[Federal Register Volume 66, Number 6 (Tuesday, January 9, 2001)]
[Proposed Rules]
[Pages 1604-1607]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-557]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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  Federal Register / Vol. 66, No. 6 / Tuesday, January 9, 2001 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1721

RIN 0572-AB60


Extensions of Payments of Principal and Interest

AGENCY: Rural Utilities Service, USDA.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Rural Utilities Service (RUS) proposes to add procedures 
and conditions under which Borrowers may request extensions of the 
payment of principal and interest. These procedures and conditions are 
stated in RUS Bulletin 20-5:320-2, Extensions of Payments of Principal 
and Interest, dated May 10, 1972, and RUS Bulletin 20-23, Section 12 
Extensions for Energy Resources Conservation Loans, dated December 8, 
1980; however, these procedures and conditions were not codified in the 
Code of Federal Regulations. This regulation will set forth procedures 
and conditions under which Borrowers may request extensions of 
principal and interest. RUS is proposing to rescind upon the effective 
date of this regulation RUS Bulletin 20-5:320-2, and RUS Bulletin 20-
23.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent no later than March 12, 2001.

ADDRESSES: Written comments should be addressed to Al Rodgers, Deputy 
Assistant Administrator, Electric Program, U.S. Department of 
Agriculture, Rural Utilities Service, Room 4037 South Building, Stop 
1560, 1400 Independence Ave., SW., Washington, DC 20250-1560. Telephone 
(202) 720-9547. RUS requires a signed original and three copies of all 
comments (7 CFR Part 1700). All comments received will be made 
available for inspection in room 4037 South Building during regular 
business hours.

FOR FURTHER INFORMATION CONTACT: Gail P. Salgado, Management Analyst, 
Rural Utilities Service, Electric Program, Room 4024 South Building, 
Stop 1560, 1400 Independence Ave., SW., Washington, DC 20250-1560. 
Telephone: (202) 205-3660.

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 12372

    This rule is excluded from the scope of Executive Order 12372, 
Intergovernmental Consultation, which may require a consultation with 
State and local officials. See the final rule related notice titled, 
``Department Programs and Activities Excluded from Executive Order 
12372'' (50 FR 47034) advising the RUS loans and loan guarantees were 
not covered by Executive Order 12372.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this rule meets the 
applicable standards provided in section 3 of the Executive Order. In 
addition, (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 appeals procedures, if any are required, must 
be exhausted prior to initiating an action against the Department or 
its agencies.

Regulatory Flexibility Act Certification

    The Administrator of RUS has determined that this rule relating to 
the RUS electric loan program is not a rule as defined by 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, receive economic benefits 
that exceed any direct costs associated with complying with RUS 
regulations and requirements.

Information Collection and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), RUS invites comments on this information collection for 
which RUS intends to request approval from the Office of Management and 
Budget (OMB).
    Comments on this notice must be received by March 12, 2001.
    Comments are invited on (a) whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (b) the 
accuracy of the agency's estimate of burden including the validity of 
the methodology and assumption used; (c) ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques on 
other forms of information technology.
    Comments may be sent to F. Lamont Heppe, Jr., Director, Program 
Development and Regulatory Analysis, Rural Utilities Service, U.S. 
Department of Agriculture, 1400 Independence Ave., SW., Stop 1522, Room 
4034 South Building, Washington, DC 20250-1522.
    Title: Extensions of Payments of Principal and Interest.
    Type of Request: New information collection.
    Abstract: To set forth the procedure for Borrowers' requests for 
extensions of principal and interest.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 4.36 hours per response.
    Respondents: Not-for-profit institutions, business or other for-
profit.
    Estimated Number of Respondents: 90.
    Estimated Number of Responses per Respondent: 2.
    Estimated Total Annual Burden on Respondents: 180.
    Copies of this information collection can be obtained from Michele 
Brooks, Program Development and Regulatory Analysis, at (202) 690-1078.
    All responses to this information collection and recordkeeping 
notice will be summarized and included in the

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request for OMB approval. All comments will also become a matter of 
public record.

