[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2023 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 7
Agriculture
________________________
Parts 1600 to 1759
Revised as of January 1, 2023
Containing a codification of documents of general
applicability and future effect
As of January 1, 2023
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 7:
SUBTITLE B--Regulations of the Department of Agriculture
(Continued)
Chapter XVI [Reserved]
Chapter XVII--Rural Utilities Service, Department of
Agriculture 7
Finding Aids:
Table of CFR Titles and Chapters........................ 793
Alphabetical List of Agencies Appearing in the CFR...... 813
List of CFR Sections Affected........................... 823
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 7 CFR 1700.1 refers
to title 7, part 1700,
section 1.
----------------------------
[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
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
volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
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To determine whether a Code volume has been amended since its
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative
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Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
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inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
amendments to existing regulations in the CFR. These OMB numbers are
placed as close as possible to the applicable recordkeeping or reporting
requirements.
PAST PROVISIONS OF THE CODE
Provisions of the Code that are no longer in force and effect as of
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for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.
``[RESERVED]'' TERMINOLOGY
The term ``[Reserved]'' is used as a place holder within the Code of
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``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used
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not dropped in error.
INCORPORATION BY REFERENCE
What is incorporation by reference? Incorporation by reference was
established by statute and allows Federal agencies to meet the
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if it were published in full in the Federal Register (5 U.S.C. 552(a)).
This material, like any other properly issued regulation, has the force
of law.
What is a proper incorporation by reference? The Director of the
Federal Register will approve an incorporation by reference only when
the requirements of 1 CFR part 51 are met. Some of the elements on which
approval is based are:
(a) The incorporation will substantially reduce the volume of
material published in the Federal Register.
(b) The matter incorporated is in fact available to the extent
necessary to afford fairness and uniformity in the administrative
process.
(c) The incorporating document is drafted and submitted for
publication in accordance with 1 CFR part 51.
What if the material incorporated by reference cannot be found? If
you have any problem locating or obtaining a copy of material listed as
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CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Authorities
and Rules. A list of CFR titles, chapters, subchapters, and parts and an
alphabetical list of agencies publishing in the CFR are also included in
this volume.
An index to the text of ``Title 3--The President'' is carried within
that volume.
[[Page vii]]
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ``Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
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INQUIRIES
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Oliver A. Potts,
Director,
Office of the Federal Register
January 1, 2023
[[Page ix]]
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, 2023.
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, Gabrielle E. Burns was Chief Editor. The Code of
Federal Regulations publication program is under the direction of John
Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 7--AGRICULTURE
(This book contains parts 1600 to 1759)
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SUBTITLE B--Regulations of the Department of Agriculture (Continued)
Part
chapter xvi [Reserved]
chapter xvii--Rural Utilities Service, Department of
Agriculture............................................... 1700
[[Page 3]]
Subtitle B--Regulations of the Department of Agriculture (Continued)
[[Page 5]]
CHAPTER XVI [RESERVED]
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[[Page 7]]
CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
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Editorial Note: Nomenclature changes to chapter XVII appear at 59 FR
66440, Dec. 27, 1994.
Part Page
1700 General information......................... 9
1703 Rural development........................... 18
1709 Assistance to high energy cost communities.. 23
1710 General and pre-loan policies and procedures
common to electric loans and guarantees. 41
1714 Pre-loan policies and procedures for insured
electric loans.......................... 95
1717 Post-loan policies and procedures common to
insured and guaranteed electric loans... 101
1718 Loan security documents for electric
borrowers............................... 148
1719 Rural Energy Savings Program................ 151
1720 Guarantees for bonds and notes issued for
utility infrastructure purposes......... 167
1721 Post-loan policies and procedures for
insured electric loans.................. 176
1724 Electric engineering, architectural services
and design policies and procedures...... 180
1726 Electric system construction policies and
procedures.............................. 196
1728 Electric standards and specifications for
materials and construction.............. 220
1730 Electric system operations and maintenance.. 246
1734 Distance learning and telemedicine loan and
grant programs.......................... 253
1735 General policies, types of loans, loan
requirements--telecommunications program 277
1737 Pre-loan policies and procedures common to
insured and guaranteed
telecommunications loans................ 303
1738 Rural broadband loans, loan/grant
combinations, and loan guarantees....... 319
1739 Broadband grant program..................... 338
1740 Rural econnectivity program................. 346
1741
Pre-loan policies and procedures for insured telephone loans [ Reserved]
[[Page 8]]
1744 Post-loan policies and procedures common to
guaranteed and insured telephone loans.. 361
1748
Post-loan policies and procedures for insured telephone loans [ Reserved]
1751 Telecommunications system planning and
design criteria, and procedures......... 388
1752 Servicing of telecommunications programs.... 392
1753 Telecommunications system construction
policies and procedures................. 400
1755 Telecommunications policies on
specifications, acceptable materials,
and standard contract forms............. 433
1757
Telephone systems operations and maintenance [ Reserved]
1758-1759
[Reserved]
[[Page 9]]
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]
1700.54 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) 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 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.
[63 FR 16085, Apr. 2, 1998, as amended at 84 FR 59920, Nov. 7, 2019]
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 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
[[Page 10]]
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]
Sec. Sec. 1700.5-1700.24 [Reserved]
Subpart B_Agency Organization and Functions
Sec. 1700.25 Office of the Administrator.
The Administrator of the Rural Utilities Service (RUS) is appointed
by the President. The Under Secretary, Rural Development delegated to
the Administrator, in 7 CFR part 2, responsibility for administering the
programs and activities of RUS. 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.
[79 FR 44117, July 30, 2014, as amended at 84 FR 59920, Nov. 7, 2019]
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.
[79 FR 44117, July 30, 2014]
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]
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.
[[Page 11]]
(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, 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, as amended at 84 FR 59920, Nov. 7, 2019]
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 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.
[[Page 12]]
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 primary point of
contact for applicants, grantees, and borrowers.
[70 FR 5351, Feb. 2, 2005. Redesignated at 71 FR 8436, Feb. 17, 2006]
Sec. Sec. 1700.35-1700.49 [Reserved]
Subpart C_Loan and Grant Approval Authorities
Sec. Sec. 1700.50-1700.52 [Reserved]
Sec. 1700.54 Electric Program.
(a) Administrator: The authority to approve the following loans,
loan guarantees, and lien accommodations and
[[Page 13]]
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.
(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
[[Page 14]]
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.
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]
[[Page 15]]
Sec. Sec. 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.
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
[[Page 16]]
(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 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
[[Page 17]]
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 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.
[[Page 18]]
(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,
feasibility analysis and service area verification by RUS consistent
with the regulations and guidelines normally applicable to the relevant
program.
Sec. Sec. 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
Subparts A-B [Reserved]
Subpart C_Rural Business Incubator Program [Reserved]
Sec.
1703.80-1703.99 [Reserved]
Subparts D-G [Reserved]
Subpart H_Deferments of RUS Loan Payments for Rural Development Projects
1703.300 Purpose.
1703.301 Policy.
[[Page 19]]
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.
Source: 54 FR 6870, Feb. 15, 1989, unless otherwise noted.
Redesignated at 55 FR 39394, Sept. 27, 1990.
Subparts A-B [Reserved]
Subpart C_Rural Business Incubator Program [Reserved]
Sec. Sec. 1703.80-1703.99 [Reserved]
Subparts D-G [Reserved]
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 H sets forth RUS' 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.
[82 FR 55925, Nov. 27, 2017]
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 20]]
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 21]]
(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 22]]
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 23]]
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 24]]
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 25]]
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.
Funding opportunity announcement (FOA) means a publicly available
document by which a Federal agency makes know its intentions to award
discretionary grants or cooperative agreements, usually as a result of
competition for funds. FOA announcements may be known as program
announcements, notices of funding availability, solicitations, or other
names depending on the agency and type of program. FOA announcements can
be found at www.Grants.gov in the Search Grants tab and on the funding
agency's or program's website.
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.
[70 FR 5351, Feb. 2, 2005, as amended at 83 FR 45032, Sept. 5, 2018]
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
[[Page 26]]
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 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;
[[Page 27]]
(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 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 2 CFR part
200, as adopted by USDA through 2 CFR part 400, 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.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
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 2 CFR part 200, as
adopted by USDA through 2 CFR part 400.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
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.
