[Federal Register Volume 68, Number 123 (Thursday, June 26, 2003)]
[Rules and Regulations]
[Pages 37952-37954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16041]


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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: Final rule.

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SUMMARY: The Rural Utilities Service (RUS) is amending 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 
regulation will set 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: This rule will become effective on July 28, 2003.

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

    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 matter of 
this rule.

Information Collection and Recordkeeping Requirements

    The reporting and recordkeeping requirements contained in this rule 
have been approved by the Office of Management and Budget (OMB) 
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) 
under OMB control number 0572-0123.

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 October 8, 2002, at 67 FR 62652, the Rural Utilities Service 
(RUS) published a proposed rule, 7 CFR parts 1710 and 1721, 
``Extensions of Payments of Principal and Interest,'' which proposed to 
amend its regulation on extensions of payment 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, the proposed rule set forth the procedure for RUS Borrowers 
to request a section 12(a) extension for distributed generation 
projects. These changes were intended to clarify the procedures 
Borrowers are to follow when requesting extensions of payments of 
principal and interest.
    Written comments on the proposed rule were received and they are 
summarized as follows:

[[Page 37953]]

    RUS received comments dated December 4, 2002, from the National 
Rural Electric Cooperative Association (NRECA) and Central Electric 
Power Cooperative (CEPC), December 6, 2002, from Sandia National 
Laboratories (Sandia), and December 9, 2002, from Denetsosie Law Office 
on behalf of the Navajo Tribal Utility Authority (NTUA).
    NRECA recommended that RUS amend Sec. Sec.  1721.101(b) and 
1721.106(a) to clarify the language and ensure that it is consistent by 
removing the reference to principal in the first sentence of these two 
sections. RUS should also remove the reference to ``level payment'' in 
Sec.  1721.101(b). These changes would make the language consistent and 
would help to eliminate questions regarding repayment of deferred 
payments. RUS agrees with these comments and has made the change to the 
final rule wording under Sec. Sec.  1721.101(b) and 1721.106(a).
    NRECA, Sandia, and NTUA recommend revising the definition of ``Off-
grid renewable energy system'' and NRECA and CEPC recommend revising 
the definition of ``Renewable energy systems,'' both to be more 
detailed. RUS is in agreement with these recommendations and has made 
the changes to the final rule wording under Sec.  1710.2.
    In addition, CEPC recommended that RUS give examples of the types 
of fuel that could qualify as renewable and stated it would also be 
beneficial to define the term ``Green Power.'' RUS determined that the 
definition is clearly inclusive of all types of biomass including the 
examples recommended by CEPC, so no change was made. CEPC also 
recommended that RUS define Green Power so those organizations that 
offer Green Power as part of an energy portfolio could do so with 
certainty regarding acceptable green fuel types to that make a part of 
their energy mix. RUS did not define the term ``Green Power'' in its 
definitions. The definition of Green Power would require a new 
rulemaking. Renewable energy is considered a type of distributed 
generation. Additional eligibility purposes for renewable energy are 
included in 7 CFR 1721.104(c).
    There was a typographical error in Sec.  1710.2, On-grid renewable 
energy system, definition. The word ``consumer's'' in the second 
sentence has been corrected to ``customer's''.

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.


0
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

0
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

0
2. Amend Sec.  1710.2(a) by adding a new definition of ``Distributed 
generation'' in alphabetical order and by revising the 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 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.
* * * * *
    Off-grid renewable energy system is a renewable energy system not 
interconnected to an area electric power system (EPS). An off-grid 
renewable energy system in areas without access to an area EPS may 
include energy consuming devices and electric wiring to provide for 
more effective or more efficient use of the electricity produced by the 
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 customer'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, provided heat is a by-product of electricity generation. 
Non-renewable energy sources may be used by a renewable energy system 
for incidental and necessary means such as, but not limited to, system 
start up, flame stabilization, continuity of system processes, or 
reduction of the moisture content of renewable fuels. 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

0
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

0
4. Amend Sec.  1721.101 by revising paragraph (b) to read as follows:


Sec.  172.101  General.

* * * * *
    (b) The total amount of interest that has been deferred, including 
interest on deferred principal, will be added to the principal balance, 
and the total amount of principal and interest that has been deferred 
will be reamortized over the remaining life of the applicable note 
beginning in the first year the deferral period ends.
* * * * *

0
5. 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

[[Page 37954]]

RUS Borrower can charge a maximum interest rate of 8 percent.

0
6. Amend Sec.  1721.104 by:

0
A. Revising paragraph (c)(1)(ii);

0
B. Redesignating paragraph (d) as (e); and

0
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.
* * * * *

0
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.
* * * * *

0
8. Amend Sec.  1721.106 by revising paragraph (a) and the heading of 
paragraph (b) to read as follows:


Sec.  1721.106  Repayment of deferred payments.

    (a) Deferments relating to financial hardship. The total amount of 
interest that has been deferred, including interest on deferred 
principal, will be added to the principal balance, and the total amount 
of principal and interest that has been deferred will be reamortized 
over the remaining life of the applicable note beginning in the first 
year the deferral period ends. For example: the amount of interest 
deferred in years 2003, 2004, 2005, 2006, and 2007, will be added to 
the principal balance and reamortized over the life of the applicable 
note for repayment starting in year 2008.
    (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: May 30, 2003.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 03-16041 Filed 6-25-03; 8:45 am]
BILLING CODE 3410-15-P