[Federal Register Volume 62, Number 97 (Tuesday, May 20, 1997)]
[Proposed Rules]
[Pages 27546-27547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13129]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1710

RIN 0572-AA89


Long-Range Financial Forecasts of Electric Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) proposes to amend its policy 
on long-range financial forecasts of electric borrowers. RUS requires 
that applicants for loans, loan guarantees, lien accommodations, and 
certain general fund approvals, submit, as part of their application, a 
long-range financial forecast. RUS loans are generally amortized over a 
period of 35 years, and the long-range financial forecast provides RUS 
information necessary to determine that the loans are feasible. This 
amended provision will eliminate some of the items in the present 
forecasting regulation that are no longer considered necessary to be 
included in borrower's forecast. Eliminated items include the 
sensitivity study for all forecasts, and a commercially available 
credit report for applicants seeking a loan or loan guarantee. The 
proposed regulation provides that RUS may request a sensitivity study 
on a case-by-case basis.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent by July 21, 1997.

ADDRESSES: Written comments should be addressed to William E. Davis, 
Program Advisor, Electric Program, Rural Utilities Service, U.S. 
Department of Agriculture, 1400 Independence Ave., SW., Washington, DC 
20250-1569. RUS requires a signed original and three 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: William E. Davis, Program Advisor, 
Electric Program, Rural Utilities Service, U.S. Department of 
Agriculture, 1400 Independence Ave., SW., Washington, D.C. 20250-1569, 
telephone number: (202) 720-0738, E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and therefore has not been reviewed 
by OMB.

Executive Order 12778

    This proposed rule has been reviewed in accordance with Executive 
Order 12778, Civil Justice Reform. RUS has determined that this 
proposed rule meets the applicable standards provided in Section 3 of 
the Executive Order.

Regulatory Flexibility Act Certification

    The Administrator of RUS has determined the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) definition of the rule does not include 
rules relating to the RUS electric program, and, therefore, the 
Regulatory Flexibility Act does not apply to this proposed rule.

Information Collection and Recordkeeping Requirements

    The reporting and recordkeeping requirements contained in the 
proposed 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.
    Send questions or comments regarding this burden or any other 
aspect of these collections of information, including suggestions for 
reducing the burden to William E. Davis, Program Advisor, Electric 
Program, Rural Utilities Service, 1400 Independence Ave., SW., 
Washington, D.C. 20250-1569.

National Environmental Policy Act Certification

    RUS has determined that this proposed 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.

Catalog of Federal Domestic Assistance

    The program described by this proposed 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, D.C. 20402-
9325, telephone number (202)783-3238.

[[Page 27547]]

Executive Order 12372

    This proposed rule is excluded from the scope of Executive Order 
12372, Intergovernmental Consultation. A Notice of Final Rule entitled 
Department Programs and Activities Excluded from Executive Order 12372 
(50 FR 47034) exempts RUS loans and loan guarantees to governmental and 
nongovernmental entities from coverage under this order.

National Performance Review

    This regulatory action is being taken as part of the
    National Performance Review program to eliminate unnecessary 
regulations and improve those that remain in force.

Background

    Rural Utilities Services,(RUS), makes loans, loan guarantees, and 
lien accommodations to provide electric service to new consumers, and 
to improve the quality and quantity of electric service to existing 
consumers in rural areas, as authorized by the Rural Electrification 
Act of 1936, as amended, 7 U.S.C. 901 et seq. (RE Act). According to 
the terms of the RE Act and RUS regulations, RUS may make a loan only 
if the Administrator of RUS determines that the security thereof is 
reasonably adequate and such loan will be repaid within the time 
agreed.
    Regulations establishing the requirement that borrowers submit a 
long-range financial forecast as part of a loan application are set 
forth at 7 CFR part 1710, subpart G. On October 19, 1993, at 58 FR 
53835, Rural Electrification Administration (REA), predecessor to RUS, 
published a rule, 7 CFR part 1717, subparts R and S, setting forth 
policies for lien accommodations and subordination. Under this 
regulation, RUS requires borrowers to submit a long-range financial 
forecast as part of certain applications for a lien accommodation or 
subordination. The proposed regulation will affect these requirements 
by changing how the long-range financial forecast is prepared.

List of Subjects in 1 CFR Part 1710

    Electric power, Electric utilities, Loan programs-energy, Rural 
areas.

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. 901-905b; Public Law 99-591, 100 Stat. 3341-
16; Public Law 103-354, 108 Stat. 3178 (7 U.S.C. 6941 et seq.)

    2. Section 1710.300 is amended by revising paragraph (d)(5) to read 
as follows:


Sec. 1710.300  General.

* * * * *
    (d) * * *
    (5) A sensitivity analysis may be required by RUS on a case-by-case 
basis. 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.
* * * * *
    3. Paragraph (f) of section 1710.300 is removed.
    4. Section 1710.302 is amended by revising paragraphs (b), (d)(1), 
and (d)(5), to read as follows:


Sec. 1710.302  Financial forecasts--power supply borrowers.

* * * * *
    (b) The financial forecast shall cover a period of 10 years. RUS 
may request projections for a longer period of time if deemed 
necessary.
* * * * *
    (d) * * *
    (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.
* * * * *
    (5) Include sensitivity analysis if required by RUS pursuant to 
Sec. 1710.300(d)(5).
* * * * *

    Dated: May 9, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-13129 Filed 5-19-97; 8:45 am]
BILLING CODE 3410-15-P