[[Page 28]]
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. 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 2 CFR
part 200, as adopted by USDA through 2 CFR part 400.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
Sec. 1709.17 Environmental review.
(a) Grants made under this subpart must comply with the
environmental review requirements in accordance with 7 CFR part 1970.
(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. 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 in accordance with 7 CFR part 1970 prior
to final award approval. The Agency may require the selected applicant
to submit additional information, 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.
[70 FR 5351, Feb. 2, 2005, as amended at 81 FR 11025, Mar. 2, 2016]
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) Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards, 2 CFR part 200, as adopted by USDA
through 2 CFR part 400;
(b) Drug-Free Workplace Act of 1998 (41 U.S.C. 8101 et. seq.), 2 CFR
part 421;
(c) E.O.s 12549 and 12689, Debarment and Suspension, 2 CFR part 180,
which is adopted by USDA through 2 CFR part 417;
(d) Byrd Anti-Lobbying Amendment (31 U.S.C. 1352), 2 CFR part 418;
and
(e) Subpart F of 2 CFR 200, as adopted by USDA through 2 CFR 400.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
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.
[[Page 29]]
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 subpart F of 2
CFR part 200, as adopted by USDA through 2 CFR part 400.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
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.
Sec. Sec. 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 2 CFR 415.1(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.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
Sec. Sec. 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
[[Page 30]]
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 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 Census block according to the most recent decennial Census of
the United States (decennial Census).
(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.
[70 FR 5351, Feb. 2, 2005, as amended at 80 FR 9860, Feb. 24, 2015]
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.
[[Page 31]]
(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, 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
[[Page 32]]
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, 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 posting a FOA on www.Grant.gov. The FOA 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, deadlines and procedures
for submitting applications. This information will also be made
available in the RUS High Energy Cost Grant program application guide
and the RUS High Energy Cost Grant program website.
[83 FR 45032, Sept. 5, 2018]
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.
[[Page 33]]
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 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
[[Page 34]]
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 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 review requirements. Grants made under this
subpart must comply with the environmental review requirements in
accordance with 7 CFR part 1970.
(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.
[70 FR 5351, Feb. 2, 2005, as amended at 81 FR 11026, Mar. 2, 2016]
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
[[Page 35]]
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 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 FOA 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 FOA. Another FOA regarding the
reopening of an application period will be announced on www.Grants.gov.
[70 FR 5351, Feb. 2, 2005, as amended at 83 FR 45033, Sept. 5, 2018]
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
[[Page 36]]
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 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
[[Page 37]]
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 population figures from the most recent
decennial Census. If the applicable population figure cannot be based on
the most recent decennial Census, RD will determine the applicable
population figure based on available population data.
(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 points for this criterion where the
aggregate value of these contributions exceed ten percent of total
eligible project costs.
[70 FR 5351, Feb. 2, 2005, as amended at 80 FR 9860, Feb. 24, 2015]
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
environmental review requirements in accordance with 7 CFR part 1970,
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.
[70 FR 5351, Feb. 2, 2005, as amended at 81 FR 11026, Mar. 2, 2016]
Sec. Sec. 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
[[Page 38]]
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.
Sec. Sec. 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 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
[[Page 39]]
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 the most recent
decennial Census of the United States. If the applicable population
estimate cannot be based on the most recent decennial Census, RD will
determine the applicable population figure based on available population
data. 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.
(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.
[70 FR 5351, Feb. 2, 2005, as amended at 80 FR 9860, Feb. 24, 2015]
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.
[[Page 40]]
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.
(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,
[[Page 41]]
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.
Sec. Sec. 1709.218-1709.300 [Reserved]
Subparts D-F [Reserved]
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 2 CFR part 200, as adopted by USDA through 2 CFR part
400.
[70 FR 5351, Feb. 2, 2005, as amended at 79 FR 76002, Dec. 19, 2014]
Sec. Sec. 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 Refinancing.
1710.54-1710.99 [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.
[[Page 42]]
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 review requirements.
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 Board of Director Resolutions.
1710.155-1710.199 [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 [Reserved]
1710.205 Minimum requirements for all load forecasts.
1710.206 Requirements for load forecasts prepared pursuant to a load
forecast work plan.
1710.207 RUS criteria for load forecasts by distribution borrowers.
1710.208 RUS criteria for load forecasts by power supply borrowers and
by distribution borrowers.
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 [Reserved]
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
1710.500 Initial contact.
1710.501 Loan application documents.
1710.502-1710.503 [Reserved]
1710.504 Additional requirements.
1710.505 Supplemental financing documents.
1710.506 Loan approval.
1710.507 Loan documents.
Subpart J_Terms of Loans Common to Electric Loans and Guarantees
1710.601 Advance of funds from loans.
1710.602 Fund advance period.
1710.603 Sequence of advances.
1710.604 Amortization of principal.
1710.605 Rescission of loans.
Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.
[[Page 43]]
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, distribution facilities, and
cybersecurity and grid security needs.
(b) This part also establishes general and pre-loan refinancing
policies and requirements that apply to the refinancing of loans made or
guaranteed for the purpose of rural electrification, furnishing and
improving electric service in rural areas, and assisting electric
borrowers to implement demand side management, energy efficiency and
conservation programs, on-grid, and off-grid renewable energy systems,
and cybersecurity and grid security improvements.
(c) Additional pre-loan policies, procedures, and requirements that
apply specifically to guaranteed and 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.
(d) This part supersedes those portions of the following RUS
Bulletins and supplements that are in conflict with this part including
but not necessarily limited to the following:
(1) 20-5 Extensions of Payments of Principal and Interest.
(2) 20-20 Deferment of Principal Repayments for Investment in
Supplemental Lending Institutions.
(3) 20-22 Guarantee of Loans for Bulk Power Supply Facilities.
(4) 20-23 Section 12 Extensions for Energy Resources Conservation
Loans.
(5) 60-10 Construction Work Plans, Electric Distribution Systems.
(6) 86-3 Headquarters Facilities for Electric Borrowers.
(7) 105-5 Financial Forecast-Electric Distribution Systems.
(8) 111-3 Power Supply Surveys.
(9) 120-1 Development, Approval, and Use of Power Requirements
Studies.
[87 FR 74496, Dec. 6, 2022]
Effective Date Note: At 87 FR 73436, Nov. 30, 2022, Sec. 1710.1 was
revised, effective Feb. 28, 2023. For the convenience of the user, the
revised text is set forth as follows:
Sec. 1710.1 General statement.
This part establishes general and pre-loan policies and requirements
that apply to both insured and guaranteed loans to finance the
construction and improvement of electric facilities in rural areas,
including generation, transmission, and distribution facilities.
Sec. 1710.2 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;
[[Page 44]]
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.
Cybersecurity and grid security improvements means:
(i) Investment in the development, expansion, and modernization of
rural utility infrastructure that addresses known and emerging
cybersecurity and grid security risks. This definition incorporates both
cybersecurity and grid security as one concept. The cybersecurity
component of the definition includes measures and investments designed
to prevent damage to, otherwise protect, or restore computers and
computer systems, industrial control systems/operational technology,
electronic communications systems, electronic communications services,
wire, and all other forms electronic communication including information
contained therein. Rural utilities often utilize cybersecurity measures
and investments to ensure service availability, system integrity, user
authentication, confidentiality, and nonrepudiation, related to the
services.
(ii) The grid security component of this definition, includes
measures and investments made to protect a utility's infrastructure
reliability and resiliency against both natural impacts and man-made
physical attacks or intrusions by individuals or groups intent on
damaging, destroying, disrupting, or removing components of utility
infrastructure or threatening to damage utility infrastructure. Measures
considered for RUS financing include, but are not limited to, fire
prevention, physical barriers, remote sensing equipment, monitoring
physical assets, security cameras, security vehicles, information and
operational technology cybersecurity measures, control systems
cybersecurity monitoring technologies, fire prevention devices and
sensors and other investments which serve the purpose of protecting
assets and maintaining the reliability of rural utility systems.
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.
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
[[Page 45]]
continuing back to and including the distribution substation.
