[Federal Register Volume 69, Number 54 (Friday, March 19, 2004)]
[Proposed Rules]
[Pages 12989-12992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6167]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1730

RIN 0572-AB92


Electric System Emergency Restoration Plan

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its 
regulations on Electric System Operations and Maintenance to

[[Page 12990]]

establish policy requiring electric program distribution, generation 
and transmission borrowers to expand a currently established Emergency 
Restoration Plan (ERP), or, if no ERP is currently established, to 
create an ERP. The ERP shall detail how the borrower will restore its 
system in the event of a system wide outage resulting from a major 
natural or man made disaster or other causes. The ERP shall include 
preventative measures and procedures for emergency recovery from 
physical and cyber attacks to borrower's electric systems and core 
businesses, and shall also address Homeland Security concerns. This 
additional requirement is not entirely new to borrowers as RUS has 
recommended similar ``plans'' in the past. Both RUS Bulletin 60-7 and 
RUS Bulletin 1730-1 provided language addressing the security of RUS 
borrowers' electric systems.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent no later than May 3, 2004.

ADDRESSES: You may submit comments by any of the following methods:
     E-mail: [email protected]. Include in the 
subject line of the message ``Electric System Emergency Restoration 
Plan.'' The e-mail must identify, in the text of the message, the name 
of the individual (and name of the entity, if applicable) who is 
submitting the comment.
     Mail: Addressed to Richard Annan, Acting 
Director, Program Development and Regulatory Analysis, Rural Utilities 
Service, U. S. Department of Agriculture, 1400 Independence Avenue, 
SW., STOP 1522, Washington, D.C. 20250-1522.
     Hand Delivery/Courier: Addressed to Richard 
Annan, Acting Director, Program Development and Regulatory Analysis, 
Rural Utilities Service, United States Department of Agriculture, 1400 
Independence Avenue, SW., Room 5168-S, Washington, D.C. 20250-1522 RUS 
requires, in hard copy, a signed original and 3 copies of all written 
comments (7 CFR 1700.4). Comments will be available for public 
inspection during normal business hours (7 CFR part 1).

FOR FURTHER INFORMATION CONTACT: John B. Pavek, Chief, Distribution 
Branch, Rural Utilities Service, Electric Program, Room 1256 South 
Building, Stop 1569, 1400 Independence Ave., SW., Washington, DC 20250-
1569, Telephone: 202-720-5082, FAX: 202-720-7491, E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed 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 proposed 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 
titled ``Department Programs and Activities Excluded from Executive 
Order 12372'' (50 FR 47034) advising that rural electrification loans 
and loan guarantees are excluded from the scope of Executive Order 
12372.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this proposed 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 are required, must be 
exhausted before an action against the Department or its agencies may 
be initiated.

Executive Order 13132

    This regulation will not have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on distribution of power and responsibilities among the 
various levels of government. Under Executive Order 13132, this rule 
does not have sufficient federalism implications to require preparation 
of a Federalism Assessment.

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 the law to 
publish a notice of proposed rulemaking with request to the subject 
matter of this rule.

Information Collection and Recordkeeping Requirements

    This rule contains no additional information collection or 
recordkeeping requirements under OMB control number 0572-0025 that 
would require approval under the Paperwork Reduction Act of 1995 (44 
U.S.C. chapter 35).

Unfunded Mandates

    This proposed rule contains no Federal mandates (under the 
regulatory provision of the Unfunded Mandates Reform Act of 1995 (2 
U.S.C. Chapter 25)) for State, local, and tribal governments or the 
private sector. Thus, this proposed 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 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 No. 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.

Background

    Electric power systems have been identified in Presidential 
Decision Directive (PDD-63) as one of the critical infrastructures of 
the United States. The term ``critical infrastructure'' is defined in 
section 1016(e) of the USA Patriot Act of 2001 (42 U.S.C. 5195c(e)) as 
``systems and assets, whether physical or virtual, so vital to the 
United States that the incapacity or destruction of such systems and 
assets would have a debilitating impact on security, national economic 
security, national public health or safety, or any combination of those 
matters.'' The United States electric power system consists of the 
generation of energy and the transmission and distribution of energy 
(collectively comprising the electric grid). The other critical 
infrastructures identified in PDD-63 are all dependant to some degree 
upon the electric power system. Damage to or loss of critical or 
significant parts of the U.S. electric power system can cause enormous 
damage to the environment, loss of life, economic loss and can affect 
the national security of the United States.