National Environmental Policy Act Certification

    The Administrator of 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, DC 20402-
9325, telephone number (202) 512-1800.

Unfunded Mandates

    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995) 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.

Background

    RUS believes it to be a good business practice to provide a 
Borrower the opportunity to request an extension of time and payment of 
principal and interest where such an extension provides the Borrower 
the flexibility to address financial hardship and achieve specified 
program objectives to benefit rural America.
    This proposed rule contains the procedures and conditions under 
which Borrowers may request RUS approval for extensions of principal 
and interest under the circumstances specified in the proposed rule. 
Eligible purposes include financial hardship, energy resource 
conservation (ERC) loans, renewable energy projects, and contributions-
in-aid of construction. The procedures and conditions for these 
purposes have not previously been codified in the Code of Federal 
Regulations. In addition, eligible new purposes (renewable energy 
projects and contributions-in-aid of construction) are included in this 
proposed rule and will follow the same procedures and conditions as the 
ERC loans. Samples of board resolutions mentioned in the proposed rule 
can be located on the RUS webpage, http://www.usda.gov/rus/electric/forms.htm.
    Authority for these extensions are contained in section 12(a) of 
the Rural Electrification Act of 1936 (RE Act), as amended and section 
236 of the Disaster Relief Act of 1970 (Pub. L. 91-606), as amended by 
the Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-
354). RUS proposes to add procedures and conditions under which 
Borrowers may request extensions of principal and interest. Many of 
these procedures and conditions are stated in RUS Bulletin 20-5:320-2, 
Extensions of Payments of Principal and Interest, dated May 10, 1972, 
and RUS Bulletin 20-23, Section 12 Extensions for Energy Resources 
Conservation Loans, dated December 8, 1980.
    RUS is proposing to rescind upon the effective date of this 
regulation RUS Bulletin 20-5:320-2, Extensions of Payments of Principal 
and Interest, dated May 10, 1972, and RUS Bulletin 20-23, section 12 
Extensions for Energy Resources Conservation Loans, dated December 8, 
1980. RUS believes the information contained in these bulletins will be 
obsolete and unnecessary upon finalization of the proposed rule.

List of Subjects in 7 CFR Part 1721

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

    For the reasons set forth in the preamble, RUS proposes to amend 7 
CFR chapter XVII, part 1721 by adding subpart B to read as follows:

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

    1. The authority citation for part 1721 continues to read:


    Authority: 7 U.S.C. 901 et seq.; 1921 et seq., and 6941 et 
seq.).
    2. Add subpart B to read as follows:

Subpart B--Extensions of Payments of Principal and Interest

Sec.
1721.100   Purpose.
1721.101   General.
1721.102   Definitions.
1721.103   Policy.
1721.104   Eligible purposes.
1721.105   Application documents.
1721.106   Repayment of deferred payment.
1721.107   Agreement.
1721.108   Commencement of the deferment.


Sec. 1721.100  Purpose.

    This subpart contains RUS procedures and conditions under which 
Borrowers may request RUS approval for extensions for the payment of 
principal and interest.


Sec. 1721.101  General.

    The procedures in this subpart are intended to provide Borrowers 
with the flexibility to request an extension of principal and interest 
as authorized under section 12(a) of the RE Act and section 236 of the 
Disaster Relief Act of 1970 (Public Law 91-606).


Sec. 1721.102  Definitions.

    The definitions contained in 7 CFR 1710.2 are applicable to this 
subpart unless otherwise stated.


Sec. 1721.103  Policy.