Distributed generation is the generation of electricity by a
sufficiently small electric generating system as to 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.
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.
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
[[Page 46]]
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.
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
will be constructed not to exceed the time identified in the Loan note,
as approved.
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 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
[[Page 47]]
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 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
[[Page 48]]
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;
(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; and
(iii) Which excludes certain populations pursuant to 7 U.S.C.
1991(a)(13)(H) and (I).
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 characterized as an area that comprises a
place and the adjacent densely settled territory that together have a
minimum population of 50,000 people.
[[Page 49]]
(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; 78 FR 73365, Dec. 5, 2013; 84 FR 32610, July 9, 2019; 87 FR 38642,
June 29, 2022; 87 FR 74497, Dec. 6, 2022]
Effective Date Note: At 87 FR 73436, Nov. 30, 2022, Sec. 1710.2 was
amended by removing the definitions for ``Approved load forecast work
plan,'' ``Load forecast work plan,'' and ``PRS work plan,'' effective
Feb. 28, 2023.
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 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]
[[Page 50]]
Sec. Sec. 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 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]
[[Page 51]]
Sec. 1710.53 Refinancing.
(a) General. (1) Subject to the availability of funds for such
purpose, RUS may use loan funds to refinance prior loans made or
guaranteed under the RE Act, as amended, (7 U.S.C. 902(a)). Such
refinancing must be in the interest of rural consumers, taxpayers, rural
economic development or otherwise in the public interest, as determined
by the Administrator.
(2) The Secretary's authority to make loans for refinancing under
this section is in addition to any other authority granted to the
Secretary to make or modify loans under the RE Act or any other
statutory authority.
(3) Nothing in this section changes the policies or standards set
forth in 7 CFR part 1717, subpart Y, or the terms and conditions of the
agreements entered into between RUS and FFB or the notes issued to RUS
or FFB in connection with RUS or FFB loans.
(4) When funds are made available under this section, RUS will issue
a public notice in the Federal Register specifying the amount of funds
available under this section. The notice will contain additional
application procedures specific to the amount and type of funding
available and new loan application periods related to the availability
of funds. The notice may also include Administration priorities, such as
directing benefits to disadvantaged communities and reducing greenhouse
gas emissions. The Administrator, in setting funding priorities and
application periods, may consider the amount of available funds, RUS
resources, RUS priorities and policy goals, and any other factors
related to the efficient operation of the agency.
(b) Definitions. For the purpose of this section, the following
terms have the following meanings. Terms not defined here are defined in
Sec. 1710.2. When the definitions provided in this section conflict
with any other definition applicable to RUS Electric Program regulations
in this chapter, including Sec. 1710.2, the definition of this section
will control only as it relates to refinancing under this section.
Advance means advance or advances of loan funds made by RUS to the
borrower pursuant to the terms and conditions in the loan documents.
Agency means the Rural Utilities Service or its successor.
Conditional commitment letter means the notification issued by the
Administrator to an eligible entity advising it of the estimated terms,
conditions, and amount of the new loan.
Eligible entity means an RUS Electric Program borrower with an
unpaid and outstanding FFB loan or RUS loan.
FFB means the Federal Financing Bank.
FFB loan means a loan made by FFB and guaranteed by RUS pursuant to
the RE Act for electric purposes.
RUS loan means a loan made by the RUS under the RE Act for electric
purposes.
(c) Loan purpose. Proceeds of loans made under this section may be
used to:
(1) Prepay all outstanding amounts owed on an FFB or RUS loan or one
or more advances made under such loan; and
(2) Pay any applicable prepayment premium, fee, or expense related
to the eligible RUS or FFB loan being refinanced.
(d) Eligibility requirements--(1) Eligible entity. Loans under this
section may only be made to an eligible entity for the purposes
indicated in paragraph (c) of this section.
(2) Eligible loans for refinancing. Only FFB loans and RUS loans as
defined in this section are eligible for refinancing under this section.
(e) Allocation of funds under this section. Unless prohibited by
congressional appropriation or statute, in allocating the funds
available to RUS under its lending authority, the Administrator may
determine, on a programmatic or case by case basis, that other RE Act
loan purposes take priority over refinancing. The Administrator may, but
is not limited to, consider the following factors in making this
determination:
(1) The overall availability of funding compared to anticipated loan
demand;
(2) The best interests of rural consumers;
(3) The protection of the Government's financial interest in
existing loans and collateral; and
(4) Broader policy objectives, including directing benefits to
disadvantaged
[[Page 52]]
communities, reducing greenhouse gas emissions, and other priorities of
the Secretary of Agriculture.
(f) Application process. (1) When funds are available, the RUS will
publish a notice identifying the amount and type of funds available for
refinancing for the funding period in total and per applicant. The
notice will identify the priorities established by the Agency for the
use of the available funds. Borrowers seeking to refinance RUS loans or
FFB loans will be required to submit, at a minimum, the following
information:
(i) Borrower reference number;
(ii) Note designation;
(iii) Rural Electric Telephone (RET) Advance loan account number;
(iv) FFB complete identifier for an FFB loan;
(v) Date(s) of advance;
(vi) Interest rate;
(vii) Principal outstanding;
(viii) Current final maturity date;
(ix) Short narrative explaining how the proposed refinancing would
be in the interest of rural consumers, taxpayers, rural economic
development or otherwise in the public interest; and
(x) The requested final maturity date for the new loan. The
requested final maturity date must be for a period not to exceed the
maximum maturity date allowed by statute, regulation, or applicable
notice. An eligible entity must submit a certification that the
remaining useful life of its electric system is equal to or exceeds the
new requested final maturity date and, that the requested final maturity
date does not exceed the term of its wholesale power contract with its
members or with its generation and transmission supplier (where
applicable).
(2) The Agency reserves the right to offer a loan under this section
with a maturity date that varies from the requested date. Unless the
Administrator makes a specific determination to the contrary, the
Electric Program will not approve a new loan that includes a final
maturity date that exceeds the remaining useful life of its electric
system or any applicable wholesale power contract term.
(3) On a case-by-case basis, as necessary, the Administrator may
approve a new loan that includes a final maturity that exceeds the
remaining useful life of the applicant's electric system or applicable
wholesale power contract term provided the Administrator finds that the
requirements contained in Sec. 1710.151 are satisfied, the new loan is
feasible under Sec. 1710.151(b), and such action addresses critical
environmental or consumer needs.
(g) Loan requirements. (1) All refinancing loans made under this
section must be in the interest of rural consumers, taxpayers, rural
economic development, or otherwise in the public interest.
(2) All refinancing loans made under this section must be feasible
as determined by RUS based on the financial condition of the borrower
and the borrower's ability to repay and all loans must be adequately
secured, as determined by RUS.
(3) Borrowers will be required to execute new legal documents,
including a new note, loan contract, and security documents as
necessary.
(4) Refinancing loans made under this section will generally be
considered categorical exclusions for the purpose of environmental
reviews because environmental reviews have previously been completed for
the FFB loans or RUS loans being refinanced.
(h) New loan terms. (1) Interest on advances made on loans made
under this section will be at the interest rate available on the date of
the advance for the new loan used to refinance the prior outstanding
loan and any related premium, fee, or expense.
(2) An eligible entity must propose a maturity date for the new loan
not to exceed the maturity prescribed by this section, a funding notice,
or thirty-five (35) years, whichever is shortest.
(3) An eligible entity may be given the option of applying the
proceeds of an advance made on the new loan to cover any applicable
prepayment premium, fee, or other expense.
(4) If the prepayment premiums are to be financed by the new loan,
the maximum principal amount of the note will be increased in an amount
sufficient to cover such prepayment premiums in full.
(5) Provided such waiver is not inconsistent with applicable law or
the
[[Page 53]]
terms and conditions of the notes previously issued to RUS or FFB, the
Administrator may, on a case-by-case basis, waive or modify the
requirements set forth in this paragraph (h), if in the Administrator's
judgment, it is necessary to implement the intent of the authorizing
statute and is in the best financial interest of the Government.
[87 FR 74497, Dec. 6, 2022]
Sec. Sec. 1710.54-1710.99 [Reserved]
Subpart C_Loan Purposes and Basic Policies
Sec. 1710.100 General.
