and criteria for acceptance of the completed 
central office, which is subject to review;
    f. Location of technical assistance service with 24-hour 
maintenance, and conditions when owner will be charged for access to the 
service;
    g. Calculations showing the method by which ringing machine sizes 
were derived;
    h. Precautions to be taken against static discharge;
    i. Details of central office grounding requirements, recognizing 
local grounding conditions;
    j. Details concerning traffic measurement capabilities and formats; 
and
    k. Details concerning AMA features and formats to be provided.
    6.2  As a part of the response to the bid, the bidder must also list 
information concerning the types and quantities of spare parts to be 
furnished. All units, excluding those units described in paragraph 
(x)(6)(i)(C) of Sec. 1755.522, must fall into one of the four classes. 
The information must be in the following format:

----------------------------------------------------------------------------------------------------------------
                           Quantity of units in the CO's and RST's      Quantity of spare parts furnished with
                                        which are bid                                  this bid
 Unit No.    Unit name -----------------------------------------------------------------------------------------
                          Class 1     Class 2    Class 3    Class 4    Class 1    Class 2    Class 3    Class 4
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------

                          7. Explanatory Notes

    Appendix D to 7 CFR 1755.522--Acceptance Checklist--Single-point 
                            Grounding System

                          1. Approval Statement

Telephone Company:______________________________________________________

RUS Borrower Designation:_______________________________________________

RUS Contract Number:____________________________________________________

N/A_____________________________________________________________________

Name:

Central Office:_________________________________________________________

Remote:_________________________________________________________________

Date of Inspection:_____________________________________________________

Names of Inspectors:
Owner Representative____________________________________________________

Central Office Supplies_________________________________________________

Consulting Engineer_____________________________________________________

Mutually Approved Exceptions:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

Grounding System Approval:

Name (Owner Representative)_____________________________________________

Signature_______________________________________________________________

Title___________________________________________________________________

Date____________________________________________________________________

Name (Supplier Representative)__________________________________________

Signature_______________________________________________________________

Title___________________________________________________________________

Date____________________________________________________________________

[[Page 692]]

                            2. General Survey

    2.1  This office is considered to be in the following category for 
probability of lightning damage based on the Figure 1 map in RUS TE&CM 
823 (also refer to paragraph (u)(2) of Sec. 1755.522)

---- Very High  ---- Higher than Average  ---- Average  ---- Lower than 
Average  ---- Very low

    2.2  Central office ground field (COGF) to be inspected for proper 
bonding of conductors to ground rods, etc. COGF to earth grounding 
reading is -------- ohms. (Refer to RUS TE&CM 802, Appendices C and D, 
Measurement Techniques.) Is this resistance reading acceptable? (Refer 
to RUS TE&CM 810, Items 1.6, 4.6.2 and 4.6.3 for protection 
considerations.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.3  Ground connection to be inspected from the master ground bar 
(MGB) to the central office ground field (COGF) to ensure it is properly 
sized and installed by most direct route with no sharp bends. (Refer to 
RUS TE&CM 810, Item 4.3.2 and section 8.1.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.4  Building structure grounds (steel rebar in footings, ironwork, 
etc.) are to be properly bonded and connected to the MGB. (Refer to RUS 
TE&CM 810, Item 4.3.4.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.5  Metallic central office door(s) are to be painted with metallic 
paint with doorknobs left bare. Door(s) and frames are to be grounded to 
the building structural ground or the MGB.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.6  Metallic fences within 6 feet (183 cm) of the exchange 
building, storage facilities ground field, etc. are to be properly 
bonded to the COGF outside of the central office building. Handhole 
enclosure is to be used for the COGF connection to permit inspection and 
disconnect for earth resistance testing. (Refer to RUS TE&CM 810, 
Appendix C, Item 4.6.1.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.7  Lightning rod systems are to be grounded by a separate 
dedicated ground field. A bond should be provided between the COGF and 
the lightning rod ground field. Handhole enclosure is to be used for the 
COGF connection to permit inspection and disconnect for earth resistance 
testing. (Refer to RUS TE&CM 810, Item 4.3.2.1.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.8  Radio/microwave tower ground grid is to be properly bonded to 
the COGF by a direct outside connection. Handhole enclosure is to be 
used for the COGF connection to permit inspection and disconnect for 
earth resistance testing. (Refer to RUS TE&CM 810, Item 4.3.2 and 
section 10.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.9  If a qualified metallic water system is present, inspect the 
MGB connecting conductor to ensure that it is properly sized and 
installed by the most direct route with no sharp bends and that it is 
clamped solidly on the water pipes. (Refer to RUS TE&CM 810, Item 4.3.3 
for details on metallic water system grounding.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.10  All power and grounding conductors are to be continuous, end 
to end, with no splices, size discontinuity or intermediate 
terminations. If an exception is necessary, unusual care must be taken 
to assure proper bonding between the two sections. (Refer to RUS TE&CM 
810, Appendix C, section 5.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.11  All ground conductors should be void of sharp bends along 
their entire lengths. (Refer to RUS TE&CM 810, Item 8.2.2.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.12  Ground conductors should only be placed in nonmetallic 
conduit. Those routed through metallic conduit require that both ends of 
the conduit be bonded to the ground conductor. (Refer to RUS TE&CM 810, 
Item 8.2.4.)

Acceptable:  ---- Yes  ---- No


[[Page 693]]


Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.13  Ground conductors should not be encircled by metallic clamp. 
Metallic straps are to be removed and replaced with nonmetallic clamps. 
(Refer to RUS TE&CM 810, Item 8.2.4.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.14  If metallic conduit is used, it is to be insulated from all 
ironwork.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.15  Inspect to determine if the required central office supplier 
electrostatic discharge plates, wrist wraps, antistatic floor mats, etc. 
are available and properly installed. (Refer to RUS TE&CM 810, Item 
12.3.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    2.16  Ground conductors, except green wires, should not be routed 
close and parallel to other conductors so as to minimize induction on 
surges into equipment wiring. It is also better not to route these 
ground conductors through cable racks or troughs, or within the confines 
of any iron work. (Refer to RUS TE&CM 810, Item 8.2.3.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

                       3. Master Ground Bar (MGB)

    3.1  The designated P, A, N, and I segments of the master ground bar 
(MGB) should be clearly identified. (Refer to RUS TE&CM 810, Figure 1 
for MGB segmentation arrangement.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.2  Check for appearance and proper location of following on MGB:
    (a) R--Interior radio equipment \1\
---------------------------------------------------------------------------

    \1\ Surge Producer--(P)
---------------------------------------------------------------------------

    (b) C--Cable entrance ground bar \1\
    (c) M--MDF ground bar \1\
    (d) G--Standby power equipment frame ground \1\
    (e) N--Commercial power MGN \2\
---------------------------------------------------------------------------

    \2\ Surge Absorber--(A)
---------------------------------------------------------------------------

    (f) B--Building structure ground \2\
    (g) L--Central office ground field \2\
    (h) W--Water pipe system \2\
    (i) N\1\--Battery Return \3\
---------------------------------------------------------------------------

    \3\ Grounds to non-IGZ Equipment--(N)
---------------------------------------------------------------------------

    (j) N\2\--Outside IGZ:  ------------\3\
    (k) N\3\--Outside IGZ:  ------------\3\
    (l) I\1\--Ground window bar \4\
---------------------------------------------------------------------------

    \4\ Grounds to IGZ Equipment (GWB's)--(I)
---------------------------------------------------------------------------

    (m) I\2\--Ground window bar \4\
Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.3  All connections to MGB are to be two-hole bolted down copper 
crimped or compression type terminal lugs. (NOTE: No solder connections 
are permitted.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.4  MGB is to be properly insulated from the mounting surface.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.5  All connections are to be tight.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.6  The MGB is to have an anticorrosion coating of the type which 
enhances conductivity.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.7  Bar is to be clearly stenciled or legibly labeled ``MGB.''

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    3.8  All ground leads are to be properly sized and labeled as to 
point of origin. (Refer to RUS TE&CM 810, Item 8.3.1 and section 8.1.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

[[Page 694]]

                       4. Ground Window Bar (GWB)

    4.1  All equipment grounds that originate inside of an Isolated 
Ground Zone (IGZ) are to be terminated on the GWB which is preferably 
located physically inside the IGZ and insulated from its support. (Refer 
to RUS TE&CM 810, Item 5.1.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    4.2  Each GWB is to be connected to the MGB by the most direct route 
with a conductor of 2/0-gauge or coarser, or resistance of less than 
0.005 ohms. Parallel conductors for redundancy if required by the 
supplier. (Refer to RUS TE&CM 810, Item 8.1.2.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    4.3  The metal framework grounds of only that switching equipment 
and associated electrical equipment located inside of the IGZ should be 
connected to the GWB as required by the central office equipment 
supplier. (Refer to RUS TE&CM 810, Item 5.5.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    4.4  GWB is to be clearly stenciled or labeled ``GWB.''

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    4.5  All connections are to be tight.

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

                      5. Isolated Ground Zone (IGZ)

    5.1  IGZ areas are to be clearly marked on the floor or in some 
other easily recognizable manner. (Refer to RUS TE&CM 810, Item 6.1.1)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    5.2  Confirm that all framework, cabinets, etc., within the IGZ are 
ground connected only to the GWB. (Refer to RUS TE&CM 810, Item 5.5.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    5.3  All cable racks, ground mats, switching and transmission 
equipment within the IGZ are to have ground leads only to the GWB. 
(Refer to RUS TE&CM 810, Item 5.5.2.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    5.4  Review ac power feed arrangement within the IGZ for acceptable 
receptacle type and confirm that all green wires are properly connected. 
(Refer to RUS TE&CM 810, Item 5.5.4.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    5.5  All ironwork, metallic conduit, and other equipment associated 
with the switch are to be properly insulated at the IGZ boundary as 
stipulated by the supplier. (Refer to RUS TE&CM 810, Item 6.2.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    5.6  With the GWB disconnected from the MGB, the resistance reading 
of ------ ohms between the GWB and the MGB indicates adequate isolation. 
(CAUTION: Test is to be conducted only with the approval and under the 
direction of the central office supplier.)

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________

                       6. Entrance and Tip Cables

    6.1  When neither a cable vault nor a splicing trough exists, the 
outside plant cable should be brought into the central office and 
spliced to tip cables with a PVC outer jacket (ALVYNR) or 
equivalent as close as practical to the cable entrance. (Refer to RUS 
TE&CM 810, Item 7.3.4.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    6.2  All outside entrance cables and all tip cable shields are to be 
separated by at least a 3-inch (7.6 cm) gap between shield ends.

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    6.3  All entrance cable shields are to be bonded separately to 
6 AWG or larger insulated wire or bonding ribbon and connected

[[Page 695]]

to the Cable Entrance Ground Bar (CEGB) by most direct route with 
minimum bends.

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    6.4  Outside plant cable shields are to be connected only to the 
CEGB, and the tip cable shields are to be connected only to the Main 
Distributing Frame Bar (MDFB).

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

                   7. Cable Entrance Ground Bar (CEGB)

    7.1  The CEGB is to be properly insulated from the mounting surface. 
(Refer to TE&CM 810, Item 4.2.1.)

    Acceptable: ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.2  The CEGB is to be located as close as possible to the physical 
ends of the entrance cable shields.

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.3  All connections are to use two-hole bolted down copper crimped 
or compression type terminal lugs. (NOTE: No solder connections are 
permitted.)

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.4  All connections are to be tight.

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.5  Bar is to be clearly stenciled or legibly labeled ``CEGB.''

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.6  All ground leads are to be properly sized and labeled.

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.7  The CEGB is to have an anticorrosion coating of the type which 
enhances conductivity.

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    7.8  The CEGB is to be connected to the MGB by a properly sized 
conductor and by the most direct route. (Refer to RUS TE&CM 810, section 
8.1.)

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

                    8. Main Distributing Frame (MDF)

    8.1  RUS strongly recommends that MDF protectors be furnished 
without heat coils. (Refer to RUS TE&CM 810, section 7.6.)

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.2  Incoming cable pairs terminated on MDF protector assemblies 
should be protected with protector modules. These modules should contain 
white coded carbon blocks or orange coded gas tube arrestors that are 
included in the RUS List of Materials. (Refer to RUS TE&CM 810, Item 
7.4)

    Acceptable:  ---- Yes    ---- No

Comments:_______________________________________________________________

________________________________________________________________________

 7______________________________________________________________________
    8.3  All incoming subscriber cable pairs are to be properly 
terminated at either a protector equipped terminal or connected to 
ground.

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.4  MDF protector assemblies may be mounted directly on the 
vertical frame ironwork. Protector assemblies on each vertical are 
interconnected with each other and the Main Distributing Frame Bar 
(MDFB) with a 6 copper grounding conductor. Alternative means 
of connecting to the MDFB are also acceptable which do not rely on the 
frame ironwork for conducting surge currents to ground. (Refer to RUS 
TE&CM 810, section 7.)

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.5  Protective ``ground connections'' should be provided between 
the MDFB and the frame ironwork for personnel protection regardless of 
the type of protector assembly used. Protective ground leads should be 
14-gauge, less than 12 inches (30.5 cm) in length with paint thoroughly 
removed at point of

[[Page 696]]

connection to the ironwork. (Refer to RUS TE&CM 810, Item 7.1.3.)

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.6  The MDFB should be insulated from the frame ironwork in all 
cases where it is used as a Master Ground Bar (MGB). (Refer to RUS TE&CM 
810, Item 7.1.2.)

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.7  Where the MDFB is used as the MGB in very small offices the 
protective ``ground connections'' should be connected on the N section 
of the bar. The MDF line protector assembly grounds should be connected 
to the P section of the bar. (Refer to RUS TE&CM 810, Item 7.1.4.)

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.8  The MDFB is to be connected to the MGB by the most direct path 
with minimum bends and proper conductor size. (Refer to RUS TE&CM 810, 
Item 8.1.4.)
    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________

    8.9  The MDFB should be free of all other ground leads when not used 
as an MGB.

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________
    8.10  Alternative arrangements which insulate the line protector 
assemblies and MDFB from the frame ironwork may require a direct ground 
connection of the frame ironwork to the MGB for personnel protection. 
Conductor is properly sized and tightened with paint removal on main 
frame ironwork at point of connection.

    Acceptable: ---- Yes    ---- No

Comments________________________________________________________________

________________________________________________________________________

________________________________________________________________________

                9. Power Service Protection and Grounding

    9.1  The ground conductor between the ac power system multigrounded 
neutral (MGN) at the main ac disconnect panel and the master ground bar 
(MGB) is to be properly sized and connected. (Refer to RUS TE&CM 810, 
Items 2.19, 4.3.1 and 8.1.3.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    9.2  If there is a non-MGN ac power system, there is to be a 
properly sized and connected insulated conductor bond between the power 
service ground electrode and the MGB. (Refer to RUS TE&CM 810, Item 
4.3.1.1.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    9.3  AC conductors including ground conductors serving 120-volt ac 
electric convenience receptacles and all direct wire peripheral 
equipment, located in the IGZ, should be sized in accordance with normal 
``green wire'' criteria. (Refer to RUS TE&CM 810, Items 5.5.4, 5.5.5, 
and 5.5.6.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    9.4  Minimum protection for ac power serving the central office 
buildings should consist of an RUS accepted secondary arrestor at the 
service entrance. (Refer to RUS TE&CM 810, section 9.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    9.5  A properly sized conductor for ground bonding between the 
standby power plant framework (not separately derived) and the MGB is to 
be provided to equalize framework voltages for personnel safety reasons. 
(Refer to RUS TE&CM 810, Item 4.2.4.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

                            10. Miscellaneous

    10.1  All non-IGZ equipment frames, relay racks, cable racks and 
other ironwork are to be properly connected to the MGB. (Refer to TE&CM 
810, Item 4.4.)

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    10.2  Shields on high frequency intra-office cables are to be 
properly isolated and connected only to an isolation ground bar in the 
relay rack. All shielded cables entering the IGZ should only be 
referenced at the IGZ termination point as given by the manufacturer. 
(Refer to RUS TE&CM 810, Item 7.2.1.2.)

Acceptable:  ---- Yes  ---- No


[[Page 697]]


Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

    10.3  Isolation ground bars in the relay racks are to be properly 
connected to the MGB with appropriate sized conductor with no sharp 
bends.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________
    10.4  All radio equipment cabinet(s) are to be at least 10 feet (305 
cm) from the IGZ.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

    10.5  The metal spare parts cabinet is to be grounded with a 
6 AWG or larger insulated wire to non-IGZ cable rack, etc. or 
directly to the MGB.

Acceptable:  ---- Yes  ---- No

Comments:_______________________________________________________________

________________________________________________________________________

________________________________________________________________________

[58 FR 30938, May 28, 1993; 58 FR 36252, July 6, 1993, as amended at 60 
FR 1711, Jan. 5, 1995, 60 FR 64312, 64314, Dec. 15, 1995; 69 FR 18803, 
Apr. 9, 2004]



Secs. 1755.523-1755.699  [Reserved]



Sec. 1755.700  RUS specification for aerial service wires.

    Secs. 1755.701 through 1755.704 cover the requirements for aerial 
service wires.

[61 FR 26074, May 24, 1996]



Sec. 1755.701  Scope.

    (a) This section covers the requirements for aerial service wires 
intended for aerial subscriber drops.
    (b) The aerial service wires can be either copper coated steel 
reinforced or nonmetallic reinforced designs.
    (c) For the copper coated steel reinforced design, the reinforcing 
members are the conductors.
    (1) The conductors are solid copper-covered steel wires.
    (2) The wire structure is completed by insulating the conductors 
with an overall extruded plastic insulating compound.
    (d) For the nonmetallic reinforced design, the conductors are solid 
copper individually insulated with an extruded solid insulating 
compound.
    (1) The insulated conductors are either laid parallel (two conductor 
design only) or twisted into pairs (a star-quad configuration is 
permitted for two pair wires).
    (2) The wire structure is completed by the application of 
nonmetallic reinforcing members and an overall plastic jacket.
    (e) All wires sold to RUS borrowers for projects involving RUS loan 
funds under Secs. 1755.700 through 1755.704 must be accepted by RUS 
Technical Standards Committee ``A'' (Telecommunications). For wires 
manufactured to the specification of Secs. 1755.700 through 1755.704, 
all design changes to an accepted design must be submitted for 
acceptance. RUS will be the sole authority on what constitutes a design 
change.
    (f) Materials, manufacturing techniques, or wire designs not 
specifically addressed by Secs. 1755.700 through 1755.704 may be allowed 
if accepted by RUS. Justification for acceptance of modified materials, 
manufacturing techniques, or wire designs must be provided to 
substantiate product utility and long term stability and endurance.

[61 FR 26074, May 24, 1996]



Sec. 1755.702  Copper coated steel reinforced (CCSR) aerial service wire.

    (a) Conductors. (1) Each conductor shall comply with the 
requirements specified in the American National Standard Institute/
Insulated Cable Engineers Association, Inc. (ANSI/ICEA) S-89-648-1993, 
paragraphs 2.1 through 2.1.5. The ANSI/ICEA S-89-648-1993 Standard For 
Telecommunications Aerial Service Wire, Technical Requirements (approved 
by ANSI July 11, 1994) is incorporated by reference in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/ICEA S-89-648-1993 are 
available for inspection during normal business hours at RUS, room 2845, 
U.S. Department of Agriculture, Washington, DC 20250-1500, or at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html. Copies are available

[[Page 698]]

from ICEA, P. O. Box 440, South Yarmouth, MA 02664, telephone number 
(508) 394-4424.
    (2) Factory joints in conductors shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 2.1.6.
    (b) Conductor insulation. (1) The raw materials used for the 
conductor insulation shall comply with the requirements specified in 
ANSI/ICEA S-89-648-1993, paragraph 3.1.1.
    (2) The raw materials shall be accepted by RUS prior to their use.
    (3) The finished conductor insulation shall be free from holes, 
splits, blisters, or other imperfections and shall be as smooth as is 
consistent with best commercial practice.
    (4) The finished conductor insulation shall comply with the 
requirements specified in ANSI/ICEA S-89-648-1993, paragraphs 3.1.5 
through 3.1.5.4.
    (5) The insulation shall have a minimum spot thickness of not less 
than 0.9 millimeters (mm) (0.03 inches (in.)) at any point.
    (c) Wire assembly. (1) The two conductors shall be insulated in 
parallel to form an integral configuration.
    (2) The finished wire assembly shall be either a flat or a notched 
oval. Other finished wire assemblies may be used provided that they are 
accepted by RUS prior to their use.
    (3) The overall dimensions of the finished wire assembly shall be in 
accordance with the following requirements:

------------------------------------------------------------------------
                                                    Dimensions
                                         -------------------------------
                Diameter                    Minimum mm      Maximum mm
                                               (in.)           (in.)
------------------------------------------------------------------------
Major...................................      5.5 (0.22)      8.0 (0.31)
Minor...................................      3.0 (0.12)      5.0 (0.19)
------------------------------------------------------------------------

    (d) Conductor marking. The insulated conductors of a finished wire 
shall be marked in accordance with the requirements specified in ANSI/
ICEA S-89-648-1993, paragraph 3.1.4.
    (e) Electrical requirements--(1) Conductor resistance. The direct 
current (dc) resistance of each conductor in a completed CCSR aerial 
service wire shall comply with the requirement specified in ANSI/ICEA S-
89-648-1993, paragraph 7.1.2.
    (2) Wet mutual capacitance. The wet mutual capacitance of the 
completed CCSR aerial service wire shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.1.3.
    (3) Wet attenuation. The wet attenuation of the completed CCSR 
aerial service wire shall comply with the requirement specified in ANSI/
ICEA S-89-648-1993, paragraph 7.1.4.
    (4) Wet insulation resistance. The wet insulation resistance of the 
completed CCSR aerial service wire shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.1.5.
    (5) Dielectric strength. (i) The wet dielectric strength between 
conductors and between each conductor of the completed CCSR aerial 
service wire and the surrounding water shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.1.6.
    (ii) The dry dielectric strength between conductors of the completed 
CCSR aerial service wire shall comply with the requirement specified in 
ANSI/ICEA S-89-648-1993, paragraph 7.1.7.
    (6) Fusing coordination. The completed CCSR aerial service wire 
shall comply with the fusing coordination requirement specified in ANSI/
ICEA S-89-648-1993, paragraph 7.1.8.
    (7) Insulation imperfections. Each length of completed CCSR aerial 
service wire shall comply with the requirement specified in ANSI/ICEA S-
89-648-1993, paragraph 7.1.9.
    (f) Mechanical requirements--(1) Impact test. (i) All CCSR aerial 
service wires manufactured in accordance with this section shall comply 
with the unaged impact test specified in ANSI/ICEA S-89-648-1993, 
paragraph 8.1.2.
    (ii) All CCSR aerial service wires manufactured in accordance with 
this section shall comply with the aged impact test specified in ANSI/
ICEA S-89-648-1993, paragraph 8.1.3.
    (2) Abrasion resistance test. All CCSR aerial service wires 
manufactured in accordance with this section shall comply with the 
abrasion resistance test specified in ANSI/ICEA S-89-648-1993, paragraph 
8.1.4.
    (3) Static load test. All CCSR aerial service wires manufactured in 
accordance with this section shall comply with the static load test 
specified in

[[Page 699]]

ANSI/ICEA S-89-648-1993, paragraph 8.1.5.
    (4) Plasticizer compatibility test. All CCSR aerial service wires 
manufactured in accordance with this section shall comply with the 
plasticizer compatibility test specified in ANSI/ICEA S-89-648-1993, 
paragraph 8.1.8.
    (g) Environmental requirements--(1) Cold temperature handling test. 
(i) All CCSR aerial service wires manufactured in accordance with this 
section shall comply with the unaged cold temperature handling test 
specified in ANSI/ICEA S-89-648-1993, paragraph 8.2.1.
    (ii) All CCSR aerial service wires manufactured in accordance with 
this section shall comply with the aged cold temperature handling test 
specified in ANSI/ICEA S-89-648-1993, paragraph 8.2.2.
    (2) Light absorption test. All CCSR aerial service wires 
manufactured in accordance with this section shall comply with the light 
absorption test specified in ANSI/ICEA S-89-648-1993, paragraph 8.2.3.
    (3) Low temperature separation test. All CCSR aerial service wires 
manufactured in accordance with this section shall comply with the low 
temperature separation test specified in ANSI/ICEA S-89-648-1993, 
paragraph 8.2.4.
    (4) Flammability test. All CCSR aerial service wires manufactured in 
accordance with this section shall comply with the flammability test 
specified in ANSI/ICEA S-89-648-1993, paragraph 8.3.
    (5) Wire listing. All CCSR aerial service wires manufactured in 
accordance with this section shall comply with the listing requirements 
specified in ANSI/ICEA S-89-648-1993, paragraph 8.4.
    (h) Identification marker. Each length of CCSR aerial service wire 
shall be identified in accordance with ANSI/ICEA S-89-648-1993, 
paragraph 9.1.4. When surface marking is employed, the color of the 
initial marking shall be either white or silver.
    (i) Length marking (optional). (1) Sequentially numbered length 
marking of the completed CCSR aerial service wire may be used at the 
option of the manufacturer unless specified by the end user.
    (2) When sequentially numbered length markings are used, the length 
markings shall be in accordance with ANSI/ICEA S-89-648-1993, paragraph 
9.1.5. The color of the initial marking shall be either white or silver.
    (j) Durability of marking. The durability of the marking of the CCSR 
aerial service wire shall comply with the requirements specified in 
ANSI/ICEA S-89-648-1993, paragraph 9.1.6.

[61 FR 26075, May 24, 1996, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.703  Nonmetallic reinforced (NMR) aerial service wire.

    (a) Conductors. (1) Each conductor shall comply with the 
requirements specified in ANSI/ICEA S-89-648-1993, paragraphs 2.2 and 
2.2.1. The ANSI/ICEA S-89-648-1993 Standard For Telecommunications 
Aerial Service Wire, Technical Requirements (approved by ANSI July 11, 
1994) is incorporated by reference in accordance with 5 U.S.C. 552(a) 
and 1 CFR part 51. Copies of ANSI/ICEA S-89-648-1993 are available for 
inspection during normal business hours at RUS, room 2845, U.S. 
Department of Agriculture, Washington, DC 20250-1500, or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html. Copies are available from ICEA, P. O. 
Box 440, South Yarmouth, MA 02664, telephone number (508) 394-4424.
    (2) Factory joints made in the conductors during the manufacturing 
process shall comply with the requirement specified in ANSI/ICEA S-89-
648-1993, paragraph 2.2.2.
    (b) Conductor insulation. (1) The raw materials used for the 
conductor insulation shall comply with the requirements specified in 
ANSI/ICEA S-89-648-1993, paragraphs 3.2 through 3.2.2.
    (2) The finished conductor insulation shall comply with the 
requirements specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.
    (3) The dimensions of the insulated conductors shall comply with the 
requirements specified in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.1.
    (4) The colors of the insulation shall comply with the requirements 
specified

[[Page 700]]

in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.2.
    (5) A permissible overall performance level of faults in conductor 
insulation shall comply with the requirement specified in ANSI/ICEA S-
89-648-1993, paragraph 3.2.4.6. The length count and number of faults 
shall be recorded. The information shall be retained for a period of 6 
months and be available for review by RUS when requested.
    (6) Repairs to the conductor insulation during manufacture are 
permissible. The method of repair shall be accepted by RUS prior to its 
use. The repaired insulation shall comply with the requirement specified 
in ANSI/ICEA S-89-648-1993, paragraph 3.2.3.3.
    (7) All repaired sections of insulation shall be retested in the 
same manner as originally tested for compliance with paragraph (b)(5) of 
this section.
    (8) The colored insulating material removed from or tested on the 
conductor, from a finished wire shall comply with the requirements 
specified in ANSI/ICEA S-89-648-1993, paragraphs 3.2.4 through 3.2.4.5.
    (c) Identification of pairs and layup of pairs. (1) The insulation 
shall be colored coded to identify:
    (i) The tip and ring conductor of each pair; and
    (ii) Each pair in the completed wire.
    (2) The colors to be used in the pairs together with the pair 
numbers shall be in accordance with the table specified in ANSI/ICEA S-
89-648-1993, paragraph 4.1.1.
    (3) The insulated conductors shall be either layed parallel (two 
conductor design only) or twisted into pairs.
    (4) When using parallel conductors for the two conductor design, the 
parallel conductors shall be designed to enable the wire to meet the 
electrical requirements specified in paragraph (g) of this section.
    (5) When twisted pairs are used, the following requirements shall be 
met:
    (i) The pair twists shall be designed to enable the wire to meet the 
electrical requirements specified in paragraph (g) of this section; and
    (ii) The average length of pair twists in any pair in the finished 
wire, when measured on any 3 meter (10 foot) length, shall not exceed 
the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.
    (6) An alternative method of forming the two-pair wire is the use of 
a star-quad configuration.
    (i) The assembly of the star-quad shall be such as to enable the 
wire to meet the electrical requirements specified in paragraph (g) of 
this section.
    (ii) The star-quad configuration shall be assembled in accordance 
with ANSI/ICEA S-89-648-1993, paragraph 4.1.2.
    (iii) The average length of twist for the star-quad in the finished 
wire, when measured on any 3 meter (10 foot) length, shall not exceed 
the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.
    (iv) The color scheme used to provide identification of the tip and 
ring conductors of each pair in the star-quad shall comply with the 
table specified in ANSI/ICEA S-89-648-1993, paragraph 4.1.2.
    (d) Strength members. The strength members shall comply with the 
requirements specified in ANSI/ICEA S-89-648-1993, paragraphs 6.1 and 
6.1.1.
    (e) Wire jacket. (1) The jacket shall comply with the requirements 
specified in ANSI/ICEA S-89-648-1993, paragraphs 5.1 and 5.1.1.
    (2) The jacket raw materials shall be accepted by RUS prior to their 
use.
    (f) Wire assembly. The finished wire assembly shall be in accordance 
with ANSI/ICEA S-89-648-1993, paragraph 5.1.3 and Figure 5-1.
    (g) Electrical requirements--(1) Conductor resistance. The dc 
resistance of each conductor in a completed NMR aerial service wire 
shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, 
paragraph 7.2.2.
    (2) Resistance unbalance. (i) The dc resistance unbalance between 
the two conductors of any pair in a completed NMR aerial service wire 
and the average resistance unbalance of all pairs in a Quality Control 
Lot shall comply with the requirements specified in ANSI/ICEA S-89-648-
1993, paragraph 7.2.3.
    (ii) The resistance unbalance between tip and ring conductors shall 
be random with respect to the direction of unbalance. That is, the 
resistance of

[[Page 701]]

the tip conductors shall not be consistently higher with respect to the 
ring conductors and vice versa.
    (3) Dry mutual capacitance. The dry mutual capacitance of the 
completed NMR aerial service wire shall comply with the requirements 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.4, Type 1.
    (4) Pair-to-pair capacitance unbalance. The pair-to-pair capacitance 
unbalance as measured on the completed NMR aerial service wire shall 
comply with the requirements specified in ANSI/ICEA S-89-648-1993, 
paragraph 7.2.5.
    (5) Attenuation. (i) The dry attenuation of the completed NMR aerial 
service wire shall comply with the requirement specified in ANSI/ICEA S-
89-648-1993, paragraph 7.2.7.
    (ii) The wet attenuation of the completed NMR aerial service wire 
shall comply with the requirement specified in ANSI/ICEA S-89-648-1993, 
paragraph 7.2.8.
    (6) Insulation resistance. (i) The dry insulation resistance of the 
completed NMR aerial service wire shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.9.
    (ii) The wet insulation resistance of the completed NMR aerial 
service wire shall comply with the requirement specified in ANSI/ICEA S-
89-648-1993, paragraph 7.2.10.
    (7) Wet dielectric strength. The wet dielectric strength between 
conductors and between each conductor of the completed NMR aerial 
service wire and the surrounding water shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.11.
    (8) Fusing coordination. The completed NMR aerial service wire shall 
comply with the fusing coordination requirement specified in ANSI/ICEA 
S-89-648-1993, paragraph 7.2.13.
    (9) Crosstalk loss. (i) The output-to-output far-end crosstalk loss 
(FEXT) for any pair of completed NMR aerial service wire shall comply 
with the requirement specified in ANSI/ICEA S-89-648-1993, paragraph 
7.2.14.
    (ii) The input-to-input near-end crosstalk loss (NEXT) for any pair 
of completed NMR aerial service wire shall comply with the requirement 
specified in ANSI/ICEA S-89-648-1993, paragraph 7.2.14.
    (h) Mechanical requirements--(1) Impact test. (i) All NMR aerial 
service wires manufactured in accordance with this section shall comply 
with the unaged impact test specified in Sec. 1755.702(f)(1)(i).
    (ii) All NMR aerial service wires manufactured in accordance with 
this section shall comply with the aged impact test specified in 
Sec. 1755.702(f)(1)(ii).
    (2) Abrasion resistance test. All NMR aerial service wires 
manufactured in accordance with this section shall comply with the 
abrasion resistance test specified in Sec. 1755.702(f)(2).
    (3) Static load test. All NMR aerial service wires manufactured in 
accordance with this section shall comply with the static load test 
specified in Sec. 1755.702(f)(3).
    (4) Elongation test. All NMR aerial service wires manufactured in 
accordance with this section shall comply with the elongation test 
specified in ANSI/ICEA S-89-648-1993, paragraph 8.1.7.
    (5) Plasticizer compatibility test. All NMR aerial service wires 
manufactured in accordance with this section shall comply with the 
plasticizer compatibility test specified in Sec. 1755.702(f)(4).
    (i) Environmental requirements--(1) Cold temperature handling test. 
(i) All NMR aerial service wires manufactured in accordance with this 
section shall comply with the unaged cold temperature handling test 
specified in Sec. 1755.702(g)(1)(i).
    (ii) All NMR aerial service wires manufactured in accordance with 
this section shall comply with the aged cold temperature handling test 
specified in Sec. 1755.702(g)(1)(ii).
    (2) Light absorption test. All NMR aerial service wires manufactured 
in accordance with this section shall comply with the light absorption 
test specified in Sec. 1755.702(g)(2).
    (3) Flammability test. All NMR aerial service wires manufactured in 
accordance with this section shall comply with the flammability test 
specified in Sec. 1755.702(g)(4).
    (4) Wire listing. All NMR aerial service wires manufactured in 
accordance with this section shall comply with the

[[Page 702]]

listing requirements specified in Sec. 1755.702(g)(5).
    (j) Ripcord (optional). (1) A ripcord may be used in the NMR aerial 
service wire structure at the option of the manufacturer unless 
specified by the end user.
    (2) When a ripcord is used it shall comply with the requirements 
specified in ANSI/ICEA S-89-648-1993, paragraphs 4.2 through 4.2.3.
    (k) Identification marker. Each length of NMR aerial service wire 
shall be identified in accordance with ANSI/ICEA S-89-648-1993, 
paragraphs 9.1 through 9.1.4. When surface marking is employed, the 
color of the initial marking shall be either white or silver.
    (l) Length marking (optional). (1) Sequentially numbered length 
marking of the completed NMR aerial service wire may be used at the 
option of the manufacturer unless specified by the end user.
    (2) When sequentially numbered length markings are used, the length 
markings shall be in accordance with in accordance with 
Sec. 1755.702(i)(2).
    (m) Durability of marking. The durability of the marking of the NMR 
aerial service wire shall comply with the requirements specified in 
Sec. 1755.702(j).

[61 FR 26076, May 24, 1996, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 1755.704  Requirements applicable to both CCSR and NMR aerial
service wires.

    (a) Acceptance testing. (1) The tests described in Secs. 1755.700 
through 1755.704 are intended for acceptance of wire designs and major 
modifications of accepted designs. What constitutes a major modification 
is at the discretion of RUS. These tests are intended to show the 
inherent capability of the manufacturer to produce wire products having 
long life and stability.
    (2) For initial acceptance, the manufacturer shall:
    (i) Certify that the product fully complies with each paragraph in 
Secs. 1755.700 through 1755.704;
    (ii) Agree to periodic plant inspections by RUS;
    (iii) Certify whether the product complies with the domestic origin 
manufacturing provisions of the ``Buy American'' requirements of the 
Rural Electrification Act of 1938 (7 U.S.C. 903 note), as amended (the 
``REA Buy-American provision'');
    (iv) Submit at least three written user testimonials concerning 
field performance of the product; and
    (v) Provide any other nonpropriety data deemed necessary by the 
Chief, Outside Plant Branch (Telecommunications).
    (3) In order for RUS to consider a manufacturer's request that a 
product be requalified, the manufacturer shall certify not later than 
June 30 of the year in which requalification is required, that the 
product:
    (i) Fully complies with each paragraph in Secs. 1755.700 through 
1755.704; and
    (ii) Does or does not comply with the domestic origin manufacturing 
provisions of the REA Buy American provisions. The required 
certifications shall be dated within 90 days of the submission.
    (4) Initial and requalification acceptance requests should be 
addresses to: Chairman, Technical Standards Committee ``A'' 
(Telecommunications), Telecommunications Standards Division, Rural 
Utilities Service, AG Box 1598, Washington, DC 20250-1598.
    (b) Extent of testing--(1) Tests on 100 percent of completed wire. 
(i) Each conductor in the completed CCSR and NMR aerial service wire 
shall be tested for continuity in accordance with ANSI/ICEA S-89-648-
1993, paragraphs 7.1.1 and 7.2.1, respectively. The ANSI/ICEA S-89-648-
1993 Standard For Telecommunications Aerial Service Wire, Technical 
Requirements (approved by ANSI July 11, 1994) is incorporated by 
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
of ANSI/ICEA S-89-648-1993 are available for inspection during normal 
business hours at RUS, room 2845, U.S. Department of Agriculture, 
Washington, DC 20250-1500, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html. 
Copies are available from ICEA, P. O. Box 440, South Yarmouth, MA 02664, 
telephone number (508) 394-4424.

[[Page 703]]

    (ii) Each conductor in the completed CCSR and NMR aerial service 
wire shall be tested for shorts in accordance with ANSI/ICEA S-89-648-
1993, paragraphs 7.1.1 and 7.2.1, respectively.
    (iii) Each length of completed CCSR and NMR aerial service wire 
shall be tested for insulation imperfections in accordance with 
Sec. 1755.702(e)(7) and Sec. 1755.703(b)(5), respectively.
    (2) Capability tests. Tests on a quality assurance basis shall be 
made as frequently as is required for each manufacturer to determine and 
maintain compliance with:
    (i) Performance of the conductors;
    (ii) Performance of the conductor insulation and jacket material;
    (iii) Sequential marking and lettering;
    (iv) Mutual capacitance, capacitance unbalance, attenuation, and 
crosstalk;
    (v) Conductor resistance, resistance unbalance, and insulation 
resistance;
    (vi) Dielectric strength and fusing coordination;
    (vii) Impact, abrasion, static load, elongation, and plasticizer 
compatibility tests; and
    (viii) Cold temperature handling, light absorption, low temperature 
separation, and flammability tests.
    (c) Summary of records of electrical and physical tests. (1) Each 
manufacturer shall maintain suitable summary records for a period of at 
least 3 years of all electrical and physical tests required on completed 
wire as set forth in paragraph (b) of this section. The test data for a 
particular lot of aerial service wire shall be in a form such that it 
may be readily available to the purchaser or to RUS upon request.
    (2) Measurements and computed values shall be rounded off to the 
number of places or figures specified for the requirement according to 
ANSI/ICEA S-89-648-1993, paragraph 1.3.
    (d) Manufacturing irregularities. (1) Repairs to the insulation of 
CCSR aerial service wires are not permitted in wires supplied to end 
users under Secs. 1755.700 through 1755.704.
    (2) Repairs to the jacket of NMR aerial service wires are not 
permitted in wires supplied to end users under Secs. 1755.700 through 
1755.704.
    (e) Splicing. Splicing of completed CCSR and NMR aerial service 
wires shall comply with the requirement specified in ANSI/ICEA S-89-648-
1993, paragraph 8.1.1.
    (f) Preparation for shipment. (1) CCSR and NMR aerial service wire 
shall be shipped either in coils or on reels.
    (2) When CCSR and NMR aerial service wires are shipped on reels the 
following provisions shall apply:
    (i) The diameter of the drum shall be large enough to prevent damage 
to the wire from reeling or unreeling. The reels shall be substantial 
and so constructed as to prevent damage to the wire during shipment and 
handling;
    (ii) A waterproof corrugated board or other suitable means of 
protection accepted by RUS prior to its use may be applied to the reel. 
If the waterproof corrugated board or other suitable material is used 
for protection, it shall be suitably secured in place to prevent damage 
to the wire during storage and handling. The use of the waterproof 
corrugated board or other suitable means of protection shall be at the 
option of the manufacturer unless specified by the end user;
    (iii) The outer end of the wire shall be securely fastened to the 
reel head so as to prevent the wire from becoming loose in transit. The 
inner end of the wire shall be securely fastened in such a way as to 
make it readily available if required for electrical testing. Spikes, 
staples, or other fastening devices which penetrate the conductor 
insulation of the CCSR aerial service wire and the jacket of the NMR 
aerial service wire shall not be used. The method of fastening the wire 
ends shall be accepted by RUS prior to their use;
    (iv) Each length of wire shall be wound on a separate reel;
    (v) Each reel shall be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the wire on the reel; 
and
    (vi) Each reel shall be stenciled or labeled on either one or both 
sides with the following information:
    (A) Customer order number;
    (B) Manufacturer's name and product code;
    (C) Factory reel number and year of manufacture;
    (D) Gauge of conductors and pair size of wire;
    (E) Length of wire; and

[[Page 704]]

    (F) RUS designation letter ``K.''
    (3) When CCSR and NMR aerial service wires are shipped in coils the 
following provisions shall apply:
    (i) The diameter of the coil shall be large enough to prevent damage 
to the wire from coiling or uncoiling;
    (ii) The nominal length of the wire in a coil shall be 305 meters 
(1,000 feet). No coil shall be less than 290 meters (950 feet) long or 
more than 460 meters (1,500 feet) long; however, 25 percent of the total 
number of coils may be less than 305 meters (1,000 feet);
    (iii) The coils of wire shall be wound securely with strong tape in 
four separate evenly spaced places;
    (iv) The coils may be protected from damage by wrapping the coil 
with heavy paper, burlap, or other suitable material accepted by RUS 
prior to its use. The use of the heavy paper, burlap, or other suitable 
means of protection shall be at the option of the manufacturer unless 
specified by the end user; and
    (v) Each coil shall be tagged with the following information:
    (A) Customer order number;
    (B) Manufacturer's name and product code;
    (C) Year of manufacture;
    (D) Gauge of conductors and pair size of wire;
    (E) Length of wire; and
    (F) RUS designation letter ``K.''
    (4) In lieu of wrapping the coil with heavy paper, burlap, or other 
suitable material, the coil may be packaged in a moisture resistant 
carton.
    (5) When the coils are shipped in moisture resistant cartons, each 
carton shall be marked with the information specified in paragraphs 
(f)(3)(v)(A) through (f)(3)(v)(F) of this section.
    (6) Other methods of shipment may be used if accepted by RUS prior 
to their use.
    (7) When NMR aerial service wire is shipped, the ends of the wire 
shall be sealed in accordance with ANSI/ICEA S-89-648-1993, paragraph 
9.2.

[61 FR 26077, May 24, 1996, as amended at 69 FR 18803, Apr. 9, 2004]



Secs. 1755.705-1755.859  [Reserved]



Sec. 1755.860  RUS specification for filled buried wires.

    (a) Scope. (1) This section covers the requirements for filled 
buried wires intended for direct burial as a subscriber drop and/or 
distribution wire.
    (i) The conductors are solid copper, individually insulated with an 
extruded solid insulating compound.
    (ii) The insulated conductors are twisted into pairs (a star-quad 
configuration is permitted for the two pair wires) which are then 
stranded or oscillated to form a cylindrical core.
    (iii) A moisture resistant filling compound is applied to the 
stranded conductors completely covering the insulated conductors and 
filling the interstices between the pairs.
    (iv) The wire structure is completed by the application of an 
optional core wrapping material, an inner jacket, a flooding compound, a 
shield, a flooding compound, and an overall plastic jacket.
    (2) The number of pairs and gauge size of conductors which are used 
within the RUS program are provided in the following table:

 
 
------------------------------------------------------------------------
American Wire Gauge (AWG)         22................  24
Pairs                             2.................  2
                                  3.................  3
------------------------------------------------------------------------

    (3) All wires sold to RUS borrowers for projects involving RUS loan 
funds under this section must be accepted by RUS Technical Standards 
Committee ``A'' (Telephone). For wires manufactured to the specification 
of this section, all design changes to an accepted design must be 
submitted for acceptance. RUS will be the sole authority on what 
constitutes a design change.
    (4) Materials, manufacturing techniques, or wire designs not 
specifically addressed by this section may be allowed if accepted by 
RUS. Justification for acceptance of modified materials, manufacturing 
techniques, or wire designs must be provided to substantiate product 
utility and long term stability and endurance.
    (5) The American National Standards Institute/Electronic Industries 
Association (ANSI/EIA) 359-A-84, EIA Standard

[[Page 705]]

Colors for Color Identification and Coding, referenced in this section 
is incorporated by reference by RUS. This incorporation by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR part 51. Copies of ANSI/EIA 359-A-84 are 
available for inspection during normal business hours at RUS, room 2845, 
U.S Department of Agriculture, Washington, DC 20250-1500, or at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal--register/code--of--federal--
regulations/ibr--locations.html. Copies are available from EIA, 2001 
Pennsylvania Avenue, NW., suite 900, Washington, DC 20006, telephone 
number (202) 457-4966.
    (6) American Society for Testing and Materials specifications (ASTM) 
A 505-87, Standard Specification for Steel, Sheet and Strip, Alloy, Hot-
Rolled and Cold-Rolled, General Requirements for; ASTM B 3-90, Standard 
Specification for Soft or Annealed Copper Wire; ASTM B 193-87, Standard 
Test Method for Resistivity of Electrical Conductor Materials; ASTM B 
224-91, Standard Classification of Coppers; ASTM B 694-86, Standard 
Specification for Copper, Copper Alloy, and Copper-Clad Stainless Steel 
Sheet and Strip for Electrical Cable Shielding; ASTM D 150-87, Standard 
Test Methods for A-C Loss Characteristics and Permittivity (Dielectric 
Constant) of Solid Electrical Insulating Materials; ASTM D 257-91, 
Standard Test Methods for D-C Resistance or Conductance of Insulating 
Materials; ASTM D 1238-90b, Standard Test Method for Flow Rates of 
Thermoplastics by Extrusion Plastometer; ASTM D 1248-84(1989), Standard 
Specification for Polyethylene Plastics Molding and Extrusion Materials; 
ASTM D 1535-89, Standard Test Method for Specifying Color by the Munsell 
System; ASTM D 3349-86, Standard Test Method for Absorption Coefficient 
of Carbon Black Pigmented Ethylene Plastic; ASTM D 4101-82(1988), 
Standard Specification for Propylene Plastic Injection and Extrusion 
Materials; ASTM D 4565-90a, Standard Test Methods for Physical and 
Environmental Performance Properties of Insulations and Jackets for 
Telecommunications Wire and Cable; ASTM D 4566-90, Standard Test Methods 
for Electrical Performance Properties of Insulations and Jackets for 
Telecommunications Wire and Cable; ASTM D 4568-86, Standard Test Methods 
for Evaluating Compatibility between Cable Filling and Flooding 
Compounds and Polyolefin Cable Materials; ASTM D 4872-88, Standard Test 
Method for Dielectric Testing of Wire and Cable Filling Compounds; ASTM 
E 8-91, Standard Test Methods of Tension Testing of Metallic Materials; 
and ASTM E 29-90, Standard Practice for Using Significant Digits in Test 
Data to Determine Conformance with Specifications, referenced in this 
section are incorporated by reference by RUS. These incorporations by 
references were approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the ASTM 
standards are available for inspection during normal business hours at 
RUS, room 2845, U.S. Department Agriculture, Washington, DC 20250-1500, 
or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. Copies are available from 
ASTM, 1916 Race Street, Philadelphia, Pennsylvania 19103-1187, telephone 
number (215) 299-5585.
    (b) Conductors and conductor insulation. (1) Each conductor must be 
a solid round wire of commercially pure annealed copper. Conductors must 
meet the requirements of the American Society for Testing and Materials 
(ASTM) B 3-90 except that requirements for Dimensions and Permissible 
Variations are waived and elongation requirements are superseded by this 
section.
    (2) The minimum conductor elongation in the final wire must comply 
with the following limits when tested in accordance with ASTM E 8-91.

