[Federal Register Volume 67, Number 225 (Thursday, November 21, 2002)]
[Rules and Regulations]
[Pages 70150-70151]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29598]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1710

RIN 0572-AB65


Demand Side Management and Renewable Energy Systems

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Utilities Service (RUS) is removing its regulations 
which detail separate policies and requirements for loans for renewable 
energy systems and demand side management. Many of these requirements 
overlap provisions found elsewhere in part 1710. Others do not seem 
well suited for the smaller scale projects of this type that are 
becoming increasingly common in the industry. RUS believes that it is 
more appropriate to consider such small scale projects in this rapidly 
developing segment of the energy industry by proceeding on a case-by-
case basis. By contrast, the balance of part 1710 affords a useful 
framework for considering utility-scale energy projects without regard 
to whether they are for demand side management or renewable resources.

EFFECTIVE DATES: November 21, 2002.

FOR FURTHER INFORMATION CONTACT: Georg A. Shultz, Chief, Energy 
Forecasting Branch, Electric Staff Division, Rural Utilities Service, 
U.S. Department of Agriculture, Stop 1569, 1400 Independence Ave., SW., 
Washington, DC 20250-1569. Telephone: (202) 720-1921. FAX: (202) 720-
7491. E-mail: [email protected].

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 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 were 
not covered by Executive Order 12372.

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 appeal procedures, if any are required, must be

[[Page 70151]]

exhausted before an action against the Department or its agencies.

Regulatory Flexibility Act Certification

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule since the Rural Utilities Service is not 
required by 5 U.S.C. 551 et seq. or any other provision of law to 
publish a notice of proposed rulemaking with respect to the subject 
matter of this rule.

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 No. 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.

Information Collection and Recordkeeping Requirements

    This rule contains no information collection or recordkeeping 
requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35).

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 sections 202 and 205 of the Unfunded 
Mandates Reform Act.

Background

    The Rural Utilities Service (RUS) is removing from part 1710 of its 
regulations entitled ``General and Pre-Loan Policies and Procedures'' 
subpart H thereof, which separately treats demand side management and 
renewable energy systems. Subpart H has seldom been used. Since it was 
first promulgated in 1994, RUS has averaged less than one of these 
loans a year. More recently, changes in the energy industry and 
technological advances have produced increased interest in utilizing 
these approaches for smaller scaled projects and projects employing 
innovative technologies. However, subpart H with its requirements for 
such things as integrated resource plans (IRP's) and demand side 
management plans present formidable barriers for the development of 
smaller projects. Furthermore, the usefulness of such traditional 
analytical devices in today's radically changed energy industry has 
become questionable. In addition, projects of this sort often possess 
unique attributes that make the application of detailed regulations 
impractical and sometimes even counterproductive. For example, subpart 
H precludes the use of innovative technologies. See 7 CFR 1710.351(a) 
and 1710.353. For all of these reasons, RUS believes that subpart H has 
become unjustified and unnecessary as a result of changed circumstances 
and should be removed or substantially revised.
    After considering the low volume of loan requests RUS receives 
annually for these loans, the disparate nature of the projects that can 
be characterized as demand side management or renewable energy systems, 
and the rapidly evolving nature of this industry, RUS has determined 
that the removal of subpart H is the better alternative. Accordingly, 
RUS will proceed case-by-case in considering requests for demand side 
management and renewable energy system loans.
    RUS expects that utility scale projects will continue to conform to 
the remaining provisions of part 1710 establishing its general and pre-
loan policies and procedures. RUS recognizes that the particular 
circumstances of an individual project may necessitate adjustments in 
the application or interpretation of its general polices and procedures 
to specific demand side management or renewable energy systems loans 
regardless of scale. The Administrator may, of course, waive or reduce 
any requirement imposed by part 1710 by resorting to the exception 
authority contained in the rule itself. See 7 CFR 1710.4. In light of 
their rarity so far, RUS anticipates that it may be necessary to 
interpret the application of part 1710 to utility scale demand side 
management and renewable energy system loans on a somewhat frequent 
basis at first. RUS will treat small-scale projects as pilot projects 
for which the remainder of part 1710 will serve merely as guidance. As 
used in this rule, ``small scale project'' refers to projects 
requesting loans less than $5 million or generating less than 10 MW 
(nameplate rating). ``Utility scale project'' refers to everything 
else.
    As RUS acquires greater experience with loans for demand side 
management and renewable energy systems, it may reissue regulations on 
this subject in the event that the volume of loans requests or the 
number of recurring issues raised warrant it. Accordingly, subpart H is 
being reserved.
    A proposed rule was issued April 25, 2001, at 66 FR 20759, inviting 
comments this action. The comment period for this proposed rule ended 
May 25, 2001. Only one comment was received. The Regulatory Flexibility 
Act Certification discussion has been modified in the Supplementary 
Information section of this final rule to respond to the comment. No 
changes where made to the text of the rule from that as proposed.

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, part 1710, as follows:

PART 1710--GENERAL AND PRELOAN POLICIES AND PROCEDURES COMMON TO 
INSURED AND GUARANTEED ELECTRIC LOANS

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

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

Subpart H--Demand Side Management and Renewable Energy Systems


Sec. Sec.  1710.350-1710.363 (Subpart H)  [Removed and Reserved]

    2. Remove and reserve subpart H.

    Dated: November 13, 2002.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 02-29598 Filed 11-20-02; 8:45 am]
BILLING CODE 3410-15-P