(a) RUS makes loans and loan guarantees to finance the construction
of electric distribution, transmission, and generation facilities,
including system improvements and replacements, and cybersecurity and
grid security improvements, required to furnish and improve electric
service in rural areas, and for demand side management, efficiency, and
energy conservation programs, and on-grid and off-grid renewable energy
systems. In certain limited circumstances, and at the discretion of the
Administrator, RUS may finance selected operating expenses of its
borrowers. Loans made or guaranteed by the Administrator will be made in
conformance with the RE Act, as amended (7 U.S.C. 901 et seq.), and this
chapter. The Administrator's decision to provide financing for selecting
operating expenses may include, but is not limited to the following
factors:
(1) The overall availability of funding compared to anticipated loan
demand;
(2) The best interests of rural consumers;
(3) The protection of the Government's financial interest in
existing loans and collateral; and
(4) Broader policy objectives, including directing benefits to
disadvantaged communities, reducing greenhouse gas emissions, and other
priorities of the Secretary of Agriculture.
(b) RUS provides technical assistance to borrowers to aid the
development or improvement of rural electric service and to protect RUS'
loan security. Additional information is available at https://
rd.usda.gov/programs-services/electric-programs.
(c) Provided funds are available for such purpose, RUS may
refinance, as provided in Sec. 1710.53, RUS Electric Program loans made
or guaranteed for the purpose of furnishing and improving electric
service in rural areas, and for the purpose of assisting electric
borrowers to implement demand side management, energy efficiency and
conservation programs, on-grid and off-grid renewable energy systems,
and cybersecurity and grid security improvements.
[87 FR 74498, Dec. 6, 2022]
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 arrangement satisfactory to RUS, or
(3) Eligible purposes under the Rural Energy Savings Program,
including energy efficiency, renewable energy, energy storage or energy
conservation measures and related services, improvements, investments,
financing or relending.
(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 direct 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
[[Page 54]]
(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.
(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, as amended at 78 FR 73365, Dec. 5, 2013; 85
FR 18418, Apr. 2, 2020]
Effective Date Note: At 87 FR 73436, Nov. 30, 2022, Sec. 1710.101
was amended by revising paragraphs (a) introductory text and paragraph
(b), effective Feb. 28, 2023. For the convenience of the user, the
revised text is set forth as follows:
Sec. 1710.101 Types of eligible borrowers.
(a) RUS makes loans to corporations, States, Tribes, territories,
and subdivisions and agencies thereof; municipalities; people's utility
districts; and cooperative, nonprofit, limited-dividend, or mutual
associations that provide or propose to provide:
* * * * *
(b) In making loans, RUS gives preference to States, Tribes,
territories, and subdivisions and agencies thereof; municipalities;
people's utility districts; and cooperative, nonprofit, or limited-
dividend associations. RUS does not make direct loans to individual
consumers.
* * * * *
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 efficiency and 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
efficiency and 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,
[[Page 55]]
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 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; 78 FR 73365, Dec. 5, 2013]
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
[[Page 56]]
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]
Effective Date Note: At 87 FR 73436, Nov. 30, 2022, Sec. 1710.105
was revised, effective Feb. 28, 2023. For the convenience of the user,
the revised text is set forth as follows:
Sec. 1710.105 State and Tribal regulatory approvals.
(a) In States or in Tribal areas where a borrower is required to
obtain approval of a project or its financing from a State or Tribal
regulatory authority, RUS requires that such approvals be obtained
before the following types of loans are approved by RUS:
(1) Loans requiring an Environmental Impact Statement;
(2) Loans to finance generation and transmission facilities, when
the loan request for such facilities is $25 million or more; and
(3) Loans for the purpose of assisting borrowers to implement demand
side management and energy conservation programs and on and off grid
renewable energy systems.
(b) In Tribal areas all borrowers are required to obtain approval of
the project from the Tribal government or relevant Tribal regulatory
body, before any loan is approved by RUS.
(c) At minimum, in the case of all loans in States or Tribal areas
where State regulatory approval is required of the project or its
financing, such State or Tribal approvals will be required before loan
funds are advanced.
(d) In cases where State regulatory authority or Tribal government
or relevant Tribal regulatory body approval has been obtained, but the
borrower has failed to proceed with the project in a timely manner
according to the schedule contained in the borrower's project design
manual, or if there are cost overruns or other developments that
threaten loan feasibility or security, RUS may require the borrower to
obtain a reaffirmation of the project and its financing from the State
or Tribal authority before any additional loan funds are advanced.
Sec. 1710.106 Uses of loan funds.
(a) Funds from loans made or guaranteed by RUS may be used to
finance:
(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
[[Page 57]]
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.
(6) Eligible Energy Efficiency and Conservation Programs pursuant to
Subpart H of this part.
(7) Cybersecurity and grid security. Eligible cybersecurity and grid
security improvements.
(8) Smart grid infrastructure. The purchase, installation,
improvements, and investments in assets needed for a robust smart grid
infrastructure capability that enables the utility to operate
efficiently, improve its reliability, and enhance its ability to recover
from disasters, physical or cyber-attacks, carry out energy efficiency
and demand side management activities, and implement renewable energy
technologies and cybersecurity and grid security strategies.
(i) Smart grid, grid security, or cybersecurity infrastructure
financed under this section must relate to one or more electric utility
or energy efficiency purpose. Loan proceeds under this section may not
be used to solely finance retail broadband services.
(ii) Notwithstanding paragraph (a)(8)(i) of this section, a borrower
is permitted to use up to 10 percent of the amount provided under this
subpart to construct, improve, or acquire broadband infrastructure
related to the project financed, subject to the requirements of 7 CFR
part 1980, subpart M.
(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 for measures related to grid
security, cybersecurity, or 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.
(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
(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 for loan feasibility and loan security set
forth in Sec. Sec. 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, 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, type,
or purpose of loans 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
[[Page 58]]
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 a RUS loan or loan guarantee of $1 million or less. Should a
shortfall or urgent need related to cybersecurity, grid security, or
statutory preference become evident during a fiscal year, the
Administrator may announce priorities in a public notice for utilizing
available funds for the balance of the fiscal year.
(2) If RUS limits the amount of loan funds approved for borrowers,
the Administrator shall provide public notice to all electric borrowers
as early as possible 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 Sec. 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.
(g) A borrower is permitted to use up to 10 percent of the amount
provided under this part to construct, improve, or acquire broadband
infrastructure related to the project financed, subject to the
requirements of 7 CFR part 1980, subpart M.
[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; 78 FR 73365, Dec. 5, 2013; 84 FR 32610, July 9, 2019; 85 FR 57081,
Sept. 15, 2020; 87 FR 74498, Dec. 6, 2022]
Effective Date Note: At 87 FR 73436, Nov. 30, 2022, Sec. 1710.106
was amended by revising paragraph (a)(3), removing paragraph (b)(1),
redesignating paragraphs (b)(2) and (3) as paragraphs (b)(1) and (2),
and revising paragraphs (c)(2) and (3), effective Feb. 28, 2023. For the
convenience of the user, the revised text is set forth as follows:
Sec. 1710.106 Uses of loan funds.
(a) * * *
(3) Headquarters Offices, Warehouse, and garage facilities. The
purchase, remodeling, or construction of headquarters office, other
headquarters facilities, warehouse, and garage facilities required for
the operation of a borrower's system. See paragraph (b) of this section.
* * * * *
(c) * * *
(2) Facilities to serve consumers who are not RE Act beneficiaries
unless those facilities are necessary and incidental to providing or
improving electric service in rural areas (See Sec. 1710.104).
(3) Any facilities or other purposes that a State regulatory
authority having jurisdiction will not approve for inclusion in the
borrower's rate base or will not otherwise allow rates sufficient to
repay with interest the debt incurred for the facilities or other
purposes.
* * * * *
[[Page 59]]
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, energy efficiency and conservation program 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) 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 48 months. 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; 78 FR 73366, Dec. 5, 2013; 86 FR 36196, July 9,
2021]
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
[[Page 60]]
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:
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.
[[Page 61]]
(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 = (A x C1) + (B x
C2)-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 for 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).
