[Federal Register Volume 69, Number 196 (Tuesday, October 12, 2004)]
[Rules and Regulations]
[Pages 60537-60542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-22779]


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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: Final rule.

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SUMMARY: The Rural Utilities Service (RUS), an agency delivering the 
U.S. Department of Agriculture's Rural Development Utilities Programs, 
is amending its regulations on Electric System Operations and 
Maintenance to require 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 manmade disaster or other causes. The ERP shall include 
preventative measures and procedures for emergency recovery from 
physical and cyber attacks to the 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. RUS Bulletin 1730-1, 
``Electric System Operation and Maintenance (O&M),'' provides language 
addressing the security of RUS borrowers' electric systems.

DATES: This rule is effective October 12, 2004. Borrowers of RUS loan 
funds will have until July 12, 2005 to certify that they have performed 
a Vulnerability and Risk Assessment, and January 12, 2006 to certify 
that they have an ERP. The completion of the first Exercise of the ERP 
must occur on or before January 12, 2007.

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: 

[[Page 60538]]

Executive Order 12866

    This final 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 final 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 final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this final 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, Federalism

    The policies contained in this rule do not have any substantial 
direct effect on states, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with states is not required.

Regulatory Flexibility Act Certification

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

Information Collection and Bookkeeping Requirements

    In accordance with 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). These requirements have been approved by emergency 
clearance under OMB Control Number 0572-0140.
    Comments on this notice must be received by December 13, 2004.
    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 on 
other forms of information technology.
    Comments may be sent to: Dawn Wolfgang, Program Development and 
Regulatory Analysis, Rural Utilities Service, U.S. Department of 
Agriculture, 1400 Independence Ave., SW., Room 5166-South, STOP 1522, 
Washington, DC 20250-1522. Fax: (202) 720-4120. E-mail: 
[email protected].
    Title: Electric System Emergency Restoration Plan.
    OMB Control Number: 0572-0140.
    Type of Request: Request for approval of a currently approved 
information collection.
    Abstract: Electric power systems have been identified in 
Presidential Decision Directive 63 (PDD-63), May 1998, 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.'' 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 and economic 
loss and can affect the national security of the United States. Such 
damage or loss can be caused by acts of nature or human acts, 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 7 (HSPD-7), December 2003, 
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. America's open 
and technologically complex society includes a wide array of critical 
infrastructure and key resources that are potential terrorist targets. 
The majority of these are owned and operated by the private sector and 
State or local governments. These critical infrastructures and key 
resources are both physical and cyber-based and span all sectors of the 
economy. 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 current electric 
borrowers enhance an existing ERP or, if none exists, develop and 
maintain an ERP.
    Title 7 CFR Part 1730, Electric System and Maintenance, establishes 
a requirement for electric program distribution, generation, and 
transmission borrowers to develop an ERP or expand an existing ERP and 
to provide RUS with a written certification that they have an ERP based 
upon a VRA.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 30 minutes per response.
    Respondents: Not for profit.
    Estimated Number of Respondents: 676.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 338 hours.
    Copies of this information collection can be obtained from Dawn 
Wolfgang, Program Development and Regulatory Analysis, Rural Utilities 
Service at (202) 720-0812.
    All responses to this notice will be summarized and included in the 
request for OMB approval. All comments will also become a matter of 
public record.

Unfunded Mandates

    This final rule contains no Federal mandates under the regulatory 
provision of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. Chapter 
25) pursuant to exceptions therein for State, local, and tribal 
governments or the private sector.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this final rule will 
not significantly affect the quality of the

[[Page 60539]]

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 final 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