[[Page 706]]



------------------------------------------------------------------------
                                                     Minimum Elongation--
                   Conductor--AWG                          Percent
------------------------------------------------------------------------
22                                                             20
24                                                             16
------------------------------------------------------------------------

    (3) Joints made in conductors during the manufacturing process may 
be brazed, using a silver alloy solder and nonacid flux, or they may be 
welded using either an electrical or cold welding technique. In joints 
made in uninsulated conductors, the two conductor ends must be butted. 
Splices made in insulated conductors need not be butted but may be 
joined in a manner acceptable to RUS.
    (4)(i) The tensile strength of any section of a conductor containing 
a factory joint must not be less than 85 percent of the tensile strength 
of an adjacent section of the solid conductor of equal length without a 
joint.
    (ii) Engineering Information: The sizes of wire used and their 
nominal diameters shall be as shown in the following table:

 
------------------------------------------------------------------------
                                               Nominal Diameter
                AWG                 ------------------------------------
                                      Millimeters (mm)    (Inches (in.))
------------------------------------------------------------------------
22                                   0.643               (0.0253)
24                                   0.511               (0.0201)
------------------------------------------------------------------------

    (5) Each conductor must be insulated with either a colored, solid, 
insulating grade, high density polyethylene or crystalline propylene/
ethylene copolymer or with a solid natural primary layer and a colored, 
solid outer skin using one of the insulating materials listed in 
paragraphs (b)(5)(i) through (b)(5)(ii) of this section.
    (i) The polyethylene raw material selected to meet the requirements 
of this section must be Type III, Class A, Category 4 or 5, Grade E9, in 
accordance with ASTM D 1248-84(1989).
    (ii) The crystalline propylene/ethylene raw material selected to 
meet the requirements of this section must be Class PP 200B 40003 E11 in 
accordance with ASTM D 4101-82(1988).
    (iii) Raw materials intended as conductor insulation furnished to 
these requirements must be free from dirt, metallic particles, and other 
foreign matter.
    (iv) All insulating raw materials must be accepted by RUS prior to 
their use.
    (6) All conductors in any single length of wire must be insulated 
with the same type of material.
    (7) A permissible overall performance level of faults in conductor 
insulation must average not greater than one fault per 12,000 conductor 
meters (40,000 conductor feet) for each gauge of conductor.
    (i) All insulated conductors must be continuously tested for 
insulation faults during the twinning operation with the method of test 
acceptable to RUS. The length count and number of faults must be 
recorded. The information must be retained for a period of 6 months and 
be available for review by RUS when requested.
    (ii) The voltages for determining compliance with the requirements 
of this section are as follows:

------------------------------------------------------------------------
                                               Direct Current Voltages
                    AWG                              (Kilovolts)
------------------------------------------------------------------------
22                                          6.0
24                                          5.0
------------------------------------------------------------------------

    (8) Repairs to the conductor insulation during manufacturing are 
permissible. The method of repair must be accepted by RUS prior to its 
use. The repaired insulation must be capable of meeting the relevant 
electrical requirements of this section.
    (9) All repaired sections of insulation must be retested in the same 
manner as originally tested for compliance with paragraph (b)(7) of this 
section.
    (10) Colored insulating material removed from or tested on the 
conductor, from a finished wire, must be capable of meeting the 
following performance requirements:

------------------------------------------------------------------------
                                                           Crystalline
                                                           Propylene/
             Property                  Polyethylene         Ethylene
                                                            Copolymer
------------------------------------------------------------------------
Melt Flow Rate
  Percent increase from raw
   material, Maximum.
  <0.5 (Initial Melt Index).......  50                      --
  0.5-2.00 (Initial Melt Index)...  25                      --

[[Page 707]]

 
  [le]5.0 (Initial Melt Index)....      --              110
 
Tensile Strength--Minimum
  Megapascals (MPa)...............  16.5                21.0
  (Pounds per Square Inch (psi))..  (2,400)             (3,000)
 
Ultimate Elongation
  Minimum, Percent................  300                 300
Cold Bend
  Failures, Maximum...............  0/10                0/10
Shrinkback
  Maximum, mm (in.)...............  10 (0.375)          10 (0.375)
Oxygen Induction Time
  Minimum, Minutes................  20                  20
------------------------------------------------------------------------

    (11) Testing procedures. The procedures for testing the insulation 
samples for compliance with paragraph (b)(10) of this section must be as 
follows.
    (i) Melt flow rate. The melt flow rate must be determined as 
described in ASTM D 1238-90b. Condition E must be used for polyethylene. 
Condition L must be used for crystalline propylene/ethylene copolymer. 
The melt flow test must be conducted prior to the filling operation.
    (ii) Tensile strength and ultimate elongation. Samples of the 
insulation material, removed from the conductor, must be tested in 
accordance with ASTM D 4565-90a using the following conditions. The 
minimum length of unclamped specimen must be 50 mm (2.0 in.). The 
minimum speed of jaw separation must be 25 mm (1.0 in.) per minute per 
25 mm (1.0 in.) of unclamped specimen. The temperature of specimens and 
surrounding shall be 23 1  deg.C.
    Note: Quality assurance testing at a jaw separation speed of 500 mm/
min (20 in./min) is permissible. Failures at this rate must be retested 
at the 50 mm/min (2 in./min) rate to determine section compliance.
    (iii) Cold bend. Samples of the insulation material on the conductor 
must be tested in accordance with ASTM D 4565-90a at a temperature of -
40 1  deg.C with a mandrel diameter equal to 3 times the outside 
diameter of the insulated conductor. There must be no cracks visible to 
normal or corrected-to-normal vision.
    (iv) Shrinkback. Samples of insulation must be tested for four hours 
in accordance with ASTM D 4565-90a. The temperature for the type of 
material is listed as follows:

------------------------------------------------------------------------
                 Material                            Temperature
------------------------------------------------------------------------
Polyethylene                                115 1  deg.C
Crystalline propylene/ethylene Copolymer    130 1  deg.C
------------------------------------------------------------------------

    (v) Oxygen induction time. Samples of insulation, which have been 
conditioned in accordance with paragraph 17.3 of ASTM D 4565-90a, must 
be tested in accordance with the procedures of ASTM D 4565-90a using 
copper pans and a test temperature of 199 1  deg.C.
    (12) Other methods of testing may be used if acceptable to RUS.
    (c) Identification of pairs and twisting of pairs. (1) The 
insulation must be colored to identify:
    (i) The tip and ring conductor of each pair; and
    (ii) Each pair in the completed wire.
    (2) The colors to be used to provide identification of the tip and 
ring conductor of each pair are shown in the following table:

------------------------------------------------------------------------
                                                      Color
               Pair No.                ---------------------------------
                                              Tip              Ring
------------------------------------------------------------------------
1                                       White            Blue
2                                       White            Orange
3                                       White            Green
------------------------------------------------------------------------

    (3) Standards of color. The colors of the insulated conductors 
supplied in accordance with this section are specified in terms of the 
Munsell Color System (ASTM D 1535-89) and must comply with the ``Table 
of Wire and Cable Limit Chips'' as defined in ANSI/EIA-359-A-84. (Visual 
color standards meeting these requirements may be obtained directly from 
the Munsell Color Company, Inc., 2441 North Calvert Street, Baltimore, 
Maryland 21218).
    (4) Positive identification of the tip and ring conductors of each 
pair by marking each conductor of a pair with

[[Page 708]]

the color of its mate is permissible. The method of marking must be 
accepted by RUS prior to its use.
    (5) Other methods of providing positive identification of the tip 
and ring conductors of each pair may be employed if accepted by RUS 
prior to its use.
    (6) The insulated conductors must be twisted into pairs.
    (7) In order to provide sufficiently high crosstalk isolation, the 
pair twists must be designed to enable the wire to meet the capacitance 
unbalance and the crosstalk loss requirements of paragraphs (m)(2), 
(m)(3), and (m)(4) of this section.
    (8) The average length of pair twists in any pair in the finished 
wire, when measured on any 3 meter (m) (10 foot(ft)) length, must not 
exceed 152 mm (6 in.).
    (9) An alternative method of forming the two pair wire is the use of 
a star-quad configuration.
    (i) The assembly of the star-quad must be such as to enable the wire 
to meet the capacitance unbalance and the crosstalk loss requirements of 
paragraphs (m)(2), (m)(3), and (m)(4) of this section.
    (ii) The four individual insulated conductors must be twisted 
together to form a star-quad configuration with the tip and ring 
conductors of each pair diagonally opposite each other in the quad.
    (iii) The average length of twist for the star-quad in the finished 
wire, when measured on any 3 m (10 ft) length, must not exceed 152 mm (6 
in.).
    (iv) The following color scheme must be used to provide 
identification of the tip and ring conductor of each pair in the star-
quad:

------------------------------------------------------------------------
                                                   Color
            Pair No.             ---------------------------------------
                                          Tip                Ring
------------------------------------------------------------------------
1                                 White with blue     Blue
                                   stripe.
2                                 White with orange   Orange
                                   stripe.
------------------------------------------------------------------------

    (v) If desired, the blue and orange conductors may contain a white 
stripe. The stripes in this case must be narrow enough so that the tip 
and ring identification is obvious.
    (d) Forming of the wire core. (1) Twisted pairs or star-quad 
configuration must be assembled in such a way as to form a substantially 
cylindrical group.
    (2) The filling compound must be applied to the wire core in such a 
way as to provide a completely filled core as is commercially practical.
    (3) If desired for manufacturing reasons, white or colored binders 
of nonhygroscopic and nonwicking material may be applied over the core.
    (e) Filling compound. (1) After or during the stranding operation 
and prior to application of the optional core wrap and inner jacket, a 
homogeneous filling compound free of agglomerates must be applied to the 
wire core. The compound must be as nearly colorless as is commercially 
feasible and consistent with the end product requirements and pair 
identification.
    (2) The filling compound must be free from dirt, metallic particles, 
and other foreign matter. It must be applied in such a way as to fill 
the space within the wire core.
    (3) The filling compound must be nontoxic and present no dermal 
hazards.
    (4) The filling compound must exhibit the following dielectric 
properties at a temperature of 23 3  deg.C when measured in accordance 
with ASTM D 150-87 or ASTM D 4872-88.
    (i) The dissipation factor must not exceed 0.0015 at a frequency of 
1 megahertz (MHz).
    (ii) The dielectric constant must not exceed 2.30.
    (5) The volume resistivity must not be less than 10\12\ ohm-cm at a 
temperature of 23 3  deg.C when measured in accordance with ASTM D 257-
91 or ASTM D 4872-88.
    (6) The individual wire manufacturer must satisfy RUS that the 
filling compound selected for use is suitable for its intended 
application. The filling compound must be compatible with the wire 
components when tested in accordance with ASTM D 4568-86 at a 
temperature of 80  deg.C.
    (f) Core wrap (optional). (1) When a core wrap is used, it must 
consist of a layer of nonhygroscopic and nonwicking dielectric material. 
The wrap must be applied with an overlap.

[[Page 709]]

    (2) The core wrap must provide a sufficient heat barrier to prevent 
visible evidence of conductor insulation deformation or adhesion between 
conductors, caused by adverse heat transfer during the inner jacketing 
operation.
    (3) If required for manufacturing reasons, white or colored binders 
of nonhygroscopic and nonwicking material may be applied over the core 
wrap.
    (4) Sufficient filling compound must be applied to the core wrap 
that voids or air spaces existing between the core and inner side of the 
core wrap are minimized.
    (g) Inner jacket. (1) An inner jacket must be applied over the core 
and/or core wrap.
    (2) The jacket must be free from holes, splits, blisters, or other 
imperfections and must be as smooth and concentric as is consistent with 
the best commercial practice.
    (3) The inner jacket material and test requirements must be as 
specified for the outer jacket material per paragraphs (j)(3) through 
(j)(5)(iv) of this section.
    (4) The inner jacket thickness at any point must not be less than 
0.5 mm (0.020 in.). The thickness must be determined from measurements 
on 50 mm (2 in.) samples taken not less than 0.3 m (1 ft) from either 
end of the wire. The average must be determined from 4 readings taken 
approximately 90  deg.apart on any cross section of the samples. The 
maximum and minimum points must be determined by exploratory 
measurements. The maximum thickness minus the minimum thickness at any 
cross section must not exceed 43 percent of the average thickness at 
that cross section.
    (h) Flooding compound. (1) Sufficient flooding compound must be 
applied on all sheath interfaces so that voids and air spaces in these 
areas are minimized.
    (2) The flooding compound must be compatible with the jacket when 
tested in accordance with ASTM D 4568-86 at a temperature of 80  deg.C. 
The floodant must exhibit adhesive properties sufficient to prevent 
jacket slip when tested in accordance with the requirements of appendix 
A, paragraph (III)(5), of this section.
    (3) The individual wire manufacturer must satisfy RUS that the 
flooding compound selected for use is acceptable for the application.
    (i) Shield. (1) A shield must be applied either longitudinally or 
helically over the inner jacket.
    (i) If the shield is applied longitudinally, it must be corrugated.
    (ii) If the shield is applied helically, it must be smooth.
    (2) The overlap for longitudinally applied shields must be a minimum 
of 2 mm (0.075 in.) The overlap for helically applied shields must be a 
minimum of 23 percent of the tape width.
    (3) General requirements for application of the shielding material 
are as follows:
    (i) Successive lengths of shielding tapes may be joined during the 
manufacturing process by means of cold weld, electric weld, soldering 
with a nonacid flux, or other acceptable means;
    (ii) Where two ends of a metal shield are to be joined together, 
care shall be taken to clean the metal surfaces in order to provide for 
a good mechanical and electrical connection;
    (iii) The shields of each length of wire must be tested for 
continuity. A one meter (3 ft) section of shield containing a factory 
joint must exhibit not more than 110 percent of the resistance of a 
shield of equal length without a joint;
    (iv) The breaking strength of any section of a shield tape 
containing a factory joint must not be less than 80 percent of the 
breaking strength of an adjacent section of the shield of equal length 
without a joint;
    (v) The reduction in thickness of the shielding material due to the 
corrugating or application process must be kept to a minimum and must 
not exceed 10 percent at any spot; and
    (vi) The shielding material must be applied in such a manner as to 
enable the wire to pass the bend test as specified in paragraph (n)(3) 
of this section.
    (4) The following materials are acceptable for use as wire 
shielding:

------------------------------------------------------------------------
               Standard Wire                    Gopher Resistant Wire
------------------------------------------------------------------------
Copper Alloy 220 (Bronze).................  Copper-Clad Stainless Steel
(0.1016 0.0076 mm).......................  0.1270 0.0127 mm

[[Page 710]]

 
(0.0040 0.0003 in.)......................  (0.0050 0.0005 in.)
 
Copper Alloy 220 (Bronze).................  Copper Alloy 664
0.1270 0.0127 mm.........................  0.1397 0.0127 mm
(0.0050 0.0005 in.)......................  (0.0055 0.0005 in.)
                                            Copper-Clad Alloy Steel
                                            0.1270 0.0127
                                            (0.0050 0.0005 in.)
------------------------------------------------------------------------

    (i) The copper-clad steels and copper alloy 664 shielding tapes must 
be capable of meeting the following performance requirements prior to 
application to the wire:

------------------------------------------------------------------------
                 Property                            Requirement
------------------------------------------------------------------------
Tensile Strength
  Minimum, MPa (psi)......................  379 (55,000)
Tensile Yield
  Minimum, MPa (psi)......................  241 (35,000)
Elongation
  Minimum, percent in 50 mm (2 in.).......  15
------------------------------------------------------------------------

    (ii) Copper alloy 220. The shielding material, prior to application 
to the wire, must be in the fully annealed condition and shall conform 
to the requirements of ASTM B 694-86 for C22000 commercial bronze.
    (iii) Copper-clad stainless steel. In addition to meeting the 
requirements of paragraph (i)(4)(i) of this section, the shielding 
material, prior to application to the wire, must be in the fully 
annealed condition and must conform to the requirements of ASTM B 694-
86, with a cladding ratio of 16/68/16 and must have a minimum electrical 
conductivity of 28 percent IACS when measured in accordance with ASTM B 
193-87.
    (iv) Copper alloy 664. In addition to meeting the requirements of 
paragraph (i)(4)(i) of this section, the shielding material, prior to 
application to the wire, must be annealed temper and must conform to the 
requirements of ASTM B 694-86 and must have a minimum electrical 
conductivity of 28 percent IACS when measured in accordance with ASTM B 
193-87.
    (v) Copper-clad alloy steel. In addition to meeting the requirements 
of paragraph (i)(4)(i) of this section, the shielding material, prior to 
application to the wire, must be in the fully annealed condition and the 
copper component must conform to the requirements of ASTM B 224-91 and 
the alloy steel component must conform to the requirements of ASTM A 
505-87, with a cladding ratio of 16/68/16, and must have a minimum 
electrical conductivity of 28 percent IACS when measured in accordance 
with ASTM B 193-87.
    (j) Outer jacket. (1) The outer jacket must provide the wire with a 
tough, flexible, protective covering which can withstand exposure to 
sunlight, to atmospheric temperatures and stresses reasonably expected 
in normal installation and service.
    (2) The jacket must be free from holes, splits, blisters, or other 
imperfections and must be as smooth and concentric as is consistent with 
the best commercial practice.
    (3) The raw material used for the outer jacket must be one of the 
five types listed in paragraphs (j)(3)(i) through (j)(3)(v) of this 
section. The raw material must contain an antioxidant to provide long 
term stabilization and the materials must contain a 2.60 0.25 percent 
concentration of furnace black to provide ultraviolet shielding. Both 
the antioxidant and furnace black must be compounded into the material 
by the raw material supplier.
    (i) Low density, high molecular weight polyethylene (LDHMW) must 
conform to the requirements of ASTM D 1248-84(1989), Type I, Class C, 
Category 4 or 5, Grade J3.
    (ii) Low density, high molecular weight ethylene copolymer (LDHMW) 
must conform to the requirements of ASTM D 1248-84 (1989), Type I, Class 
C, Category 4 or 5, Grade J3.
    (iii) Linear low density, high molecular weight polyethylene 
(LLDHMW) must conform to the requirements of ASTM D 1248-84(1989), Type 
I, Class C, Category 4 or 5, Grade J3.
    (iv) High density polyethylene (HD) must conform to the requirements 
of ASTM D 1248-84(1989), Type III, Class C, Category 4 or 5, Grade J4.
    (v) Medium density polyethylene (MD) must conform to the 
requirements of ASTM D 1248-84(1989), Type II, Class C, Category 4 or 5, 
Grade J4.

[[Page 711]]

    (vi) Particle size of the carbon selected for use must not average 
greater than 20 nanometers.
    (vii) Absorption coefficient must be a minimum of 400 in accordance 
with the procedures of ASTM D 3349-86.
    (4) The outer jacketing material removed from or tested on the wire 
must be capable of meeting the following performance requirements:

----------------------------------------------------------------------------------------------------------------
                                                                      LLDHMW,
                            Property                                 Ethylene          LDHMW         HD or MD
                                                                     Copolymer     Polyethylene    Polyethylene
----------------------------------------------------------------------------------------------------------------
Melt Flow Rate Percent increase from raw material Maximum.......                              50              50
<0.41 (Initial Melt Index)......................................             100              --              --
0.41-2.00 (Initial Melt Index)..................................              50              --              --
Tensile Strength Minimum, MPa (psi).............................    12.0 (1,700)    12.0 (1,700)    16.5 (2,400)
Ultimate Elongation Percent, Minimum............................             400             400             300
Shrinkback Percent of Length, Maximum...........................               5               5               5
Impact Failures, Maximum........................................            2/10            2/10            2/10
----------------------------------------------------------------------------------------------------------------

    (5) Testing procedures. The procedures for testing the jacket 
samples for compliance with paragraph (j)(4) of this section must be as 
follows:
    (i) Melt flow rate. The melt flow rate must be as determined by ASTM 
D 1238-90b, Condition E. Jacketing material must be free from flooding 
and filling compound.
    (ii) Tensile strength and ultimate elongation. Test in accordance 
with ASTM D 4565-90a, using a jaw separation speed of 500 mm/min (20 
in./min) for low density material and 50 mm/min (2 in./min) for high and 
medium density materials.
    (iii) Shrinkback. Test in accordance with the procedures specified 
in ASTM D 4565-90a using a test temperature of 100 1  deg.C for low 
density material and a test temperature of 115 1  deg.C for high and 
medium density materials.
    (iv) Impact. The test must be performed in accordance with ASTM D 
4565-90a using an impact force of 4 newton-meter (3 pound force-foot) at 
a temperature of -20 2  deg.C. The cylinder must strike the sample at 
the shield overlap. A crack or split in the jacket constitutes failure.
    (6) Jacket thickness. The minimum jacket thickness must be 0.64 mm 
(0.025 in.) except that the minimum thickness over the sheath slitting 
cord, if present, must be 0.46 mm (0.018 in.). The minimum point must be 
determined by exploratory measurements. The average thickness at any 
cross section must be determined from four readings including the 
minimum point, taken approximately 90  deg.apart. The thickness 
measurement must exclude any jacket material that has formed into the 
corrugation. The maximum thickness at any cross section must not be 
greater than 155 percent of the minimum thickness.
    (7) Eccentricity. The eccentricity of the jacket must not exceed 43 
percent when calculated using the formula as follows:
[GRAPHIC] [TIFF OMITTED] TC14NO91.092

    (k) Sheath slitting cord (optional). (1) Sheath slitting cords may 
be used in the wire structure at the option of the manufacturer.
    (2) When a sheath slitting cord is used it must be nonhygroscopic 
and nonwicking, continuous throughout a length of wire, and of 
sufficient strength to open the sheath without breaking the cord.
    (3) Sheath slitting cords must be capable of consistently slitting 
the jacket(s) and/or shield for a continuous length of 0.6 m (2 ft) when 
tested in accordance with the procedure specified in appendix B of this 
section.
    (l) Identification marker and length marker. (1) Each length of wire 
must be permanently identified as to manufacturer and year of 
manufacture.
    (2) The number of conductor pairs and their gauge size must be 
marked on the jacket.

[[Page 712]]

    (3) The marking must be printed on the jacket at regular intervals 
of not more than 1.5 m (5 ft).
    (4) An alternative method of marking may be used if accepted by RUS 
prior to its use.
    (5) The completed wire must have sequentially numbered length 
markers in FEET OR METERS at regular intervals of not more than 1.5 m (5 
ft) along the outside of the jacket.
    (6) The method of length marking must be such that for any single 
length of wire, continuous sequential numbering must be employed.
    (7) The numbers must be dimensioned and spaced to produce good 
legibility and must be approximately 3 mm (0.125 in.) in height. An 
occasional illegible marking is permissible if there is a legible 
marking located not more than 1.5 m (5 ft) from it.
    (8) The method of marking must be by means of suitable surface 
markings producing a clear, distinguishable, contrasting marking 
acceptable to RUS. Where direct or transverse printing is employed, the 
characters should be indented to produce greater durability of marking. 
Any other method of length marking must be acceptable to RUS as 
producing a marker suitable for the field. Size, shape and spacing of 
numbers, durability, and overall legibility of the marker will be 
considered in acceptance of the method.
    (9) The accuracy of the length marking must be such that the actual 
length of any wire section is never less than the length indicated by 
the marking and never more than one percent greater than the length 
indicated by the marking.
    (10) The color of the initial marking must be white or silver. If 
the initial marking fails to meet the requirements of the preceding 
paragraphs, it will be permissible to either remove the defective 
marking and re-mark with the white or silver color or leave the 
defective marking on the wire and re-mark with yellow. No further re-
marking is permitted. Any re-marking must be on a different portion of 
the wire circumference than any existing marking when possible and have 
a numbering sequence differing from any other existing marking by at 
least 5,000.
    (11) Any reel of wire which contains more than one set of sequential 
markings must be labeled to indicate the color and sequence of marking 
to be used. The labeling must be applied to the reel and also to the 
wire.
    (m) Electrical requirements--(1) Mutual capacitance and conductance. 
(i) The average mutual capacitance (corrected for length) of all pairs 
in any reel must not exceed 52 4 nanofarad/ kilometer (nF/km) (83 7 
nanofarad/mile (nF/mile)) when tested in accordance with ASTM D 4566-90 
at a frequency of 1.0 0.1 kilohertz (kHz) and a temperature of 23 3 
deg.C.
    (ii) The mutual conductance (corrected for length and gauge) of any 
pair must not exceed 2 micromhos/kilometer (micromhos/km) (3.3 
micromhos/mile) when tested in accordance with ASTM D 4566-90 at a 
frequency of 1.0 0.1 kHz and a temperature of 23 3  deg.C.
    (2) Pair-to-pair capacitance unbalance. The capacitance unbalance 
between any pair of the completed wire must not exceed 145 picofarad/
kilometer (pF/km) (80 picofarad/1000 ft (pF/1000 ft)) when tested in 
accordance with ASTM D 4566-90 at a frequency of 1.0 0.1 kHz and a 
temperature of 23 3  deg.C.
    (3) Pair-to-ground capacitance unbalance--(i) Pair-to-ground. The 
capacitance unbalance as measured on the individual pairs of the 
completed wire must not exceed 2625 pF/km (800 pF/1000 ft) when tested 
in accordance with ASTM D 4566-90 at a frequency of 1.0 0.1 kHz and a 
temperature of 23 3  deg.C.
    (ii) When measuring pair-to-ground capacitance unbalance, all pairs, 
except the pair under test, are grounded to the shield.
    (iii) Pair-to-ground capacitance unbalance may vary directly with 
the length of the wire.
    (4) Far-end crosstalk loss. (i) The output-to-outputfar-end 
crosstalk loss (FEXT) between any pair combination of a completed wire 
when measured in accordance with ASTM D 4566-90 at a test frequency of 
150 kHz must not be less than 58 decibel/ kilometer (dB/km) (63 decibel/
1000 ft). If the loss Ko at a frequency Fo for 
length Lo is known, then Kx can be determined for 
any other frequency Fx or length Lx by:

[[Page 713]]

[GRAPHIC] [TIFF OMITTED] TR19NO93.004

    (5) Attenuation. The attenuation of any individual pair on any reel 
of wire must not exceed the following limits when measured at or 
corrected to a temperature of 20 1  deg.C and a test frequency of 150 
kHz. The test must be conducted in accordance with ASTM D 4566-90.

------------------------------------------------------------------------
                                       Individual Pair Attenuation dB/km
                                           (decibel/mile (dB/mile))
            Conductor AWG            -----------------------------------
                                           Maximum           Minimum
------------------------------------------------------------------------
22                                    6.8 (11.0)        5.0 (8.1)
24                                    8.7 (14.0)        6.6 (10.7)
------------------------------------------------------------------------

    (6) Insulation resistance. Each insulated conductor in each length 
of completed wire, when measured with all other insulated conductors and 
the shield grounded, must have an insulation resistance of not less than 
1600 megohm-kilometer (1000 megohm-mile) at 20 1  deg.C. The 
measurement must be made in accordance with the procedures of ASTM D 
4566-90.
    (7) High voltage test. (i) In each length of completed wire, the 
insulation between conductors when tested in accordance with ASTM D 
4566-90 must withstand for 3 seconds a direct current (dc) potential 
whose value is not less than:
    (A) 5.0 kilovolts for 22-gauge conductors; and
    (B) 4.0 kilovolts for 24-gauge conductors.
    (ii) In each length of completed wire, the dielectric strength 
between the shield and all conductors in the core must be tested in 
accordance with ASTM D 4566-90 and must withstand, for 3 seconds, a dc 
potential whose value is not less than 20 kilovolts.
    (8) Conductor resistance. The dc resistance of any conductor must be 
measured in the completed wire in accordance with ASTM D 4566-90 and 
must not exceed the following values when measured at or corrected to a 
temperature of 20 1  deg.C.

------------------------------------------------------------------------
                                               Maximum Resistance
                 AWG                  ----------------------------------
                                         ohms/kilometer   (ohms/1000 ft)
------------------------------------------------------------------------
22                                     57.1               (17.4)
24                                     90.2               (27.5)
------------------------------------------------------------------------

    (9) Resistance unbalance. (i) The difference in dc resistance 
between the two conductors of any pair in the completed wire must not 
exceed 5.0 percent when measured in accordance with the procedures of 
ASTM D 4566-90.
    (ii) The resistance unbalance between tip and ring conductors shall 
be random with respect to the direction of unbalance. That is, the 
resistance of the tip conductors shall not be consistently higher with 
respect to the ring conductors and vice versa.
    (n) Mechanical requirements--(1) Defective wire. Pairs in each 
length of wire will not be permitted to have either a ground, cross, 
short or open circuit condition.
    (2) Wire breaking strength. The breaking strength of the completed 
wire must not be less than 890 newtons (200 pound-force) when tested in 
accordance with ASTM D 4565-90a using a jaw separation speed of 25 mm/
min (1.0 in./min).
    (3) Wire bending test. The completed wire must be capable of meeting 
the requirements of ASTM D 4565-90a after conditioning at -20 2  deg.C 
and at 23 2  deg.C.
    (4) Water penetration test. (i) A one meter (3 ft) length of 
completed wire must be stabilized at 23 2  deg.C and tested in 
accordance with ASTM D 4565-90a using a one meter (3 ft) water head over 
the sample or placed under the equivalent continuous pressure for one 
hour.
    (ii) After the one hour period, there must be no water leakage in 
the sheath interfaces, under the core wrap or between any insulated 
conductors in the core.
    (iii) If water leakage is detected in the first sample, one 3 m (10 
ft) additional adjacent sample from the same reel of wire must be tested 
in accordance with paragraph (n)(4)(ii) of this section. If the second 
sample exhibits water leakage, the entire reel of wire is to be 
rejected. If the second sample exhibits no leakage, the entire reel of 
wire is considered acceptable.

[[Page 714]]

    (5) Compound flow test. The completed wire must be capable of 
meeting the compound flow test specified in ASTM D 4565-90a when exposed 
for a period of 24 hours at a temperature of 80 1  deg.C. At the end of 
this test period, there must be no evidence of flowing or dripping of 
compound from either the core or sheath interfaces.
    (o) Acceptance testing and extent of testing. (1) The tests 
described in appendix A of this section are intended for acceptance of 
wire designs and major modifications of accepted designs. RUS decides 
what constitutes a major modification. These tests are intended to show 
the inherent capability of the manufacturer to produce wire products 
having long life and stability.
    (2) For initial acceptance, the manufacturer must submit:
    (i) An original signature certification that the product fully 
complies with each requirement of this section;
    (ii) Qualification Test Data, per appendix A of this section;
    (iii) To periodic plant inspections;
    (iv) A certification that the product does or does not comply with 
the domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.);
    (v) Written user testimonials concerning performance of the product; 
and
    (vi) Other nonproprietary data deemed necessary by the Chief, 
Outside Plant Branch (Telephone).
    (3) For requalification acceptance, the manufacturer must submit an 
original signature certification that the product fully complies with 
each section of the specification, excluding the Qualification Section, 
and a certification that the product does or does not comply with the 
domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.) for acceptance by June 30 every three years. The required data and 
certification must have been gathered within 90 days of the submission.
    (4) Initial and requalification acceptance requests should be 
addressed to: Chairman, Technical Standards, Committee ``A'' 
(Telephone), Telecommunications Standards Division, Rural Utilities 
Service, Washington, DC 20250-1500.
    (5) Tests on 100 percent of completed wire. (i) The shield of each 
length of wire must be tested for continuity using the procedures of 
ASTM D 4566-90.
    (ii) Dielectric strength between all conductors and the shield must 
be tested to determine freedom from grounds in accordance with paragraph 
(m)(7)(ii) of this section.
    (iii) Each conductor in the completed wire must be tested for 
continuity using the procedures of ASTM D 4566-90.
    (iv) Dielectric strength between conductors must be tested to ensure 
freedom from shorts and crosses in accordance with paragraph (m)(7)(i) 
of this section.
    (v) The average mutual capacitance must be measured on all wires.
    (6) Capability tests. Tests on a quality assurance basis must be 
made as frequently as is required for each manufacturer to determine and 
maintain compliance with:
    (i) Performance requirements for conductor insulation and jacket 
material;
    (ii) Performance requirements for filling and flooding compounds;
    (iii) Sequential marking and lettering;
    (iv) Capacitance unbalance and crosstalk;
    (v) Insulation resistance;
    (vi) Conductor resistance and resistance unbalance;
    (vii) Wire bending and wire breaking strength tests;
    (viii) Mutual conductance and attenuation; and
    (ix) Water penetration and compound flow tests.
    (p) Summary of records of electrical and physical tests. (1) Each 
manufacturer must maintain suitable summary of records for a period of 
at least 3 years for all electrical and physical tests required on 
completed wire by this section as set forth in paragraphs (o)(5) and 
(o)(6) of this section. The test data for a particular reel shall be in 
a form that it may be readily available to the purchaser or to RUS upon 
request.
    (2) Measurements and computed values must be rounded off to the 
number

[[Page 715]]

of places of figures specified for the requirement according to ASTM E 
29-90.
    (q) Manufacturing irregularities. (1) Repairs to the inner jacket 
and shield are not permitted in wire supplied to the end user under this 
section.
    (2) Minor defects in the outer jackets (defects having a dimension 
of 3 mm (0.125 in.) or less in any direction) may be repaired by means 
of heat fusing in accordance with good commercial practices utilizing 
sheath grade compound.
    (r) Preparation for shipment. (1) The wire must be shipped on reels. 
The diameter of the drum must be large enough to prevent damage to the 
wire from reeling or unreeling. The reels must be substantial and so 
constructed as to prevent damage to the wire during shipment and 
handling.
    (2) The thermal wrap must comply with the requirements of appendix C 
of this section. When a thermal reel wrap is supplied, the wrap must be 
applied to the reel and must be suitably secured in place to minimize 
thermal exposure to the wire during storage and shipment. The use of the 
thermal reel wrap as a means of reel protection will be at the option of 
the manufacturer unless specified by the end user.
    (3) The outer end of the wire must be securely fastened to the reel 
head so as to prevent the wire from becoming loose in transit. The inner 
end of the wire must be securely fastened in such a way as to make it 
readily available if required for electrical testing. Spikes, staples, 
or other fastening devices which penetrate the wire jacket must not be 
used. The method of fastening the wire ends must be accepted by RUS 
prior to it being used.
    (4) Each length of wire must be wound on a separate reel unless 
otherwise specified or agreed to by the purchaser.
    (5) Each reel must be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the wire on the reel.
    (6) Each reel must be stenciled or labeled on either one or both 
sides with the name of the manufacturer, year of manufacture, actual 
shipping length, an inner and outer end sequential length marking, 
description of the wire, reel number and the RUS wire designation:

Wire Designation

BFW
Wire Construction
Pair Count
Conductor Gauge

N = Copper Alloy 220 (Bronze) Shield
Y = Gopher Resistant Shields

Example: BFWY 3-24

Buried Filled Wire, Gopher Resistant Shield, 3 pair, 24 AWG

    (7) Both ends of the filled buried wire, manufactured to the 
requirements of this section, must be equipped with end caps which are 
acceptable to RUS.

(The information and recordkeeping requirements of this section have 
been approved by the Office of Management and Budget (OMB) under the 
control number 0572-0059)

         Appendix A to Sec. 1755.860--Qualification Test Methods

    (I) The test procedures described in this appendix are for 
qualification of initial designs and major modifications of accepted 
designs. Included in (V) of this appendix are suggested formats that may 
be used in submitting test results to RUS.
    (II) Sample Selection and Preparation. (1) All testing must be 
performed on lengths removed sequentially from the same 3 pair, 22 gauge 
jacketed wire. This wire must not have been exposed to temperatures in 
excess of 38  deg.C since its initial cool down after sheathing. The 
lengths specified are minimum lengths and if desirable from a laboratory 
testing standpoint longer lengths may be used.
    (a) Length A shall be 10 0.2 meters (33 0.5 feet) long and must be 
maintained at 23 3  deg.C. One length is required.
    (b) Length B shall be 12 0.2 meters (40 0.5 feet) long. Prepare 
the test sample by removing the inner and outer jacket, shield, and core 
wrap, if present, for a sufficient distance on both ends to allow the 
insulated conductors to be flared out. Remove sufficient conductor 
insulation so that appropriate electrical test connections can be made 
at both ends. Coil the specimen with a diameter of 15 to 20 times its 
sheath diameter. Three lengths are required.
    (c) Length C shall be one meter (3 feet) long. Four lengths are 
required.
    (d) Length D shall be 300 millimeters (1 foot) long. Four lengths 
are required.
    (e) Length E shall be 600 millimeters (2 feet) long. Four lengths 
are required.
    (f) Length F shall be 3 meters (10 feet) long and must be maintained 
at 23 3  deg.C for the duration of the test. Two lengths are required.
    (2) Data Reference Temperature. Unless otherwise specified, all 
measurements shall be made at 23 3  deg.C.

[[Page 716]]

    (III) Environmental Tests--(1) Heat Aging Test--(a) Test Samples. 
Place one sample each of lengths B, C, D, and E in an oven or 
environmental chamber. The ends of sample B must exit from the chamber 
or oven for electrical tests. Securely seal the oven exit holes.
    (b) Sequence of Tests. After conditioning the samples are to be 
subjected to the following tests:
    (i) Water Immersion Test outlined in (III)(2) of this appendix;
    (ii) Water Penetration Test outlined in (III)(3) of this appendix; .
    (iii) Insulation Compression Test outlined in (III)(4) of this 
appendix; and
    (iv) Jacket Slip Strength Test outlined in (III)(5) of this 
appendix.
    (c) Initial Measurements. (i) For sample B, measure the open circuit 
capacitance and conductance for each pair at 1 and 150 kilohertz and the 
attenuation at 150 kilohertz after conditioning the sample at the data 
reference temperature for 24 hours. Calculate the average and standard 
deviation for the data of the 3 pairs on a per kilometer (per mile) 
basis.
    (ii) The attenuation at 150 kilohertz may be calculated from open 
circuit admittance (Yoc) and short circuit impedance (Zsc) or may be 
obtained by direct measurement of attenuation.
    (iii) Record on suggested formats attached in (V) of this appendix 
or on other easily readable formats.
    (d) Heat Conditioning. (i) Immediately after completing the initial 
measurements, condition the sample for 14 days at a temperature of 65 2 
 deg.C.
    (ii) At the end of this period note any exudation of filling 
compound. Measure and calculate the parameters given in (III)(1)(c) of 
this appendix. Record on suggested formats attached in (V) of this 
appendix or on other easily readable formats.
    (iii) Cut away and discard a one meter (3 foot) section from each 
end of length B.
    (e) Overall Electrical Deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning with the initial parameters in (III)(1)(c) of this 
appendix.
    (ii) The stability of the electrical parameters after completion of 
this test must be within the following prescribed limits:
    (A) Capacitance. The average mutual capacitance must be within 5 
percent of its original value;
    (B) The change in average mutual capacitance must be less than 5 
percent over the frequency range of 1 to 150 kilohertz;
    (C) Conductance. The average mutual conductance must not exceed 2 
micromhos/kilometer (3.3 micromhos/mile) at a frequency of 1 kilohertz; 
and
    (D) Attenuation. The attenuation must not have increased by more 
than 5 percent over its original value.
    (2) Water Immersion Electrical Test--(a) Test Sample Selection. The 
10 meter (33 foot) section of length B must be tested.
    (b) Test Sample Preparation. Prepare the sample by removing the 
inner and outer jacket, shield, and core wrap, if present, for a 
sufficient distance to allow one end to be accessed for test 
connections. Cut out a series of 2.5 millimeter by 13 millimeter (0.1 
inch by 0.5 inch) rectangular slots along the test sample, at 300 
millimeter (1 foot) intervals progressing successively 90 degrees around 
the circumference of the wire. Assure that the wire core is exposed at 
each slot by slitting the inner jacket and core wrap if present. Place 
the prepared sample in a dry vessel which when filled will maintain a 
one meter (3 foot) head of water over 6 meters (20 feet) of uncoiled 
wire. Extend and fasten the ends of the wire so they will be above the 
water line and the pairs are rigidly held for the duration of the test.
    (c) Capacitance and Conductance Testing. Measure the initial values 
of mutual capacitance and conductance of all pairs in each wire at a 
frequency of 1 kilohertz before filling the vessel with water. Be sure 
the wire shield is grounded to the test equipment. Fill the vessel until 
there is a one meter (3 foot) head of water on the wires.
    (i) Remeasure the mutual capacitance and conductance after the wires 
have been submerged for 24 hours and again after 30 days.
    (ii) Record each sample separately on the suggested formats attached 
in (V) of this appendix or on other easily readable formats.
    (d) Overall Electrical Deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning with the initial parameters in (III)(2)(c) of this 
appendix.
    (ii) The stability of the electrical parameters after of the test 
must be within the following prescribed limits:
    (A) Capacitance. The average mutual capacitance must be within 5 
percent of its original value; and
    (B) Conductance. The average mutual conductance must not exceed 2 
micromhos/kilometer (3.3 micromhos/mile) at a frequency of 1 kilohertz.
    (3) Water Penetration Testing. (a) A watertight closure must be 
placed over the jacket of length C. The closure must not be placed over 
the jacket so tightly that the flow of water through preexisting voids 
or air spaces is restricted. The other end of the sample must remain 
open.
    (b) Test per Option A or Option B. (i) Option A. Weigh the sample 
and closure prior to testing. Fill the closure with water and place 
under a continuous pressure of 10 0.7 kilopascals (1.5 0.1 pounds per 
square inch

[[Page 717]]

gauge) for one hour. Collect the water leakage from the end of the test 
sample during the test and weigh to the nearest 0.1 gram. Immediately 
after the one hour test, seal the ends of the wire with a thin layer of 
grease and remove all visible water from the closure, being careful not 
to remove water that penetrated into the core during the test. Reweigh 
the sample and determine the weight of water that penetrated into the 
core. The weight of water that penetrated into the core must not exceed 
1 gram.
    (ii) Option B. Fill the closure with a 0.2 gram sodium fluorscein 
per liter water solution and apply a continuous pressure of 10 0.7 
kilopascals (1.5 0.1 pounds per square inch gauge) for one hour. Catch 
and weigh any water that leaks from the end of the wire during the one 
hour period. If no water leaks from the sample, carefully remove the 
water from the closure. Then carefully remove the outer jacket, shield, 
inner jacket and core wrap, if present, one at a time, examining with an 
ultraviolet light source for water penetration. After removal of the 
inner jacket and core wrap, if present, carefully dissect the core and 
examine for water penetration within the core. Where water penetration 
is observed, measure the penetration distance. The distance of water 
penetration into the core must not exceed 127 millimeters (5.0 inches).
    (4) Insulation Compression Test. (a) Test Sample D. Remove inner and 
outer jacket, shield, and core wrap, if present, being careful not to 
damage the conductor insulation. Remove one pair from the core and 
carefully separate, wipe off core filler and straighten the insulated 
conductors. Retwist the two insulated conductors together under 
sufficient tension to form 10 evenly spaced 360 degree twists in a 
length of 100 millimeters (4 inches).
    (b) Sample Testing. Center the mid 50 millimeters (2 inches) of the 
twisted pair between two smooth rigid parallel metal plates measuring 50 
millimeters (2 inches) in length or diameter. Apply a 1.5 volt direct 
current potential between the conductors, using a light or buzzer to 
indicate electrical contact between the conductors. Apply a constant 
load of 67 newtons (15 pound-force) on the sample for one minute and 
monitor for evidence of contact between the conductors. Record results 
on suggested formats attached in (V) of this appendix or on other easily 
readable formats.
    (5) Jacket Slip Strength Test--(a) Sample Selection. Test sample E 
from (III)(1)(a) of this appendix.
    (b) Sample Preparation. Prepare test sample in accordance with the 
procedures specified in ASTM D 4565-90a.
    (c) Sample Conditioning and Testing. Remove the sample from the 
tensile tester prior to testing and condition for one hour at 50 2 
deg.C. Test immediately in accordance with the procedure specified in 
ASTM D 4565-90a. A minimum outer jacket slip strength of 67 newtons (15 
pound-force) is required. Record the load attained.
    (6) Humidity Exposure. (a) Repeat steps (III)(1)(a) through 
(III)(1)(c)(iii) of this appendix for separate set of samples B, C, D 
and E which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, expose the test 
sample to 100 temperature cyclings. Relative humidity within the chamber 
must be maintained at 90 2 percent. One cycle consists of beginning at 
a stabilized chamber and test sample temperature of 52 1  deg.C, 
increasing the temperature to 57 1  deg.C, allowing the chamber and 
test samples to stabilize at this level, then dropping the temperature 
back to 52 1  deg.C.
    (c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this 
appendix.
    (7) Temperature Cycling. (a) Repeat steps (III)(1)(a) through 
(III)(1)(c)(iii) of this appendix for separate set of samples B, C, D 
and E which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, subject the test 
sample to 10 cycles of temperature between -40  deg.C and +60  deg.C. 
The test sample must be held at each temperature extreme for a minimum 
of 1\1/2\ hours during each cycle of temperature. The air within the 
temperature cycling chamber must be circulated throughout the duration 
of the cycling.
    (c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this 
appendix.
    (IV) Control Sample--(1) Test Samples. A separate set of lengths for 
samples A, C, D, and E must have been maintained at 23 3  deg.C for at 
least 48 hours before the testing.
    (2) Repeat steps (III)(2) through (III)(5)(c) of this appendix 
except use length A instead of length B.
    (3) Surge Test. (a) One length of sample F must be used to measure 
the breakdown between conductors while the other length of F must be 
used to measure core to shield breakdown.
    (b) The samples must be capable of withstanding, without damage, a 
single surge voltage of 20 kilovolts peak between conductors, and 35 
kilovolts peak between conductors and the shield as hereinafter 
described. The surge voltage must be developed from a capacitor 
discharge through a forming resistor connected in parallel with the 
dielectric of the test sample. The surge generator constants must be 
such as to produce a surge of 1.5 x 40 microseconds wave shape.
    (c) The shape of the generated wave must be determined at a reduced 
voltage by connecting an oscilloscope across the forming resistor with 
the wire sample connected in parallel with the forming resistor. The 
capacitor bank is charged to the test voltage

[[Page 718]]

and then discharged through the forming resistor and test sample. The 
test sample will be considered to have passed the test if there is no 
distinct change in the wave shape obtained with the initial reduced 
voltage compared to that obtained after the application of the test 
voltage.
    (V) The following suggested formats may be used in submitting the 
test results to RUS:

                                    Environmental Conditioning --------------
                                              FREQUENCY 1 kilohertz
----------------------------------------------------------------------------------------------------------------
                                                  CAPACITANCE                           CONDUCTANCE
                                    ----------------------------------------------------------------------------
            PAIR NUMBER                    nF/km            (nF/mile)         micromhos/km     (micromhos/mile)
                                    ----------------------------------------------------------------------------
                                          Initial             Final             Initial              Final
----------------------------------------------------------------------------------------------------------------
1                                    --------           --------           --------           --------
2                                    --------           --------           --------           --------
3                                    --------           --------           --------           --------
Average x                            --------           --------           --------           --------
----------------------------------------------------------------------------------------------------------------
Overall Percent Difference in Average x          Capacitance:----------------------------          Conductance:
  ----------------------------


                               Environmental Conditioning ------------------------
                                             FREQUENCY 150 kilohertz
----------------------------------------------------------------------------------------------------------------
                                        CAPACITANCE                 CONDUCTANCE                 ATTENUATION
                                --------------------------------------------------------------------------------
                                    nF/km      (nF/mile)    micromhos/km    (micromhos/      dB/km     (dB/mile)
          PAIR NUMBER           -----------------------------------------      mile)     -----------------------
                                                                         ----------------
                                   Initial       Final        Initial          Final        Initial      Final
----------------------------------------------------------------------------------------------------------------
1                                ------       ------       ------         ------          ------      ------
2                                ------       ------       ------         ------          ------      ------
3                                ------       ------       ------         ------          ------      ------
 
Average x                        ------       ------       ------         ------          ------      ------
----------------------------------------------------------------------------------------------------------------
Overall Percent Difference in Average x      Capacitance:----------------------      Conductance:
  ----------------------      Attenuation:----------------------


                            Environmental Conditioning ------------------------------
                                       WATER IMMERSION TEST (1 kilohertz)
----------------------------------------------------------------------------------------------------------------
                                               CAPACITANCE                             CONDUCTANCE
                                 -------------------------------------------------------------------------------
           PAIR NUMBER               nF/km             (nF/mile)          micromhos/km      (micromhos/mile)
                                 -------------------------------------------------------------------------------
                                    Initial      24 hours      Final        Initial       24 hours      Final
----------------------------------------------------------------------------------------------------------------
1                                 ------       ------       ------       ------         ------       ------
2                                 ------       ------       ------       ------         ------       ------
3                                 ------       ------       ------       ------         ------       ------
Average x                         ------       ------       ------       ------         ------       ------
----------------------------------------------------------------------------------------------------------------
Overall Percent Difference in Average x          Capacitance:----------------------------          Conductance:
  ----------------------------


                                             Water Penetration Test
----------------------------------------------------------------------------------------------------------------
                                                  Option A                                Option B
                                  ------------------------------------------------------------------------------
                                                                                                 Penetration mm
                                    End Leakage grams   Weight Gain grams   End Leakage grams        (in.)
----------------------------------------------------------------------------------------------------------------
Control..........................  ----------          ----------          ----------          ----------
Heat Age.........................  ----------          ----------          ----------          ----------
Humidity Exposure................  ----------          ----------          ----------          ----------

[[Page 719]]

 
Temperature Cycling..............  ----------          ----------          ----------          ----------
----------------------------------------------------------------------------------------------------------------


                         Insulation Compression
------------------------------------------------------------------------
                                                      Failures
------------------------------------------------------------------------
Control...................................  ----------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                    Jacket Slip Strength @ 50  deg.C
------------------------------------------------------------------------
                                               Load in newtons (pound-
                                                       force)
------------------------------------------------------------------------
Control...................................  ----------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                        Filler Exudation (grams)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycle.........................  ----------------
------------------------------------------------------------------------


                         Surge Test (kilovolts)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Conductor to Conductor....................  ----------------
Shield to Conductors......................  ----------------
------------------------------------------------------------------------

     Appendix B to Sec. 1755.860--Sheath Slitting Cord Qualification

    (I) The test procedures described in this appendix are for 
qualification of initial and subsequent changes in sheath slitting 
cords.
    (II) Sample Selection. All testing must be performed on two 1.2 
meters (4 feet) lengths of wire removed sequentially from the same 3 
pair, 22 gauge jacketed wire. This wire must not have been exposed to 
temperatures in excess of 38  deg.C since its initial cool down after 
sheathing.
    (III) Test Procedure. (1) Using a suitable tool, expose enough of 
sheath slitting cord to permit grasping with needle nose pliers.
    (2) The prepared test specimens must be maintained at a temperature 
of 23 1  deg.C for at least 4 hours immediately prior to and during the 
test.
    (3) Wrap the sheath slitting cord around the plier jaws to ensure a 
good grip.
    (4) Grasp and hold the wire in a convenient position while gently 
and firmly pulling the sheath slitting cord longitudinally in the 
direction away from the wire end. The angle of pull may vary to any 
convenient and functional degree. A small starting notch is permissible.
    (5) The sheath slitting cord is considered acceptable if the cord 
can slit the jacket and/or shield for a continuous length of 0.6 meter 
(2 feet) without breaking the cord.

