[Federal Register Volume 65, Number 247 (Friday, December 22, 2000)]
[Notices]
[Pages 80830-80832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32714]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service


Notice of Funding Availability (NOFA); Treasury Rate Loan Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Notice of funding availability (NOFA).

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SUMMARY: This Notice of Funding Availability (NOFA) announces the 
availability of $500 million in direct Treasury rate electric loans for 
fiscal year (FY) 2001. This document describes the eligibility and 
submission requirements, the criteria that will be used by the Rural 
Utilities Service (RUS) to select applications for funding, and the 
expectation that the current backlog of qualifying applications for 
loans from RUS under the Rural Electrification Act will exhaust all of 
the available funding. In the event this assumption proves to be 
incorrect, RUS intends to publish another NOFA on or before July 1, 
2001, announcing the availability of any remaining direct Treasury rate 
electric loan funds and how they will be allocated. The intended effect 
of this NOFA is to enable RUS to approve all direct Treasury rate 
electric loans for FY 2001 prior to July 1, 2001.

DATES: RUS intends to treat all completed qualifying applications for 
direct electric loans at the municipal rate as pre-applications for 
direct electric loans at the Treasury rate. The closing date for 
receipt of pre-applications that will be considered is October 28, 
2000; the date on which the direct Treasury rate electric loan program 
was established by Pub.L. 106-387.

ADDRESSES: Loan applicants that do not have outstanding loans from RUS 
should write to the Rural Utilities Service, United States Department 
of Agriculture, Washington, DC 20250-1500. 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). Borrowers may consult with RUS field 
representatives and headquarters staff, as necessary.

[[Page 80831]]


FOR FURTHER INFORMATION CONTACT: Robert O. Ellinger, Management 
Analyst, U.S. Department of Agriculture, Rural Utilities Service, 
Electric Program, Room 4023 South Building, Stop 1560, 1400 
Independence Ave., SW., Washington, DC 20250-1560, Telephone: 202-720-
0424.

SUPPLEMENTARY INFORMATION:

Programs Affected

    The Catalog of Federal Domestic Assistance Program number assigned 
to this program is 10.850.

Discussion of Notice

I. Authority and Distribution Methodology

a. Authority
    Section 4 of the Rural Electrification Act of 1936, (RE Act) (7 
U.S.C. 904), among other things, provides RUS with the authority to 
make loans for rural electrification and for the purpose of furnishing 
and improving electric service in rural areas. Section 305 of the RE 
Act (7 U.S.C. 935) establishes the municipal rate electric loan program 
for these purposes. Title III of the Agriculture, Rural Development, 
Food and Drug Administration, and Related Agencies Appropriations Act, 
2001 (Pub. L. 106-387) authorizes a direct Treasury rate electric loan 
program of $500 million for FY 2001.
b. Distribution Methodology
    RUS believes that Congress authorized the direct Treasury rate 
electric program to address the backlog of qualified loan applications 
for direct municipal rate electric loans from RUS. Such loans are 
generally allocated by RUS in the order that qualified applications are 
received. RUS will distribute direct Treasury rate electric loans by 
offering those municipal rate electric loan applicants whose qualified 
applications were pending at the time of the enactment of Pub.L. 106-
387 the option of selecting the direct Treasury rate in lieu of the 
municipal rate for their loans. RUS will contact applicants in the 
order of priority that their applications for municipal rate loans 
would otherwise have been funded using the loan processing priorities 
published in 7 CFR 1710.119. In that order, RUS will allocate up to the 
original (as adjusted in accordance with this NOFA) qualifying 
municipal loan amount to each applicant who so elects. RUS will proceed 
in turn until such point as the $500 million of authority has been 
exhausted. In the unlikely event that any of the authority remains 
unobligated on July 1, 2001, RUS plans to publish a notice of the 
availability of the remaining portion and describe the manner in which 
it intends to proceed. RUS intends to obligate loans for the full 
amount by September 1, 2001.

