[Federal Register Volume 66, Number 247 (Wednesday, December 26, 2001)]
[Rules and Regulations]
[Pages 66293-66295]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31574]



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 Rules and Regulations
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  Federal Register / Vol. 66 , No. 247 / Wednesday, December 26, 2001 / 
Rules and Regulations  

[[Page 66293]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1710

RIN 0572-AB71


Treasury Rate Direct Loan Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Direct final rule.

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SUMMARY: In fiscal year 2001, Congress provided funding to establish a 
Treasury rate direct loan program to address the backlog of qualified 
loan applications for insured municipal rate electric loans from RUS. 
RUS administered the Treasury rate loan program in a manner 
substantially the same as it administered the municipal rate program 
under a Notice of Funding Availability (NOFA) published in the Federal 
Register at 65 FR 80830 on December 22, 2000. Title III of the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2002 authorizes a direct Treasury 
rate electric loan program of $750 million for FY 2002. RUS is amending 
its regulations to establish rules and regulations to administer the 
Treasury rate direct loan program.

DATES: This rule is effective February 11, 2002 unless we receive 
written adverse comments or written notice of intent to submit adverse 
comments on or before January 25, 2002. If we receive such comments or 
notice, we will publish a timely document in the Federal Register 
withdrawing the direct final rule. Comments received will be considered 
under the proposed rule published in this edition of the Federal 
Register in the proposed rule section. 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, Rural Utilities Service, U.S. Department of 
Agriculture, 1400 Independence Ave., SW., STOP 1522, Washington, DC 
20250-1522. RUS suggests a signed original and three copies of all 
comments (7 CFR 1700.4). All comments received will be made available 
for public inspection at room 4030, South Building, Washington, DC, 
between 8 a.m. and 4 p.m. (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Robert O. Ellinger, Chief, Policy 
Analysis and Loan Management Staff, U.S. Department of Agriculture, 
Rural Utilities Service, Electric Program, Room 4041 South Building, 
Stop 1560, 1400 Independence Ave., SW., Washington, DC 20250-1560, 
Telephone: (202) 720-0424, FAX (202) 690-0717, 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 rule meets 
the applicable standards provided in section 3 of the Executive Order. 
In addition, all State and local laws and regulations that are in 
conflict with this rule will be preempted; no retroactive effect will 
be given to this rule; and, in accordance with section 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 before an action against the Department or its agencies 
may be initiated.

Regulatory Flexibility Act Certification

    The Administrator of RUS has determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.). The RUS electric program provides loans and loan guarantees to 
borrowers at interest rates and on terms that are more favorable than 
those generally available from the private sector. RUS borrowers, as a 
result of obtaining federal financing, receive economic benefits that 
exceed any direct economic costs associated with complying with RUS 
regulations and requirements.

Information and Recordkeeping Requirements

    The reporting and recordkeeping requirements contained in this rule 
are currently approved by the Office of Management and Budget (OMB) 
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) 
under control number 0572-0032.

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 sections 202 and 205 of the 
Unfunded Mandates Reform Act of 1995.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this rule will not 
significantly affect the quality of 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, U.S. 
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 and local officials. See the final rule related notice entitled 
``Department Programs

[[Page 66294]]

and Activities Excluded From Executive Order 12372,'' (50 FR 47034) 
advising that RUS loans and loan guarantees are not covered by 
Executive Order 12372.