      Appendix C to Sec. 1755.860--Thermal Reel Wrap Qualification

    (I) The test procedures described in this appendix are for 
qualification of initial and subsequent changes in thermal reel wraps.
    (II) Sample Selection. All testing must be performed on two 450 
millimeter (18 inch) lengths of wire removed sequentially from the same 
3 pair, 22 gauge jacketed wire. This wire must not have been exposed to 
temperatures in excess of 38  deg.C since its initial cool down after 
sheathing.
    (III) Test Procedure. (1) Place the two samples on an insulating 
material such as wood, etc.
    (2) Tape thermocouples to the jackets of each sample to measure the 
jacket temperature.
    (3) Cover one sample with the thermal reel wrap.
    (4) Expose the samples to a radiant heat source capable of heating 
the uncovered jacket sample to a minimum of 71  deg.C. A 600 watt 
photoflood lamp or an equivalent lamp having the light spectrum 
approximately that of the sun shall be used.
    (5) The height of the lamp above the jacket shall be 380 millimeters 
(15 inches) or a height that produces the 71  deg.C jacket temperature 
on the unwrapped sample.
    (6) After the samples have stabilized at the temperature, the jacket 
temperatures of the samples must be recorded after one hour of exposure 
to the heat source.
    (7) Compute the temperature difference between the jackets.
    (8) For the thermal reel wrap to be acceptable to RUS, the 
temperature differences between the jacket with the thermal reel wrap

[[Page 720]]

and the jacket without the reel wrap must be greater than or equal to 17 
 deg.C.

[58 FR 61004, Nov. 19, 1993, as amended at 60 FR 1711, Jan. 5, 1995; 69 
FR 18803, Apr. 9, 2004]



Secs. 1755.861-1755.869  [Reserved]



Sec. 1755.870  RUS specification for terminating cables.

    (a) Scope. (1) This section establishes the requirements for 
terminating cables used to connect incoming outside plant cables to the 
vertical side of the main distributing frame in a telephone central 
office.
    (i) The conductors are solid tinned copper, individually insulated 
with extruded solid dual insulating compounds.
    (ii) The insulated conductors are twisted into pairs which are then 
stranded or oscillated to form a cylindrical core.
    (iii) The cable structure is completed by the application of a core 
wrap, a shield, and a polyvinyl chloride jacket.
    (2) The number of pairs and gauge size of conductors which are used 
within the RUS program are provided in the following table:

------------------------------------------------------------------------
                 American Wire Gauge (AWG)                    22     24
------------------------------------------------------------------------
Number of Pairs...........................................     12     12
                                                               50     50
                                                              100    100
                                                              200    200
                                                              300    300
                                                              400    400
                                                              600    600
                                                              800   800
------------------------------------------------------------------------
Note: Cables larger in pair sizes from those shown in this table shall
  meet all the requirements of this section.

    (3) All cables sold to RUS borrowers for projects involving RUS loan 
funds under this section must be accepted by RUS Technical Standards 
Committee ``A'' (Telephone). For cables manufactured to the 
specification of this section, all design changes to an accepted design 
must be submitted for acceptance. RUS will be the sole authority on what 
constitutes a design change.
    (4) Materials, manufacturing techniques, or cable designs not 
specifically addressed by this section may be allowed if accepted by 
RUS. Justification for acceptance of modified materials, manufacturing 
techniques, or cable designs shall be provided to substantiate product 
utility and long term stability and endurance.
    (5) The American National Standard Institute/Electronic Industries 
Association (ANSI/EIA) 359-A-84, EIA Standard Colors for Color 
Identification and Coding, referenced in this section is incorporated by 
reference by RUS. This incorporation by reference was approved by the 
Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 
1 CFR part 51. Copies of ANSI/EIA 359-A-84 are available for inspection 
during normal business hours at RUS, room 2845, U.S. Department of 
Agriculture, Washington, DC 20250-1500, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html. Copies are available from Global Engineering Documents, 
15 Inverness Way East, Englewood, CO 80112, telephone number (303) 792-
2181.
    (6) American Society for Testing and Materials Specifications (ASTM) 
B 33-91, Standard Specification for Tinned Soft or Annealed Copper Wire 
for Electrical Purposes; ASTM B 736-92a Standard Specification for 
Aluminum, Aluminum Alloy and Aluminum-Clad Steel Cable Shielding Stock; 
ASTM D 1248-84 (1989), Standard Specification for Polyethylene Plastics 
Molding and Extrusion Materials; ASTM D 1535-89, Standard Test Method 
for Specifying Color by the Munsell System; ASTM D 2287-81 (Reapproved 
1988), Standard Specification for Nonrigid Vinyl Chloride Polymer and 
Copolymer Molding and Extrusion Compounds; ASTM D 2436-85, Standard 
Specification for Forced-Convection Laboratory Ovens for Electrical 
Insulation; ASTM D 2633-82 (Reapproved 1989), Standard Methods of 
Testing Thermoplastic Insulations and Jackets for Wire and Cable; ASTM D 
4101-82 (1988), Standard Specification for Propylene Plastic Injection 
and Extrusion Materials; ASTM D 4565-90a, Standard Test Methods for 
Physical and Environmental Performance Properties of Insulations and 
Jackets for Telecommunications Wire and Cable; ASTM D 4566-90, Standard 
Test Methods for Electrical Performance Properties of Insulations and 
Jackets for Telecommunications Wire and Cable;

[[Page 721]]

and ASTM E 29-90, Standard Practice for Using Significant Digits in Test 
Data to Determine Conformance with Specifications, referenced in this 
section are incorporated by reference by RUS. These incorporations by 
references were approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the ASTM 
standards are available for inspection during normal business hours at 
RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-
1500, or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. Copies are available from 
ASTM, 1916 Race Street, Philadelphia, Pennsylvania 19103-1187, telephone 
number (215) 299-5585.
    (7) American National Standards Institute/National Fire Protection 
Association (ANSI/NFPA), NFPA 70-1993 National Electrical Code 
referenced in this section is incorporated by reference by RUS. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of 
the ANSI/NFPA standard is available for inspection during normal 
business hours at RUS, room 2845, U.S. Department of Agriculture, 
Washington, DC 20250-1500, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html. 
Copies are available from NFPA, Batterymarch Park, Quincy, Massachusetts 
02269, telephone number 1 (800) 344-3555.
    (8) Underwriters Laboratories Inc. (UL) 1666, Standard Test for 
Flame Propagation Height of Electrical and Optical-Fiber Cables 
Installed Vertically in Shafts, dated January 22, 1991, referenced in 
this section is incorporated by reference by RUS. This incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. A copy of the UL 
standard is available for inspection during normal business hours at 
RUS, room 2845, U.S. Department of Agriculture, Washington, DC 20250-
1500, or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. Copies are available from UL 
Inc., 333 Pfingsten Road, Northbrook, Illinois 60062-2096, telephone 
number (708) 272-8800.
    (b) Conductors and conductor insulation. (1) Each conductor shall be 
a solid round wire of commercially pure annealed tin coated copper. 
Conductors shall meet the requirements of the American Society for 
Testing and Materials (ASTM) B 33-91 except that requirements for 
Dimensions and Permissible Variations are waived.
    (2) Joints made in conductors during the manufacturing process may 
be brazed, using a silver alloy solder and nonacid flux, or they may be 
welded using either an electrical or cold welding technique. In joints 
made in uninsulated conductors, the two conductor ends shall be butted. 
Splices made in insulated conductors need not be butted but may be 
joined in a manner acceptable to RUS.
    (3) The tensile strength of any section of a conductor, containing a 
factory joint, shall not be less than 85 percent of the tensile strength 
of an adjacent section of the solid conductor of equal length without a 
joint.
    (4) Engineering Information: The sizes of wire used and their 
nominal diameters shall be as shown in the following table:

------------------------------------------------------------------------
                                                    Nominal diameter
                      AWG                      -------------------------
                                                 Millimeters   (Inches)
------------------------------------------------------------------------
22............................................         0.643    (0.0253)
24............................................         0.511    (0.0201)
------------------------------------------------------------------------

    (5) Each conductor shall be insulated with a primary layer of 
natural or white solid, insulating grade, high density polyethylene or 
crystalline propylene/ethylene copolymer and an outer skin of colored, 
solid, insulating grade, polyvinyl chloride (PVC) using one of the 
insulating materials listed

[[Page 722]]

in paragraphs (b)(5)(i) through (iii) of this section.
    (i) The polyethylene raw material selected to meet the requirements 
of this section shall be Type III, Class A, Category 4 or 5, Grade E9, 
in accordance with ASTM D 1248-84 (1989).
    (ii) The crystalline propylene/ethylene raw material selected to 
meet the requirements of this section shall be Class PP 200B 40003 E11 
in accordance with ASTM D 4101-82 (1988).
    (iii) The PVC raw material selected to meet the requirements of this 
section shall be either Type PVC-64751E3XO, Type PVC-76751E3XO, or Type 
PVC-77751E3XO in accordance with ASTM D 2287-81 (1988).
    (iv) Raw materials intended as conductor insulation furnished to 
these requirements shall be free from dirt, metallic particles, and 
other foreign matter.
    (v) All insulating raw materials shall be accepted by RUS prior to 
their use.
    (6) All conductors in any single length of cable shall be insulated 
with the same type of material.
    (7) A permissible overall performance level of faults in conductor 
insulation when using the test procedures in paragraph (b)(8) of this 
section shall average not greater than one fault per 12,000 conductor 
meters (40,000 conductor feet) for each gauge of conductor.
    (8) The test used to determine compliance with paragraph (b)(7) of 
this section shall be conducted as follows:
    (i) Samples tested shall be taken from finished cables selected at 
random from standard production cable. The samples tested shall contain 
a minimum of 300 conductor meters (1,000 conductor feet) for cables 
sizes less than 50 pairs and 1,500 conductor meters (5,000 conductor 
feet) for cables sizes greater than or equal to 50 pairs. No further 
sample need be taken from the same cable production run within 6,000 
cable meters (20,000 cable feet) of the original test sample from that 
run.
    (ii) The cable sample shall have its jacket, shield, and core wrap 
removed and its core shall be immersed in tap water for a minimum period 
of 6 hours. In lieu of removing the jacket, shield, and core wrap from 
the core, the entire cable may be tested. In this case, the core shall 
be completely filled with tap water, under pressure; then the cable 
assembly shall be immersed for a minimum period of 6 hours. With the 
cable core still fully immersed, except for end connections, the 
insulation resistance (IR) of all conductors to water shall be measured 
using a direct current (dc) voltage of 100 volts to 550 volts.
    (iii) An IR value of less than 500 megohms for any individual 
insulated conductor tested at or corrected to a temperature of 23  deg.C 
is considered a failure. If the cable sample is more than 7.5 meters (25 
feet) long, all failing conductors shall be retested and reported in 7.5 
meter (25 foot) segments.
    (iv) The pair count, gauge, footage, and number of insulation faults 
shall be recorded. This information shall be retained on a 6 month 
running basis for review by RUS when requested.
    (v) A fault rate, in a continuous length in any one reel, in excess 
of one fault per 3,000 conductor meters (10,000 conductor feet) due to 
manufacturing defects is cause for rejection. A minimum of 6,000 
conductor meters (20,000 conductor feet) is required to develop a 
noncompliance in a reel.
    (9) Repairs to the conductor insulation during manufacturing are 
permissible. The method of repair shall be accepted by RUS prior to its 
use. The repaired insulation shall be capable of meeting the relevant 
electrical requirements of this section.
    (10) All repaired sections of insulation shall be retested in the 
same manner as originally tested for compliance with paragraph (b)(7) of 
this section.
    (11) The colored composite insulating material removed from or 
tested on the conductor, from a finished cable, shall be capable of 
meeting the following performance requirements:

------------------------------------------------------------------------
                                                              Composite
                          Property                            insulation
------------------------------------------------------------------------
Tensile Strength, Minimum Megapascals (MPa) (Pounds per      16.5 (2400)
 square inch (psi))........................................
Ultimate Elongation Percent, Minimum.......................          125
Cold Bend Failures, Maximum................................         0/10
Shrinkback, Maximum Millimeter (mm) (Inches (in.)).........    9.5 (3/8)
Adhesion, Maximum Newtons (N) (Pound-force (lbf))..........     13.3 (3)
Compression Minimum, N (lbf)...............................   1780 (400)
------------------------------------------------------------------------


[[Page 723]]

    (12) Testing procedures. The procedures for testing the composite 
insulation samples for compliance with paragraph (b)(11) of this section 
shall be as follows:
    (i) Tensile strength and ultimate elongation. Samples of the 
insulation material, removed from the conductor, shall be tested in 
accordance with ASTM D 2633-82(1989), except that the speed of jaw 
separation shall be 50 millimeters/minute (50 mm/min) (2 inches/minute 
(2 in./min)).

    Note: Quality assurance testing at a jaw separation speed of 500 mm/
min (20 in./min) is permissible. Failures at this rate shall be retested 
at the 50 mm/min (2 in./min) rate to determine specification compliance.

    (ii) Cold bend. Samples of the insulation material on the conductor 
shall be tested in accordance with ASTM D 4565-90a at a temperature of -
401  deg.C with a mandrel diameter of 6 mm (0.25 in.). There shall be 
no cracks visible to normal or corrected-to-normal vision.
    (iii) Shrinkback. Samples of insulation shall be tested for four 
hours at a temperature of 1151  deg.C in accordance with ASTM D 4565-
90a.
    (iv) Adhesion. Samples of insulation material on the conductor shall 
be tested in accordance with ASTM D 4565-90a with a crosshead speed of 
50 mm/min (2 in./min).
    (v) Compression. Samples of the insulation material on the conductor 
shall be tested in accordance with ASTM D 4565-90a with a crosshead 
speed of 5 mm/min (0.2 in./min).
    (13) Other methods of testing may be used if acceptable to RUS.
    (c) Identification of pairs and twisting of pairs. (1) The PVC skin 
shall be colored to identify:
    (i) The tip and ring conductor of each pair; and
    (ii) Each pair in the completed cable.
    (2) The colors used to provide identification of the tip and ring 
conductor of each pair shall be as shown in the following table:

------------------------------------------------------------------------
                                                     Color
              Pair No.               -----------------------------------
                                            Tip               Ring
------------------------------------------------------------------------
 1..................................  White            Blue
 2..................................  White            Orange
 3..................................  White            Green
 4..................................  White            Brown
 5..................................  White            Slate
 6..................................  Red              Blue
 7..................................  Red              Orange
 8..................................  Red              Green
 9..................................  Red              Brown
10..................................  Red              Slate
11..................................  Black            Blue
12..................................  Black            Orange
13..................................  Black            Green
14..................................  Black            Brown
15..................................  Black            Slate
16..................................  Yellow           Blue
17..................................  Yellow           Orange
18..................................  Yellow           Green
19..................................  Yellow           Brown
20..................................  Yellow           Slate
21..................................  Violet           Blue
22..................................  Violet           Orange
23..................................  Violet           Green
24..................................  Violet           Brown
25..................................  Violet           Slate
------------------------------------------------------------------------

    (3) Standards of color. The colors of the insulated conductors 
supplied in accordance with this section are specified in terms of the 
Munsell Color System (ASTM D 1535-89) and shall comply with the ``Table 
of Wire and Cable Limit Chips'' as defined in ANSI/EIA-359-A-84. (Visual 
color standards meeting these requirements may be obtained directly from 
the Munsell Color Company, Inc., 2441 North Calvert Street, Baltimore, 
Maryland 21218).
    (4) Positive identification of the tip and ring conductors of each 
pair by marking each conductor of a pair with the color of its mate is 
permissible. The method of marking shall be accepted by RUS prior to its 
use.
    (5) Other methods of providing positive identification of the tip 
and ring conductors of each pair may be employed if accepted by RUS 
prior to its use.
    (6) The insulated conductors shall be twisted into pairs.
    (7) In order to provide sufficiently high crosstalk isolation, the 
pair twists shall be designed to enable the cable to meet the 
capacitance unbalance and the crosstalk loss requirements of paragraphs 
(h)(2), (h)(3), and (h)(4) of this section.
    (8) The average length of pair twists in any pair in the finished 
cable, when measured on any 3 meter (m) (10 foot (ft)) length, shall not 
exceed 152 mm (6 in.).
    (d) Forming of the cable core. (1) Twisted pairs shall be assembled 
in such a way as to form a substantially cylindrical group.

[[Page 724]]

    (2) When desired for lay-up reasons, the basic group may be divided 
into two or more subgroups called units.
    (3) Each group, or unit in a particular group, shall be enclosed in 
bindings of the colors indicated for its particular pair count. The pair 
count, indicated by the color of insulation, shall be consecutive as 
indicated in paragraph (d)(5) of this section through units in a group.
    (4) Threads or tapes used as binders shall be nonhygroscopic and 
nonwicking. The threads shall consists of a suitable number of ends of 
each color arranged as color bands. When tapes are used as binders, they 
shall be colored. Binders shall be applied with a lay of not more than 
100 mm (4 in.). The colored binders shall be readily recognizable as the 
basic intended color and shall be distinguishable from all other colors.
    (5) The colors of the bindings and their significance with respect 
to pair count shall be as shown in the following table:

------------------------------------------------------------------------
       Group No.            Color of bindings        Group pair count
------------------------------------------------------------------------
1.....................  White-Blue..............  1-25
2.....................  White-Orange............  26-50
3.....................  White-Green.............  51-75
4.....................  White-Brown.............  76-100
5.....................  White-Slate.............  101-125
6.....................  Red-Blue................  126-150
7.....................  Red-Orange..............  151-175
8.....................  Red-Green...............  176-200
9.....................  Red-Brown...............  201-225
10....................  Red-Slate...............  226-250
11....................  Black-Blue..............  251-275
12....................  Black-Orange............  276-300
13....................  Black-Green.............  301-325
14....................  Black-Brown.............  326-350
15....................  Black-Slate.............  351-375
16....................  Yellow-Blue.............  376-400
17....................  Yellow-Orange...........  401-425
18....................  Yellow-Green............  426-450
19....................  Yellow-Brown............  451-475
20....................  Yellow-Slate............  476-500
21....................  Violet-Blue.............  501-525
22....................  Violet-Orange...........  526-550
23....................  Violet-Green............  551-575
24....................  Violet-Brown............  576-600
------------------------------------------------------------------------

    (6) The use of the white unit binder in cables of 100 pair or less 
is optional.
    (7) When desired for manufacturing reasons, two or more 25 pair 
groups may be bound together with nonhygroscopic and nonwicking threads 
or tapes into super-units. The group binders and the super-unit binders 
shall be colored such that the combination of the two binders shall 
positively identify each 25 pair group from every other 25 pair group in 
the cable.
    (8) Super-unit binders shall be of the colors shown in the following 
table:

                        Super-Unit Binder Colors
------------------------------------------------------------------------
                 Pair No.                           Binder color
------------------------------------------------------------------------
1-600.....................................  White
601-1200..................................  Red
------------------------------------------------------------------------

    (e) Core wrap.(1) The core shall be completely covered with a layer 
of nonhygroscopic and nonwicking dielectric material. The core wrap 
shall be applied with an overlap.
    (2) The core wrap shall provide a sufficient heat barrier to prevent 
visible evidence of conductor insulation deformation or adhesion between 
conductors, caused by adverse heat transfer during the jacketing 
operation.
    (3) Engineering Information: If required for manufacturing reasons, 
white or uncolored binders of nonhygroscopic and nonwicking material may 
be applied over the core and/or core wrap.
    (f) Shield. (1) An aluminum shield, plastic coated on one side, 
shall be applied longitudinally over the core wrap.
    (2) The shield may be applied over the core wrap with or without 
corrugations (smooth) and shall be bonded to the outer jacket.
    (3) The shield overlap shall be a minimum of 3 mm (0.125 in.) for 
cables with core diameters of 15 mm (0.625 in.) or less and a minimum of 
6 mm (0.25 in.) for cables with core diameters greater than 15 mm (0.625 
in.). The core diameter is defined as the diameter under the core wrap 
and binding.
    (4) General requirements for application of the shielding material 
shall be as follows:
    (i) Successive lengths of shielding tapes may be joined during the 
manufacturing process by means of cold weld, electric weld, soldering 
with a nonacid flux, or other acceptable means;
    (ii) The metal shield with the plastic coating shall have the 
coating removed prior to joining the metal ends together. After joining, 
the plastic coating shall be restored without voids using good 
manufacturing techniques;
    (iii) The shields of each length of cable shall be tested for 
continuity. A

[[Page 725]]

one meter (3 ft) section of shield containing a factory joint shall 
exhibit not more than 110 percent of the resistance of a shield of equal 
length without a joint;
    (iv) The breaking strength of any section of a shield tape 
containing a factory joint shall not be less than 80 percent of the 
breaking strength of an adjacent section of the shield of equal length 
without a joint;
    (v) The reduction in thickness of the shielding material due to the 
corrugating or application process shall be kept to a minimum and shall 
not exceed 10 percent at any spot; and
    (vi) The shielding material shall be applied in such a manner as to 
enable the cable to pass the bend test as specified in paragraph (i)(1) 
of this section.
    (5) The dimensions of the uncoated aluminum tape shall be 
0.20300.0254 mm (0.00800.0010 in.).
    (6) The aluminum tape shall conform to either Alloy AA-1100-0, AA-
1145-0, or AA-1235-0 as covered in the latest edition of Aluminum 
Standards and Data, issued by the Aluminum Association, except that 
requirements for tensile strength are waived.
    (7) The single-sided plastic coated aluminum shield shall conform to 
the requirements of ASTM B 736-92a, Type I Coating, Class 1 or 2, or 
Type II Coating, Class 1. The minimum thickness of the Type I Coating 
shall be 0.038 mm (0.0015 in.). The minimum thickness of the Type II 
Coating shall be 0.008 mm (0.0003 in.).
    (8) The plastic coated aluminum shield shall be tested for 
resistance to water migration by immersing a one meter (3 ft) length of 
tape under a one meter (3 ft) head of water containing a soluble dye 
plus 0.25 percent (%) wetting agent.
    (i) After a minimum of 5 minutes, no dye shall appear between the 
interface of the shield tape and the plastic coating.
    (ii) The actual test method shall be acceptable to RUS.
    (9) The bond between the plastic coated shield and the jacket shall 
conform to the following requirements:
    (i) Prepare test strips approximately 200 mm (8 in.) in length. Slit 
the jacket and shield longitudinally to produce 4 strips evenly spaced 
and centered in 4 quadrants on the jacket circumference. One of the 
strips shall be centered over the overlapped edge of the shielding tape. 
The strips shall be 13 mm (0.5 in.) wide. For cable diameters less than 
19 mm (0.75 in.) make two strips evenly spaced.
    (ii) Separate the shield and jacket for a sufficient distance to 
allow the shield and jacket to be fitted in the upper and lower jaws of 
a tensile machine. Record the maximum force required to separate the 
shield and jacket to the nearest newton (pound-force). Repeat this 
action for each test strip.
    (iii) The force required to separate the jacket from the shield 
shall not be less than 9 N (2 lbf) for any individual strip when tested 
in accordance with paragraph (f)(9)(ii) of this section. The average 
force for all strips of any cable shall not be less than 18 N (4 lbf).
    (g) Cable jacket and extraneous material. (1) The jacket shall 
provide the cable with a tough, flexible, protective covering which can 
withstand stresses reasonably expected in normal installation and 
service.
    (2) The jacket shall be free from holes, splits, blisters, or other 
imperfections and shall be as smooth and concentric as is consistent 
with the best commercial practice.
    (3) The raw material used for the cable jacket shall be one of the 
following four types:
    (i) Type PVC-55554EOXO in accordance with ASTM D 2287-81(1988);
    (ii) Type PVC-65554EOXO in accordance with ASTM D 2287-81(1988);
    (iii) Type PVC-55556EOXO in accordance with ASTM D 2287-81(1988); or
    (iv) Type PVC-66554EOXO in accordance with ASTM D 2287-81(1988).
    (4) The jacketing material removed from or tested on the cable shall 
be capable of meeting the following performance requirements:

------------------------------------------------------------------------
                                                               Jacket
                         Property                            performance
------------------------------------------------------------------------
Tensile Strength-Unaged Minimum, MPa (psi)................   13.8 (2000)
Ultimate Elongation-Unaged Minimum, Percent (%)...........           200
Tensile Strength-Aged Minimum, % of original value........            80
Ultimate Elongation-Aged Minimum, % of original value.....            50
Impact Failures, Maximum..................................          2/10
------------------------------------------------------------------------


[[Page 726]]

    (5) Testing procedures. The procedures for testing the jacket 
samples for compliance with paragraph (g)(4) of this section shall be as 
follows:
    (i) Tensile strength and ultimate elongation-unaged. The test shall 
be performed in accordance with ASTM D 2633-82(1989), using a jaw 
separation speed of 50 mm/min (2 in./min).

    Note: Quality assurance testing at a jaw separation speed of 500 mm/
min (20 in./min) is permissible. Failures at this rate shall be retested 
at the 50 mm/min (2 in./min) rate to determine specification compliance.

    (ii) Tensile strength and ultimate elongation-aged. The test shall 
be performed in accordance with paragraph (g)(5)(i) of this section 
after being aged for 7 days at a temperature of 1001  deg.C in a 
circulating air oven conforming to ASTM D 2436-85.
    (iii) Impact. The test shall be performed in accordance with ASTM D 
4565-90a using an impact force of 4 newton-meter (3 pound force-foot) at 
a temperature of -101  deg.C. The cylinder shall strike the sample at 
the shield overlap. A crack or split in the jacket constitutes failure.
    (6) Jacket thickness. The nominal jacket thickness shall be as 
specified in the following table. The test method used shall be either 
the End Sample Method (paragraph (g)(6)(i) of this section) or the 
Continuous Uniformity Thickness Gauge Method (paragraph (g)(6)(ii) of 
this section):

------------------------------------------------------------------------
                                            Nominal jacket thickness mm
               No. of pairs                            (in.)
------------------------------------------------------------------------
25 or less...............................  1.4 (0.055)
50.......................................  1.5 (0.060)
100......................................  1.7 (0.065)
200......................................  1.9 (0.075)
300......................................  2.2 (0.085)
400......................................  2.4 (0.095)
600......................................  2.9 (0.115)
800 and over.............................  3.3 (0.130)
------------------------------------------------------------------------

    (i) End sample method. The jacket shall be capable of meeting the 
following requirements:

Minimum Average Thickness--90% of nominal thickness
Minimum Thickness--70% of nominal thickness

    (ii) Continuous uniformity thickness gauge method. (A) The jacket 
shall be capable of meeting the following requirements:

Minimum Average Thickness--90% of nominal thickness
Minimum (Min.) Thickness--70 % of nominal thickness
Maximum (Max.) Eccentricity--55%
Eccentricity=Max. Thickness--Min. Thickness (Average Thickness)x100

    (B) Maximum and minimum thickness values. The maximum and minimum 
thickness values shall be based on the average of each axial section.
    (7) The color of the jacket shall be either black or dark grey in 
conformance with the Munsell Color System specified in ASTM D 1535-89.
    (8) There shall be no water or other contaminants in the finished 
cable which would have a detrimental effect on its performance or its 
useful life.
    (h) Electrical requirements--(1) Mutual capacitance and conductance. 
(i) The average mutual capacitance (corrected for length) of all pairs 
in any reel shall not exceed the following when tested in accordance 
with ASTM D 4566-90 at a frequency of 1.00.1 kilohertz (kHz) and a 
temperature of 233  deg.C:

------------------------------------------------------------------------
                                                   Mutual capacitance
                                               -------------------------
             Number of cable pairs               Nanofarad/  (Nanofarad/
                                                 kilometer      mile)
------------------------------------------------------------------------
12............................................         524       (837)
Over 12.......................................         522       (834)
------------------------------------------------------------------------

    (ii) The root mean square (rms) deviation of the mutual capacitance 
of all pairs from the average mutual capacitance of that reel shall not 
exceed 3.0 % when calculated in accordance with ASTM D 4566-90.
    (iii) The mutual conductance (corrected for length and gauge) of any 
pair shall not exceed 3.7 micromhos/kilometer (micromhos/km) (6.0 
micromhos/mile) when tested in accordance with ASTM D 4566-90 at a 
frequency of 1.00.1 kHz and a temperature of 233  deg.C.
    (2) Pair-to-pair capacitance unbalance. The capacitance unbalance as 
measured on the completed cable shall not exceed 45.3 picofarad/
kilometer (pF/km) (25 picofarad/1000 ft (pF/1000 ft)) rms when tested in 
accordance with ASTM D 4566-90 at a frequency of 1.00.1 kHz and a 
temperature of 233  deg.C.
    (3) Pair-to-ground capacitance unbalance. (i) The average 
capacitance unbalance as measured on the completed

[[Page 727]]

cable shall not exceed 574 pF/km (175 pF/1000 ft) when tested in 
accordance with ASTM D 4566-90 at a frequency of 10.1 kHz and a 
temperature of 233  deg.C.
    (ii) When measuring pair-to-ground capacitance unbalance all pairs 
except the pair under test are grounded to the shield except when 
measuring cable containing super-units in which case all other pairs in 
the same super-unit shall be grounded to the shield.
    (iii) Pair-to-ground capacitance unbalance may vary directly with 
the length of the cable.
    (4) Crosstalk loss. (i) The rms output-to-output far-end crosstalk 
loss (FEXT) measured on the completed cable in accordance with ASTM D 
4566-90 at a test frequency of 150 kHz shall not be less than 68 
decibel/kilometer (dB/km) (73 decibel/1000 ft (dB/1000 ft)). The rms 
calculation shall be based on the combined total of all adjacent and 
alternate pair combinations within the same layer and center to first 
layer pair combinations.
    (ii) The FEXT crosstalk loss between any pair combination of a cable 
shall not be less than 58 dB/km (63 dB/1000 ft) at a frequency of 150 
kHz. If the loss Ko at a frequency Fo for length 
Lo is known, then Kx can be determined for any 
other frequency Fx or length Lx by:
[GRAPHIC] [TIFF OMITTED] TR14JN94.000

    (iii) The near-end crosstalk loss (NEXT) as measured within and 
between units of a completed cable in accordance with ASTM D 4566-90 at 
a frequency of 772 kHz shall not be less than the following mean minus 
sigma (M-S) crosstalk requirement for any unit within the cable:

------------------------------------------------------------------------
                                                                   M-S
                           Unit size                             decibel
                                                                  (dB)
------------------------------------------------------------------------
Within Unit:
  12 and 13 pairs.............................................        56
  18 and 25 pairs.............................................        60
Between Unit:
  Adjacent 13 pairs...........................................        65
  Adjacent 25 pairs...........................................        66
  Nonadjacent (all)...........................................        81
------------------------------------------------------------------------


Where M-S is the Mean near-end coupling loss based on the combined total 
of all pair combinations, less one Standard Deviation, Sigma, of the 
mean value.
    (5) Insulation resistance. Each insulated conductor in each length 
of completed cable, when measured with all other insulated conductors 
and the shield grounded, shall have an insulation resistance of not less 
than 152 megohm-kilometer (500 megohm-mile) at 201  deg.C. The 
measurement shall be made in accordance with the procedures of ASTM D 
4566-90.
    (6) High voltage test. (i) In each length of completed cable, the 
dielectric strength of the insulation between conductors shall be tested 
in accordance with ASTM D 4566-90 and shall withstand, for 3 seconds, a 
direct current (dc) potential whose value is not less than:
    (A) 3.6 kilovolts for 22-gauge conductors; or
    (B) 3.0 kilovolts for 24-gauge conductors.
    (ii) In each length of completed cable, the dielectric strength 
between the shield and all conductors in the core shall be tested in 
accordance with ASTM D 4566-90 and shall withstand, for 3 seconds, a dc 
potential whose value is not less than 10 kilovolts.
    (7) Conductor resistance. The dc resistance of any conductor shall 
be measured in the completed cable in accordance with ASTM D 4566-90 and 
shall not exceed the following values when measured at or corrected to a 
temperature of 201  deg.C:

------------------------------------------------------------------------
                                                   Maximum resistance
                                               -------------------------
                      AWG                          ohms/      (ohms/1000
                                                 kilometer       ft)
------------------------------------------------------------------------
22............................................         60.7       (18.5)
24............................................         95.1       (29.0)
------------------------------------------------------------------------

    (8) Resistance unbalance. (i) The difference in dc resistance 
between the

[[Page 728]]

two conductors of a pair in the completed cable shall not exceed the 
values listed in this paragraph when measured in accordance with the 
procedures of ASTM D 4566-90:

------------------------------------------------------------------------
                                                 Resistance  Maximum for
                                                 unbalance     any reel
                                               -------------------------
                      AWG                                     Individual
                                                  Average        pair
                                                  percent      percent
------------------------------------------------------------------------
22............................................          1.5          4.0
24............................................          1.5          5.0
------------------------------------------------------------------------

    (ii) The resistance unbalance between tip and ring conductors shall 
be random with respect to the direction of unbalance. That is, the 
resistance of the tip conductors shall not be consistently higher with 
respect to the ring conductors and vice versa.
    (9) Electrical variations. (i) Pairs in each length of cable having 
either a ground, cross, short, or open circuit condition shall not be 
permitted.
    (ii) The maximum number of pairs in a cable which may vary as 
specified in paragraph (h)(9)(iii) of this section from the electrical 
parameters given in this section are listed in this paragraph. These 
pairs may be excluded from the arithmetic calculation:

------------------------------------------------------------------------
                                                             Maximum No.
                                                               of pairs
                                                                 with
                     Nominal pair count                       allowable
                                                              electrical
                                                              variation
------------------------------------------------------------------------
12-100.....................................................            1
101-300....................................................            2
301-400....................................................            3
401-600....................................................            4
601 and above..............................................            6
------------------------------------------------------------------------

    (iii) Parameter variations--(A) Capacitance unbalance-to-ground. If 
the cable fails either the maximum individual pair or average 
capacitance unbalance-to-ground requirement and all individual pairs are 
3280 pF/km (1000 pF/1000 ft) or less the number of pairs specified in 
paragraph (h)(9)(ii) of this section may be eliminated from the average 
and maximum individual calculations.
    (B) Resistance unbalance. Individual pair of not more than 7 percent 
for all gauges.
    (C) Far end crosstalk. Individual pair combination of not less than 
52 dB/km (57 dB/1000 ft).

    Note: RUS recognizes that in large pair count cables (600 pair and 
above) a cross, short, or open circuit condition occasionally may 
develop in a pair which does not affect the performance of the other 
cable pairs. In these circumstances rejection of the entire cable may be 
economically unsound or repairs may be impractical. In such 
circumstances the manufacturer may desire to negotiate with the customer 
for acceptance of the cable. No more than 0.5 percent of the pairs may 
be involved.

    (i) Mechanical requirements--(1) Cable cold bend test. The completed 
cable shall be capable of meeting the requirements of ASTM D 4565-90a 
after conditioning at -20 2  deg.C except the mandrel diameters shall 
be as specified below:

------------------------------------------------------------------------
           Cable outside diameter                  Mandrel diameter
------------------------------------------------------------------------
<40 mm (1.5 in.)............................  15x
[ge]40 mm (1.5 in.).........................  20x
------------------------------------------------------------------------

    (2) Cable flame test. The completed cable shall be capable of 
meeting a maximum flame height of 3.7 m (12.0 ft) when tested in 
accordance with Underwriters Laboratories (UL) 1666 dated January 22, 
1991.
    (3) Cable listing. All cables manufactured to the specification of 
this section at a minimum shall be listed as Communication Riser Cable 
(Type CMR) in accordance with Sections 800-50 and 800-51(b) of the 1993 
National Electrical Code.
    (j) Sheath slitting cord (optional). (1) Sheath slitting cords may 
be used in the cable structure at the option of the manufacturer.
    (2) When a sheath slitting cord is used it shall be nonhygroscopic 
and nonwicking, continuous throughout a length of cable, and of 
sufficient strength to open the sheath without breaking the cord.
    (3) Sheath slitting cords shall be capable of consistently slitting 
the jacket and/or shield for a continuous length of 0.6 m (2 ft) when 
tested in accordance with the procedure specified in appendix B of this 
section.
    (k) Identification marker and length marker. (1) Each length of 
cable shall be permanently identified as to manufacturer and year of 
manufacture.
    (2) The number of conductor pairs and their gauge size shall be 
marked on the jacket.

[[Page 729]]

    (3) The marking shall be printed on the jacket at regular intervals 
of not more than 1.5 m (5 ft).
    (4) An alternative method of marking may be used if accepted by RUS 
prior to its use.
    (5) The completed cable shall have sequentially numbered length 
markers in FEET OR METERS at regular intervals of not more than 1.5 m (5 
ft) along the outside of the jacket.
    (6) The method of length marking shall be such that for any single 
length of cable, continuous sequential numbering shall be employed.
    (7) The numbers shall be dimensioned and spaced to produce good 
legibility and shall be approximately 3 mm (0.125 in.) in height. An 
occasional illegible marking is permissible if there is a legible 
marking located not more than 1.5 m (5 ft) from it.
    (8) The method of marking shall be by means of suitable surface 
markings producing a clear, distinguishable, contrasting marking 
acceptable to RUS. Where direct or transverse printing is employed, the 
characters should be indented to produce greater durability of marking. 
Any other method of length marking shall be acceptable to RUS as 
producing a marker suitable for the field. Size, shape and spacing of 
numbers, durability, and overall legibility of the marker shall be 
considered in acceptance of the method.
    (9) The accuracy of the length marking shall be such that the actual 
length of any cable section is never less than the length indicated by 
the marking and never more than one percent greater than the length 
indicated by the marking.
    (10) The color of the initial marking for a black colored jacket 
shall be either white or silver. The color of the initial marking for a 
dark grey colored jacket shall be either red or black. If the initial 
marking of the black colored jacket fails to meet the requirements of 
the preceding paragraphs, it will be permissible to either remove the 
defective marking and re-mark with the white or silver color or leave 
the defective marking on the cable and re-mark with yellow. If the 
initial marking of the dark grey colored jacket fails to meet the 
requirements of the preceding paragraphs, it will be permissible to 
either remove the defective marking and re-mark with the red or black 
color or leave the defective marking on the cable and re-mark with 
yellow. No further re-marking is permitted. Any re-marking shall be on a 
different portion of the cable circumference than any existing marking 
when possible and have a numbering sequence differing from any other 
existing marking by at least 5,000.
    (11) Any reel of cable which contains more than one set of 
sequential markings shall be labeled to indicate the color and sequence 
of marking to be used. The labeling shall be applied to the reel and 
also to the cable.
    (l) Preconnectorized cable (optional). (1) At the option of the 
manufacturer and upon request by the purchaser, cables 100 pairs and 
larger may be factory terminated in 25 pair splicing modules.
    (2) The splicing modules shall meet the requirements of RUS Bulletin 
345-54, PE-52, RUS Specification for Telephone Cable Splicing Connectors 
(Incorporated by Reference at Sec. 1755.97), and be accepted by RUS 
prior to their use.
    (m) Acceptance testing and extent of testing. (1) The tests 
described in appendix A of this section are intended for acceptance of 
cable designs and major modifications of accepted designs. RUS decides 
what constitutes a major modification. These tests are intended to show 
the inherent capability of the manufacturer to produce cable products 
having long life and stability.
    (2) For initial acceptance, the manufacturer shall submit:
    (i) An original signature certification that the product fully 
complies with each section of the specification;
    (ii) Qualification Test Data, per appendix A of this section;
    (iii) To periodic plant inspections;
    (iv) A certification that the product does or does not comply with 
the domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.);
    (v) Written user testimonials concerning performance of the product; 
and
    (vi) Other nonproprietary data deemed necessary by the Chief, 
Outside Plant Branch (Telephone).

[[Page 730]]

    (3) For requalification acceptance, the manufacturer shall submit an 
original signature certification that the product fully complies with 
each section of the specification, excluding the Qualification Section, 
and a certification that the product does or does not comply with the 
domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.) for acceptance by June 30 every three years. The required data and 
certification shall have been gathered within 90 days of the submission.
    (4) Initial and requalification acceptance requests should be 
addressed to: Chairman, Technical Standards Committee ``A'' (Telephone), 
Telecommunications Standards Division, Rural Utilities Service, 
Washington, DC 20250-1500.
    (5) Tests on 100 percent of completed cable. (i) The shield of each 
length of cable shall be tested for continuity using the procedures of 
ASTM D 4566-90.
    (ii) Dielectric strength between all conductors and the shield shall 
be tested to determine freedom from grounds in accordance with paragraph 
(h)(6)(ii) of this section.
    (iii) Each conductor in the completed cable shall be tested for 
continuity using the procedures of ASTM D 4566-90.
    (iv) Dielectric strength between conductors shall be tested to 
ensure freedom from shorts and crosses in accordance with paragraph 
(h)(6)(i) of this section.
    (v) Each conductor in the completed preconnectorized cable shall be 
tested for continuity.
    (vi) Each length of completed preconnectorized cable shall be tested 
for split pairs.
    (vii) The average mutual capacitance shall be measured on all 
cables. If the average mutual capacitance for the first 100 pairs tested 
from randomly selected groups is between 50 and 53 nF/km (80 to 85 nF/
mile), the remainder of the pairs need not to be tested on the 100 
percent basis. (See paragraph (h)(1) of this section).
    (6) Capability tests. Tests on a quality assurance basis shall be 
made as frequently as is required for each manufacturer to determine and 
maintain compliance with:
    (i) Performance requirements for conductor insulation and jacket 
material;
    (ii) Bonding properties of coated or laminated shielding materials;
    (iii) Sequential marking and lettering;
    (iv) Capacitance unbalance and crosstalk;
    (v) Insulation resistance;
    (vi) Conductor resistance and resistance unbalance;
    (vii) Cable cold bend and cable flame tests; and
    (viii) Mutual conductance.
    (n) Summary of records of electrical and physical tests. (1) Each 
manufacturer shall maintain a suitable summary of records for a period 
of at least 3 years for all electrical and physical tests required on 
completed cable by this section as set forth in paragraphs (m)(5) and 
(m)(6) of this section. The test data for a particular reel shall be in 
a form that it may be readily available to the purchaser or to RUS upon 
request.
    (2) Measurements and computed values shall be rounded off to the 
number of places of figures specified for the requirement according to 
ASTM E 29-90.
    (o) Manufacturing irregularities. (1) Repairs to the shield are not 
permitted in cable supplied to the end user under this section.
    (2) No repairs or defects in the jacket are allowed.
    (p) Preparation for shipment. (1) The cable shall be shipped on 
reels unless otherwise specified or agreed to by the purchaser. The 
diameter of the drum shall be large enough to prevent damage to the 
cable from reeling or unreeling. The reels shall be substantial and so 
constructed as to prevent damage to the cable during shipment and 
handling.
    (2) A waterproof corrugated board or other means of protection 
acceptable to RUS shall be applied to the reel and shall be suitably 
secured in place to prevent damage to the cable during storage and 
shipment.
    (3) The outer end of the cable shall be securely fastened to the 
reel head so as to prevent the cable from becoming loose in transit. The 
inner end of the cable shall be securely fastened in such

[[Page 731]]

a way as to make it readily available if required for electrical 
testing. Spikes, staples, or other fastening devices which penetrate the 
cable jacket shall not be used. The method of fastening the cable ends 
shall be accepted by RUS prior to it being used.
    (4) Each length of cable shall be wound on a separate reel unless 
otherwise specified or agreed to by the purchaser.
    (5) The arbor hole shall admit a spindle 63 mm (2.5 in.) in diameter 
without binding. Steel arbor hole liners may be used but shall be 
acceptable to RUS prior to their use.
    (6) Each reel shall be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the cable on the reel.
    (7) Each reel shall be stenciled or labeled on either one or both 
sides with the name of the manufacturer, year of manufacture, actual 
shipping length, an inner and outer end sequential length marking, 
description of the cable, reel number and the RUS cable designation:

                            Cable Designation

CT
Cable Construction
Pair Count
Conductor Gauge

A = Coated Aluminum Shield

P = Preconnectorized Cable

Example: CTAP 100-22

Terminating Cable, Coated Aluminum Shield, Preconnectorized, 100 pairs, 
22 AWG.

    (8) When preconnectorized cable is shipped, the splicing modules 
shall be protected to prevent damage during shipment and handling. The 
protection method shall be acceptable to RUS prior to its use.

(The information collection and recordkeeping requirements of this 
section have been approved by the Office of Management and Budget (OMB) 
under control number 0572-0059)

         Appendix A to Sec. 1755.870--Qualification Test Methods

    (I) The test procedures described in this appendix are for 
qualification of initial designs and major modifications of accepted 
designs. Included in paragraph (V) of this appendix are suggested 
formats that may be used in submitting test results to RUS.
    (II) Sample Selection and Preparation. (1) All testing shall be 
performed on lengths removed sequentially from the same 25 pair, 22 
gauge jacketed cable. This cable shall not have been exposed to 
temperatures in excess of 38  deg.C since its initial cool down after 
sheathing. The lengths specified are minimum lengths and if desirable 
from a laboratory testing standpoint longer lengths may be used.
    (a) Length A shall be 12 0.2 meters (40 0.5 feet) long. Prepare 
the test sample by removing the jacket, shield, and core wrap for a 
sufficient distance on both ends to allow the insulated conductors to be 
flared out. Remove sufficient conductor insulation so that appropriate 
electrical test connections can be made at both ends. Coil the sample 
with a diameter of 15 to 20 times its sheath diameter. Two lengths are 
required.
    (b) Length B shall be 300 millimeters (1 foot) long. Three lengths 
are required.
    (c) Length C shall be 3 meters (10 feet) long and shall be 
maintained at 23 3  deg.C for the duration of the test. Two lengths are 
required.
    (2) Data Reference Temperature. Unless otherwise specified, all 
measurements shall be made at 23 3  deg.C.
    (III) Environmental Tests--(1) Heat Aging Test--(a) Test Samples. 
Place one sample each of lengths A and B in an oven or environmental 
chamber. The ends of sample A shall exit from the chamber or oven for 
electrical tests. Securely seal the oven exit holes.
    (b) Sequence of Tests. Sample B referenced in paragraph (III)(1)(a) 
of this appendix shall be subjected to the insulation compression test 
outlined in paragraph (III)(2) of this appendix.
    (c) Initial Measurements. (i) For sample A, measure the open circuit 
capacitance and conductance for each odd pair at 1, 150, and 772 
kilohertz after conditioning the sample at the data reference 
temperature for 24 hours. Calculate the average and standard deviation 
for the data of the 13 pairs on a per kilometer (per mile) basis.
    (ii) Record on suggested formats in paragraph (V) of this appendix 
or on other easily readable formats.
    (d) Heat Conditioning. (i) Immediately after completing the initial 
measurements, condition the sample for 14 days at a temperature of 65 2 
 deg.C.
    (ii) At the end of this period. Measure and calculate the parameters 
given in paragraph (III)(1)(c) of this appendix. Record on suggested 
formats in paragraph (V) of this appendix or on other easily readable 
formats.
    (e) Overall Electrical Deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning with the initial parameters in paragraph (III)(1)(c) of 
this appendix.