    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.'' 
Electric power systems have been identified in Presidential Decision 
Directive 63 (PDD-63), May 1998, as one of the critical infrastructures 
of the United States.
    The United States electric power system (electric power system) 
consists of three distinct components: Generation facilities, 
transmission facilities (including bulk transmission and 
subtransmission facilities) and distribution facilities. Specific 
definitions of generation, transmission and distribution facilities are 
located in 7 CFR 1710.2. The other critical infrastructures identified 
in PDD-63 are all dependant to some degree upon the full and continuous 
functioning of the electric power system. Damage to or loss of critical 
or significant parts of the electric power system can cause enormous 
damage to the environment, loss of life and economic loss and can 
affect the national security of the United States. Such damage or loss 
to the electric power system can be caused by acts of nature or human 
acts, ranging from an accident to an act of terrorism. Of particular 
concern are physical and cyber threats from terrorists.
    RUS borrowers have always had a duty to RUS to maintain their 
respective systems. In performing this duty, a borrower furthers the 
purposes of the Rural Electrification Act of 1936, as amended (7 U.S.C. 
901 et seq.) while also preserving the value of its system to serve as 
collateral for repayment of RUS assistance. Generally speaking, the 
scope of this duty is frequently measured against prudent utility 
practices. Thus, it is entirely appropriate for RUS to expect that its 
borrowers will be aware of and following developing standards for 
private sector emergency preparedness and business continuity. A 
voluntary standard is emerging within the private sector and the 
requirements of this final rule are consistent with that standard. The 
latest evidence of the emerging standards in this area may be found on 
page 398 of the Final Report of the National Commission on Terrorist 
Attacks upon the United States (the ``Commission'') issued on July 22, 
2004 (the ``9/11 Report'').
    The 9/11 Report notes that the Commission asked the American 
National Standards Institute (``ANSI'') to develop a consensus on a 
``National Standard of Preparedness'' for the private sector. As a 
result of public sessions, ANSI recommended that the Commission endorse 
a voluntary National Preparedness Standard based on the existing 
American National Standard on Disaster/Emergency Management and 
Business Continuity Programs (``NFPA 1600''). The Commission has done 
so and it has also explicitly encouraged the insurance and credit 
rating industries to look closely at a company's compliance with the 
ANSI standard in assessing its insurability and creditworthiness. The 
Commission wrote: ``We believe that compliance with the standard should 
define the standard of care owed by a company to its employees and the 
public for legal purposes.''
    The RUS purpose in referring to these recent developments is not to 
suggest that RUS borrowers must comply with NFPA 1600. However, RUS 
does wish to call attention to the fact that this final rule is being 
issued at a time when there appears to be a widespread recognition that 
emergency preparedness and business continuity is ``a cost of doing 
business in the post-9/11 world,'' and thus properly the concern of the 
rural utility sector and of RUS as a major provider of financing to 
this sector.
    A substantial portion of the electric infrastructure of the United 
States is located, and maintained by, rural America. To ensure that the 
electric infrastructure in rural America is adequately protected, and 
that security for RUS electric loans is adequately maintained and 
protected, RUS is instituting the requirement that all current electric 
borrowers conduct a Vulnerability and Risk Assessment (VRA) of their 
respective systems and utilize the results of this assessment to 
enhance an existing ERP or, if none exists, develop and maintain an 
ERP. Prior to approving any new RUS electric program grant, loan or 
loan guarantee, applicants will have to demonstrate that they have an 
ERP.
    The VRA is utilized to identify specific assets and infrastructure 
owned or served by the electric utility, determine the criticality and 
risk level associated with such assets and infrastructure including a 
risk versus cost analysis, identify threats and vulnerabilities, if 
any, review existing mitigation procedures, and assist in the 
development of new and additional mitigation procedures, if necessary. 
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 and employee competency and serve to identify and 
correct deficiencies in the existing ERP. This final rule defines 
``Exercise'' to mean a borrower or borrowers' participation in a 
tabletop execution of, or actual implementation of, the ERP to verify 
the operability of the ERP. The Exercise may be implemented singly by 
an individual borrower, or by an individual borrower as a participant 
in a multi-party (to include utilities, government agencies and other 
participants or combination thereof) tabletop execution or actual 
implementation of the ERP. This final rule defines ``Tabletop'' to mean 
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 with ERP procedures;
    4. Points of contact (POC) of key personnel, both internally and 
externally; and
    5. Contact numbers for POCs.
    On March 19, 2004, RUS published a proposed rule in the Federal 
Register, at 69 FR 12989, which proposed to require electric program 
distribution, generation and transmission borrowers to expand a 
currently established ERP, or if no ERP is currently established, to 
create an ERP in accordance with 7 CFR part 1730.
    RUS received 13 letters and one e-mail on this proposed rule by the 
comment deadline of May 3, 2004. Comments were received from 
Enervision, Inc., Gascosage Electric

