[Federal Register Volume 62, Number 99 (Thursday, May 22, 1997)]
[Rules and Regulations]
[Pages 27929-27930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13424]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 99 / Thursday, May 22, 1997 / Rules 
and Regulations  

[[Page 27929]]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1710


Exemptions of RUS Operational Controls under Section 306E of the 
Rural Electrification Act; Timing of Notification to Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: Section 306E of the Rural Electrification Act of 1936, as 
amended, directs The Rural Utilities Service (RUS) to minimize approval 
rights, requirements and prohibitions imposed on the operations of 
electric borrowers whose net worth exceeds 110 percent of the 
outstanding loans made or guaranteed to the borrower by RUS. Prior to 
today's amendment, RUS regulations implementing this provision included 
a requirement that RUS notify borrowers no later than May 1 of each 
year whether they meet the 110 percent test in order to qualify for the 
exemptions listed in the rule. Most of the information needed to 
determine a borrower's exemption status is contained in Financial and 
Statistical Reports that each borrower submits to RUS no later than 
March 1 each year. Because of the short time available to compile the 
data, RUS has had difficulty meeting the May 1 notification date. 
Today's rule pushes the date back to July 1. The rule makes no 
substantive changes to the ``110 percent rule.'' RUS is simply changing 
the timing of the notification to borrowers. The July 1 date is the 
same date that RUS is required to notify borrowers of exemption from 
RUS approval of certain investments. RUS believes that informing 
borrowers of their exemption status under both rules at the same time 
will reduce administrative costs to borrowers and to the agency.

DATES: This rule is effective May 22, 1997.

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 20250-1500. 
Telephone: 202-690-1078. FAX: 202-720-4120. E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: This regulatory action makes no substantive 
change to RUS regulations 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

    This rule contains no recordkeeping or reporting burdens requiring 
Office of Management and Budget (OMB) approval under the Paperwork 
Reduction Act of 1995 (44 U.S.C. Chapter 31, as amended).

Background

    Section 306E of the Rural Electrification Act of 1936, as amended, 
(7 U.S.C. 936e) directs RUS to minimize approval rights, requirements 
and prohibitions imposed on the operations of electric borrowers whose 
net worth exceeds 110 percent of the outstanding loans made or 
guaranteed to the borrower by RUS. Prior to today's amendment, RUS 
regulations required RUS to notify borrowers no later than May 1 of 
each year whether they meet the 110 percent test in order to qualify 
for the exemptions listed in the rule. See 7 CFR 1710.7(b)(3). The 110 
percent rule was last revised December 29, 1995, at 60 FR 67401, but 
the date of the notification was not changed at that time.
    Most of the information required to prepare the notification is in 
the Financial and Statistical Report that each borrower submits 
annually to RUS (RUS Form 7 for distribution borrowers, or Form 12 for 
power supply borrowers). This report is not due to RUS until March 1. 
The short time period for compiling the data has stressed agency 
resources, and RUS has had difficulty meeting the May 1 notification 
date. Today's rule pushes the notification date back to July 1. No 
changes are being made to the qualifications for the exemption or to 
the nature of the exemption itself. Borrowers who are notified that 
they are exempt will remain exempt until they are notified otherwise by 
RUS.
    Another RUS rule, Investments, Loans, and Guarantees by Electric 
Borrowers, 7 CFR 1717 subpart N, provides in Sec. 1717.656(e) that RUS 
will notify borrowers by July 1 of any change in their status with 
respect to exemption from RUS approval of certain investments. While 
the 110 percent rule and the investment rule deal with different 
exemptions, RUS believes that informing borrowers of their exemption 
status under both rules at the same time will reduce administrative 
costs to borrowers and to the government.
    Because this rule makes no change to RUS rules other than a change 
in the notification date, RUS has determined that no period for public 
comment is

[[Page 27930]]

needed, and the change in date is in effect immediately.

List of Subjects in 7 CFR Part 1710

    Electric power, Electric utilities, Loan programs--energy, 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 1710.7 is amended by revising paragraph (b)(3) to read 
as follows:


Sec. 1710.7  Exemptions of RUS operational controls under section 306E 
of the RE Act.

* * * * *
    (b) * * *
    (3) By no later than July 1 of each year, RUS will notify each 
borrower in writing of its exemption status. If the borrower's net 
worth to RUS debt ratio exceeds 110 percent based on the most recent 
year-end data, the borrower will be exempt from the operational 
controls exempted under paragraph (c) of this section until 
subsequently notified in writing by RUS that it is no longer exempt.
* * * * *
    Dated: May 15, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-13424 Filed 5-21-97; 8:45 am]
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