[[Page 732]]

    (ii) The stability of the electrical parameters after completion of 
this test shall be within the following prescribed limits:
    (A) Capacitance. The average mutual capacitance shall be within 10 
percent of its original value;
    (B) The change in average mutual capacitance shall be less than 10 
percent over the frequency range of 1 to 150 kilohertz; and
    (C) Conductance. The average mutual conductance shall not exceed 3.7 
micromhos/kilometer (6 micromhos/mile) at a frequency of 1 kilohertz.
    (2) Insulation Compression Test--(a) Test Sample B. Remove jacket, 
shield, and core wrap being careful not to damage the conductor 
insulation. Remove one pair from the core and carefully separate and 
straighten the insulated conductors. Retwist the two insulated 
conductors together under sufficient tension to form 10 evenly spaced 
360 degree twists in a length of 100 millimeters (4 inches).
    (b) Sample Testing. Center the mid 50 millimeters (2 inches) of the 
twisted pair between two smooth rigid parallel metal plates measuring 50 
millimeters (2 inches) in length or diameter. Apply a 1.5 volt direct 
current potential between the conductors, using a light or buzzer to 
indicate electrical contact between the conductors. Apply a constant 
load of 67 newtons (15 pound-force) on the sample for one minute and 
monitor for evidence of contact between the conductors. Record results 
on suggested formats in paragraph (V) of this appendix or on other 
easily readable formats.
    (3) Temperature Cycling. (a) Repeat paragraphs (III)(1)(a) through 
(III)(1)(c)(ii) of this appendix for a separate set of samples A and B 
which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, subject the test 
samples to 10 cycles of temperature between -40  deg.C and +60  deg.C. 
The test samples shall be held at each temperature extreme for a minimum 
of 1.5 hours during each cycle of temperature. The air within the 
temperature cycling chamber shall be circulated throughout the duration 
of the cycling.
    (c) Repeat paragraphs (III)(1)(d)(ii) through (III)(2)(b) of this 
appendix.
    (IV) Control Sample--(1) Test Samples. One length of sample B shall 
have been maintained at 23 3  deg.C for at least 48 hours before the 
testing.
    (2) Repeat paragraphs (III)(2) through (III)(2)(b) of this appendix.
    (3) Surge Test. (a) One length of sample C shall be used to measure 
the breakdown between conductors while the other length of C shall be 
used to measure core to shield breakdown.
    (b) The samples shall be capable of withstanding, without damage, a 
single surge voltage of 20 kilovolts peak between conductors, and 35 
kilovolts peak between conductors and the shield as hereinafter 
described. The surge voltage shall be developed from a capacitor 
discharge through a forming resistor connected in parallel with the 
dielectric of the test sample. The surge generator constants shall be 
such as to produce a surge of 1.5 x 40 microseconds wave shape.
    (c) The shape of the generated wave shall be determined at a reduced 
voltage by connecting an oscilloscope across the forming resistor with 
the cable sample connected in parallel with the forming resistor. The 
capacitor bank is charged to the test voltage and then discharged 
through the forming resistor and test sample. The test sample shall be 
considered to have passed the test if there is no distinct change in the 
wave shape obtained with the initial reduced voltage compared to that 
obtained after the application of the test voltage.
    (V) The following suggested formats may be used in submitting the 
test results to RUS:

              Environmental Conditioning ------------------

                                              Frequency 1 Kilohertz
----------------------------------------------------------------------------------------------------------------
                                                               Capacitance nF/km (nF/   Conductance micromhos/km
                                                                        mile)               (micromhos/mile)
                          Pair No.                           ---------------------------------------------------
                                                                Initial       Final       Initial       Final
----------------------------------------------------------------------------------------------------------------
 1..........................................................  ...........  ...........  ...........  ...........
 3..........................................................  ...........  ...........  ...........  ...........
 5..........................................................  ...........  ...........  ...........  ...........
 7..........................................................  ...........  ...........  ...........  ...........
 9..........................................................  ...........  ...........  ...........  ...........
11..........................................................  ...........  ...........  ...........  ...........
13..........................................................  ...........  ...........  ...........  ...........
15..........................................................  ...........  ...........  ...........  ...........
17..........................................................  ...........  ...........  ...........  ...........
19..........................................................  ...........  ...........  ...........  ...........
21..........................................................  ...........  ...........  ...........  ...........
23..........................................................  ...........  ...........  ...........  ...........

[[Page 733]]

 
25..........................................................  ...........  ...........  ...........  ...........
Average x...................................................  ...........  ...........  ...........  ...........
Overall Percent Difference in
    Average x...............................................  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------

             Environmental Conditioning --------------------

                                             Frequency 150 Kilohertz
----------------------------------------------------------------------------------------------------------------
                                                               Capacitance nF/km (nF/   Conductance micromhos/km
                                                                        mile)               (micromhos/mile)
                          Pair No.                           ---------------------------------------------------
                                                                Initial       Final       Initial       Final
----------------------------------------------------------------------------------------------------------------
 1..........................................................  ...........  ...........  ...........  ...........
 3..........................................................  ...........  ...........  ...........  ...........
 5..........................................................  ...........  ...........  ...........  ...........
 7..........................................................  ...........  ...........  ...........  ...........
 9..........................................................  ...........  ...........  ...........  ...........
11..........................................................  ...........  ...........  ...........  ...........
13..........................................................  ...........  ...........  ...........  ...........
15..........................................................  ...........  ...........  ...........  ...........
17..........................................................  ...........  ...........  ...........  ...........
19..........................................................  ...........  ...........  ...........  ...........
21..........................................................  ...........  ...........  ...........  ...........
23..........................................................  ...........  ...........  ...........  ...........
25..........................................................  ...........  ...........  ...........  ...........
Average x...................................................  ...........  ...........  ...........  ...........
    Overall Percent Difference in Average x.................  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------

             Environmental Conditioning --------------------

                                             Frequency 772 Kilohertz
----------------------------------------------------------------------------------------------------------------
                                                               Capacitance nF/km (nF/   Conductance micromhos/km
                                                                        mile)               (micromhos/mile)
                          Pair No.                           ---------------------------------------------------
                                                                Initial       Final       Initial       Final
----------------------------------------------------------------------------------------------------------------
 1..........................................................  ...........  ...........  ...........  ...........
 3..........................................................  ...........  ...........  ...........  ...........
 5..........................................................  ...........  ...........  ...........  ...........
 7..........................................................  ...........  ...........  ...........  ...........
 9..........................................................  ...........  ...........  ...........  ...........
11..........................................................  ...........  ...........  ...........  ...........
13..........................................................  ...........  ...........  ...........  ...........
15..........................................................  ...........  ...........  ...........  ...........
17..........................................................  ...........  ...........  ...........  ...........
19..........................................................  ...........  ...........  ...........  ...........
21..........................................................  ...........  ...........  ...........  ...........
23..........................................................  ...........  ...........  ...........  ...........
25..........................................................  ...........  ...........  ...........  ...........
Average x...................................................  ...........  ...........  ...........  ...........
    Overall Percent Difference in...........................
    Average x...............................................  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                Failures
------------------------------------------------------------------------
Insulation Compression:
  Control.....................................................  ........
  Heat Age....................................................  ........
  Temperature Cycling.........................................  ........
Surge Test (kilovolts):
  Conductor-to-Conductor......................................  ........
  Shield-to-Conductors........................................  ........
------------------------------------------------------------------------

     Appendix B to Sec. 1755.870--Sheath Slitting Cord Qualification

    (I) This test procedure described in this appendix is for 
qualification of initial and subsequent changes in sheath slitting 
cords.
    (II) Sample selection. All testing shall be performed on two 1.2 m 
(4 ft) lengths of cable removed sequentially from the same 25 pair, 22 
gauge jacketed cable. This cable shall not have been exposed to 
temperatures in excess

[[Page 734]]

of 38  deg.C since its initial cool down after sheathing.
    (III) Test procedure. (1) Using a suitable tool, expose enough of 
the sheath slitting cord to permit grasping with needle nose pliers.
    (2) The prepared test specimens shall be maintained at a temperature 
of 23 1  deg.C for at least 4 hours immediately prior to and during the 
test.
    (3) Wrap the sheath slitting cord around the plier jaws to ensure a 
good grip.
    (4) Grasp and hold the cable in a convenient position while gently 
and firmly pulling the sheath slitting cord longitudinally in the 
direction away from the cable end. The angle of pull may vary to any 
convenient and functional degree. A small starting notch is permissible.
    (5) The sheath slitting cord is considered acceptable if the cord 
can slit the jacket and/or shield for a continuous length of 0.6 m (2 
ft) without breaking the cord.

[59 FR 30507, June 14, 1994; 59 FR 34899, July 7, 1994, as amended at 60 
FR 1711, Jan. 5, 1995; 69 FR 18803, Apr. 9, 2004]



Secs. 1755.871-1755.889  [Reserved]



Sec. 1755.890  RUS specification for filled telephone cables with expanded insulation.

    (a) Scope. (1) This section covers the requirements for filled 
telephone cables intended for direct burial installation either by 
trenching or by direct plowing, for underground application by placement 
in a duct, or for aerial installation by attachment to a support strand.
    (i) The conductors are solid copper, individually insulated with an 
extruded cellular insulating compound which may be either totally 
expanded or expanded with a solid skin coating.
    (ii) The insulated conductors are twisted into pairs which are then 
stranded or oscillated to form a cylindrical core.
    (iii) For high frequency applications, the cable core may be 
separated into compartments with screening shields.
    (iv) A moisture resistant filling compound is applied to the 
stranded conductors completely covering the insulated conductors and 
filling the interstices between pairs and units.
    (v) The cable structure is completed by the application of suitable 
core wrapping material, a flooding compound, a shield or a shield/armor, 
and an overall plastic jacket.
    (2) The number of pairs and gauge size of conductors which are used 
within the RUS program are provided in the following table:

 
 
------------------------------------------------------------------------
AWG                                              19     22     24     26
 
Pairs                                             6      6      6
                                                 12     12     12
                                                 18     18     18
                                                 25     25     25     25
                                                        50     50     50
                                                        75     75     75
                                                       100    100    100
                                                       150    150    150
                                                       200    200    200
                                                       300    300    300
                                                       400    400    400
                                                       600    600    600
                                                       900    900    900
                                                      1000   1000   1000
                                                             1200   1200
                                                             1500   1500
                                                             1800   1800
                                                                    2100
                                                                    2400
                                                                    2700
------------------------------------------------------------------------
Note: Cables larger in pair sizes than those shown in this table must
  meet all requirements of this section.

    (3) Screened cable, when specified, must meet all requirements of 
this section. The pair sizes of screened cables used within the RUS 
program are referenced in paragraph (e)(2)(i) of this section.
    (4) All cables sold to RUS borrowers for projects involving RUS loan 
funds under this section must be accepted by RUS Technical Standards 
Committee ``A'' (Telephone). For cables manufactured to the 
specification of this section, all design changes to an accepted design 
must be submitted for acceptance. RUS will be the sole authority on what 
constitutes a design change.
    (5) Materials, manufacturing techniques, or cable designs not 
specifically addressed by this section may be allowed if accepted by 
RUS. Justification for acceptance of modified materials, manufacturing 
techniques, or cable designs must be provided to substantiate product 
utility and long-term stability and endurance.
    (6) The American National Standard Institute/Insulated Cable 
Engineers Association, Inc. (ANSI/ICEA) S-84-608-1988, Standard For 
Telecommunications Cable, Filled, Polyolefin Insulated, Copper Conductor 
Technical Requirements referenced throughout this section is 
incorporated by reference by

[[Page 735]]

RUS. This incorporation by reference was approved by the Director of the 
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
Copies of ANSI/ICEA S-84-608-1988 are available for inspection during 
normal business hours at RUS, room 2845, U.S. Department of Agriculture, 
Washington, DC 20250, or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html. 
Copies are available from ICEA, P. O. Box 440, South Yarmouth, MA 02664, 
telephone number (508) 394-4424.
    (7) American Society for Testing and Materials specifications (ASTM) 
A 505-87, Standard Specification for Steel, Sheet and Strip, Alloy, Hot-
Rolled and Cold-Rolled, General Requirements For; ASTM B 193-87, 
Standard Test Method for Resistivity of Electrical Conductor Materials; 
ASTM B 224-80, Standard Classification of Coppers; ASTM B 694-86, 
Standard Specification for Copper, Copper Alloy, and Copper-Clad 
Stainless Steel Sheet and Strip for Electrical Cable Shielding; ASTM D 
4565-90a, Standard Test Methods for Physical and Environmental 
Performance Properties of Insulations and Jackets for Telecommunications 
Wire and Cable; and ASTM D 4566-90, Standard Test Methods for Electrical 
Performance Properties of Insulations and Jackets for Telecommunications 
Wire and Cable referenced in this section are incorporated by reference 
by RUS. These incorporations by references were approved by the Director 
of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR 
part 51. Copies of the ASTM standards are available for inspection 
during normal business hours at RUS, room 2845, U.S. Department of 
Agriculture, Washington, DC 20250, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html. Copies area available from ASTM, 1916 Race Street, 
Philadelphia, PA 19103-1187, telephone number (215) 299-5585.
    (b) Conductors and conductor insulation. (1) The gauge sizes of the 
copper conductors covered by this section must be 19, 22, 24, and 26 
American Wire Gauge (AWG).
    (2) Each conductor must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraph 2.1.
    (3) Factory joints made in conductors during the manufacturing 
process must comply with the requirements specified in ANSI/ICEA S-84-
608-1988, paragraph 2.2.
    (4) The raw materials used for conductor insulation must comply with 
the requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.1 
through 3.1.3.
    (5) The finished conductor insulation must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 3.2.2, 
3.2.3, and 3.3.
    (6) Insulated conductor must not have an overall diameter greater 
than 2 millimeters (mm) (0.081 inch (in.)).
    (7) A permissible overall performance level of faults in conductor 
insulation must average not greater than one fault per 12,000 conductor 
meters (40,000 conductor feet) for each gauge of conductor.
    (i) All insulated conductors must be continuously tested for 
insulation faults during the twinning operation with a method of testing 
acceptable to RUS. The length count and number of faults must be 
recorded. The information must be retained for a period of 6 months and 
be available for review by RUS when requested.
    (ii) The voltages for determining compliance with the requirements 
of this section are as follows:

------------------------------------------------------------------------
                AWG                  Direct Current Voltages (kilovolts)
------------------------------------------------------------------------
19                                                       4.5
22                                                       3.6
24                                                       3.0
26                                                       2.4
------------------------------------------------------------------------

    (8) Repairs to the conductor insulation during manufacture are 
permissible. The method of repair must be accepted by RUS prior to its 
use. The repaired insulation must be capable of meeting the relevant 
electrical requirements of this section.

[[Page 736]]

    (9) All repaired sections of insulation must be retested in the same 
manner as originally tested for compliance with paragraph (b)(7) of this 
section.
    (10) The colored insulating material removed from or tested on the 
conductor, from a finished cable, must meet the performance requirements 
specified in ANSI/ICEA S-84-608-1988, paragraphs 3.4.1 through 3.4.6.
    (c) Identification of pairs and twisting of pairs. (1) The 
insulation must be colored to identify:
    (i) The tip and ring conductor of each pair; and
    (ii) Each pair in the completed cable.
    (2) The colors to be used in the pairs in the 25 pair group, 
together with the pair numbers must be in accordance with the table 
specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
    (3) Positive identification of the tip and ring conductors of each 
pair by marking each conductor of a pair with the color of its mate is 
permissible. The method of marking must be accepted by RUS prior to its 
use.
    (4) Other methods of providing positive identification of the tip 
and ring conductors of each pair may be employed if accepted by RUS 
prior to its use.
    (5) The insulated conductors must be twisted into pairs.
    (6) In order to provide sufficiently high crosstalk isolation, the 
pair twists must be designed to enable the cable to meet the capacitance 
unbalance and crosstalk loss requirements of paragraphs (k)(5), (k)(6), 
and (k)(8) this section.
    (7) The average length of pair twists in any pair in the finished 
cable, when measured on any 3 meter (10 foot) length, must not exceed 
the requirement specified in ANSI/ICEA S-84-608-1988, paragraph 3.5.
    (d) Forming of the cable core. (1) Twisted pairs must be assembled 
in such a way as to form a substantially cylindrical group.
    (2) When desired for lay-up reasons, the basic group may be divided 
into two or more subgroups called units.
    (3) Each group, or unit in a particular group, must be enclosed in 
bindings of the colors indicated for its particular pair count. The pair 
count, indicated by the colors of insulation, must be consecutive as 
indicated in paragraph (d)(6) of this section through units in a group.
    (4) The filling compound must be applied to the cable core in such a 
way as to provide as near a completely filled core as is commercially 
practical.
    (5) Threads and tapes used as binders must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraphs 4.2 and 
4.2.1.
    (6) The colors of the bindings and their significance with respect 
to pair count must be as follows:

------------------------------------------------------------------------
Group
 No.                Color of Bindings                 Group Pair Count
------------------------------------------------------------------------
1      White-Blue................................                  1-25
2      White-Orange..............................                 26-50
3      White-Green...............................                 51-75
4      White-Brown...............................                76-100
5      White-Slate...............................               101-125
6      Red-Blue..................................               126-150
7      Red-Orange................................               151-175
8      Red-Green.................................               176-200
9      Red-Brown.................................               201-225
10     Red-Slate.................................               226-250
11     Black-Blue................................               251-275
12     Black-Orange..............................               276-300
13     Black-Green...............................               301-325
14     Black-Brown...............................               326-350
15     Black-Slate...............................               351-375
16     Yellow-Blue...............................               376-400
17     Yellow-Orange.............................               401-425
18     Yellow-Green..............................               426-450
19     Yellow-Brown..............................               451-475
20     Yellow-Slate..............................               476-500
21     Violet-Blue...............................               501-525
22     Violet-Orange.............................               526-550
23     Violet-Green..............................               551-575
24     Violet-Brown..............................               576-600
------------------------------------------------------------------------

    (7) The use of the white unit binder in cables of 100 pairs or less 
is optional.
    (8) When desired for manufacturing reasons, two or more 25 pair 
groups may be bound together with nonhygroscopic and nonwicking threads 
or tapes into a super-unit. Threads or tapes must meet the requirements 
specified in paragraph (d)(5) of this section. The group binders and the 
super-unit binders must be color coded such that the combination of the 
two binders must positively identify each 25 pair group from every other 
25 pair group in the cable. Super-unit binders must be of the color 
shown in the following table:

[[Page 737]]



                        Super-Unit Binder Colors
------------------------------------------------------------------------
            Pair Numbers                         Binder Color
------------------------------------------------------------------------
1-600                                                  White
601-1200                                                 Red
1201-1800                                              Black
1801-2400                                             Yellow
2401-3000                                             Violet
3001-3600                                               Blue
3601-4200                                             Orange
4201-4800                                              Green
4801-5400                                              Brown
5401-6000                                              Slate
------------------------------------------------------------------------

    (9) Color binders must not be missing for more than 90 meters (300 
feet) from any 25 pair group or from any subgroup used as part of a 
super-unit. At any cable cross-section, no adjacent 25 pair groups and 
no more than one subgroup of any super-unit may have missing binders. In 
no case must the total number of missing binders exceed three. Missing 
super-unit binders must not be permitted for any distance.
    (10) Any reel of cable which contains missing binders must be 
labeled indicating the colors and location of the binders involved. The 
labeling must be applied to the reel and also to the cable.
    (e) Screened cable. (1) Screened cable must be constructed such that 
a metallic, internal screen(s) must be provided to separate and provide 
sufficient isolation between the compartments to meet the requirements 
of this section.
    (2) At the option of the user or manufacturer, identified service 
pairs providing for voice order and fault location may be placed in 
screened cables.
    (i) The number of service pairs provided must be one per twenty-five 
operating pairs plus two for a cable size up to and including 400 pairs, 
subject to a minimum of four service pairs. The pair counts for screened 
cables are as follows:

                       Screened Cable Pair Counts
------------------------------------------------------------------------
   Carrier Pair Count          Service Pairs          Total Pair Count
------------------------------------------------------------------------
24                                    4                      28
50                                    4                      54
100                                   6                     106
150                                   8                     158
200                                  10                     210
300                                  14                     314
400                                  18                     418
------------------------------------------------------------------------

    (ii) The service pairs must be equally divided among the 
compartments. The color sequence must be repeated in each compartment.
    (iii) The electrical and physical characteristics of each service 
pair must meet all the requirements set forth in this section.
    (iv) The colors used for the service pairs must be in accordance 
with the requirements of paragraph (b)(5) of this section. The color 
code used for the service pairs together with the service pair number 
are shown in the following table:

                      Color Code For Service Pairs
------------------------------------------------------------------------
                                                   Color
        Service Pair No.         ---------------------------------------
                                          Tip                Ring
------------------------------------------------------------------------
1                                 White.............  Red
2                                   ``..............  Black
3                                   ``..............  Yellow
4                                   ``..............  Violet
5                                 Red...............  Black
6                                   ``..............  Yellow
7                                   ``..............  Violet
8                                 Black.............  Yellow
9                                   ``..............  Violet
------------------------------------------------------------------------

    (3) The screen tape must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraphs 5.1 through 5.4.
    (4) The screen tape must be tested for dielectric strength by 
completely removing the protective coating from one end to be used for 
grounding purposes.
    (i) Using an electrode, over a 30 centimeter (1 foot) length, apply 
a direct current (dc) voltage at the rate of rise of 500 volts/second 
until failure.
    (ii) No breakdown should occur below 8 kilovolts.
    (f) Filling compound. (1) After or during the stranding operation 
and prior to application of the core wrap, filling compound must be 
applied to the cable core. The compound must be as nearly colorless as 
is commercially feasible and consistent with the end product 
requirements and pair identification.
    (2) The filling compound must comply with the requirements specified 
in ANSI/ICEA S-84-608-1988, paragraphs 4.4 through 4.4.4.
    (3) The individual cable manufacturer must satisfy RUS that the 
filling compound selected for use is suitable for its intended 
application. The filling compound must be applied to the cable

[[Page 738]]

in such a manner that the cable components will not be degraded.
    (g) Core wrap. (1) The core wrap must comply with the requirements 
specified in ANSI/ICEA-S-84-608-1988, paragraph 4.3.
    (2) If required for manufacturing reasons, white or colored binders 
of nonhygroscopic and nonwicking material may be applied over the core 
and/or wrap. When used, binders must meet the requirements specified in 
paragraph (d)(5) of this section.
    (3) Sufficient filling compound must have been applied to the core 
wrap so that voids or air spaces existing between the core and the inner 
side of the core wrap are minimized.
    (h) Flooding compound. (1) Sufficient flooding compound must be 
applied on all sheath interfaces so that voids and air spaces in these 
areas are minimized. When the optional armored design is used, the 
flooding compound must be applied between the core wrap and shield, 
between the shield and armor, and between the armor and the jacket so 
that voids and air spaces in these areas are minimized. The use of 
floodant over the outer metallic substrate is not required if uniform 
bonding, per paragraph (i)(7) of this section, is achieved between the 
plastic-clad metal and the jacket.
    (2) The flooding compound must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 4.5 and the jacket slip 
test requirements of appendix A, paragraph (III)(5) of this section.
    (3) The individual cable manufacturer must satisfy RUS that the 
flooding compound selected for use is acceptable for the application.
    (i) Shield and optional armor. (1) A single corrugated shield must 
be applied longitudinally over the core wrap.
    (2) For unarmored cable the shield overlap must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2. Core 
diameter is defined as the diameter under the core wrap and binding.
    (3) For cables containing the coated aluminum shield/coated steel 
armor (CACSP) sheath design, the coated aluminum shield must be applied 
in accordance with the requirements specified in ANSI/ICEA S-84-608-
1988, paragraph 6.3.2, Dual Tape Shielding System.
    (4) General requirements for application of the shielding material 
are as follows:
    (i) Successive lengths of shielding tapes may be joined during the 
manufacturing process by means of cold weld, electric weld, soldering 
with a nonacid flux or other acceptable means.
    (ii) Shield splices must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
    (iii) The corrugations and the application process of the coated 
aluminum and copper bearing shields must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.1.
    (iv) The shielding material must be applied in such a manner as to 
enable the cable to pass the cold bend test specified in paragraph 
(l)(3) of this section.
    (5) The following is a list of acceptable materials for use as cable 
shielding. Other types of shielding materials may also be used provided 
they are accepted by RUS prior to their use.

------------------------------------------------------------------------
              Standard Cable                   Gopher Resistant Cable
------------------------------------------------------------------------
8-mil Coated Aluminum \1\                   10-mil Copper
5-mil Copper                                6-mil Copper-Clad
                                            Stainless Steel
                                            5 mil Copper-Clad
                                            Stainless Steel
                                            5 mil Copper-Clad Alloy
                                            Steel
                                            7-mil Alloy 194
                                            6-mil Alloy 194
                                            8-mil Coated Aluminum \1\
                                            and 6-mil Coated Steel \1\
------------------------------------------------------------------------
\1\ Dimensions of uncoated metal.

    (i) The 8-mil aluminum tape must be plastic coated on both sides and 
must comply with the requirements of ANSI/ICEA S-84-608-1988, paragraph 
6.2.2.
    (ii) The 5-mil copper tape must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.3.
    (iii) The 10-mil copper tape must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.4.
    (iv) The 6-mil copper clad stainless steel tape must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.5.

[[Page 739]]

    (v) The 5-mil copper clad stainless steel tape must be in the fully 
annealed condition and must conform to the requirements of American 
Society for Testing and Materials (ASTM) B 694-86, with a cladding ratio 
of 16/68/16.
    (A) The electrical conductivity of the clad tape must be a minimum 
of 28 percent of the International Annealed Copper Standard (IACS) when 
measured per ASTM B 193-87.
    (B) The tape must be nominally 0.13 millimeter (0.005 inch) thick 
with a minimum thickness of 0.11 millimeter (0.0045 inch).
    (vi) The 5-mil copper clad alloy steel tape must be in the fully 
annealed condition and the copper component must conform to the 
requirements of ASTM B 224-80 and the alloy steel component must conform 
to the requirements of ASTM A 505-87, with a cladding ratio of 16/68/16.
    (A) The electrical conductivity of the copper clad alloy steel tape 
must comply with the requirement specified in (5)(v)(A) of this section.
    (B) The thickness of the copper clad alloy steel tape must comply 
with the requirements specified in (5)(v)(B) of this section.
    (vii) The 6-mil and 7-mil 194 copper alloy tapes must comply with 
the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.6.
    (6) The corrugation extensibility of the coated aluminum shield must 
comply with the requirements specified in ANSI/ICEA S-84-608-1988, 
paragraph 6.4.
    (7) When the jacket is bonded to the plastic coated aluminum shield, 
the bond between the jacket and shield must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.6.
    (8) A single plastic coated steel corrugated armor must be applied 
longitudinally directly over the coated aluminum shield listed in 
paragraph (i)(5) of this section with an overlap complying with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.2, 
Outer Steel Tape.
    (9) Successive lengths of steel armoring tapes may be joined during 
the manufacturing process by means of cold weld, electric weld, 
soldering with a nonacid flux or other acceptable means. Armor splices 
must comply with the breaking strength and resistance requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 6.3.3.
    (10) The corrugations and the application process of the coated 
steel armor must comply with the requirements specified in ANSI/ICEA S-
84-608-1988, paragraph 6.3.1.
    (i) The corrugations of the armor tape must coincide with the 
corrugations of the coated aluminum shield.
    (ii) Overlapped portions of the armor tape must be in register 
(corrugations must coincide at overlap) and in contact at the outer 
edge.
    (11) The armoring material must be so applied to enable the cable to 
pass the cold bend test specified in paragraph (l)(3) of this section.
    (12) The 6-mil steel tape must be electrolytic chrome coated steel 
(ECCS) plastic coated on both sides and must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 6.2.8.
    (13) When the jacket is bonded to the plastic coated steel armor, 
the bond between the jacket and armor must comply with the requirement 
specified in ANSI/ICEA-S-84-608-1988, paragraph 7.2.6.
    (j) Cable jacket. (1) The jacket must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.
    (2) The raw materials used for the cable jacket must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.1.
    (3) Jacketing material removed from or tested on the cable must meet 
the performance requirements specified in ANSI/ICEA S-84-608-1988, 
paragraphs 7.2.3 and 7.2.4.
    (4) The thickness of the jacket must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 7.2.2.
    (k) Electrical requirements--(1) Conductor resistance. The direct 
current resistance of any conductor in a completed cable and the average 
resistance of all conductors in a Quality Control Lot must comply with 
the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.1.
    (2) Resistance unbalance. (i) The direct current resistance 
unbalance between the two conductors of any pair in a

[[Page 740]]

completed cable and the average resistance unbalance of all pairs in a 
completed cable must comply with the requirements specified in ANSI/ICEA 
S-84-608-1988, paragraph 8.2.
    (ii) The resistance unbalance between tip and ring conductors shall 
be random with respect to the direction of unbalance. That is, the 
resistance of the tip conductors shall not be consistently higher with 
respect to the ring conductors and vice versa.
    (3) Mutual capacitance. The average mutual capacitance of all pairs 
in a completed cable and the individual mutual capacitance of any pair 
in a completed cable must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraph 8.3.
    (4) Capacitance difference. (i) The capacitance difference for 
completed cables having 75 pairs or greater must comply with the 
requirement specified in ANSI/ICEA S-84-608-1988, paragraph 8.4.
    (ii) When measuring screened cable, the inner and outer pairs must 
be selected from both sides of the screen.
    (5) Pair-to-pair capacitance unbalance--(i) Pair-to-pair. The 
capacitance unbalance as measured on the completed cable must comply 
with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 
8.5.
    (ii) Screened cable. In cables with 25 pairs or less and within each 
group of multigroup cables, the pair-to-pair capacitance unbalance 
between any two pairs in an individual compartment must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.5. The 
pair-to-pair capacitance unbalances to be considered must be:
    (A) Between pairs adjacent in a layer in an individual compartment;
    (B) Between pairs in centers of 4 pairs or less in an individual 
compartment; and
    (C) Between pairs in adjacent layers in an individual compartment 
when the number of pairs in the inner (smaller) layer is 6 or less. The 
center is counted as a layer.
    (iii) In cables with 25 pairs or less, the root-mean-square (rms) 
value is to include all the pair-to-pair unbalances measured for each 
compartment separately.
    (iv) In cables containing more than 25 pairs, the rms value must 
include the pair-to-pair unbalances in the separate compartments.
    (6) Pair-to-ground capacitance unbalance--(i) Pair-to-ground. The 
capacitance unbalance as measured on the completed cable must comply 
with the requirements specified in ANSI/ICEA S-84-608-1988, paragraph 
8.6.
    (ii) When measuring pair-to-ground capacitance unbalance all pairs 
except the pair under test are grounded to the shield and/or shield/
armor except when measuring cables containing super units in which case 
all other pairs in the same super unit must be grounded to the shield.
    (iii) The screen tape must be left floating during the test.
    (iv) Pair-to-ground capacitance unbalance may vary directly with the 
length of the cable.
    (7) Attenuation. (i) For nonscreened and screened cables, the 
average attenuation of all pairs on any reel when measured at 150 and 
772 kilohertz must comply with the requirements specified in ANSI/ICEA 
S-84-608-1988, paragraph 8.7, Foam and/or Foam-Skin Column.
    (ii) For T1C type cables over 12 pairs, the maximum average 
attenuation of all pairs on any reel must not exceed the values listed 
below when measured at a frequency of 1576 kilohertz at or corrected to 
a temperature of 20 1  deg.C. The test must be conducted in accordance 
with ASTM D 4566-90.

------------------------------------------------------------------------
                                                         Maximum Average
                                                           Attenuation
                                                             decibel/
                          AWG                             kilometer (dB/
                                                          km) (decibel/
                                                              mile)
------------------------------------------------------------------------
19.....................................................    14.9 (24.0)
22.....................................................    21.6 (34.8)
24.....................................................    27.2 (43.8)
------------------------------------------------------------------------

    (8) Crosstalk loss. (i) The equal level far-end power sum crosstalk 
loss (FEXT) as measured on the completed cable must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.8, FEXT 
Table.
    (ii) The near-end power sum crosstalk loss (NEXT) as measured on 
completed cable must comply with the requirements specified in ANSI/ICEA 
S-84-608-1988, paragraph 8.8, NEXT Table.

[[Page 741]]

    (iii) Screened cable. (A) For screened cables the NEXT as measured 
on the completed cable must comply with the requirements specified in 
ANSI/ICEA S-84-608-1988, paragraphs 8.9 and 8.9.1.
    (B) For T1C screened cable the NEXT as measured on the completed 
cable must comply with the requirements specified in ANSI/ICEA S-84-608-
1988, paragraphs 8.9 and 8.9.2.
    (9) Insulation resistance. The insulation resistance of each 
insulated conductor in a completed cable must comply with the 
requirement specified in ANSI/ICEA S-84-608-1988, paragraph 8.11.
    (10) High voltage test. (i) In each length of completed cable, the 
insulation between conductors must comply with the requirements 
specified in ANSI/ICEA S-84-608-1988, paragraph 8.12, Foam and/or Foam-
Skin Column.
    (ii) In each length of completed cable, the dielectric between the 
shield and/or armor and conductors in the core must comply with the 
requirements specified in ANSI/ICEA S-84-608-1988, paragraph 8.13, 
Single Jacketed, Foam and/or Foam-Skin Column. In screened cable the 
screen tape must be left floating.
    (iii) Screened cable. (A) In each length of completed screened 
cable, the dielectric between the screen tape and the conductors in the 
core must comply with the requirement specified in ANSI/ICEA S-84-608-
1988, paragraph 8.14.
    (B) In this test, the cable shield and/or armor must be left 
floating.
    (11) Electrical variations. (i) Pairs in each length of cable having 
either a ground, cross, short, or open circuit condition will not be 
permitted.
    (ii) The maximum number of pairs in a cable which may vary as 
specified in paragraph (k)(11)(iii) of this section from the electrical 
parameters given in this section are listed below. These pairs may be 
excluded from the arithmetic calculation.

------------------------------------------------------------------------
                                                               Maximum
                                                              Number of
                                                              Pairs With
                     Nominal Pair Count                       Allowable
                                                              Electrical
                                                              Variation
------------------------------------------------------------------------
6-100......................................................      1
101-300....................................................      2
301-400....................................................      3
401-600....................................................      4
601 and above..............................................      6
------------------------------------------------------------------------

    (iii) Parameter variations. (A) Capacitance unbalance-to-ground. If 
the cable fails either the maximum individual pair or average 
capacitance unbalance-to-ground requirement and all individual pairs are 
3937 picofarad/kilometer (1200 picofarad/1000 feet) or less, the number 
of pairs specified in paragraph (k)(11)(ii) of this section may be 
eliminated from the average and maximum individual calculations.
    (B) Resistance unbalance. Individual pair of 7 percent for all 
gauges.
    (C) Conductor resistance, maximum. The following table shows maximum 
conductor resistance:

------------------------------------------------------------------------
                                                                 (ohms/
                        AWG                            ohms/      1000
                                                     kilometer    feet)
------------------------------------------------------------------------
19                                                      29.9      (9.1)
22                                                      60.0     (18.3)
24                                                      94.5     (28.8)
26                                                     151.6     (46.2)
------------------------------------------------------------------------
Note: RUS recognizes that in large pair count cable (600 pair and above)
  a cross, short, or open circuit condition occasionally may develop in
  a pair which does not affect the performance of the other cable pairs.
  In these circumstances rejection of the entire cable may be
  economically unsound or repairs may be impractical. In such
  circumstances the manufacturer may desire to negotiate with the
  customer for acceptance of the cable. No more than 0.5 percent of the
  pairs may be involved.

    (l) Mechanical requirements--(1) Compound flow test. All cables 
manufactured in accordance with the requirements of this section must be 
capable of meeting the compound flow test specified in ANSI/ICEA S-84-
608-1988, paragraph 9.1 using a test temperature of 80 1  deg.C.
    (2) Water penetration test. All cables manufactured in accordance 
with the requirements of this section must be capable of meeting the 
water penetration test specified in ANSI/ICEA S-84-608-1988, paragraph 
9.2.
    (3) Cable cold bend test. All cables manufactured in accordance with 
the requirements of this section must be capable of meeting the cable 
cold bend test specified in ANSI/ICEA S-84-608-1988, paragraph 9.3.

[[Page 742]]

    (4) Cable impact test. All cables manufactured in accordance with 
the requirements of this section must be capable of meeting the cable 
impact test specified in ANSI/ICEA S-84-608-1988, paragraph 9.4.
    (5) Jacket notch test (CACSP sheath only). All cables utilizing the 
coated aluminum/coated steel sheath (CACSP) design manufactured in 
accordance with the requirements of this section must be capable of 
meeting the jacket notch test specified in ANSI/ICEA S-84-608-1988, 
paragraph 9.5.
    (6) Cable torsion test (CACSP sheath only). All cables utilizing the 
coated aluminum/coated steel sheath (CACSP) design manufactured in 
accordance with the requirements of this section must be capable of 
meeting the cable torsion test specified in ANSI/ICEA S-84-608-1988, 
paragraph 9.6.
    (m) Sheath slitting cord (optional). (1) Sheath slitting cord may be 
used in the cable structure at the option of the manufacturer unless 
specified by the end user.
    (2) When a sheath slitting cord is used it must be nonhygroscopic 
and nonwicking, continuous throughout a length of cable and of 
sufficient strength to open the sheath without breaking the cord.
    (n) Identification marker and length marker. (1) Each length of 
cable must be identified in accordance with ANSI/ICEA S-84-608-1988, 
paragraphs 10.1 through 10.1.4. The color of the ink used for the 
initial outer jacket marking must be either white or silver.
    (2) The markings must be printed on the jacket at regular intervals 
of not more than 0.6 meter (2 feet).
    (3) The completed cable must have sequentially numbered length 
markers in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.1.5. 
The color of the ink used for the initial outer jacket marking must be 
either white or silver.
    (o) Preconnectorized cable (optional). (1) At the option of the 
manufacturer and upon request by the purchaser, cables 100 pairs and 
larger may be factory terminated in 25 pair splicing modules.
    (2) The splicing modules must meet the requirements of RUS Bulletin 
345-54, PE-52, RUS Specification for Telephone Cable Splicing Connectors 
(Incorporated by Reference at Sec. 1755.97), and be accepted by RUS 
prior to their use.
    (p) Acceptance testing and extent of testing. (1) The tests 
described in appendix A of this section are intended for acceptance of 
cable designs and major modifications of accepted designs. What 
constitutes a major modification is at the discretion of RUS. These 
tests are intended to show the inherent capability of the manufacturer 
to produce cable products having long life and stability.
    (2) For initial acceptance, the manufacturer must submit:
    (i) An original signature certification that the product fully 
complies with each section of the specification;
    (ii) Qualification Test Data, per appendix A of this section;
    (iii) To periodic plant inspections;
    (iv) A certification that the product does or does not comply with 
the domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.);
    (v) Written user testimonials concerning field performance of the 
product; and
    (vi) Other nonproprietary data deemed necessary by the Chief, 
Outside Plant Branch (Telephone).
    (3) For requalification acceptance, the manufacturer must submit an 
original signature certification that the product fully complies with 
each section of the specification, excluding the Qualification Section, 
and a certification that the product does or does not comply with the 
domestic origin manufacturing provisions of the ``Buy American'' 
requirements of the Rural Electrification Act of 1938 (7 U.S.C. 901 et 
seq.), for acceptance by August 30 of each year. The required data must 
have been gathered within 90 days of the submission. If the initial 
acceptance of a product to this specification was within 180 days of 
August 30, then requalification for that product will not be required 
for that year.
    (4) Initial and requalification acceptance requests should be 
addressed to:

Chairman, Technical Standards Committee ``A'' (Telephone), 
Telecommunications Standard Division, Rural Utilities Service, 
Washington, DC 20250-1500.


[[Page 743]]


    (5) Tests on 100 percent of completed cable. (i) The shield and/or 
armor of each length of cable must be tested for continuity in 
accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
    (ii) The screen tape of each length of screened cable must be tested 
for continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 
8.16.
    (iii) Dielectric strength between conductors and shield and/or armor 
must be tested to determine freedom from grounds in accordance with 
paragraph (k)(10)(ii) of this section.
    (iv) Dielectric strength between conductors and screen tape must be 
tested to determine freedom from grounds in accordance with paragraph 
(k)(10)(iii) of this section.
    (v) Each conductor in the completed cable must be tested for 
continuity in accordance with ANSI/ICEA S-84-608-1988, paragraph 8.16.
    (vi) Dielectric strength between conductors, in each length of 
completed cable, must be tested to insure freedom from shorts and 
crosses in each length of completed cable in accordance with paragraph 
(k)(10)(i) of this section.
    (vii) Each conductor in the completed preconnectorized cable must be 
tested for continuity.
    (viii) Each length of completed preconnectorized cable must be 
tested for split pairs.
    (ix) The average mutual capacitance must be measured on all cables. 
If the average mutual capacitance for the first 100 pairs tested from 
randomly selected groups is between 50 and 53 nanofarads/kilometer (nF/
km) (80 and 85 nanofarad/mile), the remainder of the pairs need not be 
tested on the 100 percent basis (See paragraph (k)(3) of this section).
    (6) Capability tests. Tests on a quality assurance basis must be 
made as frequently as is required for each manufacturer to determine and 
maintain compliance with:
    (i) Performance requirements for conductor insulation, jacketing 
material, and filling and flooding compounds;
    (ii) Bonding properties of coated or laminated shielding and 
armoring materials and performance requirements for screen tape;
    (iii) Sequential marking and lettering;
    (iv) Capacitance difference, capacitance unbalance, crosstalk, and 
attenuation;
    (v) Insulation resistance, conductor resistance, and resistance 
unbalance;
    (vi) Cable cold bend and cable impact tests;
    (vii) Water penetration and compound flow tests; and
    (viii) Jacket notch and cable torsion tests.
    (q) Summary of records of electrical and physical tests. (1) Each 
manufacturer must maintain suitable summary records for a period of at 
least 3 years of all electrical and physical tests required on completed 
cable by this section as set forth in paragraphs (p)(5) and (p)(6) of 
this section. The test data for a particular reel must be in a form that 
it may be readily available to the purchaser or to RUS upon request.
    (2) Measurements and computed values must be rounded off to the 
number of places or figures specified for the requirement according to 
ANSI/ICEA S-84-608-1988, paragraph 1.3.
    (r) Manufacturing irregularities. (1) Repairs to the shield and/or 
armor are not permitted in cable supplied to end users under this 
section.
    (2) Minor defects in jackets (defects having a dimension of 3 
millimeters (0.125 inch.) or less in any direction) may be repaired by 
means of heat fusing in accordance with good commercial practices 
utilizing sheath grade compounds.
    (s) Preparation for shipment. (1) The cable must be shipped on 
reels. The diameter of the drum must be large enough to prevent damage 
to the cable from reeling or unreeling. The reels must be substantial 
and so constructed as to prevent damage to the cable during shipment and 
handling.
    (2) The thermal wrap must comply with the requirements of ANSI/ICEA 
S-84-608-1988, paragraph 10.3. When a thermal reel wrap is supplied, the 
wrap must be applied to the reel and must be suitably secured in place 
to minimize thermal exposure to the cable during storage and shipment. 
The use of the thermal reel wrap as a means of reel protection will be 
at the option of the

[[Page 744]]

manufacturer unless specified by the end user.
    (3) The outer end of the cable must be securely fastened to the reel 
head so as to prevent the cable from becoming loose in transit. The 
inner end of the cable must be securely fastened in such a way as to 
make it readily available if required for electrical testing. Spikes, 
staples, or other fastening devices which penetrate the cable jacket 
must not be used. The method of fastening the cable ends must be 
acceptable to RUS and accepted prior to its use.
    (4) Each length of cable must be wound on a separate reel unless 
otherwise specified or agreed to by the purchaser.
    (5) The arbor hole must admit a spindle 63 millimeters (2.5 inches) 
in diameter without binding. Steel arbor hole liners may be used but 
must be accepted by RUS prior to their use.
    (6) Each reel must be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the cable on the reel.
    (7) Each reel must be stenciled or labeled on either one or both 
sides with the information specified in ANSI/ICEA S-84-608-1988, 
paragraph 10.4 and the RUS cable designation:

Cable Designation

BFCE
Cable Construction
Pair Count
Conductor Gauge

E = Expanded Insulation
A = Coated Aluminum Shield
C = Copper Shield
Y = Gopher Resistant Shield
X = Armored, Separate Shield
H = T1 Screened Cable
H1C = T1C Screened Cable
P = Preconnectorized

    Example: BFCEXH100-22

Buried Filled Cable, Expanded Insulation, Armored (w/separate shield), 
T1 Screened Cable, 100 pair, 22 AWG.

    (8) When cable manufactured to the requirements of this 
specification is shipped, both ends must be equipped with end caps 
acceptable to RUS.
    (9) When preconnectorized cables are shipped, the splicing modules 
must be protected to prevent damage during shipment and handling. The 
protection method must be acceptable to RUS and accepted prior to its 
use.
    (10) All cables ordered for use in underground duct applications 
must be equipped with a factory-installed pulling-eye on the outer end 
in accordance with ANSI/ICEA S-84-608-1988, paragraph 10.5.2.

(The information and recordkeeping requirements of this section have 
been approved by the Office of Management and Budget (OMB) under the 
control number 0572-0059)

         Appendix A to Sec. 1755.890--Qualification Test Methods

    (I) The test procedures described in this appendix are for 
qualification of initial cable designs and major modifications of 
accepted designs. Included in (V) of this appendix are suggested formats 
that may to be used in submitting test results to RUS.
    (II) Sample selection and preparation. (1) All testing must be 
performed on lengths removed sequentially from the same 25 pair, 22 
gauge jacketed cable. This cable must not have been exposed to 
temperatures in excess of 38  deg.C since its initial cool down after 
sheathing. The lengths specified are minimum lengths and if desirable 
from a laboratory testing standpoint longer lengths may be used.
    (a) Length A must be 10 0.2 meters (33 0.5 feet) long and must be 
maintained at 23 3  deg.C. One length is required.
    (b) Length B must be 12 0.2 meters (40 0.5 feet) long. Prepare the 
test sample by removing the jacket, shield or shield/armor, and core 
wrap for a sufficient distance on both ends to allow the insulated 
conductors to be flared out. Remove sufficient conductor insulation so 
that appropriate electrical test connections can be made at both ends. 
Coil the sample with a diameter of 15 to 20 times its sheath diameter. 
Three lengths are required.
    (c) Length C must be one meter (3 feet) long. Four lengths are 
required.
    (d) Length D must be 300 millimeters (1 foot) long. Four lengths are 
required.
    (e) Length E must be 600 millimeters (2 feet) long. Four lengths are 
required.
    (f) Length F must be 3 meters (10 feet) long and must be maintained 
at 23 3  deg.C for the duration of the test. Two lengths are required.
    (2) Data reference temperature. Unless otherwise specified, all 
measurements must be made at 23 3  deg.C.
    (III) Environmental tests--(1) Heat aging test--(a) Test samples. 
Place one sample each of lengths B, C, D, and E in an oven or 
environmental chamber. The ends of Sample B must exit from the chamber 
or oven for electrical tests. Securely seal the oven exit holes.