[[Page 60540]]

Cooperative, North Dakota Association of Rural Electric Cooperatives, 
the National Rural Electric Cooperative Association, Wheller, Van 
Sickle & Associates, S.C. on behalf of Dairyland Power, Alabama Rural 
Electric Association of Cooperatives, Association of Electric 
Cooperatives of Virginia, Maryland and Delaware, Arkansas Electric 
Cooperative Corporation, Sunflower Electric Power Corporation, South 
Dakota Rural Electric Cooperative Association, Carroll Electric 
Membership Corporation, Great River Energy, Tri-State Generation & 
Transmission Association, Inc. and the Electric Cooperatives of South 
Carolina, Inc. Ninety three percent of the respondents supported the 
revision to 7 CFR part 1730, which requires electric program 
distribution, generation and transmission borrowers to establish and 
annually exercise an ERP.
    One respondent did not support the proposed rule. The basis for its 
opposition was that, due to the small size of the utility, 
recordkeeping would strain the existing workforce. The respondent 
stated that it has already established an Emergency and Disaster Plan 
that effectively details guidelines for restoring its system should a 
disaster occur, provides preventative measures to preclude such an 
event and incorporates Homeland Security issues.
    RUS believes that, like the respondent above, most utilities 
already have a similar plan in place, commonly referred to as a storm 
plan, and that the final rule will only require a modification of such 
plans. Borrowers will only have to modify their existing plan to add 
those items identified in Sec.  1730.28 that they have not already 
incorporated. There is not a significant amount of additional 
recordkeeping required. Section 1730.22, ``Borrower Analysis'' details 
the requirements for records of inspection which includes RUS Form 300, 
``Review Rating Summary,'' on which a borrower indicates that it has an 
ERP. The self-certification of completion of a VRA and ERP can be 
completed in simple letter form as outlined in Sec.  1730.26(b) of the 
final rule. This self-certification letter will be the only document 
submitted to and maintained by RUS with respect to the VRA and ERP.
    While the overall comments received from the remainder of the 
respondents were generally favorable, there were requests for 
additional clarification on the following items:
    1. Timeframe for implementation.
    2. Criteria for identification of critical assets (utility critical 
and National critical).
    3. Requirements for self-certification.
    4. Can borrowers collectively develop an ERP and exercise such ERP 
jointly?
    Additionally, there were a few specific questions regarding RUS' 
relationship with the North American Electric Reliability Council 
(NERC) and any possible contradiction to NERC requirements or other 
agencies that have a certain degree of responsibility in the electric 
sector such as the Nuclear Regulatory Commission (NRC). There were 
additional suggested requests that involved items to be included in a 
guide bulletin to assist RUS borrowers to comply with the proposed 
regulation.
    RUS provided the clarifications requested on the timeframe for 
implementation and, as requested, extended the timeframe to complete a 
VRA. RUS also provided explicit language regarding the basis for 
identification of critical assets or infrastructure identified as 
elements of national security, provided detailed instructions for self-
certification, and acknowledges that the ERP may be developed jointly 
by electric utilities. Further, RUS acknowledges that the annual 
exercise of an ERP may be conducted by a borrower as a participant in a 
multi-party exercise. RUS agrees with the comments regarding the 
creation of a guide bulletin which shall include a discussion of RUS' 
relationship with NERC. A guide bulletin is being developed by RUS and 
will be made available to electric borrowers to assist in implementing 
the requirements of the final rule. Nothing in this final rule 
supercedes any requirements imposed or dictated by the Nuclear 
Regulatory Commission (NRC).

List of Subjects in 7 CFR Part 1730

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

0
For the reasons set forth in the preamble, chapter XVII of title 7 of 
the Code of Federal Regulations, part 1730, is amended to read follows:

PART 1730--ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE

0
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

0
2. Section 1730.20 is revised to read as follows:


Sec.  1730.20  General.

