[Federal Register Volume 67, Number 195 (Tuesday, October 8, 2002)]
[Proposed Rules]
[Pages 62652-62654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25209]


 ========================================================================
 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. 67, No. 195 / Tuesday, October 8, 2002 / 
Proposed Rules  

[[Page 62652]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Parts 1710 and 1721

RIN 0572-AB79


Extensions of Payments of Principal and Interest

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its 
regulation on extensions of payments of principal and interest, to 
include a maximum interest rate a RUS Borrower can charge on deferments 
for programs relating to consumer loans. The maximum interest rate will 
not be more than 300 basis points above the average interest rate on 
the note(s) being deferred. This limit would allow the Borrower to 
offset all or part of the administrative costs involved. In addition, 
this proposed rule sets forth the procedure for RUS Borrowers to 
request a Section 12(a) extension for distributed generation projects. 
These changes are intended to clarify the procedures Borrowers are to 
follow when requesting extensions of payments of principal and 
interest.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent no later than December 9, 2002.

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 Avenue, 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 Avenue, SW., Washington, DC 20250-1560. 
Telephone (202) 205-3660.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be not significant for the 
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 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, 
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. 6912(e)) 
administrative appeals procedures, if any, 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. Small entities are 
not subjected to any requirements which are not applied equally to 
large entities. 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 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 December 9, 2002.
    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 or 
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.
    OMB Control Number: 0572-0123.
    Type of Request: Revision of a currently approved collection.
    Abstract: 7 CFR 1721, subpart B, sets forth the procedures for 
Borrowers to follow when requesting extensions of principal and 
interest.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 4.34 hours per response.
    Respondents: Not-for-profit institutions, business or other for-
profit.
    Estimated Number of Respondents: 94.
    Estimated Number of Responses per Respondent: 2.
    Estimated Total Annual Burden on Respondents: 816.
    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 request for OMB approval. 
All comments will also become a matter of public record.

[[Page 62653]]

Unfunded Mandates

    This rule contains no Federal mandates (under the regulatory 
provisions 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 sections 202 and 205 of the Unfunded 
Mandates Reform Act.

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 and local officials. See the final rule related notice entitled, 
``Department Programs 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

    On January 9, 2001, at 66 FR 1604, the Rural Utilities Service 
(RUS) published a proposed rule, 7 CFR Part 1721--Extensions of 
Payments of Principal and Interest, which proposed adding procedures 
and conditions under which Borrowers may request extensions of the 
payment of principal and interest. RUS Bulletins 20-5:320-2 and 20-23, 
which previously addressed extensions of principal and interest, were 
rescinded with the publication of the subsequent final rule, which was 
published in the Federal Register on January 4, 2002, at 67 FR 484. RUS 
received comments on the proposed rule from the National Rural Electric 
Cooperative Association (NRECA) recommending RUS consider allowing a 
Borrower to defer principal payments to finance properly coordinated 
distributed generation projects. RUS advised in the final rule that RUS 
agrees with NRECA's recommendation but that the comment could not be 
considered for the regulation under consideration and that it would be 
deferred for a subsequent proposal. RUS now proposes to set forth 
procedures and conditions under which RUS Borrowers may request 
extensions of principal payments to finance distributed generation 
projects. As proposed, the project(s) must be owned by the RUS Borrower 
or the customer who borrows deferred RUS loan funds from the RUS 
Borrower.
    RUS recognizes that distributed generation projects using either 
renewable or non-renewable energy sources properly coordinated and 
dispersed throughout rural electric utility service territories have 
the potential to enhance rural development through the creation of new 
jobs to install, operate, and maintain systems.
    Distributed generation projects strategically dispersed throughout 
a rural electric utility service area, near specific customers or load 
centers, can also be a cost-effective means of providing reliable 
electric service to distribution consumers. However, randomly installed 
distributed generation projects have the potential to negatively impact 
the electric system and to increase overall system costs, especially on 
rural electric distribution systems. RUS proposes to minimize these 
potential negative impacts by limiting individual unit capacity of 
consumer owned distributed generation projects eligible for this 
program. Distributed generation projects to be owned by distribution 
Borrowers would not be limited as proposed because such projects are 
expected to receive a more coordinated planning effort to benefit the 
entire system membership.
    The intent of RUS in promulgating this proposed regulation is to 
create a readily available source of locally controlled financing to 
develop distributed generation projects, that, like the already 
eligible renewable energy projects, are designed and administered to be 
in the best interest of the member of the distribution Borrower, the 
Borrower requesting the deferment, and the local community without 
impairing RUS loan feasibility and security at either the power supply 
or distribution level.
    Renewable energy is considered a type of distributed generation. 
Additional eligibility purposes for renewable energy is included in 7 
CFR 1721.104(c).
    RUS also proposes to establish a maximum interest rate a RUS 
Borrower can charge on deferments for programs relating to consumer 
loans. The maximum interest rate will not be more than 300 basis points 
above the average interest rate on the note(s) being deferred. This 
limit would be used to offset all or part of the Borrower's 
administrative costs.
    7 CFR 1710 is being amended to add a new definition of 
``Distributed generation'' and to remove and replace the definitions of 
``Off-grid renewable energy system,'' ``On-grid renewable energy 
system,'' and ``Renewable energy system.''