[[Page 745]]

    (b) Sequence of tests. The samples are to be subjected to the 
following tests after conditioning:
    (i) Water Immersion Test outlined in (III)(2) of this appendix;
    (ii) Water Penetration Test outlined in (III)(3) of this appendix;
    (iii) Insulation Compression Test outlined in (III)(4) of this 
appendix; and
    (iv) Jacket Slip Strength Test outlined in (III)(5) of this 
appendix.
    (c) Initial Measurements. (i) For Sample B measure the open circuit 
capacitance for each odd numbered pair at 1, 150, and 772 kilohertz, and 
the attenuation at 150 and 772 kilohertz after conditioning the sample 
at the data reference temperature for 24 hours. Calculate the average 
and standard deviation for the data of the 13 pairs on a per kilometer 
or (on a per mile) basis.
    (ii) The attenuation at 150 and 772 kilohertz may be calculated from 
open circuit admittance (Yoc) and short circuit impedance (Zsc) or may 
be obtained by direct measurement of attenuation.
    (iii) Record on suggested formats in (V) of this appendix or on 
other easily readable formats.
    (d) Heat conditioning. (i) Immediately after completing the initial 
measurements, condition the sample for 14 days at a temperature of 65 2 
 deg.C.
    (ii) At the end of this period note any exudation of cable filler. 
Measure and calculate the parameters given in (III)(1)(c) of this 
appendix. Record on suggested formats in (V) of this appendix or other 
easily readable formats.
    (iii) Cut away and discard a one meter (3 foot) section from each 
end of length B.
    (e) Overall electrical deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning and the initial parameters in (III)(1)(c) of this appendix.
    (ii) The stability of the electrical parameters after completion of 
this test must be within the following prescribed limits:
    (A) Capacitance. The average mutual capacitance must be within 5 
percent of its original value;
    (B) The change in average mutual capacitance must be less than 5 
percent over frequency 1 to 150 kilohertz; and
    (C) Attenuation. The 150 and 772 kilohertz attenuation must not have 
increased by more than 5 percent over their original values.
    (2) Water immersion electrical test--(a) Test sample selection. The 
10 meter (33 foot) section of length B must be tested.
    (b) Test sample preparation. Prepare the sample by removing the 
jacket, shield or shield/armor, and core wrap for sufficient distance to 
allow one end to be accessed for test connections. Cut out a series of 6 
millimeter (0.25 inch.) diameter holes along the test sample, at 30 
centimeters (1 foot) intervals progressing successively 90 degrees 
around the circumference of the cable. Assure that the cable core is 
exposed at each hole by slitting the core wrapper. Place the prepared 
sample in a dry vessel which when filled will maintain a one meter (3 
foot) head of water over 6 meters (20 feet) of uncoiled cable. Extend 
and fasten the ends of the cable so they will be above the water line 
and the pairs are rigidly held for the duration of the test.
    (c) Capacitance testing. Measure the initial values of mutual 
capacitance of all odd pairs in each cable at a frequency of 1 kilohertz 
before filling the vessel with water. Be sure the cable shield or 
shield/armor is grounded to the test equipment. Fill the vessels until 
there is a one meter (3 foot) head of water on the cables.
    (i) Remeasure the mutual capacitance after the cables have been 
submerged for 24 hours and again after 30 days.
    (ii) Record each sample separately on suggested formats attached or 
on other easily readable formats.
    (d) Overall electrical deviation. (i) Calculate the percent change 
in all average parameters between the final parameters after 
conditioning with the initial parameters in (III)(2)(c) of this 
appendix.
    (ii) The average mutual capacitance must be within 5 percent of its 
original value.
    (3) Water penetration testing. (a) A watertight closure must be 
placed over the jacket of length C. The closure must not be placed over 
the jacket so tightly that the flow of water through pre-existing voids 
of air spaces is restricted. The other end of the sample must remain 
open.
    (b) Test per Option A or Option B--(i) Option A. Weigh the sample 
and closure prior to testing. Fill the closure with water and place 
under a continuous pressure of 10 0.7 kilopascals (1.5 0.1 pounds per 
square inch gauge) for one hour. Collect the water leakage from the end 
of the test sample during the test and weigh to the nearest 0.1 gram. 
Immediately after the one hour test, seal the ends of the cable with a 
thin layer of grease and remove all visible water from the closure, 
being careful not to remove water that penetrated into the core during 
the test. Reweigh the sample and determine the weight of water that 
penetrated into the core. The weight of water that penetrated into the 
core must not exceed 6 grams.
    (ii) Option B. Fill the closure with a 0.2 gram sodium fluorscein 
per liter water solution and apply a continuous pressure 10 0.7 
kilopascals (1.5 0.1 pounds per square inch gauge) for one hour. Catch 
and weigh any water that leaks from the end of the cable during the one 
hour period. If no water leaks from the sample, carefully remove the 
water from the closure. Then carefully remove the jacket, shield or 
shield/ armor, and core wrap

[[Page 746]]

one at a time, examining with an ultraviolet light source for water 
penetration. After removal of the core wrap, carefully dissect the core 
and examine for water penetration within the core. Where water 
penetration is observed, measure the penetration distance. The distance 
of water penetration into the core must not exceed 127 millimeters (5.0 
inches).
    (4) Insulation compression test--(a) Test sample D. Remove jacket, 
shield or shield/armor, and core wrap being careful not to damage the 
conductor insulation. Remove one pair from the core and carefully 
separate, wipe off core filler and straighten the insulated conductors. 
Retwist the two insulated conductors together under sufficient tension 
to form 10 evenly spaced 360 degree twists in a length of 10 centimeters 
(4 inches).
    (b) Sample testing. Center the mid 50 millimeters (2 inches) of the 
twisted pair between 2 smooth rigid parallel metal plates that are 50 
millimeters x 50 millimeters (2 inches x 2 inches). Apply a 1.5 volt 
direct current potential between the conductors, using a light or buzzer 
to indicate electrical contact between the conductors. Apply a constant 
load of 67 newtons (l5 pound-force) on the sample for one minute and 
monitor for evidence of contact between the conductors. Record results 
on suggested formats in (V) of this appendix or on other easily readable 
formats.
    (5) Jacket slip strength test--(a) Sample selection. Test Sample E 
from (III)(1)(a) of this appendix.
    (b) Sample preparation. Prepare test sample in accordance with the 
procedures specified in ASTM D 4565-90a.
    (c) Sample conditioning and testing. Remove the sample from the 
tensile tester prior to testing and condition for one hour at 50 2 
deg.C. Test immediately in accordance with the procedures specified in 
ASTM D 4565-90a. A minimum jacket slip strength of 67 newtons (15 pound-
force) is required. Record the highest load attained.
    (6) Humidity exposure. (a) Repeat steps (III)(1)(a) through 
(III)(1)(c)(iii) of this appendix for separate set of samples B, C, D, 
and E which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, expose the test 
sample to 100 temperature cyclings. Relative humidity within the chamber 
must be maintained at 90 2 percent. One cycle consists of beginning at 
a stabilized chamber and test sample temperature of 52 1  deg.C, 
increasing the temperature to 57 1  deg.C, allowing the chamber and 
test samples to stabilize at this level, then dropping the temperature 
back to 52 1  deg.C.
    (c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this 
appendix.
    (7) Temperature cycling. (a) Repeat steps (III)(1)(a) through 
(III)(1)(c)(iii) of this appendix for separate set of samples B, C, D, 
and E which have not been subjected to prior environmental conditioning.
    (b) Immediately after completing the measurements, subject the test 
sample to the 10 cycles of temperature between a minimum of -40  deg.C 
and +60  deg.C. The test sample must be held at each temperature extreme 
for a minimum of 1\1/2\ hours during each cycle of temperature. The air 
within the temperature cycling chamber must be circulated throughout the 
duration of the cycling.
    (c) Repeat steps (III)(1)(d)(ii) through (III)(5)(c) of this 
appendix.
    (IV) Control sample--(1) Test samples. A separate set of lengths A, 
C, D, E, and F must have been maintained at 23 3  deg.C for at least 48 
hours before the testing.
    (2) Repeat steps (III)(2) through (III)(5)(c) of this appendix 
except use length A instead of length B.
    (3) Surge test. (a) One length of sample F must be used to measure 
the breakdown between conductors while the other length of F must be 
used to measure the core to shield breakdown.
    (b) The samples must be capable of withstanding without damage, a 
single surge voltage of 15 kilovolts peak between conductors, and a 25 
kilovolts peak surge voltage between conductors and the shield or 
shield/armor as hereinafter described. The surge voltage must be 
developed from a capacitor discharged through a forming resistor 
connected in parallel with the dielectric of the test sample. The surge 
generator constants must be such as to produce a surge of 1.5 x 40 
microsecond wave shape.
    (c) The shape of the generated wave must be determined at a reduced 
voltage by connecting an oscilloscope across the forming resistor with 
the cable sample connected in parallel with the forming resistor. The 
capacitor bank is charged to the test voltage and then discharged 
through the forming resistor and test sample. The test sample will be 
considered to have passed the test if there is no distinct change in the 
wave shape obtained with the initial reduced voltage compared to that 
obtained after the application of the test voltage.
    (V) The following suggested formats may be used in submitting the 
test results to RUS:

[[Page 747]]



                Environmental Conditioning--------------
                          Frequency 1 kilohertz
------------------------------------------------------------------------
                                                  Capacitance
                                      ----------------------------------
             Pair Number                     nF/km (nanofarad/mile)
                                      ----------------------------------
                                            Initial           Final
------------------------------------------------------------------------
1                                      ------------      ------------
3                                      ------------      ------------
5                                      ------------      ------------
7                                      ------------      ------------
9                                      ------------      ------------
11                                     ------------      ------------
13                                     ------------      ------------
15                                     ------------      ------------
17                                     ------------      ------------
19                                     ------------      ------------
21                                     ------------      ------------
23                                     ------------      ------------
25                                     ------------      ------------
Average x                              ------------      ------------
------------------------------------------------------------------------
Overall Percent Difference in Average x --------------


                Environmental Conditioning--------------
                         Frequency 150 kilohertz
------------------------------------------------------------------------
                                    Capacitance          Attenuation
                               -----------------------------------------
                                 nF/km (nanofarad/     dB/km (decibel/
          Pair Number                  mile)                mile)
                               -----------------------------------------
                                 Initial     Final    Initial     Final
------------------------------------------------------------------------
1                               ------     ------    ------     ------
3                               ------     ------    ------     ------
5                               ------     ------    ------     ------
7                               ------     ------    ------     ------
9                               ------     ------    ------     ------
11                              ------     ------    ------     ------
13                              ------     ------    ------     ------
15                              ------     ------    ------     ------
17                              ------     ------    ------     ------
19                              ------     ------    ------     ------
21                              ------     ------    ------     ------
23                              ------     ------    ------     ------
25                              ------     ------    ------     ------
Average x                       ------     ------    ------     ------
------------------------------------------------------------------------
Overall Percent Difference in Average x      Capacitance:------------
    Conductance:------------


                Environmental Conditioning--------------
                         Frequency 772 kilohertz
------------------------------------------------------------------------
                                    Capacitance          Attenuation
                               -----------------------------------------
                                 nF/km (nanofarad/     dB/km (decibel/
          Pair Number                  mile)                mile)
                               -----------------------------------------
                                 Initial     Final    Initial     Final
------------------------------------------------------------------------
1                               ------     ------    ------     ------
3                               ------     ------    ------     ------
5                               ------     ------    ------     ------
7                               ------     ------    ------     ------
9                               ------     ------    ------     ------
11                              ------     ------    ------     ------
13                              ------     ------    ------     ------
15                              ------     ------    ------     ------
17                              ------     ------    ------     ------
19                              ------     ------    ------     ------
21                              ------     ------    ------     ------
23                              ------     ------    ------     ------
25                              ------     ------    ------     ------
Average x                       ------     ------    ------     ------
------------------------------------------------------------------------
Overall Percent Difference in Average x      Capacitance:------------
    Conductance:------------


                Environmental Conditioning--------------
                   Water Immersion Test (1 kilohertz)
------------------------------------------------------------------------
                                                Capacitance
                                  --------------------------------------
           Pair Number                     nF/km (nanofarad/mile)
                                  --------------------------------------
                                      Initial      24 Hours      Final
------------------------------------------------------------------------
1                                  ------        ------       ------
3                                  ------        ------       ------
5                                  ------        ------       ------
7                                  ------        ------       ------
9                                  ------        ------       ------
11                                 ------        ------       ------
13                                 ------        ------       ------
15                                 ------        ------       ------
17                                 ------        ------       ------
19                                 ------        ------       ------
21                                 ------        ------       ------
23                                 ------        ------       ------
25                                 ------        ------       ------
Average x                          ------        ------       ------
------------------------------------------------------------------------
Overall Percent Difference in Average x --------------


                                             Water Penetration Test
----------------------------------------------------------------------------------------------------------------
                                                  Option A                                Option B
                                  ------------------------------------------------------------------------------
                                                                                                 Penetration mm
                                    End Leakage grams   Weight Gain grams   End Leakage grams        (in.)
----------------------------------------------------------------------------------------------------------------
Control..........................
                                  ------------------------------------------------------------------------------
Heat Age.........................
                                  ------------------------------------------------------------------------------
Humidity Exposure................
                                  ------------------------------------------------------------------------------
Temperature Cycling..............
                                  ------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------


                         Insulation Compression
------------------------------------------------------------------------
                                                      Failures
------------------------------------------------------------------------
Control...................................  ----------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                    Jacket Slip Strength @ 50  deg.C
------------------------------------------------------------------------
                                               Load in newtons (pound-
                                                       force)
------------------------------------------------------------------------
Control...................................  ----------------
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------

[[Page 748]]

 
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                        Filler Exudation (grams)
Heat Age..................................  ----------------
Humidity Exposure.........................  ----------------
Temperature Cycling.......................  ----------------
------------------------------------------------------------------------


                         Surge Test (kilovolts)
Conductor to Conductor....................  ----------------
Shield to Conductors......................  ----------------
------------------------------------------------------------------------


[58 FR 29328, May 20, 1993, as amended at 60 FR 1711, Jan. 5, 1995; 69 
FR 18803, Apr. 9, 2004]



Sec. 1755.900  Abbreviations and Definitions.

    The following abbreviations and definitions apply to Secs. 1755.901 
and 1755.902:

(a) Abbreviations.
(1) ADSS  All dielectric self-supporting;
(2) ASTM  American Society for Testing and Materials;
(3)  deg.C  Centigrade temperature scale;
(4) dB  Decibel;
(5) CSM  Central strength member;
(6) dB/km  Decibels per 1 kilometer;
(7) ECCS  Electrolytic chrome coated steel;
(8) EIA  Electronic Industries Alliance;
(9) EIA/TIA  Electronic Industries Alliance/Telecommunications Industry 
          Association;
(10) FTTH  Fiber-to-the-Home;
(11) Gbps  Gigabit per second or Gbit/s;
(12) GE  General Electric;
(13) HDPE  High density polyethylene;
(14) ICEA  Insulated Cable Engineers Association, Inc.;
(15) Km  kilometer(s;)
(16) LDPE  Low density polyethylene;
(17) m  meter(s;)
(18) Max.  Maximum;
(19) Mbit  Megabits;
(20) MDPE  Medium density polyethylene;
(21) MHz-km  Megahertz-kilometer;
(22) Min.  Minimum;
(23) MFD  Mode-Field Diameter;
(24) nm  Nanometer(s;)
(25) N  Newton(s;)
(26) NA  Numerical aperture;
(27) NESC  National Electrical Safety Code;
(28) OC  Optical cable;
(29) O.D.  Outside Diameter;
(30) OF  Optical fiber;
(31) OSHA  Occupational Safety and Health Administration;
(32) OTDR  Optical Time Domain Reflectometer;
(33) %  Percent;
(34) ps/(nm [middot] km)  Picosecond per nanometer times kilometer;
(35) ps/(nm\2\ [middot] km)  Picosecond per nanometer squared times 
          kilometer;
(36) PMD  Polarization Mode Dispersion;
(37) RUS  Rural Utilities Service;
(38) s  Second(s);
(39) SI  International System (of Units) (From the French Syst[egrave]me 
          international d'unit[eacute]s); and
(40) [micro]m  Micrometer.

    (b) Definitions--(1) Accept; Acceptance means Agency action of 
providing the manufacturer of a product with a letter by mail or 
facsimile that the Agency has determined that the manufacturer's product 
meets its requirements. For information on how to obtain Agency product 
acceptance, refer to the procedures listed at http://www.usda.gov/rus/
telecom/listing--procedures/index--listing--procedures.htm, as well as 
additional information in RUS Bulletin 345-3, Acceptance of Standards, 
Specifications, Equipment Contract Forms, Manual Sections, Drawings, 
Materials and Equipment for the Telephone Program, available for 
download at http://www.usda.gov/rus/telecom/publications/bulletins.htm.
    (2) Agency means the Rural Utilities Service, an Agency which 
delivers the United States Department of Agriculture's Rural Development 
Utilities Programs.
    (3) Armor means a metal tape installed under the outer jacket of the 
cable intended to provide mechanical protection during cable 
installation and environmental protection against rodents, termites, 
etc.
    (4) Attenuation means the loss of power as the light travels in the 
fiber usually expressed in dB/km.
    (5) Bandwidth means the range of signal frequencies that can be 
transmitted by a communications channel with defined maximum loss or 
distortion. Bandwidth indicates the information-carrying capacity of a 
channel.
    (6) Birefringence means the decomposition of a pulse of light 
entering the fiber into ``two polarized pulses'' traveling at different 
velocities due to the different refractive indexes in the polarization 
axes in which the electric fields oscillate. Different refractive 
indexes in the fiber may be caused by an

[[Page 749]]

asymmetric fiber core, internal manufacturing stresses, or through 
external stresses from cabling and installation of the fiber optic 
cable, such as bending and twisting.
    (7) Cable cutoff wavelength means the shortest wavelength at which 
only one mode light can be transmitted in any of the single mode fibers 
of an optical fiber cable.
    (8) Chromatic dispersion means the broadening of a light pulse as it 
travels down the length of an optical fiber, resulting in different 
spectral components of the light pulse traveling at different speeds, 
due to the fact that the index of refraction of the fiber core is 
different for different wavelengths.
    (9) Cladding means the outer layer of an optical fiber made of glass 
or other transparent material that is fused to the fiber core. The 
cladding concentrically surrounds the fiber core. It has a lower 
refractive index than the core, so light travelling in the fiber is 
maintained in the core by internal reflection at the core-cladding 
interface.
    (10) Core means the central region of an optical waveguide or fiber 
which has a higher refractive index than the cladding through which 
light is transmitted.
    (11) Cutoff wavelength means, in single mode fiber, the shortest 
wavelength at which only the fundamental mode of an optical wavelength 
can propagate.
    (12) Dielectric cable means a cable which has neither metallic 
members nor other electrically conductive materials or elements.
    (13) Differential group delay means the arrival time differential of 
the two polarized light components of a light pulse traveling through 
the optical fiber due to birefringence.
    (14) Graded Refractive Index Profile means the refractive index 
profile of an optical fiber that varies smoothly with radius from the 
center of the fiber to the outer boundary of the cladding.
    (15) List of Acceptable Materials means the latest edition of RUS 
Informational Publication 344-2, ``List of Materials Acceptable for Use 
on Telecommunications Systems of RUS Borrowers.'' This document contains 
a convenient listing of products which have been determined to be 
acceptable by the Agency. The List of Acceptable Materials is available 
on the Internet at http://www.usda.gov/rus/telecom/materials/
lstomat.htm.
    (16) Loose tube buffer means the protective tube that loosely 
contains the optical fibers within the fiber optic cable, often filled 
with suitable water blocking material.
    (17) Matched cable means fiber optic cable manufactured to meet the 
requirement of this section for which the calculated splice loss using 
the formula below is [le]0.06 dB for any two cabled fibers to be 
spliced.

LOSS (dB) = -10 LOG10 [4/(MFD1/MFD2 + 
    MFD2/MFD1)\2\],

where subscripts 1 and 2 refer to any two cabled fibers to be spliced.

    (18) Mil means a measurement unit of length indicating one 
thousandth of an inch.
    (19) Minimum bending diameter means the smallest diameter that must 
be maintained while bending a fiber optic cable to avoid degrading cable 
performance indicated as a multiple of the cable diameter (Bending 
Diameter/Cable Diameter).
    (20) Mode-field diameter means the diameter of the cross-sectional 
area of an optical fiber which includes the core and portion of the 
cladding where the majority of the light travels in a single mode fiber.
    (21) Multimode fiber means an optical fiber in which light travels 
in more than one bound mode. A multimode fiber may either have a graded 
index or step index refractive index profile.
    (22) Numerical Aperture (NA) means an optical fiber parameter that 
indicates the angle of acceptance of light into a fiber.
    (23) Optical fiber means any fiber made of dielectric material that 
guides light.
    (24) Optical point discontinuities means the localized deviations of 
the optical fiber loss characteristic which location and magnitude may 
be determined by appropriate OTDR measurements of the fiber.
    (25) Optical waveguide means any structure capable of guiding 
optical power. In optical communications, the term generally refers to a 
fiber designed to transmit optical signals.

[[Page 750]]

    (26) Polarization mode dispersion means, for a particular length of 
fiber, the average of the differential group delays of the two polarized 
components of light pulses traveling in the fiber, when the light pulses 
are generated from a sufficient narrow band source. The differential 
group delay varies randomly with time and wavelength. The term PMD is 
used in the industry in the general sense to indicate the phenomenon of 
birefringence (polarized light having different group velocities), and 
used specifically to refer to the value of time delay expected in a 
specific length of fiber.
    (27) PMDQ means the statistical upper bound for the PMD 
coefficient of a fiber optic cable link composed of M number of randomly 
chosen concatenated fiber optic cable sections of the same length. The 
upper bound is defined in terms of a probability level Q, which is the 
probability that a concatenated PMD coefficient value exceeds 
PMDQ. ITU G recommendations for fiber optic cables call for M 
= 20 and Q = 0.01%. This PMDQ value is the one used in the 
design of fiber optic links.
    (28) Ribbon means a planar array of parallel optical fibers.
    (29) Shield means a conductive metal tape placed under the cable 
jacket to provide lightning protection, bonding, grounding, and 
electrical shielding.
    (30) Single mode fiber means an optical fiber in which only one 
bound mode of light can propagate at the wavelength of interest.
    (31) Step Refractive Index Profile means an index profile 
characterized by a uniform refractive index within the core, a sharp 
decrease in refractive index at the core-cladding interface, and a 
uniform refractive index within the cladding.
    (32) Tight tube buffer means one or more layers of buffer material 
tightly surrounding a fiber that is in contact with the coating of the 
fiber.

[74 FR 20561, May 5, 2009]



Sec. 1755.901  Incorporation by Reference.

    (a) Incorporation by reference. The materials listed here are 
incorporated by reference where noted. These incorporations by reference 
were approved by the Director of the Federal Register in accordance with 
5 U.S.C. 552(a) and 1 CFR part 51. These materials are incorporated as 
they exist on the date of the approval, and notice of any change in 
these materials will be published in the Federal Register. The materials 
are available for purchase at the corresponding addresses noted below. 
All are available for inspection at the Rural Development Utilities 
Programs, during normal business hours at room 2849-S, U.S. Department 
of Agriculture, Washington, DC 20250. Telephone (202) 720-0699, and e-
mail [email protected]. The materials are also available for 
inspection at the National Archives and Records Administration (NARA). 
For information on the availability of these materials at NARA, call 
(202) 741-6030, or go to: http://www.archives.gov/federal--register/
code--of--federal--regulations/ibr--locations.html.
    (b) The American National Standards Institute/Institute of 
Electrical and Electronics Engineers, Inc. ANSI/IEEE C2-2007, The 
National Electrical Safety Code, 2007 edition, approved April 20, 2006, 
(``ANSI/IEEE C2-2007''), incorporation by reference approved for 
Sec. 1755.902(a), Sec. 1755.902(p), Sec. 1755.903(a), Sec. 1755.903(k) 
and Sec. 1755.903(n). ANSI/IEEE C2-2007 is available for purchase from 
IEEE Service Center, 445 Hoes Lane, Piscataway, NJ 08854, telephone 1-
800-678-4333 or online at http://standards.ieee.org/nesc/index.html.
    (c) The following Insulated Cable Engineers Association standards 
are available for purchase from the Insulated Cable Engineers, Inc. 
(ICEA), P.O. Box 1568, Carrollton, GA 30112 or from Global Engineering 
Documents, 15 Iverness Way East, Englewood, CO 80112, telephone 1-800-
854-7179 (USA and Canada) or 303-792-2181 (International), or online at 
http://global.ihs.com:
    (1) ICEA S-110-717-2003, Standard for Optical Drop Cable, 1st 
edition, September 2003 (``ICEA S-110-717''), incorporation by reference 
approved for Sec. 1755.903(a), Sec. 1755.903(b), Sec. 1755.903(c), 
Sec. 1755.903(d), Sec. 1755.903(e), Sec. 1755.903(f), Sec. 1755.903(g), 
Sec. 1755.903(l), Sec. 1755.903(n), Sec. 1755.903(p), Sec. 1755.903(u); 
and
    (2) ANSI/ICEA S-87-640-2006, Standard for Optical Fiber Outside 
Plant Communications Cable, 4th edition, December

[[Page 751]]

2006 (``ANSI/ICEA S-87-640''), incorporation by reference approved for 
Sec. 1755.902(a), Sec. 1755.902(b), Sec. 1755.902(c), Sec. 1755.902(d), 
Sec. 1755.902(e), Sec. 1755.902(i), Sec. 1755.902(l), Sec. 1755.902(m), 
Sec. 1755.902(n), Sec. 1755.902(p), Sec. 1755.902(q), Sec. 1755.902(r), 
Sec. 1755.902(u), Sec. 1755.903(b), Sec. 1755.903(g), Sec. 1755.903(l), 
Sec. 1755.903(o), Sec. 1755.903(p), and Sec. 1755.903(s).
    (d) The following American Society for Testing and Materials (ASTM) 
standards are available for purchase from ASTM International, 100 Barr 
Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959. Telephone 
(610) 832-9585, Fax (610) 832-9555, by e-mail at [email protected], or 
online at http://www.astm.org or from ANSI, 1916 Race Street, 
Philadelphia, PA 19103, telephone (215) 299-5585, or online at http://
webstore.ansi.org/ansidocstore/default.asp:
    (1) ASTM A 640-97, (Reapproved 2002) e1, Standard 
Specification for Zinc-Coated Steel Strand for Messenger Support of 
Figure 8 Cable, approved September 2002 (``ASTM A 640''), incorporation 
by reference approved for Sec. 1755.902(n);
    (2) ASTM B 736-00, Standard Specification for Aluminum, Aluminum 
Alloy and Aluminum-Clad Steel Cable Shielding Stock, approved May 10, 
2000 (``ASTM B 736''), incorporation by reference approved for 
Sec. 1755.902(m) and Sec. 1755.903(j);
    (3) ASTM D 4565-99, Standard Test Methods for Physical and 
Environmental Performance Properties of Insulations and Jackets for 
Telecommunications Wire and Cable, approved March 10, 1999 (``ASTM D 
4565''), incorporation by reference approved for Sec. 1755.902(c), 
Sec. 1755.902(m), Sec. 1755.903(c) and Sec. 1755.903(j);
    (4) ASTM D 4566-98, Standard Test Methods for Electrical Performance 
Properties of Insulations and Jackets for Telecommunications Wire and 
Cable, approved December 10, 1998 (``ASTM D 4566''), incorporation by 
reference approved for Sec. 1755.902(f), Sec. 1755.902(t) and 
Sec. 1755.903(t); and
    (5) ASTM D 4568-99, Standard Test Methods for Evaluating 
Compatibility Between Cable Filling and Flooding Compounds and 
Polyolefin Wire and Cable Materials, approved April 10, 1999 (``ASTM D 
4568''), incorporation by reference approved for Sec. 1755.902(h).
    (e) The following Telecommunications Industry Association/
Electronics Industries Association (TIA/EIA) standards are available 
from Electronic Industries Association, Engineering Department, 1722 Eye 
Street, NW., Washington, DC 20006; or from Global Engineering Documents, 
15 Iverness Way East, Englewood, CO 80112, telephone 1-800-854-7179 (USA 
and Canada) or (303) 792-2181 (International), or online at http://
global.ihs.com; or from TIA, 2500 Wilson Blvd, Suite 300, Arlington, VA 
22201, telephone 1-800-854-7179 or online http://www.tiaonline.org/
standards/catalog:
    (1) TIA/EIA Standard 455-3A, FOTP-3, Procedure to Measure 
Temperature Cycling on Optical Fibers, Optical Cable, and Other Passive 
Fiber Optic Components, approved May 1989, (``TIA/EIA Standard 455-
3A''), incorporation by reference approved for Sec. 1755.902(r).
    (2) [Reserved]
    (f) The following International Telecommunication Union (ITU) 
recommendations may be obtained from ITU, Place des Nations, 1211 Geneva 
20, Switzerland, telephone +41 22 730 6141 or online at http://
www.itu.int/ITU-T/publications/recs.html:
    (1) ITU-T Recommendation G.652, Series G: Transmission Systems and 
Media, Digital Systems and Networks, Transmission media 
characteristics--Optical fibre cables, Characteristics of a single-mode 
optical fibre and cable, approved June 2005 (``ITU-T Recommendation 
G.652''), incorporation by reference approved for Sec. 1755.902(b), 
Sec. 1755.902(q), Sec. 1755.903(b) and Sec. 1755.903(o);
    (2) ITU-T Recommendation G.655, Series G: Transmission Systems and 
Media, Digital Systems and Networks, Transmission media 
characteristics--Optical fibre cables, Characteristics of a non-zero 
dispersion-shifted single-mode optical fibre and cable, approved March 
2006 (``ITU-T Recommendation G.655''), incorporation by reference 
approved for Sec. 1755.902(b) and Sec. 1755.902(q);
    (3) ITU-T Recommendation G.656, Series G: Transmission Systems and 
Media, Digital Systems and Networks, Transmission media 
characteristics--Optical fibre cables, Characteristics of a fibre and 
cable with non-zero dispersion for wideband optical transport, approved 
December 2006 (``ITU-T Recommendation

[[Page 752]]

G.656''), incorporation by reference approved for Sec. 1755.902(b) and 
Sec. 1755.902(q);
    (4) ITU-T Recommendation G.657, Series G: Transmission Systems and 
Media, Digital Systems and Networks, Transmission media 
characteristics--Optical fibre cables, Characteristics of a bending loss 
insensitive single mode optical fibre and cable for the access network, 
approved December 2006 (``ITU-T Recommendation G.657''), incorporation 
by reference approved for Sec. 1755.902(b) and Sec. 1755.902(q); and
    (5) ITU-T Recommendation L.58, Series L: Construction, Installation 
and Protection of Cables and Other Elements of Outside Plant, Optical 
fibre cables: Special Needs for Access Network, approved March 2004 
(``ITU-T Recommendation L.58''), incorporation by reference approved for 
Sec. 1755.902(a).

[74 FR 20561, May 5, 2009]



Sec. 1755.902  Minimum performance Specification for fiber optic cables.

    (a) Scope. This section is intended for cable manufacturers, Agency 
borrowers, and consulting engineers. It covers the requirements for 
fiber optic cables intended for aerial installation either by attachment 
to a support strand or by an integrated self-supporting arrangement, for 
underground application by placement in a duct, or for buried 
installations by trenching, direct plowing, and directional or pneumatic 
boring.
    (1) General. (i) Specification requirements are given in SI units 
which are the controlling units in this part. Approximate English 
equivalent of units are given for information purposes only.
    (ii) The optical waveguides are glass fibers having directly-applied 
protective coatings, and are called ``fibers,'' herein. These fibers may 
be assembled in either loose fiber bundles with a protective core tube, 
encased in several protective buffer tubes, in tight buffer tubes, or 
ribbon bundles with a protective core tube.
    (iii) Fillers, strength members, core wraps, and bedding tapes may 
complete the cable core.
    (iv) The core or buffer tubes containing the fibers and the 
interstices between the buffer tubes, fillers, and strength members in 
the core structure are filled with a suitable material or water 
swellable elements to exclude water.
    (v) The cable structure is completed by an extruded overall plastic 
jacket. A shield or armor or combination thereof may be included under 
the jacket. The jacket may have strength members embedded in it, in some 
designs.
    (vi) Buried installation requires armor under the outer jacket.
    (vii) For self-supporting cable, the outer jacket may be extruded 
over the support messenger and cable core.
    (viii) Cables for mid-span applications for network access must be 
designed for easy mid-span access to the fibers. The manufacturer may 
use reversing oscillating stranding (SZ) described in section 6.4 of 
ITU-T Recommendation L.58, Construction, Installation and Protection of 
Cables and Other Elements of Outside Plant, 2004 (incorporated by 
reference at Sec. 1755.901(f)). The cable end user is cautioned that 
installed cable must be properly terminated. This includes properly 
securing rigid strength members (i.e., central strength member) and 
clamping the cable and jacket. It is important that cable components be 
secured to prevent movement of the cable or components over the 
operating conditions. Central strength member (CSM) clamps must prevent 
movement of the CSM; positive stop CSM clamps are recommended. The CSM 
must be routed as straight and as short as practical to prevent bowing 
or breaking of the CSM. The cable and jacket retention must be 
sufficient to prevent jacket slippage over the operating temperature 
range.
    (2) The normal temperature ranges for cables must meet paragraph 
1.1.3 of ANSI/ICEA S-87-640, Standard for Optical Fiber Outside Plant 
Communications Cable (incorporated by reference at Sec. 1755.901(c)).
    (3) Tensile rating. The standard installation tensile rating for 
cables is 2670 N (600 1bf), unless installation involves micro type 
cables that utilize less stress related methods of installation, i.e., 
blown micro-fiber cable or All-Dielectric Self-Supporting (ADSS) cables 
(see paragraph (c)(4) of this section).
    (4) ADSS and other self-supporting cables. Based on the storm 
loading districts referenced in Section 25, Loading

[[Page 753]]

of Grades B and C, of ANSI/IEEE C2-2007, National Electrical Safety 
Code, 2007 (incorporated by reference at Sec. 1755.901(b)) and the 
maximum span and location of cable installation provided by the end 
user, the manufacturer must provide a cable design with sag and tension 
tables showing the maximum span and sag information for that particular 
installation. The information included must be for Rule B, Ice and Wind 
Loading, and when applicable, information on Rule 250C, Extreme Wind 
Loading. Additionally, to ensure the proper ground clearance, typically 
a minimum of 4.7 m (15.5 feet), the end user should factor in the 
maximum sag under loaded conditions, as well as, height of attachment 
for each application.
    (5) Minimum bend diameter. For cable under loaded and unloaded 
conditions, the cable must have the minimum bend diameters indicated in 
paragraph 1.1.5, Minimum Bend Diameter, of the ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)). For very small cables, 
manufacturers may specify fixed cable minimum bend diameters that are 
independent of the outside diameter. For cables having a non-circular 
cross-section, the bend diameter is to be determined using the thickness 
of the cable associated with the preferential bending axis.
    (6) The cable is fully color coded so that each fiber is 
distinguishable from every other fiber. A basic color scheme of twelve 
colors allows individual fiber identification. Colored tubes, binders, 
threads, strippings, or markings provide fiber group identification.
    (7) Cables must demonstrate compliance with the qualification 
testing requirements of this section to ensure satisfactory end-use 
performance characteristics for the intended applications.
    (8) Optical cable designs not specifically addressed by this section 
may be allowed if accepted by the Agency. Justification for acceptance 
of a modified design must be provided to substantiate product utility 
and long term stability and endurance. For information on how to obtain 
Agency product acceptance, refer to the procedures listed at http://
www.usda.gov/rus/telecom/listing--procedures/index--listing--
procedures.htm, as well as additional information in RUS Bulletin 345-3, 
Acceptance of Standards, Specifications, Equipment Contract Forms, 
Manual Sections, Drawings, Materials and Equipment for the Telephone 
Program (hereinafter ``RUS Bulletin 345-3''), available for download at 
http://www.usda.gov/rus/telecom/publications/bulletins.htm.
    (9) All cables sold to RUS telecommunications borrowers for projects 
involving RUS loan funds must be accepted by the Agency's Technical 
Standards Committee ``A'' (Telecommunications). Any design change to 
existing acceptable designs must be submitted to the Agency for 
acceptance. As stated in paragraph 8 above, refer to the procedures 
listed at http://www.usda.gov/rus/telecom/listing--procedures/index--
listing--procedures.htm as well as RUS Bulletin 345-3.
    (10) The Agency intends that the optical fibers contained in the 
cables meeting the requirements of this section have characteristics 
that will allow signals having a range of wavelengths to be carried 
simultaneously.
    (b) Optical fibers. (1) The solid glass optical fibers must consist 
of a cylindrical core and cladding covered by either an ultraviolet-
cured acrylate or other suitable coating. Each fiber must be continuous 
throughout its length.
    (2) Zero-dispersion. Optical fibers must meet the fiber attributes 
of Table 2, G.652.B attributes, found in ITU-T Recommendation G.652 
(incorporated by reference at Sec. 1755.901(f)). However, when the end 
user stipulates a low water peak fiber, the optical fibers must meet the 
fiber attributes of Table 4, G.652.D attributes, found in ITU-T 
Recommendation G.652; or when the end user stipulates a low bending loss 
fiber, the optical fibers must meet the fiber attributes of Table 7-1, 
G.657 class A attributes, found in the ITU-T Recommendation G.657 
(incorporated by reference at Sec. 1755.901(f)).
    (3) Non-zero-dispersion. Optical fibers must meet the fiber 
attributes of Table 1, G.656 attributes, found in ITU-T Recommendation 
G.656 (incorporated by reference at Sec. 1755.901(f)). However, when the 
end user specifies Recommendation A, B, C, D, or E of ITU-

[[Page 754]]

T Recommendation G.655 (incorporated by reference at Sec. 1755.901(f)), 
the optical fibers must meet the fiber attributes of ITU-T 
Recommendation G.655.
    (4) Multimode fibers. Optical fibers must meet the requirements of 
paragraphs 2.1 and 2.3.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (5) Matched cable. Unless otherwise specified by the buyer, all 
single mode fiber cables delivered to a RUS-financed project must be 
manufactured to the same MFD specification. However, notwithstanding the 
requirements of paragraphs (d)(2) and (d)(3) of this section, the 
maximum MFD tolerance allowed for cable meeting the requirements of this 
section must be of a magnitude meeting the definition of ``matched 
cable,'' as defined in paragraph (b) of Sec. 1755.900. With the use of 
cables meeting this definition the user can reasonably expect that the 
average bi-directional loss of a fusion splice to be [le]0.1 dB.
    (6) Buyers will normally specify the MFD for the fibers in the 
cable. When a buyer does not specify the MFD at 1310 nm, the fibers must 
be manufactured to an MFD of 9.2 [micro]m with a maximum tolerance range 
of 0.5 [micro]m (362 20 microinch), unless the end user agrees to 
accept cable with fibers specified to a different MFD. When the end user 
does specify a MFD and tolerance conflicting with the MFD maximum 
tolerance allowed by paragraph (d)(5) of this section, the requirements 
of paragraph (d)(5) must prevail.
    (7) Factory splices are not allowed.
    (8) Coating. The optical fiber must be coated with a suitable 
material to preserve the intrinsic strength of the glass having an 
outside diameter of 250 15 micrometers (10 0.6 mils). Dimensions must 
be measured per the methods of paragraph 7.13 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)). The protective 
coverings must be free from holes, splits, blisters, and other 
imperfections and must be as smooth and concentric as is consistent with 
the best commercial practice. The diameter of the fiber, as the fiber is 
used in the cable, includes any coloring thickness or the uncolored 
coating, as the case may be. The strip force required to remove 30 3 
millimeters (1.2 0.1 inch) of protective fiber coating must be between 
1.0 N (0.2 pound-force) and 9.0 N (2 pound-force).
    (9) All optical fibers in any single length of cable must be of the 
same type, unless otherwise specified by end user.
    (10) Optical fiber dimensions and data reporting must be as required 
by paragraph 7.13.1.1 of ANSI/ICEA S-87-640 (incorporated by reference 
at Sec. 1755.901(c)).
    (c) Buffers. (1) The optical fibers contained in a tube buffer 
(loose tube), an inner jacket (unit core), a channel, or otherwise 
loosely packaged must have a clearance between the fibers and the inside 
of the container sufficient to allow for thermal expansions of the tube 
buffer without constraining the fibers. The protective container must be 
manufactured from a material having a coefficient of friction 
sufficiently low to allow the fibers free movement. The loose tube must 
contain a suitable water blocking material. Loose tubes must be 
removable without damage to the fiber when following the manufacturer's 
recommended procedures.
    (2) The tubes for single mode loose tube cables must be designed to 
allow a maximum mid-span buffer tube exposure of 6.096 meters (20 feet). 
The buyer should be aware that certain housing hardware may require 
cable designed for 6.096 meters of buffer tube storage.
    (3) Optical fibers covered in near contact with an extrusion (tight 
tube) must have an intermediate soft buffer to allow for thermal 
expansions and minor pressures. The buffer tube dimension must be 
established by the manufacturer to meet the requirement of this section. 
Tight buffer tubes must be removable without damage to the fiber when 
following the manufacturer's recommended procedures. The tight buffered 
fiber must be strippable per paragraph 7.20 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (4) Both loose tube and tight tube coverings of each color and other 
fiber package types removed from the finished cable must meet the 
following shrinkback and cold bend performance requirements. The fibers 
may be left in the tube.

[[Page 755]]

    (i) Shrinkback. Testing must be conducted per paragraph 14.1 of ASTM 
D 4565 (incorporated by reference at Sec. 1755.901(d)), using a talc bed 
at a temperature of 95  deg.C (203  deg.F). Shrinkback must not exceed 5 
percent of the original 150 millimeter (6 inches) length of the 
specimen. The total shrinkage of the specimen must be measured. (Buffer 
tube material meeting this test may not meet the mid-span test in 
paragraph (t)(15) of this section).
    (ii) Cold bend. Testing must be conducted on at least one tube from 
each color in the cable. Stabilize the specimen to -30 1  deg.C (-22 2 
 deg.F) for a minimum of four hours. While holding the specimen and 
mandrel at the test temperature, wrap the tube in a tight helix ten 
times around a mandrel with a diameter to be greater than five times the 
tube diameter or 50 mm (2 inches). The tube must show no evidence of 
cracking when observed with normal or corrected-to-normal vision.

    Note to paragraph (c)(4)(ii):
    Channel cores and similar slotted single component core designs do 
not need to be tested for cold bend.

    (d) Fiber identification. (1) Each fiber within a unit and each unit 
within the cable must be identifiable per paragraphs 4.2.1 and 4.3.1 of 
ANSI/ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (2) For the following items the colors designated for identification 
within the cable must comply with paragraphs 4.2.2 and 4.3.2 of ANSI/
ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)): loose 
buffer tubes, tight tube buffer fibers, individual fibers in multi-fiber 
tubes, slots, bundles or units of fibers, and the units in cables with 
more than one unit.
    (e) Optical fiber ribbon. (1) Each ribbon must be identified per 
paragraphs 3.4.1 and 3.4.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (2) Ribbon fiber count must be specified by the end user, i.e., 2, 
4, 6, 12, etc.
    (3) Ribbon dimensions must be as agreed by the end user and 
manufacturer per paragraph 3.4.4.1 of ANSI/ICEA S-87-640 (incorporated 
by reference at Sec. 1755.901(c)).
    (4) Ribbons must meet each of the following tests. These tests are 
included in the paragraphs of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)), indicated in parenthesis below.
    (i) Ribbon Dimensions (ANSI/ICEA S-87-640 paragraphs 7.14 through 
7.14.2)--measures ribbon dimension.
    (ii) Ribbon Twist Test (ANSI/ICEA S-87-640 paragraphs 7.15 through 
7.15.2)--evaluates the ability of the ribbon to resist splitting or 
other damage while undergoing dynamic cyclically twisting the ribbon 
under load.
    (iii) Ribbon Residual Twist Test (ANSI/ICEA S-87-640 paragraphs 7.16 
through 7.16.2)--evaluates the degree of permanent twist in a cabled 
optical ribbon.
    (iv) Ribbon Separability Test (ANSI/ICEA S-87-640 paragraphs 7.17 
through 7.17.2)--evaluates the ability to separate fibers.
    (5) Ribbons must meet paragraph 3.4.4.6 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)), Ribbon Strippability.
    (f) Strength members. (1) Strength members may be an integral part 
of the cable construction, but are not considered part of the support 
messenger for self-supporting optical cable.
    (2) The strength members may be metallic or nonmetallic.
    (3) The combined strength of all the strength members must be 
sufficient to support the stress of installation and to protect the 
cable in service.
    (4) Strength members may be incorporated into the core as a central 
support member or filler, as fillers between the fiber packages, as an 
annular serving over the core, as an annular serving over the 
intermediate jacket, embedded in the outer jacket, or as a combination 
of any of these methods.
    (5) The central support member or filler must contain no more than 
one splice per kilometer of cable. Individual fillers placed between the 
fiber packages and placed as annular servings over the core must contain 
no more than one splice per kilometer of cable. Cable sections having 
central member or filler splices must meet the same physical 
requirements as un-spliced cable sections.
    (6) In each length of completed cable having a metallic central 
member, the dielectric strength between the shield

[[Page 756]]

or armor, when present, and the metallic center member must withstand at 
least 15 kilovolts when tested per ASTM D 4566 (incorporated by 
reference at Sec. 1755.901(d)). The voltage must be applied for 3 
seconds minimum; no failures are allowed.
    (g) Cable core. (1) Protected fibers may be assembled with the 
optional central support member, fillers and strength members in such a 
way as to form a cylindrical group.
    (2) The standard cylindrical group or core designs commonly consist 
of 4, 6, 12, 18, or 24 fibers. Cylindrical groups or core designs larger 
than the sizes shown above must meet all the applicable requirements of 
this section.
    (3) When threads or tapes are used in cables using water blocking 
elements as core binders, they must be a non-hygroscopic and non-wicking 
dielectric material or be rendered by the gel or water blocking material 
produced by the ingress of water.
    (4) When threads or tapes are used as unit binders to define optical 
fiber units in loose tube, tight tube, slotted, or bundled cored 
designs, they must be non-hygroscopic and non-wicking dielectric 
material or be rendered by the filling compound or water blocking 
material contained in the binder. The colors of the binders must be per 
paragraphs (f)(2) and (f)(3) of this section.
    (h) Core water blocking. (1) To prevent the ingress of water into 
the core and water migration, a suitable filling compound or water 
blocking elements must be applied into the interior of the loose fiber 
tubes and into the interstices of the core. When a core wrap is used, 
the filling compound or water blocking elements, as the case may be, 
must also be applied to the core wrap, over the core wrap and between 
the core wrap and inner jacket when required.
    (2) The materials or elements must be homogeneous and uniformly 
mixed; free from dirt, metallic particles and other foreign matter; 
easily removed; nontoxic and present no dermal hazards. The filling 
compound and water blocking elements must contain a suitable antioxidant 
or be of such composition as to provide long term stability.
    (3) The individual cable manufacturer must satisfy the Agency that 
the filling compound or water blocking elements selected for use is 
suitable for its intended application by submitting test data showing 
compliance with ASTM D 4568 (incorporated by reference at 
Sec. 1755.901(d)). The filling compound and water blocking elements must 
be compatible with the cable components when tested per ASTM D 4568 at a 
temperature of 80  deg.C (176  deg.F). The jacket must retain a minimum 
of 85% of its un-aged tensile and elongation values.
    (i) Water blocking material. (1) Sufficient flooding compound or 
water blocking elements must be applied between the inner jacket and 
armor and between the armor and outer jacket so that voids and air 
spaces in these areas are minimized. The use of flooding compound or 
water blocking elements between the armor and outer jacket is not 
required when uniform bonding, paragraph (o)(9) of this section, is 
achieved between the plastic-clad armor and the outer jacket.
    (2) The flooding compound or water blocking elements must be 
compatible with the jacket when tested per paragraphs 7.19 and 7.19.1 of 
ANSI/ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)). The 
aged jacket must retain a minimum of 85% of its un-aged tensile strength 
and elongation values when tested per paragraph 7.19.2.3. The flooding 
compound must exhibit adhesive properties sufficient to prevent jacket 
slip when tested per paragraph 7.30.1 of ANSI/ICEA S-87-640 and meets 
paragraph 7.30.2 of ANSI/ICEA S-87-640 for minimum sheath adherence of 
14 N/mm for armored cables.
    (3) The individual cable manufacturer must satisfy the Agency by 
submitting test data showing compliance with the appropriate cable 
performance testing requirements of this section that the flooding 
compound or water blocking elements selected for use is acceptable for 
the application.
    (j) Core wrap. (1) At the option of the manufacturer, one or more 
layers of dielectric material may be applied over the core.
    (2) The core wrap(s) can be used to provide a heat barrier to 
prevent deformation or adhesion between the fiber tubes or can be used 
to contain the core.

