[Federal Register Volume 64, Number 248 (Tuesday, December 28, 1999)]
[Rules and Regulations]
[Pages 72488-72490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33639]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1721


Post-Loan Policies and Procedures for Insured Electric Loans

AGENCY: Rural Utilities Service, USDA.

ACTION: Direct final rule.

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SUMMARY: As a part of its ongoing program to streamline regulations, 
the Rural Utilities Service (RUS) is amending its regulation on the 
advance of funds to reflect an increase in the threshold limit from 
$25,000 to $100,000 for which plant investments may be made in the 
borrowers' systems and be eligible for insured loan fund financing 
without being included in an RUS-approved construction work plan (CWP). 
In addition, RUS has determined to no longer limit borrowers to 130 
percent of the project cost estimate for projects in the CWP or 
amendment and approved loan, as amended, for which prior RUS approval 
must be obtained. These changes will have the effect of reducing the 
number of actions by borrowers that would otherwise require RUS 
approval and will reduce administrative costs to borrowers and to the 
agency.

DATES: This rule will become effective February 11, 2000 unless we 
receive written adverse comments or notice of intent to submit adverse 
comments on or before January 27, 2000. If we receive such comments or 
notice, we will publish a timely withdrawal of the Direct Final Rule in 
the Federal Register stating that the rule will not become effective 
until we have addressed the comments received and published a final 
rule. A second public comment period will not be held. Parties 
interested in commenting on this action should do so at this time.

ADDRESSES: Submit adverse comments or notice of intent to submit 
adverse comments to F. Lamont Heppe, Jr., Director, Program Development 
and Regulatory Analysis, U.S. Department of Agriculture, Rural 
Utilities Service, Stop 1522, 1400 Independence Ave., SW., Washington, 
DC 20250-1522. RUS requests a signed original and three copies of all 
comments (7 CFR 1700.4). Comments will be available for public 
inspection during regular business hours (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Charles M. Philpott, Chief, 
Engineering Branch, Northern Regional Division, U.S. Department of 
Agriculture , Rural Utilities Service, Room 4034 South Bldg., 1400 
Independence Ave., SW., Washington, DC 20250-1522. Telephone: (202) 
720-1432. E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget (OMB).

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. RUS has determined that this final rule 
meets the applicable standards provided in section 3 of the Executive 
Order. In accordance with the Executive Order and the rule: (1) all 
State and local laws and regulations that are in conflict with this 
rule will be preempted; (2) no retroactive effect will be given to this 
rule and (3) in accordance with Sec. 212(e) of the Department of 
Agriculture Reorganization Act of 1994 (7 U.S.C. Sec. 6912(e)) 
administrative appeal procedures, if any are required, must be 
exhausted prior to initiating litigation against the Department or its 
agencies.

Regulatory Flexibility Act Certification

    The Administrator of RUS has determined that this rule relating to 
RUS' electric loan program is not a rule as defined in the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) and, therefore, the Regulatory 
Flexibility Act does not apply to this rule. RUS borrowers, as a result 
of obtaining federal financing, received economic benefits that exceed 
any direct economic costs associated with complying with RUS 
regulations and requirements.

Information Collection and Recordkeeping Requirements

    The Office of Management and Budget has approved the reporting and 
recordkeeping requirements contained in 7 CFR part 1721 under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) and assigned 
control number 0572-0032. This rule contains no additional information 
collection or recordkeeping requirements.

National Environmental Policy Act Certification

    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.

Catalog of Federal Domestic Assistance

    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, 
telephone number (202) 512-1800.

Executive Order 12372

    This rule is excluded from the scope of Executive Order 12372, 
Intergovernmental Consultation, which may require consultation with 
State local, and tribal governments or the private sector. A final rule 
related notice entitled, ``Department Programs and Activities Excluded 
from Executive

[[Page 72489]]

Order 12372,'' (50 FR 47034) determined that RUS loans and loan 
guarantees were not covered by Executive Order 12372.

Unfunded Mandates

    This rule contains no Federal mandates (under the regulatory 
provision of Title II of the Unfunded Mandates Reform Act) for State, 
local, and tribal governments, or the private sector. Thus, this rule 
is not subject to the requirements of section 202 and 205 of the 
Unfunded Mandates Reform Act of 1995.