    (a) In reviewing requests for extension of payment of principal and 
interest, consideration shall be given to the effect of such extensions 
on the security of the Government's loans, and on the ability of the 
Borrower to achieve program objectives. It is the policy of RUS to 
extend the time for payment of principal and interest on the basis of 
findings that such extension does not impair the security and 
feasibility of the Government's loans and:
    (1) Is essential to the effectiveness of the Borrower's operations 
in achieving specified program objectives; or
    (2) Is necessary to help a Borrower place its operations on a more 
stable financial basis and thereby provide assurance of repayment of 
loans within the time when payments of such loans are due under the 
terms of the note or notes as extended; or
    (3) Is otherwise in the best interest of the Government.
    (b) Extensions will be given in the minimum amount to achieve the 
purpose of the extension.
    (c) The total amount of interest that has been deferred will be 
added to the principal balance and the total amount of principal and 
interest that has been deferred will be reamortized over the life of 
the applicable note beginning in year six (6).
    (d) Payment of principal and interest will not be extended more 
than 5 years after such payment shall have become due. However, in 
cases where the extension is being granted because, at the sole 
discretion of the Administrator, a severe hardship has been 
experienced, the Administrator may grant a longer extension provided 
that the maturity date of any such loan does not extended to a date 
beyond forty (40) years from the date of the loan.


Sec. 1721.104  Eligible purposes.

    (a) Deferments for financial hardship. (1) A Borrower may defer 
principal or interest or both in cases of severe financial hardship. 
The deferral would be considered so as to help a Borrower place its 
operations on a more stable

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financial basis and thereby provide assurance of repayment of loans 
within the time when payment of such loans are due under the terms of 
the note or notes as extended.
    (2) The determination as to whether a Borrower qualifies for the 
deferment will be made by RUS on a case-by-case basis, considering such 
factors as:
    (i) Substantial unreimbursed expenses relating to storm damage;
    (ii) Loss of large power load;
    (iii) Substantial loss of consumers or load due to hostile 
annexations and condemnations; or
    (iv) Need to substantially upgrade a borrower's system to bring it 
into compliance with the National Electric Safety Code (NESC).
    (b) Deferments for energy resource conservation (ERC) loans. (1) A 
Borrower may defer principal payments to make funds available to their 
consumers to conserve energy. Amounts deferred under this program can 
be used to cover the cost of labor and materials for the following 
energy conservation measures:
    (i) Caulking;
    (ii) Weather-stripping;
    (iii) Heat pump systems (including water source heat pumps);
    (iv) Heat pumps, water heaters, and central heating or central air 
conditioning system replacements or modifications, which reduce energy 
consumption;
    (v) Ceiling insulation;
    (vi) Wall insulation;
    (vii) Floor insulation;
    (viii) Duct insulation;
    (ix) Pipe insulation;
    (x) Water heater insulation;
    (xi) Storm windows;
    (xii) Thermal windows;
    (xiii) Storm or thermal doors;
    (xiv) Electric system coordinated customer-owned devices that 
reduce the maximum kilowatt demand on the electric system;
    (xv) Clock thermostats; or
    (xvi) Attic ventilation fans.
    (2) ERC loans will be amortized over not more than 84 months, 
without penalty for prepayment of principal.
    (c) Deferments for renewable energy projects. (1) A Borrower may 
defer principal payments to finance renewable energy projects. Amounts 
deferred under this program can be used to cover any and all costs to 
install all or part of a renewable energy system including, without 
limitation:
    (i) Energy conversion technology;
    (ii) Electric system interface;
    (iii) Delivery equipment;
    (iv) Control equipment; and
    (v) Certain energy consuming devices.
    (2) A Borrower may defer principal payments for the purpose of 
providing its consumers with loans to install all or part of customer-
owned renewable energy systems up to 5kW.
    (3) For the purpose of this subpart, a renewable energy system is 
one that can directly collect and convert solar, wind, or biomass 
energy into a usable form of energy such as electricity or heat.
    (4) For the purpose of this subpart, a renewable energy project 
consists of one or more renewable energy systems.
    (d) Deferments for contributions-in-aid of construction. (1) A 
Borrower may defer principal payments to make funds available to new 
full time residential consumers to assist them in paying their share of 
the construction costs (contribution-in-aid of construction) needed to 
connect them to the Borrower's system.
    (2) Amounts available for this purpose will be limited to the 
amount of the construction costs that are in excess of the average cost 
per residential consumer incurred by the Borrower to connect new 
permanent residential consumers during the last calendar year for which 
data is available.