[[Page 12991]]

Such damage or loss can be caused by an act of nature or an act by man, 
ranging from an accident to an act of terrorism. Of particular concern 
are physical and cyber threats from terrorists.
    Protecting America's critical infrastructure is the shared 
responsibility of Federal, state, and local government, in active 
partnership with the private sector. Homeland Security Presidential 
Directive /Hspd-7 established a national policy for Federal departments 
and agencies to identify and prioritize United States critical 
infrastructure and key resources and to protect them from terrorist 
attacks. The Department of Homeland Security's Directorate of 
Information Analysis and Infrastructure Protection (IAIP) is the lead 
organization in coordinating the national effort to secure the nation's 
critical infrastructure. This IAIP function will give state, local, and 
private entities one primary contact instead of many for coordinating 
protection activities within the Federal government, including 
vulnerability assessments, strategic planning efforts, and exercises. 
RUS and, most importantly, RUS electric borrowers must be diligently 
proactive in electric infrastructure security.
    RUS is uniquely coupled with the electric infrastructure of rural 
America and its electric borrowers serving rural America. A substantial 
portion of the electric infrastructure of the United States resides in, 
and is maintained by, rural America. To ensure that the electric 
infrastructure in rural America is adequately protected, RUS is 
instituting the requirement that all electric borrowers conduct a 
vulnerability and risk assessment of their respective systems and 
utilize the results of this assessment to enhance a current ERP or, if 
none exists, develop and maintain an ERP. Prior to approving any RUS 
grant, loan or loan guarantee, borrowers will have to demonstrate that 
they have an ERP.
    The vulnerability and risk assessment is utilized to identify 
assets and infrastructure owned or served by the electric utility, 
determine the criticality and risk level associated with such assets 
and infrastructure, identify threats, depict vulnerabilities, if any, 
review existing mitigation procedures, assist in the development of new 
and additional mitigation procedures, if necessary, and perform a risk 
versus cost analysis. The ERP will provide written procedures detailing 
response and restoration efforts in the event of a major system outage 
resulting from a natural or man made disaster. An annual Exercise of 
the ERP will ensure operability, employee competency and serve to 
identify and correct deficiencies in the existing ERP. For the purpose 
of this regulation, ``Exercise'' means a borrower's tabletop execution 
of, or actual implementation of, the ERP to verify the operability of 
the ERP. Such Exercise may be implemented singly by an individual 
borrower or, as a participant in a multi-party (State, County, utility 
or combination thereof) tabletop execution or actual implementation of 
the ERP. For the purpose of this regulation, ``Tabletop'' means a 
hypothetical emergency response scenario in which participants will 
identify the policy, communication, resources, data, coordination, and 
organizational elements associated with an emergency response. The 
Exercise must, at a minimum, verify:
    1. Operability of alert and notification systems;
    2. Efficacy of plan;
    3. Employee competency of procedures;
    4. Points of contact (POC) of key personnel, both internally and 
externally; and
    5. Contact numbers of POC.

List of Subjects in 7 CFR Part 1730

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

    For the reasons set forth in the preamble, chapter XVII of title 7 
of the Code of Federal Regulations, RUS proposes to amend part 1730 as 
follows:

PART 1730--ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE

    1. The authority citation for part 1730 continues to read as 
follows:

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

Subpart B--Operations and Maintenance Requirements

    2. Section 1730.20 is revised to read as follows:


Sec.  1730.20  General.

    Each distribution borrower and power supply borrower shall operate 
and maintain its system in compliance with prudent utility practice, in 
compliance with its loan documents, and in compliance with all 
applicable laws, regulations and orders, shall maintain its systems in 
good repair, working order and condition, and shall make all needed 
repairs, renewals, replacements, alterations, additions, betterments 
and improvements, in accordance with applicable provisions of the 
borrower's security instrument. Each borrower is responsible for on-
going operations and maintenance programs, performing a system security 
vulnerability and risk assessment, establishing and maintaining an 
Emergency Restoration Plan (ERP), maintaining records of the physical 
and electrical condition and security of its electric system and for 
the quality of services provided to its customers. The borrower is also 
responsible for all necessary inspections and tests of the component 
parts of its system, and for maintaining records of such inspections 
and tests. Each borrower shall budget sufficient resources to operate 
and maintain its system and annually exercise its ERP in accordance 
with the requirements of this part. For portions of the borrower's 
system that are not operated by the borrower, if any, the borrower is 
responsible for ensuring that the operator is operating and maintaining 
the system properly in accordance with the operating agreement.
    3. Section 1730.21 is amended by:
    a. Revising paragraph (a) and
    b. Adding to the end of the first sentence in paragraph (c), ``or 
has been determined as a critical component of national security.''
    The revision reads as follows:


Sec.  1730.21  Inspections and tests.