[[Page 757]]

    (k) Inner jackets. (1) For designs with more than one jacket, the 
inner jackets must be applied directly over the core or over the 
strength members when required by the end user. The jacket must be free 
from holes, splits, blisters, or other imperfections and must be as 
smooth and concentric as is consistent with the best commercial 
practice. The inner jacket must not adhere to other cable components 
such as fibers, buffer tubes, etc.
    (2) For armored and unarmored cable, an inner jacket is optional. 
The inner jacket may absorb stresses in the cable core that may be 
introduced by armor application or by armored cable installation.
    (3) The inner jacket material and test requirements must be the same 
as the outer jacket material, except that either black or natural 
polyethylene may be used and the thickness requirements are included in 
paragraph (m)(4) of this section. In the case of natural polyethylene, 
the requirements for absorption coefficient and the inclusion of furnace 
black are waived.
    (4) The inner jacket thickness must be determined by the 
manufacturer, but must be no less than a nominal jacket thickness of 0.5 
mm (0.02 inch) with a minimum jacket thickness of 0.35 mm (0.01 inch).
    (l) Outer jacket. (1) The outer jacket must provide the cable with a 
tough, flexible, protective covering which can withstand exposure to 
sunlight, to atmosphere temperatures, and to stresses reasonably 
expected in normal installation and service.
    (2) The jacket must be free from holes, splits, blisters, or other 
imperfections and must be as smooth and concentric as is consistent with 
the best commercial practice.
    (3) The jacket must contain an antioxidant to provide long term 
stabilization and must contain a minimum of 2.35 percent concentration 
of furnace black to provide ultraviolet shielding measures as required 
by paragraph 5.4.2 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)), except that the concentration of furnace black does 
not necessarily need to be initially contained in the raw material and 
may be added later during the jacket making process.
    (4) The raw material used for the outer jacket must be one of the 
types listed below.
    (i) Type L1. Low density, polyethylene (LDPE) must conform to the 
requirements of paragraph 5.4.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (ii) Type L2. Linear low density, polyethylene (LLDPE) must conform 
to the requirements of paragraph 5.4.2 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (iii) Type M. Medium density polyethylene (MDPE) must conform to the 
requirements of paragraph 5.4.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (iv) Type H. High density polyethylene (HDPE) must conform to the 
requirements of paragraph 5.4.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (5) Particle size of the carbon selected for use must not average 
greater than 20 nm.
    (6) The outer jacketing material removed from or tested on the cable 
must be capable of meeting the performance requirements of Table 5.1 
found in ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (7) Testing Procedures. The procedures for testing the jacket 
specimens for compliance with paragraph (n)(5) of this section must be 
as follows:
    (i) Jacket material density measurement. Test per paragraphs 7.7.1 
and 7.7.2 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (ii) Tensile strength, yield strength, and ultimate elongation. Test 
per paragraphs 7.8.1 and 7.8.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (iii) Jacket material absorption coefficient test. Test per 
paragraphs 7.9.1 and 7.9.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (iv) Environmental stress crack resistance test. For large cables 
(outside diameter [ge] 30 mm (1.2 inch)), test per paragraphs 7.10.1 
through 7.10.1.2 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)). For small cables (Diameter < 30 mm (1.2 inch)), test 
per paragraphs 7.10.2 through and 7.10.2.2 of ANSI/ICEA S-87-640. A 
crack

[[Page 758]]

or split in the jacket constitutes failure.
    (v) Jacket shrinkage test. Test per paragraphs 7.11.1 and 7.11.2 of 
ANSI/ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (8) Jacket thickness. The outer jacket must meet the requirements of 
paragraphs 5.4.5.1 and 5.4.5.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (9) Jacket repairs. Repairs are allowed per paragraph 5.5 of ANSI/
ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (m) Armor. (1) A steel armor, plastic coated on both sides, is 
required for direct buried cable manufactured under this section. Armor 
is optional for duct and aerial cable, as required by the end user. The 
plastic coated steel armor must be applied longitudinally directly over 
the core wrap or the intermediate jacket and have a minimum overlap of 
3.0 millimeters (118 mils), except for small diameter cables with 
diameters of less than 10 mm (394 mils) for which the minimum overlap 
must be 2 mm (79 mils). When a cable has a shield, the armor should 
normally be applied over the shielding tape.
    (2) The uncoated steel tape must be electrolytic chrome coated steel 
(ECCS) and must meet the requirements of paragraph B.2.4 of ANSI/ICEA S-
87-640 (incorporated by reference at Sec. 1755.901(c)).
    (3) The reduction in thickness of the armoring material due to the 
corrugating or application process must be kept to a minimum and must 
not exceed 10 percent at any spot.
    (4) The armor of each length of cable must be electrically 
continuous with no more than one joint or splice allowed in any length 
of one kilometer of cable. This requirement does not apply to a joint or 
splice made in the raw material by the raw material manufacturer.
    (5) The breaking strength of any section of an armor tape, 
containing a factory splice joint, must not be less than 80 percent of 
the breaking strength of an adjacent section of the armor of equal 
length without a joint.
    (6) For cables containing no flooding compound over the armor, the 
overlap portions of the armor tape must be bonded in cables having a 
flat, non-corrugated armor to meet the mechanical requirements of 
paragraphs (t)(1) through (t)(16)(ii) of this section. If the tape is 
corrugated, the overlap portions of the armor must be sufficiently 
bonded and the corrugations must be sufficiently in register to meet the 
requirements of paragraphs (t)(1) through (t)(16)(ii) of this section.
    (7) The armor tape must be so applied as to enable the cable to pass 
the Cable Low (-30  deg.C (-22  deg.F)) and High (60  deg.C (140 
deg.F)) Temperatures Bend Test, as required by paragraph (t)(3) of this 
section.
    (8) The protective coating on the steel armor must meet the Bonding-
to-Metal, Heat Sealability, Lap-Shear and Moisture Resistance 
requirements of Type I, Class 2 coated metals per ASTM B 736 
(incorporated by reference in Sec. 1755.901(d)).
    (9) When the jacket is bonded to the plastic coated armor, the bond 
between the plastic coated armor and the outer jacket must not be less 
than 525 Newtons per meter (36 pound-force) over at least 90 percent of 
the cable circumference when tested per ASTM D 4565 (incorporated by 
reference at Sec. 1755.901(d)). For cables with strength members 
embedded in the jacket, and residing directly over the armor, the area 
of the armor directly under the strength member is excluded from the 90 
percent calculation.
    (n) Figure 8 aerial cables. (1) When self-supporting aerial cable 
containing an integrated support messenger is supplied, the support 
messenger must comply with the requirements specified in paragraphs 
D.2.1 through D.2.4 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)), with exceptions and additional provisions as follows:
    (i) Any section of a completed strand containing a joint must have 
minimum tensile strength and elongation of 29,500 Newtons (6,632 pound-
force) and 3.5 percent, respectively, when tested per the procedures 
specified in ASTM A 640 (incorporated by reference in Sec. 1755.901(d)).
    (ii) The individual wires from a completed strand which contains 
joints must not fracture when tested per the

[[Page 759]]

``Ductility of Steel'' procedures specified in ASTM A 640 (incorporated 
by reference at Sec. 1755.901(d)), except that the mandrel diameter must 
be equal to 5 times the nominal diameter of the individual wires.
    (iii) The support strand must be completely covered with a flooding 
compound that offers corrosion protection. The flooding compound must be 
homogeneous and uniformly mixed.
    (iv) The flooding compound must be nontoxic and present no dermal 
hazard.
    (v) The flooding compound must be free from dirt, metallic 
particles, and other foreign matter that may interfere with the 
performance of the cable.
    (2) Other methods of providing self-supporting cable specifically 
not addressed in this section may be allowed if accepted. Justification 
for acceptance of a modified design must be provided to substantiate 
product utility and long term stability and endurance. To obtain the 
Agency's acceptance of a modified design, refer to the product 
acceptance procedures available at http://www.usda.gov/rus/telecom/
listing--procedures/index--listing--procedures.htm, as well as RUS 
Bulletin 345-3.
    (3) Jacket thickness requirements. Jackets applied over an integral 
messenger must meet the following requirements:
    (i) The minimum jacket thickness at any point over the support 
messenger must meet the requirements of paragraph D.3 of ANSI/ICEA S-87-
640 (incorporated by reference at Sec. 1755.901(c)).
    (ii) The web dimension for self-supporting aerial cable must meet 
the requirements of paragraph D.3 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (o) Sheath slitting cord. (1) A sheath slitting cord or ripcord is 
optional.
    (2) When a sheath slitting cord is used it must be capable of 
slitting the jacket or jacket and armor, at least one meter (3.3 feet) 
length without breaking the cord at a temperature of 23 5  deg.C (73 9 
 deg.F).
    (3) The sheath slitting cord must meet the sheath slitting cord test 
described in paragraph (t)(1) of this section.
    (p) Identification markers. (1) Each length of cable must be 
permanently identified. The method of marking must be by means of 
suitable surface markings producing a clear distinguishable contrasting 
marking meeting paragraph 6.1.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)), and must meet the durability 
requirements of paragraphs 7.5.2 through 7.5.2.2 of ANSI/ICEA S-87-640.
    (2) The color of the initial marking must be white or silver. If the 
initial marking fails to meet the requirements of the preceding 
paragraphs, it will be permissible to either remove the defective 
marking and re-mark with the white or silver color or leave the 
defective marking on the cable and re-mark with yellow. No further re-
marking is permitted. Any re-marking must be done on a different portion 
of the cable's circumference where the existing marking is found and 
have a numbering sequence differing from any other marking by at least 
3,000. Any reel of cable that contains more than one set of sequential 
markings must be labeled to indicate the color and sequence of marking 
to be used. The labeling must be applied to the reel and also to the 
cable.
    (3) Each length of cable must be permanently labeled OPTICAL CABLE, 
OC, OPTICAL FIBER CABLE, or OF on the outer jacket and identified as to 
manufacturer and year of manufacture.
    (4) Each length of cable intended for direct burial installation 
must be marked with a telephone handset in compliance with requirements 
of the Rule 350G of the ANSI/IEEE C2-2007 (incorporated by reference at 
Sec. 1755.901(b)).
    (5) Each length of cable must be identified as to the manufacturer 
and year of manufacturing. The manufacturer and year of manufacturing 
may also be indicated by other means as indicated in paragraphs 6.1.2 
through 6.1.4 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (6) The number of fibers on the jacket must be marked on the jacket.
    (7) The completed cable must have sequentially numbered length 
markers in METERS or FEET at regular intervals of not more than 2 feet 
or not more than 1 meter along the outside of the jacket. Continuous 
sequential numbering must be employed in a single length of cable. The 
numbers must be

[[Page 760]]

dimensioned and spaced to produce good legibility and must be 
approximately 3 millimeters (118 mils) in height. An occasional 
illegible marking is permissible when it is located within 2 meters of a 
legible making for cables marked in meters or 4 feet for cables marked 
in feet.
    (8) Agreement between the actual length of the cable and the length 
marking on the cable jacket must be within the limits of +1 percent and 
-0 percent.
    (9) Jacket print test. Cables must meet the Jacket Print Test 
described in paragraphs 7.5.2.1 and 7.5.2.2 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (q) Performance of a finished cable--(1) Zero dispersion optical 
fiber cable. Unless otherwise specified by the end user, the optical 
performance of a finished cable must comply with the attributes of Table 
2, G.652.B attributes, found in ITU Recommendation G.652 (incorporated 
by reference at Sec. 1755.901(f)). However, when the end user stipulates 
a low water peak fiber the finished cable must meet the attributes of 
Table 4, G.652.D attributes, found in ITU-T Recommendation G.652; or 
when the end user stipulates a low bending loss fiber, the finished 
cable must meet the attributes of Table 7-1, G.657 class A attributes, 
found in ITU-T Recommendation G.657 (incorporated by reference at 
Sec. 1755.901(f)).
    (i) The attenuation methods must be per Table 8.4, Optical 
attenuation measurement methods, of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (ii) The cable must have a maximum attenuation of 0.1 dB at a point 
of discontinuity (a localized deviation of the optical fiber loss). Per 
paragraphs 8.4 and 8.4.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)), measurements must be conducted at 1310 
and 1550 nm, and at 1625 nm when specified by the end user.
    (iii) The cable cutoff wavelength ([gamma]cc) must be 
reported per paragraph 8.5.1 of ANSI/ICEA S-87-640 (incorporated by 
reference in Sec. 1755.901(c)).
    (2) Nonzero dispersion optical fiber cable. Unless otherwise 
specified by the end user, the optical performance of the finished cable 
must comply with the attributes of Table 1, G.656 attributes, found in 
ITU-T Recommendation G.656 (incorporated by reference at 
Sec. 1755.901(f)). When the buyer specifies Recommendation A, B, C, D or 
E of ITU-T Recommendation G.655 (incorporated by reference at 
Sec. 1755.901(f)), the finished cable must comply with the attributes of 
ITU-T Recommendation G.655.
    (i) The attenuation methods must be per Table 8.4, Optical 
attenuation measurement methods of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (ii) The cable must have a maximum attenuation of 0.1 dB at a point 
of discontinuity (a localized deviation of the optical fiber loss). Per 
paragraphs 8.4 and 8.4.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)), measurements must be conducted at 1310 
and 1550 nm, and at 1625 nm when specified by the end user.
    (iii) The cable cutoff wavelength ([gamma]cc) must be 
reported per paragraph 8.5.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (3) Multimode optical fiber cable. Unless otherwise specified by the 
end user, the optical performance of the fibers in a finished cable must 
comply with Table 8.1, Attenuation coefficient performance requirement 
(dB/k), Table 8.2, Multimode bandwidth coefficient performance 
requirements (MHz-km) and Table 8.3, Points discontinuity acceptance 
criteria (dB), of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (4) Because the accuracy of attenuation measurements for single mode 
fibers becomes questionable when measured on short cable lengths, 
attenuation measurements are to be made utilizing characterization cable 
lengths. Master Cable reels must be tested and the attenuation values 
measured will be used for shorter ship lengths of cable.
    (5) Because the accuracy of attenuation measurements for multimode 
fibers becomes questionable when measured on short cable lengths, 
attenuation measurements are to be made utilizing characterization cable 
lengths. If the ship length of cable is less than one kilometer, the 
attenuation values measured on longer

[[Page 761]]

lengths of cable (characterization length of cable) before cutting to 
the ship lengths of cable may be applied to the ship lengths.
    (6) Attenuation must be measured per Table 8.4, Optical Attenuation 
Measurement Methods, of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (7) The bandwidth of multimode fibers in a finished cable must be no 
less than the values specified in ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)), Table 8.2 per paragraphs 8.3.1 and 
8.3.2.
    (r) Mechanical requirements. Fiber optic cables manufactured under 
the requirements of this section must be tested by the manufacturer to 
determine compliance with such requirements. Unless otherwise specified, 
testing must be performed at the standard conditions defined in 
paragraph 7.3.1 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)). The standard optical test wavelengths to be used are 
1550 nm single mode and 1300 nm multi-mode, unless otherwise specified 
in the individual test.
    (1) Sheath slitting cord test. All cables manufactured under the 
requirements of this section must meet the Ripcord Functional Test 
described in paragraphs 7.18.1 and 7.18.2 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (2) Material compatibility and cable aging test. All cables 
manufactured under the requirements of this section must meet the 
Material Compatibility and Cable Aging Test described in paragraphs 7.19 
through 7.19.2.4 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (3) Cable low and high bend test. Cables manufactured under the 
requirements of this section must meet the Cable Low (-30  deg.C (-22 
deg.F)) and High (60  deg.C (140  deg.F)) Temperatures Bend Test per 
paragraphs 7.21 and 7.21.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (4) Compound flow test. All cables manufactured under 
therequirements of this section must meet the test described in 
paragraphs 7.23, 7.23.1, and 7.23.2 of ANSI/ICEA S-87-640 (incorporated 
by reference at Sec. 1755.901(c)).
    (5) Cyclic flexing test. All cables manufactured under the 
requirements of this section must meet the Flex Test described in 
paragraphs 7.27 through 7.27.2 of the ANSI/ICEA S-87-640 (incorporated 
by reference at Sec. 1755.901(c)).
    (6) Water penetration test. All cables manufactured under the 
requirements of this section must meet paragraphs 7.28 through 7.28.2 of 
ANSI/ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (7) Cable impact test. All cables manufactured under the 
requirements of this section must meet the Cable Impact Test described 
in paragraphs 7.29.1 and 7.29.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (8) Cable tensile loading and fiber strain test. Cables manufactured 
under the requirements of this section must meet the Cable Loading and 
Fiber Strain Test described in paragraphs 7.30 through 7.30.2 of ANSI/
ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)). This test 
does not apply to aerial self-supporting cables.
    (9) Cable compression test. All cables manufactured under 
requirements of this section must meet the Cable Compressive Loading 
Test described in paragraphs 7.31 through 7.31.2 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (10) Cable twist test. All cables manufactured under the 
requirements of this section must meet the Cable Twist Test described in 
paragraphs 7.32 through 7.32.2 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (11) Cable Lighting damage susceptibility test. Cables manufactured 
under the requirements of this section must meet the Cable Lighting 
Damage Susceptibility Test described in paragraphs 7.33 and 7.33.1 of 
ANSI/ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (12) Cable external freezing test. All cables manufactured under the 
requirements of this section must meet the Cable External Freezing Test 
described in paragraphs 7.22 and 7.22.1 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (13) Cable temperature cycling test. All cables manufactured under 
the requirements of this section must meet the

[[Page 762]]

Cable Temperature Cycling Test described in paragraph 7.24.1 of ANSI/
ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (14) Cable sheath adherence test. All cables manufactured under the 
requirements of this section must meet the Cable Sheath Adherence Test 
described in paragraphs 7.26.1 and 7.26.2 of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (15) Mid-span test. This test is applicable only to cables of a 
loose tube design specified for mid-span applications with tube storage. 
Cable of specialty design may be exempted from this requirement when 
this requirement is not applicable to such design. All buried and 
underground loose tube single mode cables manufactured per the 
requirements in this section and intended for mid-span applications with 
tube storage must meet the following mid-span test without exhibiting an 
increase in fiber attenuation greater than 0.1 dB and a maximum average 
increase over all fibers of 0.05 dB.
    (i) The specimen must be installed in a commercially available 
pedestal or closure or in a device that mimics their performance, as 
follows: A length of cable sheath, equal to the mid-span length, must be 
removed from the middle of the test specimen so as to allow access to 
the buffer tubes. All binders, tapes, strength members, etc. must be 
removed. The buffer tubes must be left intact. The cable ends defining 
the ends of the mid-span length must be properly secured in the closure 
to the more stringent of the cable or hardware manufacturer's 
recommendations. Strength members must be secured with an end stop type 
clamp and the outer jacket must be clamped to prevent slippage. A 
minimum of 6.096 meters (20 feet) of cable must extend from the entry 
and exit ports of the closure for the purpose of making optical 
measurements. If a device that mimics the performance of pedestals or 
closures is used, the buffer tubes must be wound in a coil with a 
minimum width of 3 inches and minimum length of 12 inches.
    (ii) The expressed buffer tubes must be loosely constrained during 
the test.
    (iii) The enclosure, with installed cable, must be placed in an 
environmental chamber for temperature cycling. It is acceptable for some 
or all of the two 20 feet (6.096 meters) cable segments to extend 
outside the environmental chamber.
    (iv) Lids, pedestal enclosures, or closure covers must be removed if 
possible to allow for temperature equilibrium of the buffer tubes. If 
this is not possible, the manufacturer must demonstrate that the buffer 
tubes are at temperature equilibrium prior to beginning the soak time.
    (v) Measure the attenuation of single mode fibers at 1550 10 nm. 
The supplier must certify the performance of lower specified wavelengths 
comply with the mid-span performance requirements.
    (vi) After measuring the attenuation of the optical fibers, test the 
cable sample per TIA/EIA Standard 455-3A (incorporated by reference at 
Sec. 1755.901(e)). Temperature cycling, measurements, and data reporting 
must conform to TIA/EIA Standard 455-3A. The test must be conducted for 
at least five complete cycles. The following detailed test conditions 
must apply:
    (A) TIA/EIA Standard 455-3A (incorporated by reference at 
Sec. 1755.901(e)), Section 4.1--Loose tube single mode optical cable 
sample must be tested.
    (B) TIA/EIA Standard 455-3A (incorporated by reference at 
Sec. 1755.901(e)), Section 4.2--An Agency accepted 8 to 12 inch diameter 
optical buried distribution pedestal or a device that mimics their 
performance must be tested.
    (C) Mid-span opening for installation of loose tube single mode 
optical cable in pedestal must be 6.096 meters (20 feet).
    (D) TIA/EIA Standard 455-3A (incorporated by reference at 
Sec. 1755.901(e)), Section 5.1--3 hours soak time.
    (E) TIA/EIA Standard 455-3A (incorporated by reference at 
Sec. 1755.901(e)), Section 5.2--Test Condition C-2, minimum -40  deg.C 
(-40  deg.F) and maximum 70  deg.Celsius (158  deg.F).
    (F) TIA/EIA Standard 455-3A (incorporated by reference at 
Sec. 1755.901(e)), Section 5.7.2--A statistically representative amount 
of transmitting fibers in all express buffer tubes passing through the 
pedestal and stored must be measured.

[[Page 763]]

    (G) The buffer tubes in the closure or pedestal must not be handled 
or moved during temperature cycling or attenuation measurements.
    (vii) Fiber cable attenuation measured through the express buffer 
tubes during the last cycle at -40  deg.C (-40  deg.F) and +70  deg.C 
(158  deg.F) must not exceed a maximum increase of 0.1 dB and must not 
exceed a 0.05 dB average across all tested fibers from the initial 
baseline measurements. At the conclusion of the temperature cycling, the 
maximum attenuation increase at 23  deg.C from the initial baseline 
measurement must not exceed 0.05 dB which allows for measurement noise 
that may be encountered during the test. The cable must also be 
inspected at room temperature at the conclusion of all measurements; the 
cable must not show visible evidence of fracture of the buffer tubes nor 
show any degradation of all exposed cable assemblies.
    (16) Aerial self-supporting cables. The following tests apply to 
aerial cables only:
    (i) Static tensile testing of aerial self-supporting cables. Aerial 
self-supporting cable must meet the test described in paragraphs D.4.1.1 
through D.4.1.5 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (ii) Cable galloping test. Aerial self-supporting cable made to the 
requirements of this section must meet the test described in paragraphs 
D.4.2 through D.4.2.3 of ANSI/ICEA S-87-640 (incorporated by reference 
at Sec. 1755.901(c)).
    (s) Pre-connectorized cable. (1) At the option of the manufacturer 
and upon request by the end user, the cable may be factory terminated 
with connectors.
    (2) All connectors must be accepted by the Agency prior to their 
use. To obtain the Agency's acceptance of connectors, refer to product 
acceptance procedures available at http://www.usda.gov/rus/telecom/
listing--procedures/index--listing--procedures.htm as well as RUS 
Bulletin 345-3.
    (t) Acceptance testing. (1) The tests described in the Appendix to 
this section are intended for acceptance of cable designs and major 
modifications of accepted designs. What constitutes a major modification 
is at the discretion of the Agency. These tests are intended to show the 
inherent capability of the manufacturer to produce cable products that 
have satisfactory performance characteristics, long life, and long-term 
optical stability but are not intended as field tests. After initial 
Rural Development product acceptance is granted, the manufacturer will 
need to apply for continued product acceptance in January of the third 
year after the year of initial acceptance. For information on Agency 
acceptance, refer to the product acceptance procedures available at 
http://www.usda.gov/rus/telecom/listing--procedures/index--listing--
procedures.htm, as well as RUS Bulletin 345-3.
    (2) Acceptance. For initial acceptance, the manufacturer must 
submit:
    (i) An original signature certification that the product fully 
complies with each paragraph of this section;
    (ii) Qualification Test Data, per the Appendix to this section;
    (iii) A set of instructions for handling the cable;
    (iv) OSHA Material Safety Data Sheets for all components;
    (v) Agree to periodic plant inspections;
    (vi) A certification stating whether the cable, as sold to RUS 
Telecommunications borrowers, complies with the following two 
provisions:
    (A) Final assembly or manufacture of the product, as the product 
would be used by an RUS Telecommunications borrower, is completed in the 
United States or eligible countries (currently, Mexico, Canada and 
Israel); and
    (B) The cost of United States and eligible countries' components (in 
any combination) within the product is more than 50 percent of the total 
cost of all components utilized in the product. The cost of non-domestic 
components (components not manufactured within the United States or 
eligible countries) which are included in the finished product must 
include all duties, taxes, and delivery charges to the point of assembly 
or manufacture;
    (vii) Written user testimonials concerning performance of the 
product; and
    (viii) Other nonproprietary data deemed necessary.

[[Page 764]]

    (3) Re-qualification acceptance. For submission of a request for 
continued product acceptance after the initial acceptance, follow 
paragraph (v)(1) of this section and then, in January every three years, 
the manufacturer must submit an original signature certification stating 
that the product fully complies with each paragraph of this section, 
excluding the Qualification Section, and a certification that the 
products sold to RUS Telecommunications borrowers comply with paragraphs 
(v)(2)(vi) through (v)(2)(vi)(B) of this section. The tests of the 
Appendix to this section must be conducted and records kept for at least 
three years and the data must be made available to the Agency on 
request. The required data must have been gathered within 90 days of the 
submission. A certification must be submitted to the Agency stating that 
the cable manufactured to the requirements of this section has been 
tested per the Appendix of this section and that the cable meets the 
test requirements.
    (4) Initial and re-qualification acceptance requests should be 
addressed to: Chairman, Technical Standards Committee ``A'' 
(Telecommunications), STOP 1550, Advanced Services Division, Rural 
Development Telecommunications Program, Washington, DC 20250-1500.
    (5) Tests on 100 Percent of Completed Cable. (i) The armor for each 
length of cable must be tested for continuity using the procedures of 
ASTM D 4566 (incorporated by reference at Sec. 1755.901(d)).
    (ii) Attenuation for each optical fiber in the cable must be 
measured.
    (iii) Optical discontinuities greater than 0.1 dB must be isolated 
and their location and amplitude recorded.
    (6) Capability tests. The manufacturer must establish a quality 
assurance system. Tests on a quality assurance basis must be made as 
frequently as is required for each manufacturer to determine and 
maintain compliance with all the mechanical requirements and the fiber 
and cable attributes required by this section, including:
    (i) Numerical aperture and bandwidth of multimode fibers;
    (ii) Cut off wavelength of single mode fibers;
    (iii) Dispersion of single mode fibers;
    (iv) Shrinkback and cold testing of loose tube and tight tube 
buffers, and mid-span testing of cables of a loose tube design with tube 
storage;
    (v) Adhesion properties of the protective fiber coating;
    (vi) Dielectric strength between the armor and the metallic central 
member;
    (vii) Performance requirements for the fibers.
    (viii) Performance requirements for the inner and outer jacketing 
materials;
    (ix) Performance requirements for the filling and flooding 
compounds;
    (x) Bonding properties of the coated armoring material;
    (xi) Sequential marking and lettering; and
    (xii) Mechanical tests described in paragraphs (t)(1) through 
(t)(16)(ii) of this section.
    (u) Records tests. (1) Each manufacturer must maintain suitable 
summary records for a period of at least 3 years of all optical and 
physical tests required on completed cable by section as set forth in 
paragraphs (v)(5) and (v)(6) of this section. The test data for a 
particular reel must be in a form that it may be readily available to 
the Agency upon request. The optical data must be furnished to the end 
user on a suitable and easily readable form.
    (2) Measurements and computed values must be rounded off to the 
number of places or figures specified for the requirement per paragraph 
1.3 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (v) Manufacturing irregularities. (1) Under this section, repairs to 
the armor, when present, are not permitted in cable supplied to the end 
user.
    (2) Minor defects in the inner and outer jacket (defects having a 
dimension of 3 millimeter or less in any direction) may be repaired by 
means of heat fusing per good commercial practices utilizing sheath 
grade compounds.
    (w) Packaging and preparation for shipment. (1) The cable must be 
shipped on reels containing one continuous length of cable. The diameter 
of the drum must be large enough to prevent damage to the cable from 
reeling and unreeling. The diameter must be at

[[Page 765]]

least equal to the minimum bending diameter of the cable. The reels must 
be substantial and so constructed as to prevent damage during shipment 
and handling.
    (2) A circumferential thermal wrap or other means of protection must 
be secured between the outer edges of the reel flange to protect the 
cable against damage during storage and shipment. The thermal wrap must 
meet the requirements included in the Thermal Reel Wrap Test, described 
below. This test procedure is for qualification of initial and 
subsequent changes in thermal reel wraps.
    (i) Sample selection. All testing must be performed on two 450 
millimeter (18 inches) lengths of cable removed sequentially from the 
same fiber jacketed cable. This cable must not have been exposed to 
temperatures in excess of 38  deg.C (100  deg.F) since its initial cool 
down after sheathing.
    (ii) Test procedure. (A) Place the two samples on an insulating 
material such as wood.
    (B) Tape thermocouples to the jackets of each sample to measure the 
jacket temperature.
    (C) Cover one sample with the thermal reel wrap.
    (D) Expose the samples to a radiant heat source capable of heating 
the uncovered sample to a minimum of 71  deg.C (160  deg.F). A GE 600 
watt photoflood lamp or an equivalent lamp having the light spectrum 
approximately that of the sun must be used.
    (E) The height of the lamp above the jacket must be 380 millimeters 
(15 inches) or an equivalent height that produces the 71  deg.C (160 
deg.F) jacket temperature on the unwrapped sample must be used.
    (F) After the samples have stabilized at the temperature, the jacket 
temperatures of the samples must be recorded after one hour of exposure 
to the heat source.
    (G) Compute the temperature difference between jackets.
    (H) The temperature difference between the jacket with the thermal 
reel wrap and the jacket without the reel wrap must be greater than or 
equal to 17  deg.C (63  deg.F).
    (3) Cables must be sealed at the ends to prevent entrance of 
moisture.
    (4) The end-of-pull (outer end) of the cable must be securely 
fastened to prevent the cable from coming loose during transit. The 
start-of-pull (inner end) of the cable must project through a slot in 
the flange of the reel, around an inner riser, or into a recess on the 
flange near the drum and fastened in such a way to prevent the cable 
from becoming loose during installation.
    (5) Spikes, staples or other fastening devices must be used in a 
manner which will not result in penetration of the cable.
    (6) The arbor hole must admit a spindle 63.5 millimeters (2.5 
inches) in diameter without binding.
    (7) Each reel must be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the cable on the reel.
    (8) Each reel must be stenciled or lettered with the name of the 
manufacturer.
    (9) The following information must be either stenciled on the reel 
or on a tag firmly attached to the reel: Optical Cable, Type and Number 
of Fibers, Armored or Non-armored, Year of Manufacture, Name of Cable 
Manufacturer, Length of Cable, Reel Number, 7 CFR 1755.902, Minimum 
Bending Diameter for both Residual and Loaded Condition during 
installation.
    Example: Optical Cable, G.657 class A, 4 fibers, Armored, XYZ 
Company, 1050 meters, Reel Number 3, 7 CFR 1755.902. Minimum Bending 
Diameter: Residual (Installed): 20 times Cable O.D., Loaded Condition: 
40 times Cable O.D.

                        Appendix to Sec. 1755.902

                                               Fiber Optic Cables
                               Bulletin 1753F-601(PE-90) Qualifications Test Data
[Initial qualification and three year re-qualification test data required for TELECOMMUNICATIONS PROGRAM product
              acceptance. Please note that some tests may apply only to a particular cable design.]
----------------------------------------------------------------------------------------------------------------
                                                                                 Initial           3 Year re-
                 Paragraph                                Test                qualification      qualification
----------------------------------------------------------------------------------------------------------------
(e)(4)(i)..................................  Shrinkback...................                 X

[[Page 766]]

 
(e)(4)(ii).................................  Cold Bend....................                 X
(t)(1).....................................  Sheath Slitting Cord.........                 X
(t)(2).....................................  Material Compatibility.......                 X
(t)(3).....................................  Cable Low & High Bend........                 X                  X
(t)(4).....................................  Compound Flow................                 X
(t)(5).....................................  Cyclic Flexing...............                 X                  X
(t)(6).....................................  Water Penetration............                 X                  X
(t)(7).....................................  Cable Impact.................                 X                  X
(t)(8).....................................  Cable Tensile Loading & Fiber                 X                  X
                                              Strain.
(t)(9).....................................  Cable Compression............                 X
(t)(10)....................................  Cable Twist..................                 X                  X
(t)(11)....................................  Cable Lighting Damage                         X
                                              Susceptibility.
(t)(12)....................................  Cable External Freezing......                 X
(t)(13)....................................  Cable Temperature Cycling....                 X                  X
(t)(14)....................................  Cable Sheath Adherence.......                 X
(t)(15)....................................  Mid-Span.....................                 X                  X
(t)(16)(i).................................  Static Tensile Testing of                     X                  X
                                              Aerial Self-Supporting
                                              Cables.
(t)(16)(ii)................................  Cable Galloping..............                 X
(y)(2)(i)..................................  Thermal Reel Wrap test.......                 X
----------------------------------------------------------------------------------------------------------------


[74 FR 20561, May 5, 2009]



Sec. 1755.903  Fiber optic service entrance cables.

    (a) Scope. This section covers Agency requirements for fiber optic 
service entrance cables intended for aerial installation either by 
attachment to a support strand or by an integrated self-supporting 
arrangement, for underground application by placement in a duct, or for 
buried installations by trenching, direct plowing, directional or 
pneumatic boring. Cable meeting this section is recommended for fiber 
optic service entrances having 12 or fewer fibers with distances less 
than 100 meters (300 feet).
    (1) General. (i) Specification requirements are given in SI units 
which are the controlling units in this part. Approximate English 
equivalent of units are given for information purposes only.
    (ii) The optical waveguides are glass fibers having directly-applied 
protective coatings, and are called ``fibers,'' herein. These fibers may 
be assembled in either loose fiber bundles with a protective core tube, 
encased in several protective buffer tubes, in tight buffer tubes, or 
ribbon bundles with a protective core tube.
    (iii) Fillers, strength members, core wraps, and bedding tapes may 
complete the cable core.
    (iv) The core or buffer tubes containing the fibers and the 
interstices between the buffer tubes, fillers, and strength members in 
the core structure are filled with a suitable material or water 
swellable elements to exclude water.
    (v) The cable structure is completed by an extruded overall plastic 
jacket. A shield or armor or combination thereof may be included under 
the jacket. This jacket may have strength members embedded in it, in 
some designs.
    (vi) For rodent resistance or for additional protection with direct 
buried installations, it is recommended the use of armor under the outer 
jacket.
    (vii) For self-supporting cable the outer jacket may be extruded 
over the support messenger and cable core.
    (viii) For detection purposes, the cable may have toning elements 
embedded or extruded with the outer jacket.
    (2) The cable is fully color coded so that each fiber is 
distinguishable from every other fiber. A basic color scheme of twelve 
colors allows individual fiber identification. Colored tubes, binders, 
threads, striping, or markings provide fiber group identification.

[[Page 767]]

    (3) Cables manufactured to the requirements of this section must 
demonstrate compliance with the qualification testing requirements to 
ensure satisfactory end-use performance characteristics for the intended 
applications.
    (4) Optical cable designs not specifically addressed by this section 
may be allowed. Justification for acceptance of a modified design must 
be provided to substantiate product utility and long term stability and 
endurance. For information on how to obtain Agency's acceptance of such 
a modified design, refer to the product acceptance procedures available 
at http://www.usda.gov/rus/telecom/listing--procedures/index--listing--
procedures.htm as well as RUS Bulletin 345-3.
    (5) The cable must be designed for the temperatures ranges of Table 
1-1, Cable Normal Temperature Ranges, of ICEA S-110-717 (incorporated by 
reference at Sec. 1755.901(c)).
    (6) Tensile rating. The cable must have ratings that are no less 
than the tensile ratings indicated in paragraph 1.1.4, Tensile Rating, 
of Part 1 of the ICEA S-110-717 (incorporated by reference at 
Sec. 1755.901(c)).
    (7) Self-supporting cables. Based on the storm loading districts 
referenced in Section 25, Loading of Grades B and C, of ANSI/IEEE C2-
2007 (incorporated by reference at Sec. 1755.901(b)), and the maximum 
span and location of cable installation provided by the end user, the 
manufacturer must provide a cable design with sag and tension tables 
showing the maximum span and sag information for that particular 
installation. The information included must be for Rule B, Ice and Wind 
Loading, and when applicable, information on Rule 250C, Extreme Wind 
Loading. Additionally, to ensure the proper ground clearance, typically 
a minimum of 4.7 m (15.5 feet), the end user should factor in the 
maximum sag under loaded conditions as well as height of attachment for 
each application.
    (8) Minimum bend diameter. For cable under loaded and unloaded 
conditions, the cable must have the minimum bend diameters indicated in 
paragraph 1.1.5, Minimum Bend Diameter, of Part 1 of ICEA S-110-717 
(incorporated by reference at Sec. 1755.901(c)). For very small cables, 
manufacturers may specify fixed cable minimum bend diameters that are 
independent of the outside diameter.
    (9) All cables sold to RUS Telecommunications borrowers must be 
accepted by the Agency's Technical Standards Committee ``A'' for 
projects involving RUS loan funds. All design changes to Agency 
acceptable designs must be submitted to the Agency for acceptance. 
Optical cable designs not specifically addressed by this section may be 
allowed, if accepted by the Agency. Justification for acceptance of a 
modified design must be provided to substantiate product utility and 
long term stability and endurance. For information on how to obtain the 
Agency's acceptance of cables, refer to the product acceptance 
procedures available at http://www.usda.gov/rus/telecom/listing--
procedures/index--listing--procedures.htm as well as RUS Bulletin 345-3.
    (10) The Agency intends that the optical fibers contained in the 
cables meeting the requirement of this section have characteristics that 
will allow signals, having a range of wavelengths, to be carried 
simultaneously.
    (11) The manufacturer is responsible to establish a quality 
assurance system meeting industry standards described in paragraph 1.8 
of ICEA S-110-717 (incorporated by reference at Sec. 1755.901(c)).
    (12) The cable made must meet paragraph 1.10 of ICEA S-110-717 
(incorporated by reference at Sec. 1755.901(c)).
    (b) Optical fibers. (1) The solid glass optical fibers must consist 
of a cylindrical core and cladding covered by either an ultraviolet-
cured acrylate or other suitable coating. Each fiber must be continuous 
throughout its length.
    (2) Optical fibers must meet the fiber attributes of Table 2, 
G.652.B attributes, of ITU-T Recommendation G.652 (incorporated by 
reference at Sec. 1755.901(f)), unless the end user specifically asks 
for another type of fiber. However, when the end user stipulates a low 
water peak fiber, the optical fibers must meet the fiber attributes of 
Table 4, G.652.D attributes, of ITU-T Recommendation G.652; or when the 
end user stipulates a low bending loss fiber, the optical fibers must 
meet the fiber

[[Page 768]]

attributes of Table 7-1, G.657 class A attributes, of ITU-T 
Recommendation G.657 (incorporated by reference at Sec. 1755.901(f)).
    (i) Additionally, optical ribbon fibers must meet paragraph 3.3, 
Optical Fiber Ribbons, of Part 3 of ICEA S-110-717 (incorporated by 
reference at Sec. 1755.901(c)).
    (ii) [Reserved]
    (3) Multimode fibers. Optical fibers must meet the requirements of 
paragraphs 2.1 and 2.3.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (4) Matched cable. Unless otherwise specified by the buyer, all 
single mode fiber cables delivered to an Agency-financed project must be 
manufactured to the same MFD specification. However, notwithstanding the 
requirements indicated in paragraphs (d)(2) and (d)(3) of this section, 
the maximum MFD tolerance allowed for cables meeting the requirements of 
this section must be of a magnitude meeting the definition of ``matched 
cable,'' as defined in paragraph (b) of Sec. 1755.900. With the use of 
cables meeting this definition the user can reasonably expect that the 
average bi-directional loss of a fusion splice to be [le]0.1 dB.
    (5) Buyers will normally specify the MFD for the fibers in the 
cable. When a buyer does not specify the MFD at 1310 nm, the fibers must 
be manufactured to an MFD of 9.2 [micro]m with a maximum tolerance range 
of 0.5 [micro]m (362 20 microinch), unless the buyer agrees to accept 
cable with fibers specified to a different MFD. When the buyer does 
specify a MFD and tolerance conflicting with the MFD maximum tolerance 
allowed by paragraph (d)(4) of this section, the requirements of 
paragraph (d)(4) must prevail.
    (6) Factory splices are not allowed.
    (7) All optical fibers in any single length of cable must be of the 
same type unless otherwise specified by end user.
    (8) Optical fiber dimensions and data reporting must be as required 
by paragraph 7.13.1.1 of ANSI/ICEA S-87-640 (incorporated by reference 
at Sec. 1755.901(c)).
    (c) Buffers/coating. (1) The optical fibers contained in a buffer 
tube (loose tube) loosely packaged must have a clearance between the 
fibers and the inside of the container sufficient to allow for thermal 
expansions without constraining the fibers. The protective container 
must be manufactured from a material having a coefficient of friction 
sufficiently low to allow the fibers free movement. The design may 
contain more than one tube. Loose buffer tubes must meet the 
requirements of Paragraph 3.2.1, Loose Buffer Tube Dimensions, of Part 3 
of ICEA S-110-717 (incorporated by reference at Sec. 1755.901(c)).
    (2) The loose tube coverings of each color and other fiber package 
types removed from the finished cable must meet the following shrinkback 
and cold bend performance requirements. The fibers may be left in the 
tube.
    (i) Shrinkback. Testing must be conducted per ASTM D 4565 
(incorporated by reference at Sec. 1755.901(d)), paragraph 14.1, using a 
talc bed at a temperature of 95  deg.C. Shrinkback must not exceed 5 
percent of the original 150 millimeter length of the specimen. The total 
shrinkage of the specimen must be measured.
    (ii) Cold bend. Testing must be conducted on at least one tube from 
each color in the cable. Stabilize the specimen to -20 1  deg.C for a 
minimum of four hours. While holding the specimen and mandrel at the 
test temperature, wrap the tube in a tight helix ten times around a 
mandrel with a diameter the greater of five times the tube diameter or 
50 mm. The tube must show no evidence of cracking when observed with 
normal or corrected-to-normal vision.
    (3) Optical fiber coating must meet the requirements of paragraph 
2.4, Optical Fiber Coatings and Requirements, of Part 2 of ICEA S-110-
717 (incorporated by reference at Sec. 1755.901(c)).
    (i) All protective coverings in any single length of cable must be 
continuous and be of the same material except at splice locations.
    (ii) The protective coverings must be free from holes, splits, 
blisters, and other imperfections and must be as smooth and concentric 
as is consistent with the best commercial practice.
    (iii) Repairs to the fiber coatings are not allowed.
    (d) Fiber and buffer tube identification. Fibers within a unit and 
the units

[[Page 769]]

within a cable must be identified as indicated in paragraphs 4.2 and 4.3 
of Part 4 of ICEA S-110-717 (incorporated by reference at 
Sec. 1755.901(c)), respectively.
    (e) Strength members. (1) Combined strength of all the strength 
members must be sufficient to support the stress of installation and to 
protect the cable in service. Strength members must meet paragraph 4.4, 
Strength Members, of ICEA S-110-717 (incorporated by reference at 
Sec. 1755.901(c)). Self supporting aerial cables using the strength 
members as an integral part of the cable strength must comply with 
paragraph C.4, Static Tensile Testing of Aerial Self-Supporting Cables, 
of ANNEX C of ICEA S-110-717.
    (2) Strength members may be incorporated into the core as a central 
support member or filler, as fillers between the fiber packages, as an 
annular serving over the core, as an annular serving over the 
intermediate jacket, embedded in the outer jacket or as a combination of 
any of these methods.
    (3) The central support member or filler must contain no more than 
one splice per kilometer of cable. Individual fillers placed between the 
fiber packages and placed as annular servings over the core must contain 
no more than one splice per kilometer of cable. Cable sections having 
central member or filler splices must meet the same physical 
requirements as un-spliced cable sections.
    (4) Notwithstanding what has been indicated in other parts of this 
document, in each length of completed cable having a metallic central 
member, the dielectric strength between the optional armor and the 
metallic center member must withstand at least 15 kilovolts direct 
current for 3 seconds.
    (f) Forming the cable core. (1) Protected fibers must be assembled 
with the optional central support member and strength members in such a 
way as to form a cylindrical group or other acceptable core 
constructions and must meet Section 4.5, Assembly of Cables, of Part 4 
of ICEA S-110-717 (incorporated by reference at 1755.901(c)). Other 
acceptable cable cores include round, figure 8, flat or oval designs.
    (2) The standard cylindrical group or core designs must consist of 
12 fibers or less.
    (3) When threads or tapes are used as core binders, they must be 
colored either white or natural and must be a non-hygroscopic and non-
wicking dielectric material. Water swell-able threads and tapes are 
permitted.
    (g) Filling/flooding compounds and water blocking elements. (1) To 
prevent the ingress and migration of water through the cable and core, 
filling/flooding compounds or water blocking elements must be used.
    (i) Filling compounds must be applied into the interior of the loose 
fiber tubes and into the interstices of the core. When a core wrap is 
used, the filling compound must also be applied to the core wrap, over 
the core wrap and between the core wrap and inner jacket when required.
    (ii) Flooding compounds must be sufficiently applied between the 
optional inner jacket and armor and between the armor and outer jacket 
so that voids and air spaces in these areas are minimized. The use of 
floodant between the armor and outer jacket is not required when uniform 
bonding, per paragraph l(9) of this section, is achieved between the 
plastic-clad armor and the outer jacket. Floodant must exhibit adhesive 
properties sufficient to prevent jacket slip when tested per the 
requirements of paragraphs 7.26 through 7.26.2 of Part 7, Testing, Test 
Methods, and Requirements, of ANSI/ICEA S-87-640 (incorporated by 
reference at 1755.901(c)).
    (iii) Water blocking elements must achieve equal or better 
performance in preventing the ingress and migration of water as compared 
to filling and flooding compounds. In lieu of a flooding compound, water 
blocking elements may be applied between the optional inner jacket and 
armor and between the armor and outer jacket to prevent water migration. 
The use of the water blocking elements between the armor and outer 
jacket is not required when uniform bonding, per paragraph (l)(10) of 
this section, is achieved between the plastic-clad armor and the outer 
jacket.
    (2) The materials must be homogeneous and uniformly mixed; free

[[Page 770]]

from dirt, metallic particles and other foreign matter; easily removed; 
nontoxic and present no dermal hazards.
    (3) The individual cable manufacturer must satisfy the Agency that 
the filling compound or water blocking elements selected for use is 
suitable for its intended application.
    (i) Filling/Flooding compound materials must be compatible with the 
cable components when tested per paragraph 7.16, Material Compatibility 
and Cable Aging Test, of Part 7 of ICEA S-110-717 (incorporated by 
reference at Sec. 1755.901(c)).
    (ii) Water blocking elements must be compatible with the cable 
components when tested per paragraph 7.16, Material Compatibility and 
Cable Aging Test, of Part 7 of ICEA S-110-717 (incorporated by reference 
at Sec. 1755.901(c)).
    (h) Core wrap (optional). (1) At the option of the manufacturer, one 
or more layers of non-hygroscopic and non-wicking dielectric material 
may be applied with an overlap over the core.
    (2) The core wrap(s) can be used to provide a heat barrier to 
prevent deformation or adhesion between the fiber tubes or can be used 
to contain the core.
    (3) When core wraps are used, sufficient filling compound must be 
applied to the core wraps so that voids or air spaces existing between 
the core wraps and between the core and the inner side of the core wrap 
are minimized.
    (i) Inner jacket (optional). (1) Inner jackets may be applied 
directly over the core or over the strength members. Inner jackets are 
optional.
    (2) The inner jacket material and test requirements must be the same 
as for the outer jacket material per paragraph (n) of this section, 
except that either black or natural polyethylene may be used. In the 
case of natural polyethylene, the requirements for absorption 
coefficient and the inclusion of furnace black are waived.
    (j) Armor (optional). (1) A steel armor, plastic coated on both 
sides, is recommended for direct buried service entrance cable in gopher 
areas. Armor is also optional for duct and aerial cable as required by 
the end user. The plastic coated steel armor must be applied 
longitudinally directly over the core wrap or the intermediate jacket 
and must have an overlapping edge.
    (2) The uncoated steel tape must be electrolytic chrome coated steel 
(ECCS) with a thickness of 0.155 0.015 millimeters.
    (3) The reduction in thickness of the armoring material due to the 
corrugating or application process must be kept to a minimum and must 
not exceed 10 percent at any spot.
    (4) The armor of each length of cable must be electrically 
continuous with no more than one joint or splice allowed per kilometer 
of cable. This requirement does not apply to a joint or splice made in 
the raw material by the raw material manufacturer.
    (5) The breaking strength of any section of an armor tape, 
containing a factory splice joint, must not be less than 80 percent of 
the breaking strength of an adjacent section of the armor of equal 
length without a joint.
    (6) For cables containing no floodant over the armor, the overlap 
portions of the armor tape must be bonded in cables having a flat, non-
corrugated armor to meet the requirements of paragraphs (r)(1) and 
(r)(2) of this section. If the tape is corrugated, the overlap portions 
of the armor must be sufficiently bonded and the corrugations must be 
sufficiently in register to meet the requirements of paragraphs (r)(1) 
and (r)(2) of this section.
    (7) The armor tape must be so applied as to enable the cable to meet 
the testing requirements of paragraphs (r)(1) and (r)(2) of this 
section.
    (8) The protective coating on the steel armor must meet the Bonding-
to-Metal, Heat Sealability, Lap-Shear and Moisture Resistance 
requirements of Type I, Class 2 coated metals per ASTM B 736 
(incorporated by reference at Sec. 1755.901(d)).
    (9) When the jacket is bonded to the plastic coated armor, the bond 
between the plastic coated armor and the outer jacket must not be less 
than 525 Newtons per meter over at least 90 percent of the cable 
circumference when tested per ASTM D 4565 (incorporated by reference at 
Sec. 1755.901(d)). For cables with strength members embedded in the 
jacket, and residing directly over the armor, the area of the armor 
directly

[[Page 771]]

under the strength member is excluded from the 90 percent calculation.
    (k) Optional support messenger (aerial cable). (1) Integrated 
messenger(s) for self-supporting cable must provide adequate strength to 
operate under the appropriate weather loading conditions over the 
maximum specified span.
    (2) Based on the storm loading districts referenced in Section 25, 
Loading of Grades B and C, of ANSI/IEEE C2-2007 (incorporated by 
reference at Sec. 1755.901(b)), and the maximum span and location of 
cable installation provided by the end user, the manufacturer must 
provide a cable design with sag and tension tables showing the maximum 
span and sag information for that particular installation. The 
information included must be for Rule B, Ice and Wind Loading, and when 
applicable, information on Rule 250C, Extreme Wind Loading. 
Additionally, to ensure the proper ground clearance, typically a minimum 
of 4.7 m (15.5 feet) the end user should factor in the maximum sag under 
loaded conditions as well as height of attachment for each application.
    (l) Outer jacket. (1) The outer jacket must provide the cable with a 
tough, flexible, protective covering which can withstand exposure to 
sunlight, to atmosphere temperatures and to stresses reasonably expected 
in normal installation and service.
    (2) The jacket must be free from holes, splits, blisters, or other 
imperfections, and must be as smooth and concentric as is consistent 
with the best commercial practice.
    (3) Jacket materials must meet the stipulations of paragraph 5.4 of 
ANSI/ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)), 
except that the concentration of furnace black does not necessarily need 
to be initially contained in the raw material and may be added later 
during the jacket making process. Jacket thickness must have a 0.50 mm 
minimum thickness over the core or over any radial strength member used 
as the primary strength element(s), 0.20 mm when not used as the primary 
strength member, and 0.30 mm over any optional toning elements.
    (4) Jacket Repairs must meet the stipulations of paragraph 5.5, 
Jacket Repairs, of ICEA S-110-717 (incorporated by reference at 
Sec. 1755.901(c)).
    (5) Jacket Testing: The jacket must be tested to determine 
compliance with requirements of this section. The specific tests for the 
jacket are described in paragraphs 7.6 through 7.11.2 of Part 7, 
Testing, Test Methods, and Requirements, of ANSI/ICEA S-87-640 
(incorporated by reference at Sec. 1755.901(c)).
    (m) Sheath slitting cord (optional). (1) A sheath slitting cord is 
optional.
    (2) When a sheath slitting cord is used it must be non-hygroscopic 
and non-wicking, or be rendered such by the filling or flooding 
compound, continuous throughout a length of cable and of sufficient 
strength to open the sheath over at least a one meter length without 
breaking the cord at a temperature of 23 5  deg.C.
    (n) Identification and length markers. (1) Each length of cable must 
be permanently labeled OPTICAL CABLE, OC, OPTICAL FIBER CABLE, or OF on 
the outer jacket and identified as to manufacturer and year of 
manufacture.
    (2) Each length of cable intended for direct burial installation 
must be marked with a telephone handset in compliance with the 
requirements of the Rule 350G of ANSI/IEEE C2-2007 (incorporated by 
reference at Sec. 1755.901(b)).
    (3) Mark the number of fibers on the jacket.
    (4) The identification and date marking must conform to paragraph 
6.1, Identification and Date Marking, of ICEA S-110-717 (incorporated by 
reference at Sec. 1755.901(c)).
    (5) The length marking must conform to paragraph 6.3, Length 
Marking, of ICEA S-110-717 (incorporated by reference at 
Sec. 1755.901(c)).
    (o) Optical performance of a finished cable. (1) Unless otherwise 
specified by the end user, the optical performance of a finished cable 
must comply with the attributes of Table 2, G.652.B attributes, found in 
ITU Recommendation G.652 (incorporated by reference at 
Sec. 1755.901(f)). However, when the end user stipulates a low water 
peak fiber the finished cable must meet the attributes of Table 4, 
G.652.D attributes, found in ITU-T Recommendation G.652; or when the end 
user stipulates a low bending loss fiber, the finished cable

