[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Rules and Regulations]
[Pages 7921-7922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4334]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 35 / Friday, February 21, 1997 / 
Rules and Regulations  

[[Page 7921]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1710


Temporary Loan Processing Procedures for Insured Electric Loans

AGENCY: Rural Utilities Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Rural Utilities Service (RUS) is amending its rule to 
allow RUS to process loans with a loan period of more than 2 years in 
two parts when applications substantially exceed available funds. RUS 
amended its rules in 1995 to lengthen the allowable loan period for 
insured electric loans from 2 years to 4 years. Since borrowers may now 
apply for loans to cover construction financing needs for a longer 
period of time, the average loan has become larger. At the same time, 
loan authority for FY 1997 is less than for 1996. This situation has 
produced long delays between the time applications are submitted and 
the time loans can be approved. RUS believes that this is a temporary 
situation that will disappear as more and more borrowers get on a 
longer loan application cycle. The rule is intended to reduce 
processing delays.

DATES: This rule is effective February 21, 1997. Written comments must 
be received by RUS or bear a postmark or equivalent not later than May 
22, 1997.

ADDRESSES: Submit written comments to Sue Arnold, Financial Analyst, 
U.S. Department of Agriculture, Rural Utilities Service, Room 4032-S, 
1400 Independence Avenue, SW, STOP 1522, Washington, DC 20250-1500. RUS 
requires, in hard copy, a signed original and 3 copies of all comments 
(7 CFR 1700.30(e)). Comments will be available for public inspection 
during regular business hours (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Sue Arnold, Financial Analyst, U.S. 
Department of Agriculture, Rural Utilities Service, Room 4032-S, 1400 
Independence Avenue, SW., STOP 1522, Washington, DC 20250-1522. 
Telephone: 202-720-0736. FAX: 202-720-4120. E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: This regulatory action has been determined 
to be not significant for the purposes of Executive Order 12866, 
Regulatory Planning and Review, and, therefore has not been reviewed by 
the Office of Management and Budget (OMB). The Administrator of RUS has 
determined that a rule relating to the RUS electric loan program is not 
a rule as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) for which RUS published a general notice of proposed rulemaking 
pursuant to 5 U.S.C. 553(b), or any other law. Therefore, the 
Regulatory Flexibility Act does not apply to this rule. The 
Administrator of RUS has determined that this rule will not 
significantly affect the quality of the human environment as defined by 
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). 
Therefore, this action does not require an environmental impact 
statement or assessment. This rule is excluded from the scope of 
Executive Order 12372, Intergovernmental Consultation, which may 
require consultation with State and local officials. A Notice of Final 
Rule titled Department Programs and Activities Excluded from Executive 
Order 12372 (50 FR 47034) exempts RUS electric loans and loan 
guarantees from coverage under this Order. This rule has been reviewed 
under Executive Order 12988, Civil Justice Reform. RUS has determined 
that this rule meets the applicable standards provided in Sec. 3 of the 
Executive Order.
    The program described by this rule is listed in the Catalog of 
Federal Domestic Assistance Programs under number 10.850 Rural 
Electrification Loans and Loan Guarantees. This catalog is available on 
a subscription basis from the Superintendent of Documents, the United 
States Government Printing Office, Washington, DC 20402-9325.

Information Collection and Recordkeeping Requirements

    The recordkeeping and reporting burdens contained in this rule were 
approved by the Office of Management and Budget (OMB) pursuant to the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended) 
under control number 0572-0032.

Background

    On January 21, 1995, at 60 FR 3726, RUS amended its rules to 
lengthen the maximum allowable loan period from 2 years to 4 years for 
most insured loans. The loan period, sometimes referred to as the 
financing period, means the period of time during which the facilities 
listed in a loan application will be constructed. The loan period was 
lengthened in order to reduce administrative costs to borrowers, 
supplemental lenders, and RUS of submitting and processing multiple 
applications.
    Since borrowers may now apply for loans covering financing needs 
for a longer period of time, the average loan size has become larger. 
At the same time, budget authority for FY 1997 is less than for FY 
1996. In FY 1996, RUS used all its budget authority for municipal rate 
loans and hardship rate loans, approving 97 municipal rate loans (a 
total of $544,616,858) and 23 hardship rate loans ($90,577,664). On 
September 30, 1996, the end of the FY, RUS had a backlog of 106 
applications for municipal rate loans ($709.0 million) and 28 
applications for hardship rate loans ($119.9 million). Additional 
applications have been received during FY 97. Total budget authority 
for FY 1997 for municipal rate and hardship rate loans is only 
$455,564,561 and $68,785,578, respectively.
    The large difference between loan funds requested for eligible 
purposes, and loan funds available for lending has caused long delays 
between the time a loan application is submitted and the time RUS can 
act on the application. Currently the queue for municipal rate loans is 
about a year, and the queue for hardship rate loans is approaching 16 
months.
    In spite of the smaller budget authority, RUS believes that the 
loan queue will be significantly shortened as more and more borrowers 
get used to a longer loan application cycle. However, in those years 
when there is a significant shortfall in available funding, the agency 
must have the flexibility to manage the limited resources. This interim 
final rule will give RUS such flexibility, and will