(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
[[Page 62]]
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.
[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; 84 FR 32610, July 9,
2019]
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 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
[[Page 63]]
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,
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
[[Page 64]]
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 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
[[Page 65]]
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) The term for loans made to finance Eligible EE Programs will be
determined in accordance with Sec. 1710.408 of this part.
(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; 78 FR 73366, Dec. 5, 2013]
Sec. 1710.116 [Reserved]
Sec. 1710.117 Environmental review requirements.
Borrowers are required to comply with the environmental review
requirements in accordance with 7 CFR part 1970, and other applicable
environmental laws, regulations and Executive orders.
[81 FR 11026, Mar. 2, 2016]
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]
[[Page 66]]
Sec. 1710.120 Construction standards and contracting.
Borrowers shall follow all RUS requirements regarding construction
work plans, energy efficiency and conservation program work plans,
construction standards, approved materials, construction and related
contracts, inspection procedures, and bidding procedures.
[57 FR 1053, Jan. 9, 1992, as amended at 78 FR 73366, Dec. 5, 2013]
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 2 CFR part 180, as adopted by
USDA through 2 CFR part 417.
[79 FR 76002, Dec. 19, 2014]
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 2 CFR part 418.
[79 FR 76002, Dec. 19, 2014]
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 (41 U.S.C. 8101 et. seq.) and the Act's implementing regulations (2
CFR part 421) 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.
[79 FR 76002, Dec. 19, 2014]
Sec. Sec. 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
[[Page 67]]
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.
(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) Environmental review requirements. A borrower must comply with
the environmental review requirements in accordance with 7 CFR part
1970.
(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.
[57 FR 1053, Jan. 9, 1992, as amended at 65 FR 14786, Mar. 20, 2000; 78
FR 73366, Dec. 5, 2013; 81 FR 11026, Mar. 2, 2016]
Sec. 1710.153 Additional requirements and procedures.
Additional requirements and procedures for obtaining RUS financial
assistance are set forth in 7 CFR part 1712
[[Page 68]]
for loan guarantees, and in 7 CFR part 1714 for insured loans.
Sec. 1710.154 Board of Director Resolutions.
Specific actions that require a Board of Director Resolution from a
borrower:
(a) Board approval of loan documents;
(b) Major change in the terms of a loan, i.e. maturity;
(c) Initial access to RD Apply (or successor RUS online application
systems);
(d) Requests for approval by a Board, acting as the regulatory
authority, for any departure from the RUS Uniform System of Accounts
with the exception of those deferrals specifically identified in Sec.
1767.13(d); and
(e) eAuthentication requirements.
[84 FR 32610, July 9, 2019]
Sec. Sec. 1710.155-1710.199 [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.
Effective Date Note: At 87 FR 73437, Nov. 30, 2022, Sec. 1710.200
was amended by revising the first sentence, effective Feb. 28, 2023. For
the convenience of the user, the revised text is set forth as follows:
Sec. 1710.200 Purpose
This subpart contains RUS policies for the preparation, review,
approval and use of load forecasts. * * *
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 provide a load forecast in support of any request
for RUS financial assistance. The borrower must also maintain a load
forecast work plan on file. The borrower's load forecast must be
prepared pursuant to the 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
provide an approved load forecast in support of any request for RUS
financial assistance. The member power supply borrower may comply with
this requirement by participation in and inclusion of its load
forecasting information in the load forecast of its power supply
borrower. The load forecasts must be prepared pursuant to the 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
a 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.
[84 FR 32610, July 9, 2019]
Effective Date Note: At 87 FR 73437, Nov. 30, 2022, Sec. 1710.202
was amended by revising
[[Page 69]]
paragraphs (a) and (b), effective Feb. 28, 2023. For the convenience of
the user, the revised text is set forth as follows:
Sec. 1710.202 Requirement to prepare a load forecast--power supply
borrowers.
(a) A power supply borrower with a total utility plant of $500
million or more must maintain and provide a current (prepared within the
last 2 years) load forecast in support of any request for RUS financial
assistance.
(b) A power supply borrower that is a member of another power supply
borrower that has a total utility plant of $500 million or more must
provide an approved load forecast in support of any request for RUS
financial assistance. The member power supply borrower may comply with
this requirement by participation in and inclusion of its load
forecasting information in the load forecast of its power supply
borrower.
* * * * *
Sec. 1710.203 Requirement to prepare a load forecast--distribution
borrowers.
(a) A distribution borrower that is a member of a power supply
borrower, with a total utility plant of $500 million or more must
provide a 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
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 provide a load
forecast in support of any request for RUS financial assistance. The
distribution borrower may comply with this requirement by participation
in and inclusion of its load forecasting information in the load
forecast of its power supply borrower. The distribution borrower's load
forecast must be prepared pursuant to the 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 a load forecast that meets the requirements of this subpart in
support of an application for any RUS loan or loan guarantee that
exceeds $3 million or 5 percent of total utility plant, whichever is
greater. The distribution borrower may comply with this requirement by
participation in and inclusion of its load forecasting information in
the load forecast of its power supply borrower.
(d) A distribution borrower with a total utility plant of less than
$500 million and that is unaffiliated with a power supply borrower must
provide a load forecast that meets the requirements of this subpart in
support of an application for any RUS loan or loan guarantee which
exceeds $3 million or 5 percent of total utility plant, whichever is
greater.
(e) A distribution borrower with a total utility plant of $500
million or more must provide a load forecast in support of any request
for RUS financing assistance. The borrower must also maintain a load
forecast work plan. The distribution borrower may comply with this
requirement by participation in and inclusion of its load forecasting
information in the load forecast of its power supply borrower.
[84 FR 32610, July 9, 2019]
Effective Date Note: At 87 FR 73437, Nov. 30, 2022, Sec. 1710.203
was revised, effective Feb. 28, 2023. For the convenience of the user,
the revised text is set forth as follows:
Sec. 1710.203 Requirement to prepare a load forecast--distribution
borrowers.
(a) A distribution borrower that is a member of a power supply
borrower, with a total utility plant of $500 million or more must
provide a current (prepared within the last 2 years) load forecast in
support of any request for RUS financial assistance. The distribution
borrower may comply with this requirement by participation in and
inclusion of its load forecasting information in the approved load
forecast of its power supply borrower.
(b) A distribution borrower that is a member of a power supply
borrower which is itself a member of another power supply borrower that
has a total utility plant of $500 million or more must provide a current
(prepared within the last 2 years) load forecast in support of any
request for RUS financial assistance. The distribution borrower may
comply with this requirement by participation in and inclusion of its
load forecasting
[[Page 70]]
information in the load forecast of its power supply borrower.
(c) A distribution borrower that is a member of a power supply
borrower with a total utility plant of less than $500 million must
provide a current (prepared within the last 2 years) load forecast that
meets the requirements of this subpart in support of an application for
any RUS loan or loan guarantee that exceeds $3 million or 5 percent of
total utility plant, whichever is greater. The distribution borrower may
comply with this requirement by participation in and inclusion of its
load forecasting information in the load forecast of its power supply
borrower.
(d) A distribution borrower with a total utility plant of less than
$500 million and that is unaffiliated with a power supply borrower must
provide a current (prepared within the last 2 years) load forecast that
meets the requirements of this subpart in support of an application for
any RUS loan or loan guarantee which exceeds $3 million or 5 percent of
total utility plant, whichever is greater.
(e) A distribution borrower with a total utility plant of $500
million or more must provide a current (prepared within the last 2
years) load forecast in support of any request for RUS financing
assistance. The distribution borrower may comply with this requirement
by participation in and inclusion of its load forecasting information in
the load forecast of its power supply borrower.
Sec. 1710.204 [Reserved]
Sec. 1710.205 Minimum requirements for all load forecasts.
(a) Contents of load forecast. All load forecasts submitted by
borrowers for approval must include:
(1) 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 and
energy efficiency and conservation program 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.
(b) Formats. RUS does not require a specific format for the
narrative, documentation, data, and other information 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.
(c) Document retention. The borrower must retain its latest load
forecasts and supporting documentation. Any load forecast work plan must
be retained as part of the load forecast.
(d) 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 when requested by RUS.
(e) 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.