[[Page 772]]

must meet the attributes of Table 7-1, class A attributes, of ITU-T 
Recommendation G.657 (incorporated by reference at Sec. 1755.901(f)).
    (i) The attenuation methods must be per Table 8.4, Optical 
attenuation measurement methods, of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (ii) The cable must have a maximum attenuation of 0.1 dB at a point 
of discontinuity (a localized deviation of the optical fiber loss). Per 
paragraphs 8.4 and 8.4.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)), measurements must be conducted at 1310 
and 1550 nm, and at 1625 nm when specified by the end user.
    (iii) The cable cutoff wavelength ([gamma]cc) must be 
reported per paragraph 8.5.1 of ANSI/ICEA S-87-640 (incorporated by 
reference at Sec. 1755.901(c)).
    (2) Multimode optical fiber cable. Unless otherwise specified by the 
end user, the optical performance of the fibers in a finished cable must 
comply with Table 8.1, Attenuation coefficient performance requirement 
(dB/km), Table 8.2, Multimode bandwidth coefficient performance 
requirements (MHz-km), and Table 8.3, Points discontinuity acceptance 
criteria (d), of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (3) Because the accuracy of attenuation measurements for single mode 
fibers becomes questionable when measured on short cable lengths, 
attenuation measurements are to be made utilizing characterization cable 
lengths. Master Cable reels must be tested and the attenuation values 
measured will be used for shorter ship lengths of cable.
    (4) Because the accuracy of attenuation measurements for multimode 
fibers becomes questionable when measured on short cable lengths, 
attenuation measurements are to be made utilizing characterization cable 
lengths. If the ship length of cable is less than one kilometer, the 
attenuation values measured on longer lengths of cable (characterization 
length of cable) before cutting to the ship lengths of cable may be 
applied to the ship lengths.
    (5) Attenuation must be measured per Table 8.4, Optical Attenuation 
Measurement Methods, ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (6) The bandwidth of multimode fibers in a finished cable must be no 
less than the values specified in Table 8.2 per paragraph 8.3.1 of ANSI/
ICEA S-87-640 (incorporated by reference at Sec. 1755.901(c)).
    (p) Mechanical requirements. (1) Cable Testing: Cable designs must 
meet the requirements of Part 7, Testing and Test Methods, of ICEA S-
110-717 (incorporated by reference at Sec. 1755.901(c)), except for 
paragraph 7.15 applicable to tight tube fibers.
    (2) Bend test. All cables manufactured must meet the ``Cable Low and 
High Temperature Bend Test'' described in Section 7.21 (paragraphs 7.21, 
7.21.1, and 7.21.2) of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (q) Pre-connectorized cable (optional). (1) At the option of the 
manufacturer and upon request by the end user, the cable may be factory 
terminated with connectors.
    (2) All connectors must be accepted by the Agency prior to their 
use. For information on how to obtain the Agency's acceptance, refer to 
the product acceptance procedures available at http://www.usda.gov/rus/
telecom/listing--procedures/index--listing--procedures.htm as well as 
RUS Bulletin 345-3.
    (r) Acceptance testing and extent of testing. (1) The tests 
described in this section are intended for acceptance of cable designs 
and major modifications of accepted designs. What constitutes a major 
modification is at the discretion of the Agency. These tests are 
intended to show the inherent capability of the manufacturer to produce 
cable products that have satisfactory performance characteristics, long 
life, and long-term optical stability, but are not intended as field 
tests. For information on how to obtain the Agency's acceptance, refer 
to the product acceptance procedures available at http://www.usda.gov/
rus/telecom/listing--procedures/index--listing--procedures.htm as well 
as RUS Bulletin 345-3.
    (2) For initial acceptance, the manufacturer must submit:

[[Page 773]]

    (i) An original signature certification that the product fully 
complies with each paragraph of this section;
    (ii) Qualification Test Data for demonstrating that the cable meets 
the requirements of this section;
    (iii) A set of instructions for handling the cable;
    (iv) OSHA Material Safety Data Sheets for all components;
    (v) Agree to periodic plant inspections;
    (vi) Agency's ``Buy American'' Requirements. For each cable for 
which the Agency acceptance is requested, the manufacturer must include 
a certification stating whether the cable complies with the following 
two domestic origin manufacturing provisions:
    (A) Final assembly or manufacture of the product, as the product 
would be used by an Agency's borrower, is completed in the United States 
or eligible countries. For a list of eligible countries, see http://
www.usda.gov/rus/telecom/publications/eligible.htm; and
    (B) The cost of United States and eligible countries' components (in 
any combination) within the product is more than 50 percent of the total 
cost of all components utilized in the product. The cost of non-domestic 
components (components not manufactured within the United States or 
eligible countries) which are included in the finished product must 
include all duties, taxes, and delivery charges to the point of assembly 
or manufacture;
    (vii) Written user testimonials concerning performance of the 
product; and
    (viii) Other nonproprietary data deemed necessary by the Chief, 
Technical Support Branch (Telecommunications).
    (3) For continued Agency product acceptance, the manufacturer must 
submit an original signature certification that the product fully 
complies with each paragraph of this section and a certification stating 
whether the cable meets the two domestic provisions of paragraph 
(t)(2)(vi) above for acceptance by January every three years. The 
certification must be based on test data showing compliance with the 
requirements of this section. The test data must have been gathered 
within 90 days of the submission and must be kept on files per paragraph 
(u)(1).
    (4) Initial and re-qualification acceptance requests should be 
addressed to: Chairman, Technical Standards Committee ``A'' 
(Telecommunications), STOP 1550, Advanced Services Division, Rural 
Development Utilities Program, Washington, DC 20250-1550.
    (s) Records of optical and physical tests. (1) Each manufacturer 
must maintain suitable summary records for a period of at least 3 years 
of all optical and physical tests required on completed cable 
manufactured under the requirement of this section. The test data for a 
particular reel must be in a form that it may be readily available to 
the Agency upon request. The optical data must be furnished to the end 
user on a suitable and easily readable form.
    (2) Measurements and computed values must be rounded off to the 
number of places or figures specified for the requirement per paragraph 
1.3 of ANSI/ICEA S-87-640 (incorporated by reference at 
Sec. 1755.901(c)).
    (t) Manufacturing irregularities. (1) Repairs to the armor, when 
present, are not permitted in cable supplied to the end user under the 
requirement of this section. The armor for each length of cable must be 
tested for continuity using the procedures of ASTM D 4566 (incorporated 
by reference at Sec. 1755.901(d)).
    (2) Minor defects in the inner and outer jacket (defects having a 
dimension of 3 millimeter or less in any direction) may be repaired by 
means of heat fusing per good commercial practices utilizing sheath 
grade compounds.
    (3) Buffer tube repair is permitted only in conjunction with fiber 
splicing.
    (u) Packaging and preparation for shipment. (1) All cables must 
comply with paragraph 6.5, Packaging and Marking, of ICEA S-110-717 
(incorporated by reference at Sec. 1755.901(c)).
    (2) For cables shipped on reels a circumferential thermal wrap or 
other means of protection complying with section (w)(3) of this section 
must be secured between the outer edges of the reel flange to protect 
the cable against damage during storage and shipment. This requirement 
applies to reels weighing more that 75 lbs. The thermal

[[Page 774]]

wrap is optional for reels weighing 75 lbs or less.
    (3) The thermal wrap must meet the requirements included in the 
Thermal Reel Wrap Test, described below in paragraphs (w)(3)(i) and 
(w)(3)(ii) of this section. This test procedure is for qualification of 
initial and subsequent changes in thermal reel wraps.
    (i) Sample selection. All testing must be performed on two 450 
millimeter (18 inches) lengths of cable removed sequentially from the 
same fiber jacketed cable. This cable must not have been exposed to 
temperatures in excess of 38  deg.C (100  deg.F) since its initial cool 
down after sheathing.
    (ii) Test procedure. (A) Place the two samples on an insulating 
material such as wood.
    (B) Tape thermocouples to the jackets of each sample to measure the 
jacket temperature.
    (C) Cover one sample with the thermal reel wrap.
    (D) Expose the samples to a radiant heat source capable of heating 
the uncovered sample to a minimum of 71  deg.C (160  deg.F). A GE 600 
watt photoflood lamp or an equivalent lamp having the light spectrum 
approximately that of the sun must be used.
    (E) The height of the lamp above the jacket must be 380 millimeters 
(15 inches) or an equivalent height that produces the 71  deg.C (160 
deg.F) jacket temperature on the unwrapped sample must be used.
    (F) After the samples have stabilized at the temperature, the jacket 
temperatures of the samples must be recorded after one hour of exposure 
to the heat source.
    (G) Compute the temperature difference between jackets.
    (H) The temperature difference between the jacket with the thermal 
reel wrap and the jacket without the reel wrap must be greater than or 
equal to 17  deg.C (63  deg.F).
    (4) Cable must be sealed at the ends to prevent entrance of 
moisture.
    (5) The end-of-pull (outer end) of the cable must be securely 
fastened to prevent the cable from coming loose during transit. The 
start-of-pull (inner end) of the cable must project through a slot in 
the flange of the reel, around an inner riser, or into a recess on the 
flange near the drum and fastened in such a way to prevent the cable 
from becoming loose during installation.
    (6) Spikes, staples or other fastening devices must be used in a 
manner which will not result in penetration of the cable.
    (7) The minimum size arbor hole must be 44.5 mm (1.75 inch) and must 
admit a spindle without binding.
    (8) Each reel must be plainly marked to indicate the direction in 
which it should be rolled to prevent loosening of the cable on the reel.
    (9) Each reel must be stenciled or lettered with the name of the 
manufacturer.
    (10) The following information must be either stenciled on the reel 
or on a tag firmly attached to the reel: Optical Cable, Type and Number 
of Fibers, Armored or Nonarmored, Year of Manufacture, Name of Cable 
Manufacturer, Length of Cable, Reel Number, REA 7 CFR 1755.903.
    Example: Optical Cable, G.657 class A, 4 fibers, Armored. XYZ 
Company, 1050 meters, Reel Number 3, REA 7 CFR 1755.903.
    (11) When pre-connectorized cable is shipped, the splicing modules 
must be protected to prevent damage during shipment and handling.

[74 FR 20561, May 5, 2009]



Sec. 1755.910  RUS specification for outside plant housings and
serving area interface systems.

    (a) Scope. (1) The purpose of this specification is to inform 
manufacturers and users of outside plant housings and serving area 
interface (SAI) systems of the engineering and technical requirements 
that are considered necessary for satisfactory performance in outside 
plant environments. Included are the mechanical, electrical, and 
environmental requirements, desired design features, and test methods 
for evaluation of the product.
    (2) The housing and terminal requirements reflect the best 
engineering judgment available at the present time and may be subject to 
change due to advances in technology, economic conditions, or other 
factors.
    (3) The test procedures described in this section are required by 
RUS to demonstrate the functional reliability

[[Page 775]]

of the product. However, other standard or unique test procedures may 
serve the same function. In such cases, RUS shall evaluate the test 
procedures and results on an individual basis.
    (4) The test procedures specified herein satisfy the requirements of 
housings as well as the requirements of terminals that may be installed 
within housings. Some of the requirements are interrelated to several 
tests designed to determine the performance aspects of terminals and are 
directly affected by testing required for housings. Therefore, the 
manufacturer should carefully review all the test requirements in order 
to develop a testing schedule that is comprehensive, efficient in terms 
of the number of test specimens required and can be accomplished in an 
orderly and logical sequence.
    (5) The specified tests may require special facilities to comply 
with Federal, State, or local regulatory requirements. Some test 
procedures are potentially hazardous to personnel because of the high 
voltages and mechanical forces involved. Safety precautions are 
necessary to prevent injury.
    (6) Underwriters Laboratories, Inc. (UL) 94, Tests for Flammability 
of Plastic Materials for Parts in Devices and Appliances, fourth 
edition, dated June 18, 1991, referenced in this section is incorporated 
by reference by RUS. This incorporation by reference was approved by the 
Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 
1 CFR part 51. A copy of the UL standard is available for inspection 
during normal business hours at RUS, room 2845-S, U.S. Department of 
Agriculture, Washington, DC 20250-1500, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html. Copies are available from UL Inc., 333 Pfingsten Road, 
Northbrook, Illinois 60062-2096, telephone number (708) 272-8800.
    (7) The American Society for Testing and Materials Specifications 
(ASTM) A 109-91, Standard Specification for Steel, Strip, Carbon, Cold-
Rolled; ASTM A 153-82 (Reapproved 1987), Standard Specification for Zinc 
Coating (Hot-Dip) on Iron and Steel Hardware; ASTM A 366/A 366M-91, 
Standard Specification for Steel, Sheet, Carbon, Cold-Rolled, Commercial 
Quality; ASTM A 525-91b, Standard Specification for General Requirements 
for Steel Sheet, Zinc-Coated (Galvanized) by the Hot-Dip Process; ASTM A 
526/A 526M-90, Standard Specification for Steel Sheet, Zinc-Coated 
(Galvanized) by the Hot-Dip Process, Commercial Quality; ASTM A 569/A 
569M-91a, Standard Specification for Steel, Carbon (0.15 Maximum, 
Percent), Hot-Rolled Sheet and Strip Commercial Quality; ASTM A 621/A 
621M-92, Standard Specification for Steel, Sheet and Strip, Carbon, Hot-
Rolled, Drawing Quality; ASTM B 117-90, Standard Test Method of Salt 
Spray (Fog) Testing; ASTM B 539-90, Standard Test Methods for Measuring 
Contact Resistance of Electrical Connections (Static Contacts); ASTM B 
633-85, Standard Specification for Electrodeposited Coatings of Zinc on 
Iron and Steel; ASTM D 523-89, Standard Test Method for Specular Gloss; 
ASTM D 610-85 (Reapproved 1989), Standard Test Method for Evaluating 
Degree of Rusting on Painted Steel Surfaces; ASTM D 822-89, Standard 
Practice for Conducting Tests on Paint and Related Coatings and 
Materials using Filtered Open-Flame Carbon-Arc Light and Water Exposure 
Apparatus; ASTM D 1535-89, Standard Test Method for Specifying Color by 
the Munsell System; ASTM D 1654-92, Standard Test Method for Evaluation 
of Painted or Coated Specimens Subjected to Corrosive Environments; ASTM 
D 1693-70 (Reapproved 1988), Standard Test Method for Environmental 
Stress-Cracking of Ethylene Plastics; ASTM D 2197-86 (Reapproved 1991), 
Standard Test Method for Adhesion of Organic Coatings by Scrape 
Adhesion; ASTM D 2247-92, Standard Practice for Testing Water Resistance 
of Coatings in 100% Relative Humidity; ASTM D 2565-92, Standard Practice 
for Operating Xenon Arc-Type Light-Exposure Apparatus With and Without 
Water for Exposure of Plastics; ASTM D 2794-92, Standard Test Method for 
Resistance of Organic Coatings to the Effects of Rapid Deformation 
(Impact);

[[Page 776]]

ASTM D 3928-89, Standard Test Method for Evaluation of Gloss or Sheen 
Uniformity; ASTM D 4568-86, Standard Test Methods for Evaluating 
Compatibility Between Cable Filling and Flooding Compounds and 
Polyolefin Cable Materials; ASTM G 21-90, Standard Practice for 
Determining Resistance of Synthetic Polymeric Materials to Fungi; and 
ASTM G 23-90, Standard Practice for Operating Light-Exposure Apparatus 
(Carbon-Arc Type) With and Without Water for Exposure of Nonmetallic 
Materials, referenced in this section are incorporated by reference by 
RUS. These incorporations by references were approved by the Director of 
the Federal Register in accordance with 5 U.S.C. 552(a) and 7 CFR part 
51. Copies of the ASTM standards are available for inspection during 
normal business hours at RUS, room 2845-S, U.S. Department of 
Agriculture, Washington, DC 20250-1500, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html. Copies are available from ASTM, 1916 Race Street, 
Philadelphia, Pennsylvania 19103-1187, telephone number (215) 299-5585.
    (b) General information. (1) Outside plant housings are fabricated 
of either metallic or nonmetallic materials in different sizes and 
configurations to suit a variety of applications. The purpose of a 
housing is to protect its contents from environmental elements, rodents, 
insects, or vandalism and unauthorized access. Housings are designed 
with internal brackets for accommodating splicing, bonding and grounding 
connections, cable terminals, cross-connect facilities, load coils, and 
optical and electronic equipment.
    (2) Pedestals are housings primarily intended to house, organize, 
and protect cable terminations incorporating terminal blocks, splice 
connectors and modules, ground lugs and load coils. Activities typically 
performed in a pedestal are cable splicing, shield bonding and 
grounding, inductive loading, and connection of subscriber drops.
    (3) Serving area interface (SAI) cabinets are housings intended to 
perform some of the same functions as pedestals but are primarily 
intended to serve as the connecting terminal between feeder cable and 
distribution cables.
    (4) Outside plant housings shall be manufactured in accordance with 
National Electrical Code (NEC) requirements, Underwriters' Laboratories 
(UL) requirements, Department of Labor, Occupational Safety and Health 
Administration Standards (OSHA), and all other applicable Federal, 
State, and local requirements including, but not limited to, statutes, 
rules, regulations, orders, or ordinances otherwise imposed by law.
    (c) General documentation requirements--(1) Installation and 
maintenance instructions. (i) Each product shall have available a set of 
instructions designed to provide sufficient information for the 
successful installation of the housing, cables, auxiliary equipment, and 
the associated splice preparation. The instructions shall be of 
sufficient size to be easily read and shall be printed using waterproof 
ink. Pedestal instruction sheets shall include a list of miscellaneous 
replacement parts that may be purchased locally. SAI systems shall be 
supplied with complete instructions for installation and use.
    (ii) When requested by RUS, or an RUS borrower, the manufacturer 
shall prepare a training package for the purpose of training technicians 
in the use and installation of the product and its auxiliary equipment.
    (iii) The manufacturer shall provide ordering information for repair 
parts. Repair parts shall be obtainable through a local distributor or 
shall be easily obtainable. Information describing equivalent parts and 
their sources should be provided for those parts that may also be 
obtained from other sources.
    (2) Quality assurance. The manufacturer shall demonstrate the 
existence of an ongoing quality assurance program that includes 
controls, procedures, and standards used for vendor certification, 
source inspection, incoming inspection, manufacture, in process testing, 
calibration and maintenance of tools and test equipment, final product

[[Page 777]]

inspection and testing, periodic qualification testing and control of 
nonconforming materials and products. The manufacturer shall maintain 
quality assurance records for five years.
    (3) RUS acceptance applications. (i) The tests described in this 
specification are required for acceptance of product designs and major 
modifications of accepted designs. All modifications shall be considered 
major unless otherwise declared by RUS. The tests are intended to show 
the inherent capability of the manufacturer to produce products which 
have an expected service life of 30 years.
    (ii) For initial acceptance the manufacturer shall:
    (A) Submit an original signature certification that the product 
complies with each section of the specification;
    (B) Provide qualification test data;
    (C) Provide OSHA Material Safety Data Sheets for the product;
    (D) Provide a detailed explanation concerning the intended use and 
capacity of the product;
    (E) Provide a complete set of instructions, recommendations for 
equipment organization and splicing;
    (F) Agree to periodic plant inspections;
    (G) Provide a certification that the product does or does not comply 
with the domestic origin manufacturing provisions of the ``Buy 
American'' requirements of the Rural Electrification Act of 1938 (52 
Stat. 818);
    (H) Provide user testimonials concerning field performance of the 
product;
    (I) Provide product samples if requested by RUS; and
    (J) Provide any other data required by the Chief, Outside Plant 
Branch (Telephone).
    (iii) Each requirement of this section must be addressed in 
submissions for acceptance. The designation N/A may be entered when the 
requirements do not apply.
    (iv) Acceptance requests should be addressed to: Chairman, Technical 
Standards, Committee ``A'' (Telephone), Telecommunications Standards 
Division, Rural Utilities Service, Washington, DC 20250-1500.
    (d) Functional design criteria for housings--(1) General 
requirements. (i) The functional requirements for housings concern 
materials, finishes, environmental factors, and design features that are 
applicable to most above ground housings used in the outside plant.
    (ii) Housings shall be of sufficient size to permit easily managed 
installation, operational, testing, and maintenance operations. The 
general shape of outside plant housings is usually comparable to that of 
a rectangular column or cylinder, with the shape of any particular 
housing being left to the manufacturer's discretion. Each design is 
subject to acceptance by RUS.
    (2) Housing types and capacities. (i) Housings used in outside plant 
are either the smaller housings generally known as pedestals or larger 
housings known as equipment or splice cabinets. Both categories may have 
designs intended for stake mounting, pole mounting, or pad mounting.
    (ii) The classifications of pedestals are the general purpose 
channel Type (H) and the dome Type (M). The Type H pedestal has either 
front only access or back and front access while the Type M pedestal has 
top only access. Pedestals are further designated as follows:

------------------------------------------------------------------------
                                                          Pole mounted
  Stake mounted           Type          Pole mounted      (extra high)
------------------------------------------------------------------------
BD3                H                  BD3A
BD4                H                  BD4A
BD5                H                  BD5A
BD7                H                  BD7A
BD14               M                  BD14A             BD14AG
BD15               M                  BD15A             BD15AG
BD16               M                  BD16A             BD16AG
------------------------------------------------------------------------

    (iii) The minimum volume associated with the pedestal designations 
shall be as shown in the following table:

------------------------------------------------------------------------
                                                      Minimum volume
                                                 -----------------------
        Pedestal \1\ housing designation             Cubic       (Cubic
                                                  centimeters   Inches)
                                                     cm \3\     (in.\3\)
------------------------------------------------------------------------
BD3, BD3A \2\ ..................................       9,000       (550)
BD4, BD4A \2\ ..................................      15,000       (900)
BD5, BD5A \2\ ..................................      35,000     (2,100)
BD7( \2\ )......................................      72,000     (4,400)
BD14, BD14A, BD14AG \3\ ........................       9,000       (550)
BD15, BD15A, BD15AG \3\ ........................      27,000     (1,600)
BD16, BD16A, BD16AG \3\ ........................      38,000    (2,300)
------------------------------------------------------------------------
Note 1: Housings designed for unique purposes will be evaluated on a
  case-by-case basis.
Note 2: For Type H pedestals, the minimum volume is that space as
  measured 5 centimeters (cm) (2 inches (in.)) below the top of the
  housing to a point 40 cm (16 in.) above the bottom of the lower cover
  plate.

[[Page 778]]

 
Note 3: The minimum volume of the Type M pedestals shall be the space
  within the dome measured from the lower edge of the dome to a point 5
  cm (2 in.) from the top.

    (iv) Equipment cabinets intended for use as SAI housings shall be 
assigned size designations according to their maximum pair termination 
capacities. The capacity will vary depending on the type of terminating 
equipment used. SAI cabinets shall be suffix designated with an ``A'' 
for pole mounting, ``X'' for pad mounting, and ``S'' for stake mounting.
    (v) Large pair count splice cabinets are classified according to 
their splice capacity. Approximately 48 cm\3\ (3.0 in.\3\) of splice 
area per pair straight spliced shall be permitted.
    (vi) The minimum volume associated with large pair count splice 
cabinets shall be as shown in the following table:

------------------------------------------------------------------------
                                             Minimum volume      Maximum
                                        -----------------------  splice
     Splice cabinet \1\ designation                             capacity
                                          (cm.\3\)   (in.\3\)    (pairs)
------------------------------------------------------------------------
BD6000                                     295,000    (18,000)     6,000
BD8000                                     393,000    (24,000)     8,000
BD10000                                    491,000    (30,000)    10,000
------------------------------------------------------------------------
Note 1: Additional sizes of splice cabinets shall be considered by RUS
  on a case-by-case basis.

    (3) Design and fabrication requirements for housings. (i) Type H 
pedestal housings may consist of an enclosed channel incorporating an 
integrally mounted stake that serves as a backplate, or they may be 
designed for universal mounting on stakes or poles. The body of the 
housing shall have two major components; an upper cover and a base 
cover. The upper cover shall have a top, front and back plate with the 
front cover removable to permit entry and provide increased work space. 
The base cover shall consist of a front plate and back plate. The base 
cover back plate may be an extension of the upper back plate cover.
    (ii) Type M pedestal housings shall consist of a one piece upper 
sleeve designed to fit over the base cover trapping air to prohibit 
water from entering the splice area when installed in locations prone to 
temporary flooding. Pedestals designed to be mounted extra high on poles 
for locations susceptible to deep snow shall have a bottom close-off 
option available to prohibit the ingress of birds, rodents and insects.
    (iii) The external housing components on all outside plant housings 
shall provide reasonable protection against accidental removal or 
vandalism. Housings shall be equipped with a cover plate retaining bolt 
and cup washer that may be opened only with an industry accepted socket 
type can wrench. Housings may be equipped with provisions to allow the 
purchaser to install a padlock.
    (iv) Installed housings shall resist the disassembling force of 
frost heaving applied to the bottom of ground line cover plates. The 
base cover must remain stationary to stabilize the contents of the 
housing cavity.
    (v) In an effort to provide protection against dust penetration, 
blowing snow, rain, and ultraviolet light degradation of internal 
components, all mechanical gaps shall be restricted. The use of seals, 
overlaps, gaskets, and/or dovetailing is required to assure satisfactory 
protection of housed equipment.
    (vi) Knockouts, cutouts, or notches designed to accommodate aerial 
service drops shall not be permitted. A design option for housings 
intended to accommodate service drops shall include a separate channel 
or equivalent in the base cover to allow future additions of service 
drops without the removal of gravel or the moisture barrier in the base 
of the housing. Service wire channels must be designed to prevent the 
entry of birds, reptiles, rodents and insects.
    (vii) Minimal venting of SAI housings may be necessary to relieve 
internal pressure and condensation.
    (viii) There shall be no aluminum housing components that will 
become buried in the soil when the housing is properly installed.
    (ix) Housing components may be assembled using rivets, welds, glue, 
bolts and nuts, or other techniques suitable for the materials involved.
    (x) Housings and their components that require field assembly must 
be capable of being assembled with tools normally available to outside 
plant technicians.
    (xi) Hinged doors on SAI housings and large pair count splice 
housings shall be equipped with a device that restrains the doors in the 
open position.

[[Page 779]]

    (xii) Outside plant housings shall be free of sharp edges, burrs, 
etc., that could present a safety hazard to personnel involved in 
installation and use of the product or to the general public. Surfaces 
inside housings must not allow pinching of conductors during 
installation of cover plates or the opening and closing of doors.
    (xiii) A ground line mark shall be provided, approximately 15 cm (6 
in.) below the top edge of the housing base cover plate on housings 
intended for ground level mounting. Base cover plates shall have a 
minimum height of 31 cm (12 in.).
    (xiv) Any housing, which weighs in excess of 91 kilograms (kg) (200 
pounds (lb)), including its contents, shall be equipped with lifting 
brackets for attaching hoisting cables or chains.
    (xv) Housing stakes shall be a minimum of 107 cm (42 in.) in length. 
If fabricated from steel, they shall have a minimum thickness of No. 13 
gauge as measured according to American Society for Testing and 
Materials (ASTM) A 525-91b. Stakes shall be formed into a ``U'' channel 
with a minimum depth of 2 cm (0.75 in.). The stake shall be a single 
part of suitable design strength for driving 91 cm (36 in.) into the 
soil with hand tools without damage such as bending or warping. The 
stake shall have adequate mounting holes having a minimum separation of 
15 cm (6 in.) for mounting the housing baseplate. The stake material 
must resist corrosion and deterioration when exposed to soil and 
atmospheric conditions.
    (xvi) The housing design must permit a logical progression of 
installation steps that would normally be encountered in typical field 
installations.
    (xvii) Provisions for attaching housings to stakes, poles, walls, 
other housings, or pads shall be provided for each design intended for 
those purposes. Locations of holes for mounting attachments may be 
provided by knockouts on above ground components. Mounting hole 
locations for below ground components may be predrilled.
    (xviii) Pole mounting hardware shall provide at least 1.3 cm (0.5 
in.) clearance from the pole to the housing. Pole mounting brackets 
shall accommodate the wide range of pole sizes used in the telephone 
industry.
    (xix) Pad-mounted housings shall have hardware available for 
anchoring the housing base to the pad. A template may be provided to 
assist in the location of mounting attachment details for pad 
preparation.
    (xx) Housings equipped with stub cables shall have strain relief 
devices to permit shipping and handling of the housing without damage to 
the housing or stub cables. Only RUS accepted cable shall be used for 
stub cables. The cable manufacturer's recommendations concerning minimum 
bend radius shall be observed. The minimum bend radius for most copper 
cables is 10 times the cable diameter.
    (xxi) Cable supports shall be provided near the top of the ground 
line cover and other appropriate locations within the housing to provide 
cable stability consistent with the intended use and capacity of the 
housing. Cable supports shall be capable of holding a minimum load of 23 
kg (50 lb).
    (xxii) An adequate supply of nonmetallic retainer clips or tie wraps 
capable of supporting a minimum load of 23 kg (50 lb) shall be provided 
with the housing. Adequate spaces for installation of the clips or tie 
wraps must be provided on the housing backplate and cable supports.
    (xxiii) Housing chambers designed for splicing operations shall be 
equipped with insulated supporting straps or rods suitable for 
supporting splice bundles. The insulation on the straps or rods shall 
extend for the entire length of the device and shall have a dielectric 
strength of 15 kilovolts (kv) direct current (dc) minimum. Housings 
having an ``H'' frame design where both front and rear covers may be 
removed may incorporate insulated tie bars to be used as cable supports.
    (xxiv) Housings designed to contain equipment in addition to splices 
shall be equipped with a device for physically separating the splice 
area from the service area of the housing.
    (xxv) A dielectric shield rated at 15 kv dc shall be provided to 
enclose the cable splice area. The shield shall extend from the lower 
cable supports to within 2.5 cm (1 in.) of the top of the housing. The 
shield shall be equipped

[[Page 780]]

with Velcro or equivalent fastening devices designed to hold the shield 
in both the open or closed positions. The fastening devices shall extend 
along the entire vertical edge of the dielectric shield.
    (xxvi) Mounting arrangements for a variety of terminal blocks and 
other equipment shall be provided by means of good housekeeping panels 
or other devices that may enhance the service aspect of the housing.
    (xxvii) Housings designed for SAI cabinets may be shipped with 
terminal blocks installed and stub cables attached. If this option is 
exercised, the stub cables and terminal blocks must be RUS accepted. In 
all cases, SAI cabinets must be equipped with appropriate mounting 
devices for installing the peripheral equipment required for a serving 
area interface.
    (xxviii) SAI cabinets shall be designed to provide physical 
separation between the splicing area and the area provided for running 
cross-connect jumpers.
    (xxix) SAI cabinets and large splice housings must have an external 
feature for attaching a padlock to prevent unauthorized entry.
    (xxx) Each housing shall have a tinned or zinc electroplated copper 
alloy or equivalent connector plate or bar to be used for terminating 
ground and cable shield bond connections. The device shall be equipped 
with captive studs and nuts with captive lock washers designed for 
attaching 6 American Wire Gauge (AWG) copper bonding harness wire or 
braid and a 6 AWG copper ground wire. Connector plates shall be equipped 
with enough studs and nuts to provide individual connections equivalent 
to the maximum number of cable sheaths recommended for the housing. 
Housings shall incorporate design features that enable the field 
installation of at least one additional connector plate for service 
conditions that require numerous connections. A bonding and grounding 
system capable of providing support and strain relief for service wires 
shall be provided for housings intended for use as distribution points. 
The bonding system shall be designed to provide sheath continuity as 
cable and service wires are installed, and prior to any other operation 
being performed. The bonding arrangement shall provide electrical 
continuity between all bonds and the ground connector plate. The bonding 
and grounding arrangement shall permit the lifting of individual cable 
ground connections for testing and cable locating activities without 
jeopardizing the grounding potential of other cables that may enter the 
housing. The bonding and grounding system shall be capable of conducting 
a current of 1000 amperes for at least 20 seconds.
    (4) Warning sign. (i) A buried cable warning sign shall be securely 
attached to the outside of each housing. The lettering information on 
the sign shall be permanent.
    (ii) For pedestals, the sign shall be centered horizontally on the 
front cover and the top of the sign shall be not more than 10 cm (4 in.) 
from the top of the housing.
    (iii) For SAI cabinets, the sign shall be centered horizontally and 
vertically on the door. If there are two doors, the sign shall be 
mounted on the left door.
    (iv) Deviations from warning sign location requirements are 
permitted only for housing design constraints. Alternate sign locations 
will be considered by RUS.
    (v) The RUS standard sign design is shown in Figure 1.
    (5) Housing materials. (i) Materials used in housings shall present 
no environmental or safety hazard as defined by industry standards or 
Federal, State, or local laws and regulations. Figure 1 is as follows:

[[Page 781]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.000

    (ii) All materials are required to have fire resistance ratings 
consistent with recognized industry standards. External materials must 
be flame resistant.
    (iii) All materials used in the manufacture of housings or component 
parts must achieve the required strength properties, resist 
deterioration when exposed to outdoor conditions, and be

[[Page 782]]

acceptable to RUS for the specific application. New materials or 
materials not familiar to the RUS staff shall be supported by test and 
performance data which demonstrates their suitability for the intended 
use.
    (iv) Nonmetallic housing materials shall have a fungus growth rating 
no greater than one according to ASTM G 21-90.
    (v) Metallic components shall be either corrosion resistant or 
protected against corrosion and must not produce galvanic corrosion in 
wet or humid conditions on other metals that may be present in the 
housing environment.
    (vi) Mill galvanized steel used in the manufacture of housings shall 
comply with the appropriate requirements of one of the following 
standards:
    (A) ASTM A 109-91;
    (B) ASTM A 366/A 366M-91;
    (C) ASTM A 525-91b; or
    (D) ASTM A 526/A 526M-90.
    (vii) Hot rolled steel shall comply with the appropriate 
requirements of one of the following standards:
    (A) ASTM A 569/A 569M-91a; or
    (B) ASTM A 621/A 621M-92.
    (viii) Cold rolled steel shall comply with the appropriate 
requirements of one of the following standards:
    (A) ASTM A l09-91; or
    (B) ASTM A 366/A 366M-91.
    (ix) Steel parts used for internal housing brackets shall be 
hexavalent chromate coated or zinc plated in accordance with ASTM B 633-
85.
    (x) Hardware items used for assembling or fastening housing 
components shall be 300 series or passivated 400 series stainless steel 
or hot dip galvanized in accordance with ASTM A l53-82 (1987). Other 
materials will be considered by RUS on an individual basis.
    (xi) Aluminum components shall be fabricated from alloy types 5052 
or 6061 or other types that have been recognized as having acceptable 
corrosion resistance and formability and weldability features.
    (xii) Nonmetallic parts must be resistant to solvents and stress 
cracking and shall be compatible with metals and other materials such as 
conductor insulations and filling compounds used in the manufacture of 
cable. Plastic materials must be noncorrosive to metals and resist 
deterioration when exposed to industrial chemical pollutants, ultra-
violet rays, road salts, cleaning agents, insecticides, fertilizers, or 
other detrimental elements normally encountered in the outdoor 
environment.
    (xiii) Housing door seals and gaskets may be manufactured from 
rubber or synthetic rubber-like elastomer materials. Seals and gaskets 
shall exhibit a high degree of weatherability with an effective life of 
at least 30 years in the outdoor environment. The material shall be tear 
resistant and have a low compression set.
    (6) Housing finish requirements. (i) All interior and exterior 
surfaces of housings shall be free from blisters, wrinkles, cracks, 
scratches, dents, heat marks, and other defects.
    (ii) There shall be inherent design provisions to prevent 
objectionable deterioration of the housing such as rusting, exposure of 
fiber or delamination. Secondary protection, such as galvanizing over 
steel per ASTM A 526/A 526M-90 or anodizing over aluminum, shall be 
provided to ensure reliability over the projected 30 year design life of 
the housing.
    (iii) Painted metal housings shall have a minimum gloss of 60 (60 
deg.specular) in accordance with ASTM D 523-89.
    (iv) All painted surfaces shall have a uniform color and texture in 
accordance with ASTM D 3928-89. Nonmetallic housings shall meet 
recognized industry standards concerning optical appearance for gloss 
and haze as applicable for the material.
    (v) The colors of housings that RUS will consider for acceptance 
shall be as follows:

------------------------------------------------------------------------
                Color                              Standard
------------------------------------------------------------------------
Gray-Green..........................  Munsell 6.5 GY 6.03/1.6
                                      Munsell 4.4 GY 6.74/1.5
Green...............................  Munsell 8.8 G 2.65/5.3
Orange..............................  Federal Standard 595A
                                      Color Number l2246
                                      Munsell 0.15YR 5.26/13.15
Chocolate...........................  Munsell 5.27YR 2.40/2.60
                                      Color Number 835
------------------------------------------------------------------------

    (7) Installation requirements. (i) The design of the housing must 
provide for a logical and normal installation sequence, i.e., 
excavation, installation of

[[Page 783]]

a foundation or base and anchoring devices, addition of hardware, 
installation and bonding of cables, splicing, addition of service, and 
final closing.
    (ii) No special tools or equipment other than that usually carried 
by outside plant technicians and construction crews must be required for 
installation of the housing. Security devices are the exception to this 
requirement.
    (iii) Installation hardware shall maintain housings in an erect and 
stable position when subjected to normal storm loads. Pad-mounted 
designs must accommodate precast or cast-in-place reinforced concrete or 
other suitable prefabricated material. Brackets, inserts for fastening, 
conduit openings, or other items necessary for a pad-mounted 
installation must be provided. The manufacturer shall provide detailed 
drawings or a template for locating inserts, conduit openings, or slots 
for cast-in-place pad construction.
    (e) Performance criteria and test procedures for housings--(1) 
General information. (i) The housing manufacturer shall perform adequate 
inspections and tests to demonstrate that housings and housing 
components comply with RUS requirements.
    (ii) Testing shall be performed at a room temperature of 243  deg.C 
(755  deg.C). Temperatures for testing performed at other than room 
temperature shall be determined as near the center of the product under 
test as practical.
    (2) Description of test housing. (i) Each distinctly designed and 
configured family of housings intended to perform a particular function 
shall be tested.
    (ii) The typical test sample shall consist of the exterior housing 
components such as covers, backplates, good housekeeping panels, cap 
assembly, anchor posts, decals, etc. Interior components must include 
the bonding and grounding hardware for cables and service wires and the 
dielectric shield. The housing may include terminal blocks or cross-
connect modules, cable splices, or the typical outside plant equipment 
the housing is designed to contain and protect.
    (3) Environmental requirement for housings--(i) Thermal shock. The 
test housing shall be placed in a test chamber and exposed to the 
temperature cycle of Figure 2 for five complete cycles. The step 
function nature of the temperature changes may be achieved by insertion 
and removal of the test housing from the chamber. The soak time at each 
temperature shall be four hours. The housing shall be removed from the 
test chamber at the conclusion of the five-cycle period. After the test 
housing temperature has stabilized to room temperature, the housing must 
be inspected for deterioration of materials and satisfactory operation 
of mechanical functions. Figure 2 is as follows:

[[Page 784]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.001

    (ii) Thermal shock and humidity. The test housing shall be placed in 
an environmental test chamber at 95 3 percent (%) relative humidity 
(RH) and temperature cycled per Figure 3 for a period of 30 days. At the 
end of the test there shall be no rust or corrosion of any closure 
components. Minor corrosion due to surface scratches, nicks, etc. is 
permitted. If the closure is made of a nonmetallic material, there shall 
be no signs of degradation. Figure 3 is as follows:

[[Page 785]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.002

    (iii) Humidity and condensation. Test panels shall be placed in an 
environmental chamber and subjected to 1,008 hours (42 cycles) of 
exposure per ASTM D 2247-92. One cycle consists of 24 hours of 100% 
humidity (with condensation on the panels) at a cabinet temperature of 
381  deg.C (1002  deg.F) and an ambient temperature of 251  deg.C 
(772  deg.F) without heat input. Upon completion of cycling, the test 
panels shall be subjected to an 11 newton-meter (N-m) (100 pound-inches 
(lb-in.)) impact test using the Gardner-Impact Tester or equivalent. 
Test panels shall show no substrate or coating cracking or loss of 
coating adhesion on either side.
    (iv) Weatherability. Three test panels shall be tested for 
weatherability in accordance with the appropriate procedures of either 
ASTM D 822-89 or ASTM G 23-90. Total exposure time shall be a minimum of 
800 hours. Failure is defined as fading, cracking, blistering, or 
delamination on any of the three test panels.
    (v) Low temperature durability. Low temperature durability shall be 
proven by exposing the three test panels from (e)(3)(iv) of this section 
to at least 25 continuous cycles of the following test sequence:
    (A) To insure complete saturation of the three test panels, soak 
them for 96 hours in a container of distilled water 222  deg.C (71.64 
deg.F);
    (B) Lower the temperature of the water and the immersed test panels 
to -282  deg.C (-18.44  deg.F) and stabilize for 24 hours;
    (C) Thaw the water with the samples to 222  deg.C (71.64  deg.F) 
and stabilize for 24 hours;

[[Page 786]]

    (D) Repeat the procedure 24 times. Any cracking, crazing, deforming, 
or delaminating on any of the three test panels shall be considered a 
failure; and
    (E) Remove the samples from the water and impact test the three 
panels by delivering a force of 11.3 N-m (100 lb-in.) using a Gardner-
Impact Tester to each specimen at 71, 22, and -282  deg.C (159.8, 71.6, 
and -18.44  deg.F), after stabilizing them at those temperatures for at 
least two hours. Visual inspection shall reveal no deformation or 
perforations on any of the test panels.
    (vi) Corrosion resistance. Corrosivity shall be tested in accordance 
with the requirements of ASTM B 117-90. Both scribed and unscribed 
panels shall be evaluated following the procedures of ASTM D 1654-92. 
Scribed panels shall have a rating of at least six, following 500 hours 
of exposure to salt fog, and the unscribed panels shall have a rating no 
lower than 10, after 1,000 hours exposure. Visual rust inspection shall 
confirm no more than 0.03% rusting (rust grade 9) of the surface area of 
the test sample when evaluated in accordance with ASTM D 610-85(1989). 
The unscribed samples shall be impacted with an 11.3 N-m (100 lb-in.) 
force, using a Gardner-Impact Tester or equivalent. Visual inspection of 
the impacted samples shall reveal no loss of adhesion between the base 
material and the coating or cracking at the finish on the test panels.
    (vii) Fungi resistance. Fungi resistance of nonmetallic housing 
materials shall be tested according to the procedures of ASTM G 21-90. 
Any rating greater than one shall be considered a failure.
    (viii) Stress crack resistance. The stress cracking characteristics 
of nonmetallic housing components shall be tested in accordance with 
ASTM D 1693-70 (Reapproved 1988). The tests shall be performed at 
492\1/2\ C (1204\1/2\ F) for 14 days and exposed to the following 
materials:
    (A) Industry recognized filling compounds;
    (B) Isopar M;
    (C) Industry recognized solvents;
    (D) Industry recognized encapsulants; and
    (E) Commonly used insect, pest, and weed control products and 
agricultural fertilizers.
    (ix) Chemical resistance. (A) Chemical resistance shall be 
determined by immersing representative nonmetallic material samples in 
each of the following solutions for 72 hours at 222  deg.C (71.64 
deg.F):
    (1) 3% sulfuric acid;
    (2) 100 parts per million (ppm) trichloroethane in water;
    (3) 0.2 N sodium hydroxide; and
    (4) Unleaded high octane gasoline.
    (B) There shall be no swelling, deformation, or softening of the 
material samples or any discoloration of the solution.
    (x) Ultraviolet resistance. Test panels of metallic and nonmetallic 
outer housing materials shall be subjected to 700 hours exposure per 
ASTM D 2565-92 using the type BH apparatus. The panels shall not exhibit 
fading, blistering, checking, or delamination.
    (xi) Weathertightness. The housing shall be mounted in its typical 
field installation position and sprayed with water. The temperature of 
the water shall be adjusted to be equal to or warmer than the 
temperature of the cabinet interior to avoid the possibility of 
condensation. A water spray head shall be used to direct water at the 
housing so that the water stream will strike the assembly at a downward 
angle of 45 degrees. The flow of the water shall be 3.8 liters per 
minute (one gallon per minute), with 276 kilopascals (40 pounds per 
square inch) head of pressure. The spray head shall be held 1.8 meters 
(m) (6 feet (ft)) from the test cabinet. The spray head shall be 
adjusted so that water impinges uniformly over the housing surface. The 
duration of the test shall be five minutes. All vertical cabinet 
surfaces shall be tested by this procedure. The exterior of the cabinet 
shall be thoroughly dried with towels (no heat drying) prior to 
examination of the housing interior. The interior of the housing shall 
be checked for presence of water. Wetting of over-lapping surfaces is 
permitted. There shall be no presence of water inside the housing.
    (xii) Wind Resistance. (A)(1) Stub pole or wall mounted SAI and 
large pair

[[Page 787]]

count splice housings shall be subjected to a load (F) as shown in 
Figure 4 and the following table to simulate the turning moment 
equivalent to a uniform wind load of 161 kilometers per hour (km/h) (100 
miles per hour (mi/h)) perpendicular to the largest surface area.

------------------------------------------------------------------------
                                                             Load
 Maximum area of largest surface square centimeters  -------------------
           cm\2\ (Square inches) (in.\2\)                kg       (lb)
------------------------------------------------------------------------
5,200 (800) or less.................................        18      (40)
5,201 to 9,100 (801 to 1,400).......................        32      (70)
9,101 to 13,000 (1,401 to 2,000)....................        45     (100)
13,001 to 16,200 (2,001 to 2,500)...................        57    (125)
------------------------------------------------------------------------
Note: The procedures for housings with larger surface area will be
  evaluated by RUS on a case-by-case basis.

    (2) The housing shall remain in its original mounting position 
throughout the test and exhibit no mechanical deformation.
    (3) Figure 4 is as follows:

[[Page 788]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.003

    (B)(1) Pad or ground mounted SAI or splice housings shall be 
subjected to a load (F) as shown in Figure 5 and the following table to 
simulate the overturning moment equivalent to a uniform wind load of 161 
km/h (100 mi/h) perpendicular to the largest surface area.

[[Page 789]]



------------------------------------------------------------------------
                                 Maximum area of            Load
       Height cm (in.)           largest surface   ---------------------
                                 cm\2\ (in.\2\)         kg        (lb)
------------------------------------------------------------------------
122 (48) or less............  11,000 (1,700) or            91      (200)
                               less.
                              11,001-13,000 (1,701-       104      (230)
                               2,000).
                              13,001-14,900 (2,001-       118      (260)
                               2,300).
123-152 (49-60).............  11,700 (1,800) or            91      (200)
                               less.
                              11,701-14,300 (1,801-       109      (240)
                               2,200).
                              14,301-16,200 (2,201-       127      (280)
                               2,500).
                              16,201-18,800 (2,501-       145      (320)
                               2,900).
                              18,801-20,800 (2,901-       163      (360)
                               3,200).
                              20,801-23,400 (3,201-       181      (400)
                               3,600).
153-183 (61-72).............  14,300 (2,200) or           109      (240)
                               less.
                              14,301-16,900 (2,201-       127      (280)
                               2,600).
                              16,901-19,500 (2,601-       150      (330)
                               3,000).
                              19,501-22,700 (3,001-       172      (380)
                               3,500).
                              22,701-25,300 (3,501-       190      (420)
                               3,900).
                              25,301-27,900 (3,901-       213     (470)
                               4,300).
------------------------------------------------------------------------
Note: The procedures for housings with larger surface areas will be
  evaluated by RUS on a case-by-case basis

    (2) The housing shall remain in its original mounting position 
throughout the test and exhibit no mechanical deformation.
    (3) Figure 5 is as follows:

[[Page 790]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.004

    (xiii) Fire resistance.(A) The test housing shall be installed in a 
manner typical of field installation. U.S. No. 1 wheat straw shall be 
placed on the ground around the housing base in an one meter (3 ft) 
radius at an approximate depth of 10 cm (4 in.). The straw shall be 
ignited and permitted to burn fully. After the housing has cooled, its 
contents shall be inspected for evidence of ignition, melting, burning, 
or structural damage. Damage sufficient to impair service constitutes 
failure.