[[Page 7922]]

provide borrowers with a degree of financial certainty.
    The rule will allow RUS to process applications for loans with a 
loan period of more than 2 years in two parts during a fiscal year when 
applications substantially exceed available funds. RUS will notify all 
electric borrowers in writing before invoking these procedures.
    RUS recognizes that the success of the electric program in 
maintaining high quality electric service at reasonable rates in rural 
areas depends on the ability of electric borrowers to maintain and 
improve their electric systems. The temporary procedures in this rule 
will assist borrowers in the essential task of planning and managing 
their cash flows.
    Concurrent with the publication of this rule, RUS is issuing 
Bulletin 1710C-1, Temporary Processing Procedures for Insured Electric 
Loans, a compliance guide to assist borrowers, supplemental lenders, 
and other interested parties. RUS is mailing the rule and the bulletin 
to all electric borrowers and to supplemental lenders. RUS believes 
that the procedures in the bulletin will allow all borrowers to share 
the limited loan appropriations on a fair and equitable basis.
    Because of: (1) The exceptionally large backlog of applications for 
municipal rate and hardship rate loans, and (2) The urgent need for 
processing procedures that will allow RUS to advance loan funds during 
the spring construction season, RUS is putting these procedures into 
effect immediately for FY 1997. RUS requests comments and suggestions, 
especially on alternate methods of allocating the limited amount of 
loan funds.

List of Subjects in 7 CFR Part 1710

    Electric power, Electric utilities, Loan programs--energy, 
Reporting and recordkeeping requirements, Rural areas.

    For the reasons set out in the preamble, and under the authority of 
7 U.S.C. 901 et seq., RUS amends 7 CFR Part 1710 as follows:

PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO 
INSURED AND GUARANTEED ELECTRIC LOANS

    1. The authority citation for part 1710 continues to read as 
follows:

    Authority: 7 U.S.C. 901-950(b); Pub. L. 99-591, 100 Stat. 3341; 
Pub. L. 103-354, 108 Stat. 3178 (7 U.S.C. 6941 et seq.).

    2. Section 1710.106 is amended by revising paragraph (e) to read as 
follows:


Sec. 1710.106  Uses of loan funds.

* * * * *
    (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 of all 
loans of that type approved during the fiscal year. Depending on the 
amount of the shortfall between the amount authorized for lending and 
the loan application inventory on hand for each type of loan, RUS may 
either reduce the amount on an equal proportion basis for all 
applicants for that type of loan based on the amount of funds for which 
the applicant is eligible, or may shorten the loan period for which 
funding will be approved to less than the maximum of 4 years. All 
applications for the same type of loan approved during a fiscal year 
will be treated in the same manner, except that RUS will not limit 
funding to any borrower requesting an RUS loan or loan guarantee of $1 
million or less.
    (2) If RUS limits the amount of loan funds approved for borrowers, 
the Administrator shall notify all electric borrowers early in the 
fiscal year of the manner in which funding will be limited. The portion 
of the loan application that is not funded during that fiscal year may, 
at the borrower's option, be treated as a second loan application 
received by RUS at a later date. This date will be determined by RUS in 
the same manner for all affected loans and will be based on the 
availability of loan funds. The second loan application shall be 
considered complete except that the borrower must submit a 
certification from a duly authorized corporate official stating that 
funds are still needed for loan purposes specified in the original 
application and must notify RUS of any changes in its circumstances 
that materially affects the information contained in the original loan 
application or the primary support documents. See 7 CFR 1710.401(f).
* * * * *
    Dated: February 13, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-4334 Filed 2-20-97; 8:45 am]
BILLING CODE 3410-15-P