Background

    RUS is amending its regulations to change the definition of a minor 
project from the current threshold level of $25,000 or less, to a 
project costing $100,000 or less. Section 1721.1 restricts borrowers to 
advances of insured loan funds for projects, except for minor projects, 
that are included in an RUS approved borrower's construction work plan 
(CWP) or CWP amendment. A minor project is defined as a project costing 
$25,000 or less. A minor project is eligible for insured loan funding 
without being included in an RUS-approved CWP or amendment. In RUS' 
review of the impact of this rule on borrowers, we have determined that 
the $25,000 limit for a minor project is creating unneeded paperwork 
and cost burdens on borrowers requiring unnecessary CWP amendments to 
be approved by RUS, without producing significant benefits. The 
increase to $100,000 for a minor project will allow borrowers greater 
flexibility in their construction programs and reduce the number of CWP 
amendments requiring RUS approval. The level of $100,000 is considered 
reasonable and adequate for purposes of monitoring borrowers' 
construction programs and will provide sufficient safeguards to assure 
that RUS loan funds are being used for intended loan purposes.
    RUS is further amending its regulations to eliminate the 
requirement that funding requests from borrowers not exceed 130 percent 
of the project cost estimate, previously approved by RUS in the 
borrowers' CWP or CWP amendment and in an approved loan.
    Under Sec. 1721.1, the ``130 percent rule'' applies to each major 
project included in the borrower's CWP and RUS approved loan. In RUS' 
review of compliance with this rule, we have determined that the 
majority of cases of noncompliance occur when borrowers exceed 130 
percent of the cost estimate for projects coded in the 100 and 600 
series. These project codes relate to the construction of distribution 
line extensions and the installation of miscellaneous line equipment 
required to provide electric service to new customers. Since a borrower 
cannot accurately predict the number of new customers, significant cost 
variations can and do occur in these projects from the time the cost 
estimates were originally prepared in the CWP. In view of this, RUS is 
amending the rule to remove the 130 percent limitation for the projects 
coded 100 and 600.
    Further, in reviewing the 130 percent rule as applied to the 
remaining major project codes in the CWP and approved loan, most 
borrowers are either providing good cost estimates for the projects in 
the CWP and loan or are amending the CWP, as needed, based on factors 
other than an increase in cost. Therefore, RUS is amending the 
regulation to eliminate the ``130 percent rule'' in its entirety for 
all major projects included in the borrowers' CWPs and RUS-approved 
insured loans.
    RUS believes that the changes under this rule will reduce 
administrative costs to borrowers and to the Government and will relax 
the RUS requirements under which borrowers may qualify for RUS insured 
fund financing.

List of Subjects in 7 CFR Part 1721

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

    For the reasons set forth in the preamble, RUS amend 7 CFR chapter 
XVII as follows:

PART 1721--POST-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC 
LOANS

    1. The authority citation for part 1721 is revised to read as 
follows:

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

    2. Section 1721.1 is revised to read as follows:


Sec. 1721.1  Advances.

    (a) Purpose and amount. With the exception of minor projects, 
insured loan funds will be advanced only for projects which are 
included in an RUS approved borrower's construction work plan (CWP) or 
approved amendment and in an approved loan, as amended. Loan fund 
advances can be requested in an amount representing actual costs 
incurred.
    (b) Minor project. Minor project means a project costing $100,000 
or less. Such a project qualifies for advance of loan funds even though 
it may not have been included in an RUS-approved borrower's CWP, 
amendment to such CWP, or approved loan. Total advances requested shall 
not exceed the total loan amount. All projects for which loan fund 
advances are requested must be constructed to achieve purposes 
permitted by terms of the loan contract between the borrower and RUS.
    (c) Certification. Pursuant to the applicable provisions of the RUS 
loan contract, borrowers shall certify with each request for funds to 
be approved for advance that such funds are for projects in compliance 
with this section and shall also provide for those that cost in excess 
of $100,000, a contract or work order number as applicable and a CWP 
cross-reference project coded identification number. For a minor 
project not included in an RUS approved borrower's CWP, the Borrower 
shall describe the project and do one of the following to satisfy RUS' 
environmental requirements (see 7 CFR part 1794).
    (1) If applicable, state that the project is a categorical 
exclusion of a type described in Sec. 1794.21(b), which normally does 
not require preparation of an Environmental Report (ER); or
    (2) If applicable, state that the project is a categorical 
exclusion of a type that normally requires an ER and then:
    (i) Submit the ER with the request for funds to be approved for 
advance, or
    (ii) If applicable, certify that it has analyzed the minor project 
with respect to a comprehensive service area environmental map and data 
base collected and used in preparing the ER for its RUS-approved 
borrower's CWP, and that on the basis of that information, the minor 
project will not be located in an environmentally sensitive area or 
location.
    (d) Noncompliance. Where insured loan funds are found to have been 
advanced in noncompliance with this section, borrowers will be required 
to deposit the appropriate amount of the over-advance in the 
construction fund-trustee account and pay any accrued and unpaid 
interest to RUS. The Administrator will require borrowers, in order to 
remedy such noncompliance, to pay an additional amount equal to the 
interest on the funds over-advanced for the period such funds were 
outstanding, calculated at a rate equal to the difference between the 
RUS loan interest rate and the most recent rate at which RUS sold 
Certificates of Beneficial Ownership (CBO's). While RUS will generally 
permit the amount of over-advance deposited in the construction fund-
trustee account to be subsequently used by the borrower for RUS 
approved projects, nothing in this section shall be construed to 
preclude RUS from exercising any rights or

[[Page 72490]]

remedies which RUS may have pursuant to the loan contract.

    Dated: December 21, 1999.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 99-33639 Filed 12-27-99; 8:45 am]
BILLING CODE 3410-15-P