[[Page 791]]

    (B) Polymeric materials shall be tested in accordance with the 
Underwriters Laboratories Publication (UL) 94, dated June 18, 1991. 
Materials used in housing components shall have a rating of 94V-0 or 
94V-1 and shall not sustain combustion when an open flame source is 
removed.
    (4) Mechanical requirements for housings--(i) Impact resistance. The 
test housing shall be subjected to the following impacts according to 
its minimum volume or minimum width and depth as shown in the following 
table:

------------------------------------------------------------------------
                                                           Impact force
  Minimum volume cm\3\ (in.\3\)      Minimum width or   ----------------
                                      depth cm (in.)       N-m   (lb-ft)
------------------------------------------------------------------------
Less than 35,000 (2,100).........  Less than 13 (5)....      68     (50)
35,000 (2,100) or greater........  13 (5) or greater...     136    (100)
------------------------------------------------------------------------

    (A) The impact force shall be delivered to the front, back, and top 
surfaces. Circular housings shall be impacted on side surfaces 180 
deg.apart and on the top. The device used to deliver the force shall be 
spherical and approximately 25 to 31 cm (10 to 12 in.) in diameter. A 
typical test procedure may include the use of a hard rubber bowling 
ball, weighing 6 to 7 kg (13 to 16 lb), enclosed in a mesh bag, attached 
to a rope with a metal ring. The load shall be dropped vertically on the 
top surface and applied to the sides with a pendulum motion using the 
appropriate height and extension arm to achieve the required impact 
force. The housing must be impacted at the approximate mid-point of the 
surface area.
    (B) Housings shall be conditioned for a minimum of eight hours at -
40  deg.C (-40  deg.F) in an environmental chamber prior to testing. If 
the chamber is insufficient in size to conduct tests within the chamber, 
the housing may be removed and shall be tested within 10 minutes after 
removal.
    (C) After impact testing, the housing shall not exhibit fractured or 
ruptured surfaces sufficient to allow the ingress of moisture or dust. 
The housing shall not exhibit mechanical damage that would impair the 
functioning of hinges, latches, locks, etc.
    (ii) Load deflection. Free standing buried plant housings shall be 
tested for load deflection in accordance with Figure 6. The assembled 
housing shall be rigidly held in place by a mechanical means to simulate 
a normal field installation. A length of wire or cable, or other 
suitable material, shall be placed around the top section of the housing 
and deadended. The wire or cable shall be initially tensioned to 23 kg 
(50 lb). A measurement shall then be taken of the deflection of the 
housing at the top as shown in Figure 6. The deflection shall be 
recorded at incremental loads of 23 kg (50 lb) until destruction of the 
housing occurs. The average load for the three directions shall not be 
less than 136 kg (300 lb) and the minimum load in any direction shall be 
113 kg (250 lb). Failure is defined as housing component fracture or 
crazing of the housing's surface finish. Figure 6 is as follows:

[[Page 792]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.005

    (iii) Vibration requirements. The test housing and its contents 
shall be subjected to acceleration at a sine wave frequency sweep rate 
as shown in Figure 7 for a housing packaged for shipment and Figure 8 
for an unpackaged housing. The frequency sweep may be performed 
continually or sequentially. The test shall be conducted once along each 
of three mutually perpendicular axes of the housing. There shall be no 
mechanical or electrical degradation of the housing or its contents. 
Noticeable damage to the housing constitutes failure. Figure 7 and 
Figure 8 are as follows:

[[Page 793]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.006


[[Page 794]]


[GRAPHIC] [TIFF OMITTED] TR21OC94.007

    (iv) Drop test requirements. Housings shall be subjected to 
appropriate drop tests according to their weight. The drop tests shall 
be performed on housings and their contents as normally packaged as well 
as on unpackaged housings. The tests shall be conducted on a smooth 
level concrete floor or similar unyielding surface. For corner drops, 
the packaged housing and its contents shall be oriented at impact such 
that a straight line drawn through the struck corner and package 
geometric center is approximately perpendicular to the impact surface.
    (A) Packaged housings and their contents weighing 91 kg (200 lb) or 
less

[[Page 795]]

shall be capable of enduring a single drop on each face or corner 
without damage from a height specified as follows:

------------------------------------------------------------------------
                                                                  Drop
      Packaged housing including contents weight kg (lb)       height cm
                                                                 (in.)
------------------------------------------------------------------------
0 to 9 (0 to 20).............................................    76 (30)
10 to 23 (21 to 50)..........................................    61 (24)
24 to 45 (51 to 100).........................................    53 (21)
46 to 91 (101 to 200)........................................    46 (18)
------------------------------------------------------------------------

    (B) Packaged housings and their contents weighing more than 91 kg 
(200 lb) shall be capable of enduring a single drop on each of two 
diagonally opposite corners of the package without significant damage 
from a height specified as follows:

------------------------------------------------------------------------
                                                                  Drop
      Packaged housing including contents weight kg (lb)       height cm
                                                                 (in.)
------------------------------------------------------------------------
92 to 453 (201 to 1000)......................................    30 (12)
Over to 453 (1000)...........................................     15 (6)
------------------------------------------------------------------------

    (1) The packaged housing and contents shall be placed on its normal 
shipping base with one corner supported 15 cm (6 in.) above the floor 
and the other corner of the same end supported 30 cm (12 in.) above the 
floor as shown in Figure 9. The unsupported end of the package shall be 
raised so that the lowest corner reaches the height listed above and 
then allowed to fall freely. Figure 9 is as follows:
[GRAPHIC] [TIFF OMITTED] TR21OC94.008


[[Page 796]]


    (2) The procedure of paragraph (e)(4)(iv)(B)(1) of this section 
shall be repeated for the diagonally opposite corner.
    (3) The packaged housing and contents shall be capable of enduring a 
single drop on each edge of the base of its normal shipping position 
from the required height without damage and shall remain operational 
without function impairment. The packaged housing and contents shall be 
placed on its base with one edge supported on a sill 15 cm (6 in.) high 
and the unsupported edge raised to the required height as shown in 
Figure 10 and allowed to fall freely. Figure 10 is as follows:
[GRAPHIC] [TIFF OMITTED] TR21OC94.009

    (4) The procedure of (e)(4)(iv)(B)(3) of this section shall be 
repeated for all edges of the base.
    (C) Unpackaged housings and their contents weighing 23 kg (50 lb) or 
less shall be capable of enduring a single drop on each face and 
adjacent corners without significant damage from a height specified as 
follows:

------------------------------------------------------------------------
                                                                  Drop
      Packaged housing including contents weight kg (lb)       height cm
                                                                 (in.)
------------------------------------------------------------------------
0 to 9 (0 to 20).............................................     10 (4)
10 to 23 (21 to 50)..........................................      8 (3)
------------------------------------------------------------------------

    (D)(1) Unpackaged housings and their contents weighing more than 23 
kg (50 lb) shall be capable of enduring a single drop without 
significant damage when lifted by its normal hoisting supports as shown 
in Figure 11 and with its lowest point at a height specified as follows:

------------------------------------------------------------------------
                                                                  Drop
      Packaged housing including contents weight kg (lb)       height cm
                                                                 (in.)
------------------------------------------------------------------------
23 to 45 (51 to 100).........................................      5 (2)
------------------------------------------------------------------------

    (2) Figure 11 is as follows:

[[Page 797]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.010

    (v) Firearms resistance. All housings shall be tested for resistance 
to penetration by direct impact from a 12 gauge shotgun equipped with a 
modified choke and the use of a 3\3/4\ dram equivalent powder charge and 
35 grams 6 lead shot fired from a distance of 15 m (50 ft). The 
12 gauge shotgun shall be fired from a normal standing position at the 
front side of the housing. Penetration through the housing wall by the 
lead shot shall constitute failure.
    (vi) Lifting hardware requirements. The lifting hardware on housings 
and their contents that weigh more than 91 kg (200 lb) shall be tested. 
The housing shall be fastened to a restraining device such as a concrete 
slab and subjected to loading through the lifting attachments to 
simulate the lifting

[[Page 798]]

load. For the first test a lifting line equipped with a dynamometer 
shall be attached to the housing lifting hardware and a load applied 
equal to three times the weight of a fully equipped housing. Deformation 
or damage to the housing or lifting hardware constitutes failure. A 
second test shall be conducted with the same arrangements as for the 
first except that a load shall be applied equal to six times the weight 
of a fully equipped housing. There shall be no catastrophic failure of 
the lifting hardware or housing.
    (vii) Stub cable strain relief tests. Housings equipped with cable 
stubs and cable shipping retainer shall be tested by lifting a test 
housing, with the maximum length and weight of cable orderable, in a 
manner causing the full weight of the cable to be supported by the 
cabinet. Examination of the cable sheath after lifting shall reveal no 
tearing, rupturing, or other damage. The cable conductors and shield 
shall be tested for shorts and opens. Electrical defects to the stub 
cable or damage to the housing constitutes failure.
    (viii) Door restrainer evaluation. (A) The housing shall be 
positioned with the door held in the open position by the door 
restraining device. A load, determined in accordance with the following 
table, shall be applied to the center of the door, perpendicular to the 
door and in each of the opening and closing directions.

------------------------------------------------------------------------
                                                               Load kg
        Maximum area of door surface cm\2\ (in\2\.)              (lb)
------------------------------------------------------------------------
5,200 (800) or less........................................     72 (160)
5,201 to 9,100 (801 to 1,400)..............................    127 (280)
9,101 to 13,000 (1,401 to 2,000)...........................   181 (400)
------------------------------------------------------------------------
Note: Test procedures for housings with larger doors will be evaluated
  by RUS on a case-by-case basis.

    (B) There shall be no functional failure of the restraining device 
nor mechanical damage to the housing.
    (ix) Security evaluation. The security locking device shall be 
capable of withstanding a maximum torque of 2.8 N-m (25 lb-in.) without 
incurring physical damage to the closure, thereby resulting in a 
condition where the closure cannot be either accessed or locked.
    (5) Electrical requirements for housings. Each bonding stud and nut 
location shall be evaluated by attaching one lead from a dc or 
alternating current (ac) power source to a bonding stud with the nut 
torqued as specified by its manufacturer and the other power source lead 
connected to the closure grounding conductor connector. The current path 
thus established must be capable of sustaining a current of 1,000 
amperes root-mean-square for at least 20 seconds without fusing or 
causing any damage to the closure or its contents.
    (6) Finish requirements--(i) Impact resistance. The finish on 
painted metal surfaces shall not exhibit radial cracking on the impact 
surface (intrusion) when indented at 18 N-m (160 lb-in.) with a 1.6 cm 
(0.6 in.) diameter spherical indentor. This test shall be performed in 
accordance with ASTM D 2794-92 with the exception that the test panel 
shall be of the same material, thickness, and finish as the pedestal 
housing being evaluated.
    (ii) Finish adhesion. Painted finishes shall be tested for adhesion 
of finish in accordance with ASTM D 2197-86 (Reapproved 1991), Method A. 
There shall be no gouging in the top coat when tested with an 8 kg (17.7 
lb) load. Gouging is defined as removal or separation of paint particles 
or breaking of the finish by the scraping loop to the extent of exposing 
base metal.
    (iii) Color evaluation. The color of the housing finish should be 
compared against the Munsell system of color notation, as described in 
ASTM D 1535-89 to determine color consistency with that desired.
    (iv) Gloss evaluation. The finish on painted housings shall be 
tested on two approximately 20 cm x 20 cm (8 in. x 8 in.) samples for 
each color used in accordance with the procedures of ASTM D 523-89. The 
finish shall have a minimum gloss of 60 (60  deg.Specular).
    (v) Secondary finish evaluation. Evidence of secondary protection 
shall be required for RUS acceptance. Typical secondary protection is 
galvanizing per ASTM A 526/A 526M-90 for steel surfaces.
    (f) Functional design criteria for binding post terminal blocks used 
in SAI cabinets--(1) General description. A conventional binding post 
terminal consists of a metallic element or post, one end of which is 
configured for the permanent connection of 22, 24, or 26 AWG solid 
copper conductors and the opposite end

[[Page 799]]

is configured for recurring connections and disconnections of solid 
copper cross-connect wire using a threaded screw or stud and nut 
combination for gripping the wire. The terminal is usually housed in a 
SAI cabinet. However, the terminal may receive limited use in smaller 
pedestal-type housings and pole mounted cabinets in the outside plant 
environment.
    (2) Design and fabrication requirements. (i) Terminal blocks used in 
outside plant housings are expected to perform satisfactorily for a 
nominal design life of 30 years.
    (ii) All individual terminals or terminal fields must be enclosed 
and the terminal enclosure must be totally filled with an encapsulating 
grease or gel which prevents connection degradation caused by moisture 
and corrosion. The encapsulant must provide complete encapsulation of 
terminal metallic connections and surfaces and totally fill all voids 
and cavities within individual terminal enclosures or terminal field 
enclosures to prevent ingress of moisture. The encapsulant must not 
restrict access to the terminal or restrict craft personnel from making 
connections. The encapsulant must be compatible with the standard 
materials used in cross-connect hardware and wiring.
    (iii) Binding post terminals shall not be susceptible to damage 
under normal use of standard tools used by outside plant technicians 
such as screwdrivers and test set clips. In addition, use of other tools 
such as scissors, diagonal cutters and long nose pliers for tightening 
and loosening screws shall not result in damage to the terminal.
    (iv) Terminals shall be designed so that a typical technician using 
customary tools shall be able to terminate cross-connect wire on a pair 
of terminals, or to remove it, without causing an electrical short 
between any two terminals or any other adjacent terminals.
    (v) The terminal count sequence shall be indicated using numerals of 
at least 0.25 cm (0.10 in.) in height.
    (vi) A means shall be provided to distinguish feeder terminals from 
distribution terminals.
    (vii) A means shall be provided to identify tip terminals and ring 
terminals in a terminal field. The identification convention shall 
indicate tip on the left with ring on the right for horizontal spacing 
and tip on the top with ring on the bottom for vertical spacing.
    (viii) The preferred height of the highest terminal in the connector 
field in a ground mounted SAI unit shall be 168 cm (66 in.) or less as 
measured from the top surface of the mounting pad. The bottom or lowest 
terminals in the connector field shall be at least 46 cm (18 in.) from 
the top surface of the pad.
    (ix) Pole mounted aerial units shall be 84 cm (33 in.) or less in 
width. The maximum allowable height of the highest terminals in a pole 
mounted aerial unit is 168 cm (66 in.) as measured from the top surface 
of the standard balcony seat used with the interface. For computation 
purposes, 15 cm (6 in.) shall be allowed for the distance between the 
bottom of the interface and the top of the balcony seat.
    (3) Auxiliary features. (i) SAI cabinets with terminal designs which 
do not permit direct attachment of common test instrument clips to 
terminal pairs without the occurrence of shorts shall be equipped with 
single pair auxiliary test contacts. The auxiliary test contacts shall 
attach to a terminal pair and provide a set of secondary terminals which 
will accept typical test instrument clips without the occurrence of 
shorts. Wire used to connect the auxiliary test contacts to the 
secondary terminals shall be 20 gauge minimum stranded conductor copper 
wire with a minimum dielectric strength between conductors of 15 kv. The 
test connector shall be functional on all terminal pairs.
    (ii) A 25 or 50 pair test connector shall be available which can be 
used to make reliable electrical contact to terminals associated with 
discrete 25 pair binder groups. The multi-pair test connector shall be 
provided with a minimum of 1.8 m (6 ft) of suitable cabling terminated 
to a connector, for interfacing with test sets common to the industry. 
The multi-pair test connector shall be functional on all terminal 
groups.
    (iii) A special service marker shall be available which must attach 
to a binding post terminal to identify special circuits and insulate 
exposed metal

[[Page 800]]

parts from accidental shorts from tools and wires. A supply of 25 
special service markers shall be provided with each SAI cabinet. The 
color of special service markers shall be red.
    (iv)(A) A supply of twisted pair cross-connect wire shall be 
supplied with housings that are equipped with cross-connect terminals or 
that have provisions for mounting cross-connect terminals. The minimum 
length of cross-connect wire supplied is dependent on the SAI cabinet 
terminal capacity as follows:

------------------------------------------------------------------------
         Cabinet termination capacity (pairs)             Wire length
------------------------------------------------------------------------
  1 to 600...........................................      60 m (200 ft)
601 to 1200..........................................     120 m (400 ft)
Over 1200............................................     180 m (600 ft)
------------------------------------------------------------------------

    (B) The cabinet shall be equipped to store the length of wire in a 
manner designed for convenient dispensing. The cross-connect wire supply 
shall be easily replaceable.
    (g) Performance criteria and test procedures for binding post 
terminal blocks used in SAI cabinets--(1) General. Many of the tests 
described in this section require that the terminal block be installed 
in an appropriate housing in its typical field configuration.
    (2) Environmental requirements--(i) Insulation resistance/high 
humidity and salt fog exposure. A test specimen shall consist of a 
standard ground or pole mounted housing equipped with a full complement 
of binding post terminals equipped with 25 special service markers. The 
minimum number of terminals to be tested shall be 100 pair (100 tips and 
100 associated rings). The test terminals shall be selected to form a 
terminal array of approximate square dimensions. A 1 cm (36 in.) length 
of cross-connect wire shall be installed on each test terminal. All tips 
shall be joined together and all rings shall be joined together with a 
48 volt dc potential applied as shown in Figure 12 during the high 
humidity/salt fog and simulated rain exposures. The 48 volt dc may be 
temporarily removed from the test samples during the measurement process 
and the ring terminal being measured shall be isolated from the 
remaining ring terminals. The terminal insulation resistance shall be 
measured at a potential of 100 volts dc using suitable instrumentation 
with a minimum measurement range of 10\4\ to 10\12\ ohms. Figure 12 is 
as follows:

[[Page 801]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.011

    (A) High humidity. The test housing shall be placed in an 
environmental test chamber at 953% RH and the temperature cycled as 
shown in Figure 3 in paragraph (e)(3)(ii) of this section for a period 
of 30 days. The cabinet doors shall remain in the fully open position. 
The insulation resistance between the ring terminal of each sample and 
all the common tip terminals shall be measured each 24 hours when the 
temperature is between 38 and 57  deg.C (100 and 135  deg.F) and 
increasing. The minimum insulation resistance when measured in 
accordance with paragraph (g)(2)(i) of this section shall not be less 
than 1x10\6\ ohms.
    (B) Salt fog. A test housing with its doors closed shall be placed 
in a salt fog 35  deg.C (95  deg.F) test chamber and exposed to a salt 
fog spray per ASTM B 117-90 for a period of 30 days. The insulation 
resistance should be measured every 24 hours as indicated in paragraph 
(g)(2)(i) of the section and shall not be less than 1x10\6\ ohms. The 
special service markers shall exhibit no sign of fading, corrosion, 
swelling, warping, running color, or other signs of deterioration.
    (ii) Insulation resistance/simulated rain exposure. (A) A test 
housing as described in paragraph (g)(2)(i) of this section shall be 
tested for water infiltration. The test shall be conducted using the 
method described in paragraph (e)(3)(xi) of this section. The cabinet 
doors shall remain closed for the duration of the test. The insulation 
resistance between the ring terminals and the common tip terminals shall 
be measured during and immediately following the spray application as 
indicated in paragraph (g)(2)(i) of this section and shall not be less 
than 1x10\6\ ohms.
    (B) With the cabinet doors open, a spray of tap water at a rate of 
3.8 liters per minute (1 gallon per minute) at 276 kilo-pascals (40 
pounds per square inch)

[[Page 802]]

shall be directed on the terminal array for a period of 1 minute 
saturating all of the terminals. Following the spray application the 
doors shall be closed. The cabinet shall be maintained in a temperature 
environment of 26 to 28  deg.C (78 to 82  deg.F) at 953% RH for 6 
hours. The insulation resistance shall then be measured as specified in 
paragraph (g)(2)(i) of this section. The minimum insulation resistance 
shall not be less than 1x10\6\ ohms.
    (iii) Contact resistance. A minimum of 100 terminals equipped with 
cross-connect wire that has been installed in a manner typical of that 
used in the industry shall be temperature cycled.
    (A) The test shall consist of eight-hour temperature cycles with 
one-hour dwells at extreme temperatures of -40  deg.C to +60  deg.C (-40 
 deg.F to +140  deg.F), and temperature changes at an average rate of 16 
 deg.C (60  deg.F) per hour between the extremes. The relative humidity 
shall be maintained at 953%. The eight-hour test shall be conducted for 
512 cycles. Millivolt drop measurements shall be made initially and 
after 2, 8, 16, 32, 64, 256, and 512 cycles with the samples at room 
temperature. The resistance measurement technique must conform to ASTM B 
539-90. The measurement method must have an accuracy of at least 30 
microohms for resistances less than 50 milliohms. The change in contact 
resistance shall not exceed 2 milliohms.
    (B) A minimum of 100 terminals equipped with cross-connect wire 
installed in a manner typical of the industry shall be maintained at 118 
 deg.C (245  deg.F) during the test period, except during disturbance 
measurement periods where each wire connection to the terminals shall 
have a 0.23 kg (0.5 lb) force momentarily applied in a manner to stress 
the connection. Initial millivolt measurements shall be made without 
disturbing the joints in accordance with paragraph (g)(2)(iii)(A) of 
this section with the samples at room temperature. After initial 
measurement each sample shall be disturbed followed by a millivolt drop 
measurement after 1, 2, 4, 8, 16, and 33 days. The change in contact 
resistance should be less than 2 milliohms when compared to the initial 
measurement.
    (iv) Fire resistance. A fully equipped cabinet including a full 
complement of cross-connect jumpers shall be installed in the standard 
field arrangement and tested for fire resistance in accordance with 
paragraphs (e)(3)(xiii) introductory text through (e)(3)(xiii)(B) of 
this section. After cooling, the cabinet, terminals, and associated 
wiring shall be inspected for signs of ignition, melting, burning, or 
structural damage of sufficient consequences such that the results are 
service affecting.
    (v) Encapsulant material compatibility. The terminal connection 
encapsulant compound must be compatible with the standard materials used 
in cross-connect hardware and wiring when aged in accordance with ASTM D 
4568-86 at a temperature of 801  deg.C (176 2  deg.F). The conductor 
insulation shall retain a minimum of 85% of its unaged tensile strength 
and elongation values. The cross-connect hardware shall exhibit no 
visible material degradation.
    (vi) Encapsulant flow test. Terminal connection encapsulant must 
remain stable at 801  deg.C (1762  deg.F) when tested in an 
environmental chamber. Test specimens shall be suspended in a preheated 
oven over a glass dish or other drip-catching medium for a period of 24 
hours. At the end of the test period, the glass dish shall be examined 
for evidence of flowing or dripping of encapsulant from the cross-
connect terminal. More than 0.5 gram of encapsulant in the dish at the 
end of the test constitutes failure.
    (3) Mechanical requirements--(i) Vibration. A test housing equipped 
with a full complement of cross-connect terminals and jumper wiring 
shall be subjected to vibration testing in accordance with paragraph 
(e)(4)(iii) of this section.
    (ii) Torsional capacity of binding posts. The test specimens shall 
consist of the complete binding post terminal consisting of the screw or 
nut, washers if required, and threaded post or stud respectively.
    (A) Test specimens shall include the terminals along the matrix edge 
at mid-span locations as well as centrally located terminals. Tests 
shall be conducted using a torque indicating screwdriver, or wrench, 
with an accuracy of

[[Page 803]]

0.17 N-m (1.5 lb-in.) or better. The torque indicating device shall be 
used to tighten a screw or nut until failure of the screw or nut is 
achieved. Tests shall be conducted while the test specimen is stabilized 
at temperatures of -40  deg.C, 20  deg.C, and 71  deg.C (-40  deg.F, +68 
 deg.F, and at +160  deg.F). Record the torques at terminal failure. At 
least 10 test specimens shall be tested at each temperature. The failure 
torque shall not be less than 2.8 N-m (25.0 lb-in.) for each 
temperature.
    (B) The post or stud of the binding post terminal shall not fail 
before the screw or nut when increasing torque. The faceplate or 
receptacle restraining the post or stud shall not fail before the screw 
or nut when increasing torque.
    (iii) Lateral loading capacity of binding posts. A minimum of three 
sets of 25 terminals shall be tested with the test specimens stabilized 
at temperatures of -40  deg.C, 20  deg.C and 71  deg.C (-40  deg.F, +68 
deg.F, and 100  deg.F). The test arrangement shall include the terminals 
along the matrix edge at mid-span locations as well as centrally located 
terminals. A force measuring device, such as a dynamometer, shall be 
attached to the end of a binding post terminal and a 16 kg (35 lb) force 
applied orthogonally to the terminal axis in 4 perpendicular directions 
as shown in Figure 13. Permanent deformation in excess of 0.08 cm (0.03 
in.) or any structural damage in either the terminal or faceplate 
constitutes a failure. Figure 13 is as follows:

[[Page 804]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.012

    (iv) Axial pullout resistance. A minimum of three sets of 25 
terminals shall be tested with the test specimens stabilized at 
temperatures of -40  deg.C, 20  deg.C, and 71  deg.C (-40  deg.F, +68 
deg.F, and 100  deg.F). The test arrangement shall include the terminals 
along the matrix edge at mid-span locations as well as centrally located 
terminals. A force measuring device, such as a dynamometer, shall be 
attached to a terminal and a force of 16 kg (35 lb) applied on axis as 
shown in Figure 14. There shall be no permanent deformation in excess of 
0.08 cm (0.03 in.), any structural damage, or terminal pull-out in 
either the terminal or the faceplate. Figure 14 is as follows:

[[Page 805]]

[GRAPHIC] [TIFF OMITTED] TR21OC94.013

    (v) Test connector reliability. (A) A single pair connector shall be 
capable of making a minimum of 100 successive connections to binding 
post terminals without the occurrence of an open circuit. The test shall 
include terminals along the matrix edge, center, top, and bottom.
    (B) A multi-pair test connector shall be attached to the binding 
post terminal field and tests for opens between the binding post 
terminals and the test

[[Page 806]]

connector shall be conducted. All circuits must prove good. The test 
shall be repeated along the terminal matrix edges, center, top, and 
bottom.
    (vi) Service cycle reliability. A torque indicating device or wrench 
with an accuracy of 0.17 N-m (1.5 lb-in.) or better shall be used to 
tighten the terminal screw or nut as appropriate to 1.7 N-m (15.0 lb-
in.). The terminal nut or screw is then loosened and retightened to 1.7 
N-m (15 lb-in.). After 50 repeated connections and disconnections, the 
terminal shall be placed in an environmental chamber at 95% RH where the 
temperature shall be cycled as indicated in Figure 3 in paragraph 
(e)(3)(ii) of this section for a duration of 72 hours. The terminal 
shall then be momentarily removed from the chamber and the test 
procedure repeated. After a total of 250 loosening and retightening 
cycles have accumulated, the terminal must be capable of withstanding a 
torque of 1.7 N-m (15 lb-in.).
    (4) Dielectric strength. All housing components in the vicinity of 
unsheathed field cable conductors, unsheathed housing stub cable or 
harness conductors, terminals, or cross-connect wire paths shall have a 
minimum dielectric strength of 500 volts ac to the cabinet grounding and 
bonding bracket. Dielectric strength is tested by connecting one lead 
from a 500-volt ac at 0.5 ampere source to the cabinet ground connector 
and the other lead is passed along the surfaces of all cabinet 
components in the vicinity of unsheathed cable or harness conductors, 
cross-connect wire paths, and in the splice area where unsheathed field 
cable conductors may be located. Sparkover constitutes failure.
    (5) Operational requirements--(i) Durability. In order to verify the 
durability requirements while minimizing the number of test housings 
required to complete the test program, the binding posts selected for 
tests shall be separately identified and then checked to establish 
compliance after the various tests have been conducted.
    (ii) Twenty-five jumper connections shall be made on each of two 
binding post connectors chosen at random from a representative sample in 
an assembled interface unit. After exposure to this test, these and 
adjacent connectors shall be inspected for damage such as cracks or 
chips in metal or plastic parts. Failure consists of structural damage, 
open circuits through the connector, or inability to pass the torsional, 
lateral loading, or axial pullout tests described in paragraphs 
(g)(3)(ii) through (g)(3)(iv) of this section.
    (iii) Select six binding posts at random in a representative 
interface. On each connector, attach any test cord included with the 
unit and then remove the test cord as follows. On binding post sample 1, 
remove the cord normally ten times. On binding post sample 2, remove the 
cord ten times by jerking the test leads straight out. In these and the 
remaining tests, do this without releasing any manual attachment 
mechanisms. On sample 3, remove ten times by jerking downward at 45 
deg.from horizontal; sample 4, upward at 45  deg.ten times; sample 5, 
left 45  deg.ten times; sample 6, right 45  deg.ten times. Check for 
opens and damage in the test cord, clips, and connectors. Failure 
consists of structural damage, open circuits through the connector, or 
inability of the terminal blocks to pass the torsional, lateral loading, 
axial pullout, test connector reliability, or dielectric strength tests 
described in paragraphs (g)(3)(ii) through (g)(3)(v)(B), and paragraph 
(g)(4) of this section.
    (iv) Use craft tools such as scissors, diagonal cutters, and long 
nose pliers to loosen and tighten screws where the binding post design 
does not prohibit the possibility. Failure consists of severe structural 
damage.
    (h) Functional design criteria for insulation displacement type 
cross-connect modules used in SAI cabinets--(1) General description. 
Cross-connect modules normally consist of multiple metallic contact 
elements that are retained by nonmetallic fixtures. The contact elements 
are spliced with permanent wire leads compatible for splicing to 22, 24, 
or 26 gauge cable on one side and configured for the acceptance of 
recurring connections and disconnections of plastic insulated cross-
connect wire on the other side. Cross-connect modules are usually housed 
in a SAI cabinet. However, modules may receive limited usage in smaller 
pedestal-type

[[Page 807]]

housings and cabinets in the outside plant environment.
    (2) Design and fabrication requirements. (i) All individual 
terminals or terminal fields must be enclosed and the terminal 
enclosures must be totally filled with an encapsulating grease or gel 
which prevents connection degradation caused by moisture and corrosion. 
The encapsulant must provide complete encapsulation of terminal metallic 
connections and surfaces and totally fill all voids and cavities within 
individual terminal enclosures or terminal field enclosures to prevent 
ingress of moisture. The encapsulant must not restrict access to the 
terminal or restrict craft personnel from making connections. The 
encapsulant must be compatible with the standard materials used in 
cross-connect hardware and wiring.
    (ii) The cross-connect module manufacturer shall make available any 
nonstandard tools and test apparatus which are required for splicing, 
placing of jumpers, and the performance of maintenance operations.
    (iii) The module shall be designed so that a typical outside plant 
technician using tools shall be able to terminate cross-connect wire on 
terminals, or to remove them without causing electrical shorts between 
any other terminals.
    (iv) The pair count sequence terminated on a module shall be easily 
visible and shall have numerals of at least 0.25 cm (0.10 in.) in 
height.
    (v) Feeder terminations shall be easily distinguished from 
distribution terminations.
    (vi) Tip and ring terminations shall be easily visible and shall be 
identifiable as described in paragraph (f)(2)(vi) of this section.
    (vii) The preferred locations for cross-connect modules to be 
mounted inside a housing is the same as those for terminals and are 
described in paragraphs (f)(2)(vii) and (f)(2)(viii) of this section.
    (3) Auxiliary features. (i) Housings equipped with cross-connect 
modules shall be equipped with auxiliary test contacts as described in 
paragraphs (f)(3)(i) and (f)(3)(ii) of this section.
    (ii) Special service markers shall be available for cross-connect 
modules as described in paragraph (f)(3)(iii) of this section.
    (iii) Housings equipped with, or designed for, cross-connect modules 
shall contain a supply of cross-connect wire as described in paragraph 
(f)(3)(iv) of this section.
    (i) Performance criteria and test procedures for insulation 
displacement type cross-connect modules--(1) General. Many of the tests 
described in this section require that the cross-connect module be 
installed in an appropriate housing in its typical field configuration 
for testing. Resistance measurements should be made with an electrical 
device which measures changes in resistance for each test parameter 
measured. The tests specified provide an indication of the stability of 
the electrical connections under the test conditions encountered.
    (2) Environmental requirements. (i) A fully equipped arrangement of 
cross-connect modules having approximately 25 special service markers 
shall successfully complete environmental testing in accordance with 
paragraphs (e)(3) introductory text through (e)(3)(xiii)(B) of this 
section.
    (ii) Insulation resistance/high humidity and salt fog exposure. 
Insulation resistance measurements shall not be less than 1x10\6\ ohms 
when cross-connect modules are tested by a procedure similar to that 
described in paragraphs (g)(2)(i) introductory text through (g)(2)(i)(B) 
of this section.
    (iii) Insulation resistance/simulated rain exposure. Insulation 
resistance measurements shall not be less than 1x10\6\ ohms when cross-
connect modules are tested by a procedure similar to that described in 
and paragraphs (g)(2)(ii) introductory text through (g)(2)(ii)(B) of 
this section.
    (iv) Contact resistance. The change in contact resistance should not 
exceed 2 milliohms when cross-connect modules are tested by a procedure 
similar to that described in paragraphs (g)(2)(iii) introductory text 
through (g)(2)(iii)(B) of this section.
    (v) Fire resistance. A housing fully equipped with cross-connect 
modules and jumper wiring shall be tested for fire resistance by a 
procedure similar to that described in paragraph (g)(2)(iv) of this 
section.

[[Page 808]]

    (vi) Encapsulant material compatibility. Cross-connect wire 
insulation and cross-connect hardware shall exhibit no visible material 
degradation when tested by the procedure described in paragraph 
(g)(2)(v) of this section.
    (vii) Encapsulant flow test. The cross-connect contact encapsulant 
shall drip no more than 0.5 gram when tested by the procedure described 
in paragraph (g)(2)(vi) of this section.
    (3) Mechanical requirements--(i) Vibration. A housing fully equipped 
with cross-connect modules shall be vibration tested in accordance with 
paragraph (g)(3)(i) of this section.
    (ii) Test connector reliability. The test connectors supplied with 
housings intended for cross-connect modules shall successfully complete 
100 successive connections as described in paragraphs (g)(3)(v) 
introductory text through (g)(3)(v)(B) of this section.
    (iii) Service cycle reliability. A combination of multiple 
insertions of jumper wires, vibration, and temperature cycling shall be 
performed on cross-connect modules. The multiple insertions on 
approximately 100 connections shall be accomplished by 300 operations 
consisting of insertion, removal and reinsertion of new jumper wire. 
Contact resistance shall be measured and the final insertion of jumper 
wire shall not be removed from the connectors but must be subjected to 
vibration testing in accordance with paragraph (g)(3)(i) of this section 
and temperature cycled as indicated in Figure 3 in paragraph (e)(3)(ii) 
of this section for a duration of 72 hours. After vibration and 
temperature cycling, the average change in contact resistance shall be 
no greater than 2 milliohms.
    (iv) Jumper wire pull-out resistance. Test modules that have 
received no prior conditioning shall be equipped with 100 38 cm (15 in.) 
jumper connections of the gauges recommended for use with the module 
using the insertion tool recommended by the cross-connect module 
manufacturer. With the test samples suitably supported, wires from each 
sample shall be pulled, one at a time, by a tensile machine at a cross-
head speed of 6 centimeters per minute (cm/min) (2.4 inches per minute 
(in./min)). Wires shall be pulled both perpendicular and parallel to the 
plane of the cross-connect field and shall withstand a load of at least 
1.1 kg (2.5 lb) before pulling out.
    (v) Cable conductor pull-out resistance. Test modules that have 
received no prior conditioning shall be equipped with 100 26, 24, and 22 
AWG 38 cm (15 in.) cable conductors using the insertion tool recommended 
by the cross-connect module manufacturer. With the test samples suitably 
supported, conductors from each sample shall be pulled, one at a time, 
by a tensile machine at a cross-head speed of 6 cm/min (2.4 in./min). 
Wires shall be pulled both perpendicular and parallel to the plane of 
the face of the splice module and shall withstand a load of at least 1.1 
kg (2.5 lb) before pulling out.
    (4) Electrical requirements--(i) Dielectric strength. A housing 
fully equipped with cross-connect modules shall be tested for dielectric 
strength in accordance with (g)(4) of this section.
    (ii) The dielectric strength of a contact within the cross-connect 
module to contacts on either side shall be tested. The module shall be 
tested in a dry environment with an ac power source capable of supplying 
8 kv at a rate of increase of 500 volts per second, a circuit breaker to 
open at breakdown, and a voltmeter to record the breakdown potential. 
Cross-connect modules shall be prepared in accordance with industry 
accepted splicing techniques with leads trimmed to approximately 38 cm 
(15 in.). The dielectric strength of each contact to the contacts on 
either side shall have an average dielectric strength of approximately 
5.0 kv.
    (5) Operational requirements--(i) Durability. In order to verify the 
durability requirements while minimizing the number of test housings 
required to complete the test program, the contacts selected for tests 
shall be separately identified and then checked to establish compliance 
after the various tests have been conducted.
    (ii) Twenty-five jumper connections shall be made on each of two 
contacts chosen at random from a representative sample in an assembled 
interface unit. After this test, these and surrounding contacts shall be 
inspected for damage such as cracks or chips in metal or plastic parts. 
Failure consists of structural damage, open circuits

[[Page 809]]

through the connector, or inability to pass the jumper wire pullout 
tests described in paragraph (i)(3)(iv) of this section.
    (iii) Select six contacts at random in a representative interface. 
On each of these contacts attach any test cord included with the unit as 
specified under normal use of that cord and then remove the test cord as 
follows. On sample 1, remove the cord normally ten times. On sample 2, 
remove the clip ten times by jerking the test leads straight out. In 
these and the remaining tests, do this without releasing any manual 
attachment mechanisms. On sample 3, remove ten times by jerking downward 
at 45  deg.from horizontal; sample 4, upward 45  deg.ten times; sample 
5, left 45  deg.ten times; sample 6, right 45  deg.ten times. Check for 
opens and damage in the test cord, clips, and cross-connect modules. 
Failure consists of structural damage, open circuits through the 
connector, or inability of module to pass the test connector 
reliability, jumper wire pullout, and dielectric strength tests 
described in paragraphs (i)(3)(ii), (i)(3)(iv), and (i)(4)(ii) of this 
section.
    (j) Packaging and identification requirements--(1) Product 
identification. (i) Each housing, terminal block, or cross-connect 
module shall be permanently marked with the manufacturer's name or trade 
mark.
    (ii) The date of manufacture, model number, serial number and RUS 
assigned designations shall be placed on a decal inside housings. The 
product identification nomenclature must correspond with the 
nomenclature used in the manufacturer's quality assurance program.
    (2) Packaging requirements. (i) Buried plant housings shall be 
packaged securely in an environmentally safe container to prevent either 
deterioration or physical damage to the unit during shipment, handling 
and storage.
    (ii) The product with all the necessary parts shall be shipped in 
one container unless significant advantages to the user can be obtained 
otherwise. Packaging of parts in the carton shall be such that the parts 
become available in the order in which they are needed. The package 
should be clearly marked as to which end to open. Packages shall be 
clearly labeled, and correspond to the names given in the instructions.
    (iii) Products packed in shipping containers shall be cushioned, 
blocked, braced, and anchored to prevent movement and damage.
    (iv) All products shall be secured to pallets with non-metallic 
strapping. The strapping and the manner employed shall be of sufficient 
quantity, width, and thickness to preclude failure during transit and 
handling.
    (v) The use of shrink or stretch film to secure the load to the 
pallet is permitted. However, such film must be applied over the 
required strapping.
    (vi) Containers that are too large or heavy to be palletized, such 
as crates, shall be shipped in their own containers. When practical, 
these containers shall be provided with skids to facilitate fork-lift 
handling.
    (vii) When packaged, the outer cartons shall meet the requirements 
of the Uniform Freight Classification and the National Motor Freight 
Classification.
    (3) Container marking requirements. (i) The package shall be readily 
identifiable as to the manufacturer, model number, date of manufacture, 
and serial number.
    (ii) The RUS assigned housing designation shall be stamped or marked 
on the outside of the package container with letter and number sizes 
large enough for easy identification.
    (iii) Each package shall be marked with its approximate gross 
weight.
    (iv) All containers carrying delicate or fragile items shall be 
marked to clearly identify this condition.
    (v) All marking shall be clear, legible, and as large as space 
permits.

(The information and recordkeeping requirements of this section have 
been approved by the Office of Management and Budget under control 
number 0572-0059)

[59 FR 53044, Oct. 21, 1994, as amended at 69 FR 18803, Apr. 9, 2004]

    PART 1757_TELEPHONE SYSTEMS OPERATIONS AND MAINTENANCE [RESERVED]

[[Page 811]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 813]]



                    Table of CFR Titles and Chapters




                      (Revised as January 1, 2014)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (200--299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300-- 
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Housing and Urban Development (Parts 2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)
     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)

[[Page 814]]

       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)
        II  Recovery Accountability and Transparency Board (Parts 
                200--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600-- 3699)
    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)

[[Page 815]]

    XXXIII  Overseas Private Investment Corporation (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)
     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)

[[Page 816]]

    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (9600--9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
     XCVII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--99)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)

[[Page 817]]

      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)

[[Page 818]]

        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

[[Page 819]]

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

[[Page 820]]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

[[Page 821]]

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)

[[Page 822]]

        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)

[[Page 823]]

        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)

[[Page 824]]

      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)

[[Page 825]]

         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (700--799)[Reserved]
            Subtitle C--Regulations Relating to Education
        XI  National Institute for Literacy (Parts 1100--1199)
       XII  National Council on Disability (Parts 1200--1299)

[[Page 826]]

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)

[[Page 827]]

       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--599)

[[Page 828]]

         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)

[[Page 829]]

       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Health and Human Services (Parts 300--399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)

[[Page 830]]

        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)[Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)

[[Page 831]]

         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--
                1499)[Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 833]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2014)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     22, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII, L
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV, L
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII, L
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII

[[Page 834]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Bureau of Ocean Energy Management, Regulation,    30, II
     and Enforcement
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I

[[Page 835]]

Defense Contract Audit Agency                     32, I
Defense Department                                2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99

[[Page 836]]

  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV

[[Page 837]]

Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A,
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 6, I; 8, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V

[[Page 838]]

Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department                               2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Bureau of Ocean Energy Management, Regulation,  30, II
       and Enforcement
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
Iraq Reconstruction, Special Inspector General    5, LXXXVII
     for
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V

[[Page 839]]

  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Office of Workers' Compensation Programs        20, VII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III

[[Page 840]]

National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III, IV
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Offices of Independent Counsel                    28, VI
Office of Workers' Compensation Programs          20, VII
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Recovery Accountability and Transparency Board    4, II
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII, L
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV, L
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII, L

[[Page 841]]

Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
   and Water Commission, United States Section
[[Page 842]]

U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 843]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2009 are enumerated in the following list. Entries indicate the 
nature of the changes effected. Page numbers refer to Federal Register 
pages. The user should consult the entries for chapters, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.fdsys.gov. For changes to this volume of the CFR 
prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 1964-
1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. The 
``List of CFR Sections Affected 1986-2000'' is available at 
www.fdsys.gov.

                                  2009

7 CFR
                                                                   74 FR
                                                                    Page
Chapter XVII
1710.2  (a) amended................................................56543
1730.60--1730.100 (Subpart C)  Added...............................32409
1755  Heading revised..............................................20561
1755.900  Revised..................................................20561
1755.901  Added....................................................20561
1755.902  Added....................................................20561
1755.903  Added....................................................20561

                                  2010

7 CFR
                                                                   75 FR
                                                                    Page
Chapter XVII
1720.1  Revised....................................................42573
1720.2  Revised....................................................42573
1720.3  Amended....................................................42574
1720.4  (a)(2), (3), (4) and (b)(2) revised........................42574
1720.5  (a)(1) and (b)(1) revised..................................42574
1720.6  (a)(7) revised.............................................42574
1720.7  (b)(3), (4) and (d) revised; (b)(5) and (6) added..........42574
1720.8  (a)(3), (4) and (8) revised................................42574
1720.12  (a)(5) revised............................................42575
1720.13  Revised...................................................42575
1755.97  Table amended.............................................59934

                                  2011

7 CFR
                                                                   76 FR
                                                                    Page
Chapter XVII
1728.97  Revised...................................................36963
1728.98  Added.....................................................36964
1728.201  Revised..................................................36965
1728.202  Revised..................................................36965
1730.28  (e)(4) amended; (e)(5) redesignated as (e)(6); new (e)(5) 
        added......................................................47056
1735.10  (a) revised; (g) added; interim...........................56093
1735.12  (g) added; interim........................................56093
1735.14  (a)(4) added; interim.....................................56094
1735.22  (c) through (i) redesignated as (d) through (j); new (c) 
        added; interim.............................................56094
1738  Revised; interim.............................................13785
1755.97  Revised...................................................36975

                                  2012

7 CFR
                                                                   77 FR
                                                                    Page
Chapter XVII
1700.100--1700.150 (Subpart D)  Added..............................35250
1724.54  (e)(2) and (g)(2) revised..................................3071
1726.14  Amended....................................................3071
1726.50  (a) revised................................................3072
1726.51  (a)(1), (b)(1) and (2) revised.............................3072
1726.76  (a) revised................................................3072
1726.77  (b)(1) and (c) revised.....................................3072

[[Page 844]]

1726.125  (a), (b)(1) and (2) revised...............................3072
1726.150  (b) revised...............................................3072
1726.176  (b)(2)(i) and (3) revised.................................3072
1728.97  (e), (f) and (g) redesignated as (f), (h) and (i); (d) 
        revised; new (e) and (g) added.............................19528
1728.202  (f)(3)(i)(B), (C) and (ii)(A) correctly revised..........29537
1728.204  Added....................................................19529
1735.10  Regulation at 76 FR 56093 confirmed.......................15565
1735.12  Regulation at 76 FR 56093 confirmed.......................15565
1735.14  Regulation at 76 FR 56094 confirmed.......................15565
1735.22  Regulation at 76 FR 56094 confirmed.......................15565

                                  2013

7 CFR
                                                                   78 FR
                                                                    Page
Chapter XVII
1710.2  (a) amended; eff. 2-3-14...................................73365
1710.100  Amended; eff. 2-3-14.....................................73365
1710.101  (b) amended; eff. 2-3-14.................................73365
1710.102  (a) and (b) amended; eff. 2-3-14.........................73365
1710.106  (a)(6) added; (c)(1) and (d) revised; eff. 2-3-14........73365
1710.109  (a) amended; eff. 2-3-14.................................73366
1710.115  (c) added; eff. 2-3-14...................................73366
1710.120  Amended; eff. 2-3-14.....................................73366
1710.152  (e) added; eff. 2-3-14...................................73366
1710.202  (d) added; eff. 2-3-14...................................73366
1710.203  (f) added; eff. 2-3-14...................................73366
1710.205  (b)(5) amended; eff. 2-3-14..............................73366
1710.255  Added; eff. 2-3-14.......................................73366
1710.300  (d)(3), (4) and (5) redesignated as (d)(4), (5) and (6); 
        new (d)(3) added; eff. 2-3-14..............................73366
1710.302  (d)(5) amended; eff. 2-3-14..............................73366
1710.400--1710.407 (Subpart H)  Added; eff. 2-3-1473366
1710.400  Redesignated as 1710.500; eff. 2-3-14....................73366
1710.401  Redesignated as 1710.501; eff. 2-3-14....................73366
1710.402  Redesignated as 1710.502; eff. 2-3-14....................73366
1710.403  Redesignated as 1710.503; eff. 2-3-14....................73366
1710.404  Redesignated as 1710.504; eff. 2-3-14....................73366
1710.405  Redesignated as 1710.505; eff. 2-3-14....................73366
1710.406  Redesignated as 1710.506; eff. 2-3-14....................73366
1710.407  Redesignated as 1710.507; eff. 2-3-14....................73366
1710.500  Redesignated from 1710.400; eff. 2-3-14..................73366
1710.501  Redesignated from 1710.401; eff. 2-3-14..................73366
1710.502  Redesignated from 1710.402; eff. 2-3-14..................73366
1710.503  Redesignated from 1710.403; eff. 2-3-14..................73366
1710.504  Redesignated from 1710.404; eff. 2-3-14..................73366
1710.505  Redesignated from 1710.405; eff. 2-3-14..................73366
1710.506  Redesignated from 1710.406; eff. 2-3-14..................73366
1710.507  Redesignated from 1710.407; eff. 2-3-14..................73366
1717.852  (b)(2)(ii) revised; eff. 2-3-14..........................73370
1721.1  (a) revised; eff. 2-3-14...................................73370
1724.30  (a) revised; eff. 2-3-14..................................73370
1726  Correctly amended; CFR correction............................69286
1730.20--1730.59 (Subpart B)  Appendix A amended; eff. 2-3-14......73371
1738  Regulation at 76 FR 13785 confirmed...........................8359
1738.153  (a) revised; (b) amended..................................8360
1739  Revised......................................................25791


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