[[Page 71]]
(f) Coordination. A load forecast of a power supply borrower must
consider the load forecasts of all its member systems.
[84 FR 32610, July 9, 2019]
Effective Date Note: At 87 FR 73437, Nov. 30, 2022, Sec. 1710.205
was amended by revising paragraphs (a) and (c), effective Feb. 28, 2023.
For the convenience of the user, the revised text is set forth as
follows:
Sec. 1710.205 Minimum requirements for all load forecasts.
(a) Contents of load forecast. All load forecasts submitted by
borrowers for approval must include:
(1) Scope of the load forecast. The narrative shall address the
overall approach, time periods, and expected internal and external uses
of the forecast. Examples of internal uses include providing information
for developing or monitoring demand side management programs, supply
resource planning, load flow studies, wholesale power marketing, retail
marketing, cost of service studies, rate policy and development,
financial planning, and evaluating the potential effects on electric
revenues caused by competition from alternative energy sources or other
electric suppliers. Examples of external uses include meeting State and
Federal regulatory requirements, obtaining financial ratings, and
participation in reliability council, power pool, regional transmission
group, power supplier or member system forecasting and planning
activities.
(2) Resources used to develop the load forecast. The discussion
shall identify and discuss the borrower personnel, consultants, data
processing, methods, and other resources used in the preparation of the
load forecast. The borrower shall identify the borrower's members and,
as applicable, member personnel that will serve as project leaders or
liaisons with the authority to make decisions and commit resources
within the scope of the current and future load forecasts.
(3) A comprehensive description of the database used in the study.
The narrative shall describe the procedures used to collect, develop,
verify, validate, update, and maintain the data. A data dictionary
thoroughly defining the database shall be included. The borrower shall
make all or parts of the database available or otherwise accessible to
RUS in electronic format if requested.
(4) A narrative for each new load forecast or update of a load
forecast. The narrative shall discuss the methods and procedures used in
the analysis and modeling of the borrower's electric system loads. The
narrative shall also describe the borrower's system, service territory,
and consumers.
(5) A narrative discussing the borrower's past, existing, and
forecast of future electric system loads. The narrative must identify
and explain substantive assumptions and other pertinent information used
to support the estimates presented in the load forecast.
(6) A narrative discussing load forecast uncertainty or alternative
futures that may determine the borrower's actual loads. The narrative
shall describe examples of uncertainties such as economic scenarios,
weather conditions, and others that borrowers may decide to address in
their analysis including:
(i) Most-probable assumptions, with normal weather;
(ii) Pessimistic assumptions, with normal weather;
(iii) Optimistic assumptions, with normal weather;
(iv) Most-probable assumptions, with severe weather;
(v) Most-probable assumptions, with mild weather;
(vi) Impacts of wholesale or retail competition; or
(vii) New environmental requirements.
(7) A summary of the forecast's results on an annual basis. Include
alternative futures, as applicable: This summary shall be designed to
accommodate the transfer of load forecast information to a borrower's
other planning or loan support documents. Computer-generated forms or
electronic submissions of data are acceptable. Graphs, tables,
spreadsheets or other exhibits shall be included throughout the forecast
as appropriate.
(8) A narrative discussing the coordination activities conducted
between a power supply borrower and its members, as applicable, and
between the borrower and RUS.
(9) Borrowers with a residential demand of 50 percent or more of
total kWh should include in the Load Forecast a Residential Consumer
Survey that is performed at least every 5 years to obtain data on
appliance and equipment saturation and electricity demand. Any such
borrower that is experiencing or anticipates changes in usage patterns
shall consider surveys on a more frequent schedule. Power supply
borrowers shall coordinate such surveys with their members.
(10) Residential consumer surveys may be based on the aggregation of
member-based samples or on a system-wide sample, provided that the
latter provides relevant regional breakdowns as appropriate.
(11) A load forecast for a power supply borrower and its members
must cover all member systems, including those that are not borrowers.
Each borrower is individually responsible for forecasting all its RE Act
beneficiary and non-RE Act beneficiary loads.
(12) A narrative description of the borrower's load forecast
including future load projections, forecast assumptions, and the methods
and procedures used to develop the forecast.
[[Page 72]]
(13) Projections of usage by consumer class, number of consumers by
class, annual system peak demand, and season of peak demand for the
number of years agreed upon by RUS and the borrower.
(14) A summary of the year-by-year results of the load forecast in a
format that allows efficient transfer of the information to other
borrower planning or loan support documents.
(15) The load impacts of a borrower's demand side management and
energy efficiency and conservation program activities, if applicable.
(16) Graphic representations of the variables specifically
identified by management as influencing a borrower's loads.
(17) A database that tracks all relevant variables that might
influence a borrower's loads.
* * * * *
(c) Documentation retention. The borrower must retain its latest
load forecasts and supporting documentation.
* * * * *
Sec. 1710.206 Requirements for load forecasts prepared pursuant to a load
forecast work plan.
(a) Contents of load forecasts prepared under a 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 a 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 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;
[[Page 73]]
(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 a load forecast work plan. A borrower required
to maintain a load forecast work plan must also be able to demonstrate
that both it and its RUS borrower members are in compliance with its
load forecast work plan.
[65 FR 14786, Mar. 20, 2000, as amended at 84 FR 32611, July 9, 2019]
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.206
was removed, effective Feb. 28, 2023.
Sec. 1710.207 RUS criteria for load forecasts by distribution borrowers.
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.
[65 FR 14786, Mar. 20, 2000, as amended at 84 FR 32611, July 9, 2019]
Sec. 1710.208 RUS criteria for load forecasts by power supply borrowers
and by distribution borrowers.
All load forecasts submitted by power supply borrowers and by
distribution borrowers must satisfy the following criteria:
(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
[65 FR 14786, Mar. 20, 2000, as amended at 84 FR 32611, July 9, 2019]
Sec. 1710.209 Requirements for load forecast work plans.
(a) In addition to the load forecast required under Sec. Sec.
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 a 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
[[Page 74]]
load forecast work plan of their power supply borrower.
(b) A 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 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. A 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 load
forecast work plan and they will modify the load forecast work plan as
needed to address changing circumstances or enhance the usefulness of
the load forecast work plan.
(c) A 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 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) A load forecast work plan must outline the coordination and
preparation requirements for both the power supply borrower and its
members.
(e) A load forecast work plan must describe the borrower's process
and methods to be used in producing the load forecast.
(f) 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 the aggregation of member-based samples or on a system-
wide sample, provided that the latter provides for relevant regional
breakdowns as appropriate.
(g) Load forecast work plans must provide for RUS review of the load
forecasts as the load forecast is being developed.
(h) A power supply borrower's work plan must have the concurrence of
the majority of the members that are borrowers.
[84 FR 32611, July 9, 2019]
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.209
was removed, effective Feb. 28, 2023.
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.
Sec. Sec. 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 10-20 years or more. CWPs specify and document plant
requirements for the short-term, usually 4 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
[[Page 75]]
investments, and additions of generation capacity and associated
transmission plant.
(b) 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.
(c) 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.
(d) Applications for a loan or loan guarantee from RUS (new loans or
budget reclassifications) must be supported by a current CWP approved by
RUS. RUS approval of these plans relates only to the facilities,
equipment, and other purposes to be financed by RUS, and means that the
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.
(e) Except as provided in paragraph (f) 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 and receive
Environmental Clearance 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.
(f) 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 losing eligibility for RUS financing of the repairs. The
borrower must notify the RUS regional office in writing 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.
(g) A CWP may be amended or augmented when the borrower can
demonstrate the need for the changes.
(h) A borrower's CWP or special engineering studies must be
supported by the appropriate level of environmental review
documentation, in accordance with 7 CFR part 1970.
(i) All engineering activities required by this subpart must be
performed by qualified engineers, who may be staff employees of the
borrower or outside consultants. All engineering services must be
reviewed by a licensed professional engineer.
(j) 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.
[84 FR 32611, July 9, 2019]
[[Page 76]]
Sec. 1710.251 Construction work plans--distribution borrowers.
(a) All distribution borrowers must maintain a current CWP 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 typically cover a
construction period of 4 years and includes 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;
(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) Outdoor 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;
(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; and
(13) Other items that are specifically determined by RUS as being
eligible for financing prior to inclusion in the CWP.