    (a) Each borrower shall conduct all necessary inspections and tests 
of the component parts of its electric system, annually exercise its 
emergency restoration plan, and maintain adequate records of such 
inspections and tests. ``Exercise'' means a borrower's Tabletop 
execution of, or actual implementation of, the ERP to verify the 
operability of the ERP. Such Exercise may be implemented singly by an 
individual borrower or, as a participant in a multi-party (State, 
County, utility or combination thereof) Tabletop execution or actual 
implementation of the ERP. ``Tabletop'' means a hypothetical emergency 
response scenario in which participants will identify the policy, 
communication, resources, data, coordination, and organizational 
elements associated with an emergency response.
* * * * *
    4. Section 1730.22 is amended by revising paragraph (a) and 
paragraph (b) introductory text to read as follows:


Sec.  1730.22  Borrower analysis.

    (a) Each borrower shall periodically analyze and document its 
security, operations and maintenance policies, practices, and 
procedures to determine if they are appropriate and if they are being 
followed. The records of inspections and tests are also to be reviewed 
and analyzed to identify any

[[Page 12992]]

trends which could indicate deterioration in the physical condition or 
the operational effectiveness of the system or suggest a need for 
changes in security, operations or maintenance policies, practices and 
procedures. For portions of the borrower's system that are not operated 
by the borrower, if any, the borrower's written analysis would also 
include a review of the operator's performance under the operating 
agreement.
    (b) When a borrower's security, operations and maintenance 
policies, practices, and procedures are to be reviewed and evaluated by 
RUS, the borrower shall:
* * * * *
    5. Section 1730.26 is amended by:
    a. Revising the section title;
    b. Designating the text as paragraph (a) and adding a paragraph 
heading; and
    c. Adding a new paragraph (b).
    This redesignation and addition are to read as follows:


Sec.  1730.26  Certification.

    (a) Engineer's certification. * * *
    (b) Emergency Restoration Plan certification. If the self-
certification of an ERP and vulnerability and risk assessment are not 
received prior to completion of the loan approval process, approval of 
the loan will not be considered until the certifications are received 
by RUS.
    5. Sections 1730.27 and 1730.28 are added to read as follow:


Sec.  1730.27  Vulnerability and risk assessment.

    (a) Each borrower shall perform an initial and periodic 
vulnerability and risk assessment of its electric system and maintain 
adequate records of such assessments.
    (b) The borrower vulnerability and risk assessment is to be 
utilized by the borrower to assist in identifying critical facilities 
and business operational assets, the exposure of these identified 
facilities and assets to harm via natural or manmade acts, and methods 
or methodology to mitigate the exposure to harm.
    (c) The vulnerability and risk assessment shall include, but not be 
limited to, identifying:
    (1) Critical assets or infrastructure served by the borrowers' 
electric system that are identified as elements of national security;
    (2) Critical asset components and elements unique to the RUS 
borrowers system;
    (3) External system impacts (interdependency) with loss of 
identified system components;
    (4) Threats to facilities and assets identified in paragraphs 
(c)(1) or (2) of this section; and
    (5) Criticality and risk level of the borrowers system.


Sec.  1730.28  Emergency Restoration Plan (ERP).

    (a) Each borrower shall have a written ERP. The ERP should be 
developed by the borrower through the borrower's unique knowledge of 
its system, prudent utility practices and the borrower's completed 
vulnerability and risk assessment. The ERP shall include, but not be 
limited to:
    (1) A list of key contact emergency numbers (emergency agencies, 
borrower management and other key personnel, contractors and equipment 
suppliers, other utilities, and others that might need to be reached in 
an emergency);
    (2) A list of key utility management and other personnel and 
identification of a chain of command and delegation of authority and 
responsibility during an emergency;
    (3) Procedures for recovery from loss of power to the headquarters, 
key offices, and/or operation center facilities.
    (4) A Business Continuity Section describing a plan to maintain or 
re-establish business operations following an event which disrupts 
business systems (computer, financial, and other business systems).
    (b) The ERP must be approved and signed by the borrower's manager 
or chief executive officer and approved by the Board of Directors, as 
applicable.
    (c) Copies of the most recent approved ERP must be made readily 
available to key personnel at all times.
    (d) The ERP shall be Exercised at least annually to ensure 
operability and employee familiarity.
    (e) If modifications are made to an existing ERP:
    (1) The modified ERP must be prepared in compliance with the 
provisions of paragraphs (b) and (c) of this section; and
    (2) Additional Exercises will be necessary to maintain employee 
operability and familiarity.
    (f) Each borrower shall maintain records of such Exercises.

    Dated: March 8, 2004.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 04-6167 Filed 3-18-04; 8:45 am]
BILLING CODE 3410-15-P