Sec. 17121.105  Application documents.

    (a) Deferments for financial hardship. A Borrower requesting a 
section 12 deferment because of financial hardship should submit the 
following:
    (1) A summary of the financial position of the Borrower, based on 
the latest information available (usually less than 60 days old).
    (2) A copy of the board resolution requesting an extension due to 
financial hardship.
    (3) A 10-year financial forecast of revenues and expenses on a cash 
basis, by year, for the period of the extension and 5 years beyond to 
establish that the remaining payments can be made as rescheduled.
    (4) A listing of notes or portions of notes to be extended, the 
effective date for the beginning of the extension, and the length of 
the extension.
    (5) A narrative description of the nature and cause of the hardship 
and the strategy that will be instituted to mitigate or eliminate the 
effects of the hardship.
    (b) Deferments for energy resource conservation loans. A Borrower 
requesting principal deferments for an ERC loan program should submit 
the following information:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of offering an ERC loan 
program to its members.
    (2) A copy of the board resolution establishing the ERC loan 
program and outlining the details of the program.
    (c) Deferments for renewable energy projects. A Borrower requesting 
principal deferments for its renewable energy project should submit the 
following information:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of offering a renewable 
energy project program to its members and outlining the details of the 
program.
    (2) A copy of the board resolution establishing the renewable 
energy project.
    (d) Deferments for contribution-in-aid of construction. A Borrower 
requesting principal deferments for contribution-in-aid of construction 
should submit the following information:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of offering a 
contribution-in-aid of construction program and outlining the details 
of the program.
    (2) A copy of the board resolution establishing the contribution-
in-aid of construction program.
    (3) A summary of the calculations used to determine the average 
cost per residential consumer. (See Sec. 1721.104 (d)(2)).


Sec. 1721.106  Repayment of deferred payment.

    (a) Deferments relating to financial hardship. The total amount of 
interest that has been deferred will be added to the principal balance 
and the total amount of principal and interest that has been deferred 
will be reamortized over the life of the applicable note beginning in 
year six (6). For example: the amount of interest deferred in years 
2001, 2002, 2003, 2004, and 2005, will be added to the principal 
balance and reamortized over the life of the applicable note in year 
2006.
    (b) Deferments relating to the ERC loan program, renewable energy 
project, and the contribution-in-aid of construction. An extension 
agreement is for a term of two (2) years. The installment will be 
recalculated each time the Borrower defers the payment of principal and 
recognition of the deferred amount will begin with the next payment. 
For example: the amount deferred in the October payment will be 
reamortized over a 84 month period starting with the next payment 
(November if paying on a monthly basis). When a Borrower defers 
principal under any of these programs the scheduled payment on the 
account will increase by an amount sufficient to pay off the deferred 
amount by the date specified in the agreement (usually 84 months (28 
quarters)).

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Sec. 1721.107  Agreement.

    After approval of the Borrower's request for a deferment of 
principal and interest, an extension agreement, containing the terms of 
the extension, together with associated materials, will be prepared and 
forwarded to the Borrower by RUS.


Sec. 1721.108  Commencement of the deferment.

    The deferment of principal and interest will not begin until the 
extension agreement and any other supporting materials requested by RUS 
have been executed and returned by the Borrower to RUS in form and 
substance satisfactory to RUS.

    Dated: December 19, 2000.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 01-557 Filed 1-8-01; 8:45 am]
BILLING CODE 3410-15-P