[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; 84 FR 32612, July 9,
2019; 86 FR 36196, July 9, 2021]
Sec. 1710.252 Construction work plans--power supply borrowers.
(a) All power supply borrowers must maintain a current CWP 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) Typically a power supply borrower's CWP shall cover a period of
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:
[[Page 77]]
(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; 84 FR 32612, July 9, 2019; 86 FR 36196, July 9,
2021]
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. An analysis of purchased power options, including an analysis
of available alternate sources of power shall be included. The analysis
should include the terms and conditions of any requests for proposals
and responses to such requests.
(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.
[57 FR 1053, Jan. 9, 1992, as amended at 84 FR 32612, July 9, 2019]
Sec. 1710.254 [Reserved]
Sec. 1710.255 Energy efficiency work plans--energy efficiency borrowers.
(a) All energy efficiency borrowers must maintain a current EEWP
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
[[Page 78]]
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
(e) The borrower's EEWP must include an estimated schedule for the
implementation of included projects.
[78 FR 73366, Dec. 5, 2013, as amended at 84 FR 32612, July 9, 2019]
Sec. Sec. 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 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) RUS-approved EE Program work plan;
(4) The current rate schedules or new rates;
(5) 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
[[Page 79]]
(6) 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 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; 78
FR 73366, Dec. 5, 2013; 84 FR 32612, July 9, 2019]
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 required by RUS on a case by case basis; and
(5) Include sensitivity analysis if required by RUS pursuant to
Sec. 1710.300(d)(6).
[[Page 80]]
(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; 78
FR 73366, Dec. 5, 2013]
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 Sec. Sec. 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)
Sec. Sec. 1710.304-1710.349 [Reserved]
Subpart H_Energy Efficiency and Conservation Loan Program
Source: 78 FR 73366, Dec. 5, 2013, unless otherwise noted.
Sec. 1710.400 Purpose.
(a) This subpart establishes policies and requirements that apply to
loans and loan guarantees to finance Energy 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.
[[Page 81]]
(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.
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.400
was amended by revising paragraph (b)(2), effective Feb. 28, 2023. For
the convenience of the user, the revised text is set forth as follows:
Sec. 1710.400 Purpose.
* * * * *
(b) * * *
(2) Although not a goal, RUS recognizes that there will be a
reduction of greenhouse gases with energy efficiency improvements.
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.
(2) For residential energy efficiency improvements, an energy
auditor shall
[[Page 82]]
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 through a Consumer
interface or smart meter.
[[Page 83]]
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.
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.404
was amended by removing the definition for ``Certified energy auditor
for commercial and industrial energy efficiency improvements'' and
adding a definition for ``Certified energy auditor'' in alphabetical
order, effective Feb. 28, 2023. For the convenience of the user, the
added text is set forth as follows:
Sec. 1710.404 Definitions.
* * * * *
Certified energy auditor means:
(1) A certified energy auditor for commercial and industrial energy
efficiency improvements shall mean an energy auditor who meets at least
one of the following criteria:
(i) An individual possessing a current commercial or industrial
energy auditor certification from a national, industry-recognized
organization;
(ii) A Licensed Professional Engineer in the State in which the
audit is conducted with at least 1 year experience and who has completed
at least two similar type Energy Audits;
(iii) An individual with a four-year engineering or architectural
degree with at least 3 years experience and who has completed at least
five similar type Energy Audits; or
(iv) Beginning in calendar year 2015, an energy auditor
certification recognized by the Department of Energy through its Better
Buildings Workforce Guidelines project.
(2) A certified energy auditor for residential energy efficiency
improvements shall mean an energy auditor that meets one of the
following criteria:
(i) The workforce qualification requirements of the Home Performance
with Energy Star Program, as outlined in Section 3 of the Home
Performance with Energy Star Sponsor Guide; or
(ii) An individual possessing a current residential energy auditor
or building analyst certification from a national, industry-recognized
organization.
* * * * *
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:
[[Page 84]]
(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 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
[[Page 85]]
(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.
(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
[[Page 86]]
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 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.
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.408
was amended by revising the second sentence of paragraph (h), effective
Feb. 28, 2023. For the convenience of the user, the revised text is set
forth as follows:
Sec. 1710.408 Quality assurance plan.
* * * * *
(h) * * * In these cases, utilities shall monitor the work done by
the contractors and confirm that the contractors are performing quality
work. * * *
* * * * *
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
[[Page 87]]
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 statement 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 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.
[78 FR 73366, Dec. 5, 2013, as amended at 84 FR 32613, July 9, 2019]
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;
[[Page 88]]
(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.
Sec. Sec. 1710.414-1710.499 [Reserved]
Subpart I_Application Requirements and Procedures for Loans
Source: 60 FR 3731, Jan. 19, 1995, unless otherwise noted.
Sec. 1710.500 Initial contact.
(a) Loan applicants that do not have outstanding loans from RUS
should contact the Rural Utilities Service via Email at
[email protected], call RUS at (202) 720-9545 or write to the
Rural Utilities Service Administrator, United States Department of
Agriculture, 1400 Independence Ave. SW, STOP 1560, Room 5165,
Washington, DC 20250-1560. Loan Applicants may also visit RUS' website
to locate a local General Field Representative at https://
www.rd.usda.gov/contact-us/electric-gfr. A field or headquarters staff
representative may be assigned by RUS 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, Deputy Assistant
Administrator, Office of Loan Origination and Approval. 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).
[60 FR 3731, Jan. 19, 1995. Redesignated at 78 FR 73366, Dec. 5, 2013,
as amended at 84 FR 32613, July 9, 2019]
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.500
was amended by revising the first sentence of paragraph (a), effective
Feb. 28, 2023. For the convenience of the user, the revised text is set
forth as follows:
Sec. 1710.500 Initial contact.
(a) Loan applicants that do not have outstanding loans from RUS
should contact the Rural Utilities Service via Email at
[email protected], call RUS at (202) 720-9545 or write to the Rural
Utilities Service Administrator, United States Department of
Agriculture, 1400 Independence Ave. SW, STOP 1560, Room 4121,
Washington, DC 20250-1560. * * *
* * * * *
Sec. 1710.501 Loan application documents.
(a) All borrowers. Borrowers may be eligible to submit their loan
application via RUS' electronic application intake system instead of
submitting a paper submission. Please consult your
[[Page 89]]
GFR in accordance with Sec. 1710.500. All applications for electric
loans shall include the documents listed in this paragraph (a).
(1) Loan application letter. A letter signed by the borrower's
manager indicating the actual corporate name, the borrowers RUS
Designation, the borrowers RUS Loan Designation, and taxpayer
identification number of the borrower and addressing the following
items:
(i) The amount of loan and loan type. The sources and amounts of any
supplemental or other financing. 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);
(ii) The Maturity Date/Term of the Loan in number of years (useful
life to determine maximum);
(iii) A short description of the purpose of the loan, i.e.,
generation, distribution, transmission, energy efficiency, etc.;
(iv) Method of Amortization;
(v) The Borrower's DUNS Number;
(vi) The Borrower's Organization Number from its State Corporation
Commission or similar entity;
(vii) The Borrower's Exact Legal Name (please state the legal name
and identify the legal document used to state the name or attach such
document;
(viii) List of current counties where real property is located;
(ix) Attach current property schedule;
(x) Identify any new counties with property since last loan;
(xi) Authorized/registered place of business;
(xii) Debt Limit;
(xiii) Identify any State regulatory approvals needed;
(xiv) List any subsidiaries;
(xv) Identify any material financial or other material change since
last loan, including a list of any pending litigation and where there is
insurance to cover such;
(xvi) Breakdown of loan funds by State;
(xvii) Construction Work Plan (CWP), if not previously submitted
through RD Apply or other method;
(xviii) Environmental Report (ER), if not previously submitted
through RD Apply or other method;
(xix) Statement authorizing RUS to release appropriate information
and data relating to the loan application to the FFB and any existing
supplemental lenders.
(2) Special resolutions. Included any special resolutions required
by Federal or State Authorities and any others as identified and
required by the RUS General Field Representative (for example, use of
contractors, corrective action plans, etc.)