List of Subjects

7 CFR Part 1710

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

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 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:

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

Subpart A--General

    2. Amend Sec.  1710.2(a) by adding a new definition of 
``Distributed generation'' in alphabetical order and by revising 
definitions of ``Off-grid renewable energy system,'' ``On-grid 
renewable energy system,'' and ``Renewable energy system'' as follows:


Sec.  1710.2  Definitions and rules of construction.

* * * * *
    Distributed generation is the generation of electricity by a 
sufficiently small electric generating system as to allow 
interconnection of the electric generating system near the point of 
service at distribution voltages or customer voltages including points 
on the customer side of the meter. A distributed generating system may 
be operated in parallel or independent of the electric power system. A 
distributed generating system may be fueled by any source, including 
but not limited to renewable energy sources. A distributed generation 
project may include one or more distributed generation systems.
* * * * *

[[Page 62654]]

    Off-grid renewable energy system is a renewable energy system not 
interconnected to an area electric power system.
    On-grid renewable energy system is a renewable energy system 
interconnected to an area electric power system (EPS) through a 
normally open or normally closed device. It can be interconnected to 
the EPS on either side of a consumer's meter.
* * * * *
    Renewable energy system is an energy conversion system fueled from 
any of the following energy sources: solar, wind, hydropower, biomass, 
or geothermal. Any of these energy sources may be converted to heat or 
electricity. Energy from bio-mass may be converted from any organic 
matter available on a renewable basis, including dedicated energy crops 
and trees, agricultural food and feed crops, agricultural crop wastes 
and residues, wood wastes and residues, aquatic plants, animal wastes, 
municipal wastes, and other waste materials.
* * * * *

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

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

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

Subpart B--Extensions of Payments of Principal and Interest

    4. Amend Sec.  1721.103 by adding paragraph (c) to read as follows:


Sec.  1721.103  Policy.

* * * * *
    (c) The maximum interest rate a RUS Borrower can charge on 
deferments for programs relating to consumer loans, e.g., energy 
resource conservation (ERC) program, contribution-in-aid of 
construction (CIAC), etc., will not be more than 300 basis points above 
the average interest rate on the note(s) being deferred. For example, 
if the RUS Borrower's average interest rate on the note(s) being 
deferred is 5 percent, the RUS Borrower can charge a maximum interest 
rate of 8 percent.
    5. Amend Sec.  1721.104 by;
    a. Revising paragraph (c)(1)(ii);
    b. Redesignating paragraph (d) as (e); and
    c. Adding a new paragraph (d).
    This revision and addition are to read as follows:


Sec.  1721.104  Eligible purposes.

* * * * *
    (c) * * *
    (1) * * *
    (ii) Electric power system interfaces;
* * * * *
    (d) Deferments for distributed generation projects.
    (1) A Borrower may request that RUS defer principal payments to 
enable the Borrower to finance distributed generation projects. Amounts 
deferred under this program can be used to cover costs to install all 
or part of a distributed generation system that:
    (i) The Borrower will own and operate, or
    (ii) The consumer owns, provided the system owned by the consumer 
does not exceed 5KW.
    (2) A distributed generation project may include one or more 
individual systems.
* * * * *
    7. Amend Sec.  1721.105 by redesignating paragraph (d) as (e) and 
by adding a new paragraph (d) to read as follows:


Sec.  1721.105  Application documents.

* * * * *
    (d) Deferments for distributed generation projects. A Borrower 
requesting principal deferments for distributed generation projects 
must submit the following information and approval is also subject to 
any applicable terms and conditions of the Borrower's loan contract, 
mortgage, or indenture:
    (1) A letter from the Borrower's General Manager requesting an 
extension of principal payments for the purpose of financing 
distributed generation projects and describing the details of the 
project, and
    (2) A copy of the board resolution establishing the distributed 
generation projects program.
* * * * *
    8. Amend Sec.  1721.106 by revising the heading of paragraph (b) to 
read as follows:


Sec.  1721.106  Repayment of deferred payments.

* * * * *
    (b) Deferments relating to the ERC loan program, renewable energy 
project(s), distributed generation project(s), and the contribution(s)-
in-aid of construction.
* * * * *

    Dated: September 10, 2002.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 02-25209 Filed 10-7-02; 8:45 am]
BILLING CODE 3410-15-P