II. Applications Process

    Qualifying applications for direct municipal rate electric loans 
which have been submitted to RUS in accordance with 7 CFR part 1710 
subpart I, before October 28, 2000 will be treated as pre-applications 
for direct Treasury rate electric loans. RUS will contact qualified 
applicants in the order which they are presently queued, and offer the 
applicant the opportunity to elect to receive its loan at the direct 
Treasury rate in lieu of the municipal rate. Applicants should notify 
RUS promptly in writing of their election. Only timely responses 
received by RUS and electing the direct Treasury rate will qualify for 
further loan processing by RUS at that rate. All other applicants will 
remain in the municipal rate loan queue without prejudice. RUS notes 
that a reduction of $500 million of applications in the municipal rate 
loan queue will result in reaching municipal rate loan applications 
that otherwise would not be reached during FY 2001. Congress authorized 
a direct municipal rate electric loan program level of $295 million for 
FY 2001. RUS estimates its current backlog of qualified applications 
for electric distribution loans as exceeding $1.2 billion. Therefore, 
RUS anticipates that it will significantly reduce but not substantially 
eliminate its backlog of electric distribution loan applications.

III. Application Submission Requirements

    Each application should include all of the information, materials, 
forms and exhibits required by 7 CFR part 1710 subpart I, as well as 
comply with the provisions of this NOFA. RUS believes that it currently 
has received sufficient pre-applications to exhaust all available FY 
2001 funding for the direct Treasury rate electric program and 
therefore it is not soliciting additional applications for this rate 
category at this time.

IV. Differences Between Direct Municipal Rate Electric Loan Category 
and Direct Treasury Rate Electric Loan Category

    Generally speaking, since the primary distinction between the 
established direct municipal rate electric loan program and the direct 
Treasury rate electric loan program is merely one of interest setting 
methodologies, RUS intends to administer the direct Treasury rate 
program during FY 2001 in a manner substantially the same as it 
administers the direct municipal rate program. General and pre-loan 
policies and procedures for electric loans made by RUS may be found in 
7 CFR parts 1710 and 1714. It is intended that the use of established 
and highly successful direct electric loan program procedures will 
enable RUS to promptly make prudent loans to qualified applicants. 
These procedures have generally worked well and are familiar to both 
RUS staff and to the applicants. This approach helps assure that the 
funds authorized by Congress for FY 2001 are expended in a timely 
manner as Congress intended. The principal variances are as follows:
a. Interest Rates
    1. The standard interest rate on direct Treasury rate loans will be 
established daily by the United States Treasury.
    2. The interest rates for Treasury rate loans can be found on the 
Internet at www.federalreserve.gov/releases/H15/currrent/.
    3. Selection of interest rate terms will be made by the borrower 
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 rates for terms 
greater than 30 years will be at the 30-year rate.
    4. There will be no interest rate cap on Treasury rate loans.
b. Prepayment
    A direct Treasury rate electric loan may be repaid at par on its 
rollover maturity date if there is one. Such a loan may also be prepaid 
with no premiums or penalties at its ``net present value'' (NPV) as 
determined by RUS using the prepayment methodology in 7 CFR part 1786.
c. Supplemental Financing
    The Administrator has elected not to impose any supplemental 
financing requirements in conjunction with direct Treasury rate 
electric loans made during FY 2001. Accordingly, the ``original 
qualifying municipal amount'' referred to in part I.B of this NOFA may 
be adjusted at the election of the applicant to include otherwise 
eligible amounts that would have been financed from other sources in 
accordance with 7 CFR 1710.110(c). Request for an adjustment in the 
``original'' amount should specify the amount of the adjustment and 
accompany the applicant's election to use the Treasury rate category of 
direct electric loan. See part II of this NOFA.

[[Page 80832]]

V. 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 
plans to 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 this NOFA. All notes will 
be secured in accordance with the terms of 7 CFR part 1718.

    Dated: December 18, 2000.
Christopher A. McLean,
Administrator, Rural Utilities Service.
[FR Doc. 00-32714 Filed 12-21-00; 8:45 am]
BILLING CODE 3410-15-P