(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. The projects and
related costs, included on this form, shall be used to justify the loan
amount and are not meant to be an exclusive list of those projects that
could receive funds under this loan. In addition, to be included on this
form, the project must have received written documentation of RUS
concluding its environmental review. The advance of loan funds for
projects shall be governed by 7 CFR part 1721. The date on page one (1)
of the RUS Form 740c is the beginning date of the loan period. RUS 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
[[Page 90]]
than 33 years. This statement or schedule will be used to determine the
final maturity of the loan. See Sec. 1710.115.
(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. RUS will use the Borrower's
year end filed Financial and Operating Report Electric Distribution
(formerly known as the RUS Form 7) or the Financial and Operating Report
Electric Power Supply (formerly known as the RUS Form 12) unless the
borrower has failed to meet its applicable financial ratios, as required
by its security instrument and loan contract. The reports are required
to be filed electronically in the agency's Data Collection System. If
the borrower's financial requirements have not been met, RUS will
require a current Financial and Operating Report to be submitted with
the loan application, which shall contain the most recent data available
and shall not be more than 60 days old when received by RUS. In
addition, for those borrowers not meeting their financial ratios, the
following information shall also be provided as part of the loan
application:
(i) Any other information required to be submitted by RUS;
(ii) A Plan to meet their Financial Ratios;
(iii) The Date of the Borrower's last rate change and the amount/
percentage of that rate change;
(iv) A list of any Subsidiaries along with a brief summary
identifying the purpose of each subsidiary and identify the percentage
interest in each if less than 100%;
(v) If the issues with the Borrower not meeting its financial ratios
involves the subsidiary or equity investment losses a business plan and
exit strategy shall be provided;
(vi) An updated Financial and Operating Report within 60 days of
actual loan approval which will be requested by RUS and can be submitted
later.
(6) Load Forecast Study. A current Load Forecast Study will be
included in the loan application which is not more than 2 years old when
the loan application is submitted unless the borrower is a member of a
Power Supplier which only completes a Load Forecast once every 3 years.
In that case the Load Forecast shall not be more than 3 years old when
the loan application is submitted.
(7) Long Range Financial Forecast and assumptions. 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 in a form acceptable to RUS. The forecast shall include any
sensitivity analysis and/or analysis of alternative scenarios only if
requested by the RUS General Field Representative.
(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
[[Page 91]]
of all ultimate consumers by state. This breakdown may be a copy of Form
EIA 861 submitted by the Borrower to the Department of Energy or in a
similar form. See 7 CFR 1714.7(b) and 1714.8(a). To expedite the
processing of loan applications, RUS strongly encourages distribution
borrowers to provide this information to the GFR prior to submitting the
application.
(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 2 CFR
417, and Sec. 1710.123 of this part.
(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 2 CFR 418, and Sec. 1710.125. Borrowers applying for both
insured and guaranteed financing should consult RUS before submitting
this information.
(13) Federal debt delinquency requirements. See Sec. 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) Assurance regarding Felony Conviction (AD Form 3030). This form
must be included with each application to document the status regarding
a felony criminal violation and status of any unpaid federal tax
liability;
(15) RD Form 400-4, Assurance Agreement. This form provides
assurance to USDA that recipients of federal financial assistance are in
compliance with Title VI of the Civil Rights Act of 1964, 7 CFR part 15
and other agency regulations;
(16) Seismic safety certifications. This certification shall be
included, if required under 7 CFR part 1792.
(17) Other forms. Other forms as required by law or as requested.
(b) New or returning borrowers. In addition to the items in
paragraph (a) of this section, applications for loans submitted by new
or returning borrowers shall include the items listed in this paragraph
(b).
(1) A copy of the Borrower's Current Bylaws;
(2) Identify the Borrower's Type of Organizational Structure and a
copy of their Articles of Incorporation;
(3) Provide evidence of where Borrower is registered to do business;
[[Page 92]]
(4) Copies of the Borrower's Audited GAAP financials for the past 1-
3 years, if available or other financial information, as requested on a
case by case basis;
(5) A list of any secured outstanding debt including the amount and
name of lender;
(6) Evidence of Collateral and/or its ability to pledge such
collateral;
(7) An Attorney Opinion for the Borrower including the counties
served, a property schedule, the state of incorporation, any pending
litigation, the corporate debt limit, the Borrower's legal name and type
of legal organization, and the borrower's legal authority to pledge its
collateral or other assets.
(8) Copies of the Borrower's Power Supply Contracts and arrangements
(including wholesale rate contracts);
(9) Competitive position information including its rates and rate
disparity between neighboring utilities;
(10) Construction Work Plan and/or Engineering Power Cost Study, if
not previously submitted;
(11) An Environmental Report related to the facilities for which
financing is being requested, if not previously submitted.
(c) Power Supply Borrowers. In addition to the loan application,
consisting of the documents required by paragraph (a) or (b) of this
section, Power Supply Borrowers must also provide RUS with the
following:
(1) Information on its Power Supply arrangements and/or wholesale
power contracts including the maturity dates. Please note copies of the
contracts may be requested on a case by cases basis;
(2) A Profile of the Power Supply Borrowers' fuel supply
arrangements;
(3) The Borrowers Load Resource Table;
(4) Information on its Transmission and Interconnection
arrangements. Please note that copies of the contracts related to such
arrangements may be requested on a case by case basis;
(5) The Power Supply Borrowers' New/Returning membership chart
profile and relationships as applicable.
(d) Submission of documents. (1) Generally, all information required
by paragraphs (a), (b), and (c) of this section is submitted to RUS in a
single application. Borrowers may be eligible to submit their loan
application via RUS' electronic application intake system instead of
submitting hard copies of the loan applications. Please contact your
respective General Field Representative or RUS Headquarters to determine
if you are eligible to utilize the electronic system.
(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.
(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
[[Page 93]]
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)
[60 FR 3731, Jan. 19, 1995. Redesignated at 78 FR 73366, Dec. 5, 2013,
as amended at 79 FR 76002, Dec. 19, 2014; 81 FR 11026, Mar. 2, 2016; 84
FR 32613, July 9, 2019; 86 FR 36196, July 9, 2021]
Effective Date Note: At 87 FR 73438, Nov. 30, 2022, Sec. 1710.501
was amended by revising paragraphs (a)(1)(v), (viii), (x), (xiii), and
(xvi) and (a)(2) and (8); removing paragraph (a)(4); and redesignating
paragraphs (a)(5) through (17) as paragraphs (a)(4) through (16),
effective Feb. 28, 2023. For the convenience of the user, the revised
text is set forth as follows:
Sec. 1710.501 Loan application documents.
(a) * * *
(1) * * *
(v) The Borrower's Unique Entity Identifier;
* * * * *
(viii) List of current counties and Tribal lands where real property
is located;
* * * * *
(x) Identify any new counties and Tribal lands with property since
last loan;
* * * * *
(xiii) Identify any State or Tribal regulatory approvals needed;
* * * * *
(xvi) Breakdown of loan funds by State and Tribal lands;
* * * * *
(2) Special resolutions. Included any special resolutions required
by Federal, State, or Tribal Authorities and any others as identified
and required by the RUS General Field Representative (for example, use
of contractors, corrective action plans, etc.). Resolutions of support
from Tribal government or Tribal regulatory authority are required by
any non-Tribal applicant intending to serve Tribal areas before any loan
is approved by RUS.
* * * * *
(8) Rate disparity and consumer income data. If the borrower is
applying under the rate disparity and consumer income tests for either a
municipal rate loan subject to the interest rate cap or a hardship rate
loan, the application must provide a breakdown of residential consumers
either by county, Tribal land, or by census tract. In addition, if the
borrower serves in 2 or more States, the application must include a
breakdown of all ultimate consumers by State. This breakdown may be a
copy of Form EIA 861 submitted by the Borrower to the Department of
Energy or in a similar form. See 7 CFR 1714.7(b) and 1714.8(a). To
expedite the processing of loan applications, RUS strongly encourages
distribution borrowers to provide this information to the GFR prior to
submitting the application.
* * * * *
Sec. Sec. 1710.502-1710.503 [Reserved]