Background

    Title III of the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 2001 (Pub. L. 
106-387) authorized a direct Treasury rate electric loan program of 
$500 million for FY 2001. On December 22, 2000, a Notice of Funding 
Availability (NOFA) was published in the Federal Register at 65 FR 
80830 announcing the availability of $500 million in direct Treasury 
rate electric loans for fiscal year (FY) 2001. The document described 
the eligibility and submission requirements, the criteria to be used by 
the 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 would exhaust all of the available 
funding.
    With the primary distinction between the established municipal rate 
electric loan program and the Treasury rate electric loan program 
merely one of interest setting methodologies, qualifying applications 
for municipal rate electric loans which were submitted to RUS in 
accordance with 7 CFR part 1710, subpart I, before October 28, 2000, 
were treated as pre-applications for Treasury rate electric loans. RUS 
contacted qualified applicants in the order which they were queued, and 
offered the applicant the opportunity to elect to receive its loan at 
the Treasury rate in lieu of the municipal rate. RUS administered the 
direct Treasury rate program during FY 2001 in a manner substantially 
the same as it administered the municipal rate program.
    General, pre-loan, and post-loan policies and procedures for 
electric loans made by RUS may be found in 7 CFR parts 1710, 1714, and 
1717. It is expected that the continued use of established and highly 
effective electric loan program procedures will enable RUS to continue 
to make prudent loans to qualified applicants. These procedures are 
familiar to both RUS staff and to the applicants and worked well for 
the Treasury rate loan program. Continuing this approach helps assure 
that the funds authorized by Congress are expended in a timely and 
efficient manner as Congress intended. RUS considered using another 
NOFA for FY 2002 but has decided that the continuation of this program 
for the second year makes rulemaking appropriate at this time.
    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. Title III of the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2002 (Pub. L. 107-76) authorizes a 
direct Treasury rate electric loan program of $750 million for FY 2002. 
Congress provided funding for continuation of the Treasury rate direct 
loan program in an effort to meet current and projected demand for 
capital to furnish and improve electric service in rural areas. RUS is 
amending its regulations to establish rules and regulations for use in 
administering the Treasury rate direct loan program.

List of Subjects in 7 CFR Part 1710

    Electric power, Electric utilities, Loan programs-energy, Reporting 
and recordkeeping requirements, Rural areas.


    For the reasons set forth in the preamble, RUS amends 7 CFR Chapter 
XVII as follows:

PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO 
ELECTRIC LOANS AND GUARANTEES

    1. The authority citation for this part 1710 continues to read as 
follows:

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


    2. The subject heading for part 1710 is revised to read as set out 
above.

Subpart B--Types of Loans and Loan Guarantees

    3. Redesignate Sec. 1710.51 as Sec. 1710.52 and add a new 
Sec. 1710.51 to read as follows:


Sec. 1710.51  Direct loans.

    RUS makes direct loans under section 4 of the RE Act.
    (a) General. Except as otherwise modified by this section, RUS will 
make loans under the direct Treasury rate loan program in the same 
manner that it makes loans under the municipal rate program. The 
general and pre-loan policies and procedures for municipal rate 
electric loans made by RUS may be found in this part and 7 CFR part 
1714. Treasury rate electric loans are also governed by such municipal 
rate policies and procedures, except as follows:
    (1) Interest rates. The standard interest rate on direct Treasury 
rate loans will be established daily by the United States Treasury. The 
borrower will select interest rate terms 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 rate terms to final maturity date, if other than 
published by Treasury, will be determined by RUS. Interest rates for 
terms greater than 30 years will be at the 30-year rate. There will be 
no interest rate cap on Treasury rate loans.
    (2) Prepayment. A Treasury rate direct electric loan may be repaid 
at par on its rollover maturity date if there is one. Such a loan, or 
portion thereof, may also be prepaid after it has been advanced for not 
less than two years, at any time prior to its rollover or final 
maturity date at its ``net present value'' (NPV) as determined by RUS.
    (3) Supplemental financing. Supplemental financing will not be 
required in connection with Treasury rate direct electric loans.
    (4) Transitional assistance. A Treasury rate direct loan is not 
available to provide transitional assistance to borrowers.
    (b) 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 will 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 
paragraphs (a) (1) and (2) of this section. All notes will be secured 
in accordance with the terms of 7 CFR part 1718.

Subpart C--Loan Proposes and Basic Policies

    4. In Sec. 1710.102, redesignate paragraphs (b) and (c) as (c) and 
(d) and add a new paragraph (b) to read as follows:


Sec. 1710.102  Borrower eligibility for different types of loans.

* * * * *
    (b) Direct loans under section 4. Direct loans are normally 
reserved for the financing of distribution and subtransmission 
facilities of both distribution and power supply borrowers, including, 
under certain circumstances, the implementation of demand side 
management, energy conservation programs, and on grid and off grid 
renewable energy systems.
* * * * *

[[Page 66295]]

Subpart I--Application Requirements and Procedures for Loans

    5. The heading for Subpart I is revised to read as set out above.

    6. Revise Sec. 1710.401(a)(2)(i) to read as follows:


Sec. 1710.401  Loan application documents.

    (a) * * *
    (2) * * *
    (i) The requested loan type, loan amount, loan term, final maturity 
and method of amortization (Sec. 1710.110(b));
* * * * *

    Dated: December 18, 2001.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 01-31574 Filed 12-21-01; 8:45 am]
BILLING CODE 3410-15-P