    Each electric program distribution, transmission and generation 
borrower (as defined in Sec.  1710.2) 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, individually or regionally 
performing a system security Vulnerability and Risk Assessment (VRA), 
establishing and maintaining an Emergency Restoration Plan (ERP), 
maintaining records of the physical, cyber 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. An actual manmade or natural event on the 
borrowers system in which a borrower utilizes a significant portion of 
its ERP shall count as an annual exercise for that calendar year, 
provided that after conclusion of the event, the borrower verifies 
accuracy of the emergency points-of-contact (POC) and the associated 
contact numbers as listed in their ERP. 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.

0
3. Section 1730.21 is amended by revising paragraphs (a) and (c) to 
read 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 
ERP, and maintain records of such inspections and tests. For the 
purpose of this part, ``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 performed singly by an 
individual borrower, or as an active participant in a multi-party (to 
include utilities, government agencies and other participants or 
combination thereof) Tabletop execution or actual

[[Page 60541]]

full implementation of the ERP. For the purpose of this part, 
``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.
* * * * *
    (c) Inspections of facilities must include a determination of 
whether the facility complies with the National Electrical Safety Code, 
National Electrical Code (as applicable), and applicable State or local 
regulations and whether additional security measures are considered 
necessary to reduce the vulnerability of those facilities which, if 
damaged or destroyed, would severely impact the reliability and 
security of the electric power grid, cause significant risk to the 
safety and health of the public and/or impact the ability to provide 
service to consumers over an extended period of time. The electric 
power grid, also known as the transmission grid, consists of a network 
of electrical lines and related facilities, including certain 
substations, used to connect distribution facilities to generation 
facilities, and includes bulk transmission and subtransmission 
facilities as defined in Sec.  1710.2 of this title. Any serious or 
life-threatening deficiencies shall be promptly repaired, disconnected, 
or isolated in accordance with applicable codes or regulations. Any 
other deficiencies found as a result of such inspections and tests are 
to be recorded and those records are to be maintained until such 
deficiencies are corrected or for the retention period required by 
paragraph (b) of this section, whichever is longer.

0
4. Section 1730.22 is amended by revising paragraph (a) and paragraph 
(b) introductory text to read as follow:


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 trends which could indicate deterioration 
in the physical or cyber 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:
* * * * *

0
5. Section 1730.26 is amended by:
0
A. Revising the section heading;
0
B. Designating the text as paragraph (a) and adding a paragraph 
heading; and
0
C. Adding a new paragraph (b).
    These additions are to read as follows:


Sec.  1730.26  Certification.

    (a) Engineer's certification. * * *
    (b) Emergency Restoration Plan certification. The borrower's 
Manager or Chief Executive Officer shall provide written certification 
to RUS stating that a VRA has been satisfactorily completed that meets 
the criteria of Sec.  1730.27 (a), (b), (c), or (d), as applicable and 
Sec.  1730.27(e)(1) through (e)(8), and that the borrower has an ERP 
that meets the criteria of Sec.  1730.28 (a), (b), (c), or (d), as 
applicable, and Sec.  1730.28 (e), (f), and (g). The written 
certification shall be in letter form. Applicants for new RUS electric 
loans, loan guarantees or grants shall include the written 
certification in the application package submitted to RUS. If the self-
certification of an ERP and VRA are not received as set forth in this 
section, approval of the loan, loan guarantees or grants will not be 
considered until the certifications are received by RUS.

0
5. Sections 1730.27, 1730.28 and 1730.29 are added to read as follows:


Sec.  1730.27  Vulnerability and Risk Assessment (VRA).

    (a) Each borrower with an approved RUS electric program loan as of 
October 12, 2004 shall perform an initial VRA of its electric system no 
later than July 12, 2005. Additional or periodic VRA's may be necessary 
if significant changes occur in the borrower's system, and records of 
such additional assessments shall be maintained by the borrower.
    (b) Each applicant that has submitted an application for an RUS 
electric program loan or grant prior to October 12, 2004, but whose 
application has not been approved by RUS by such date, shall perform an 
initial VRA of its electric system in accordance with Sec.  1730.27(a).
    (c) Each applicant that submits an application for an RUS electric 
program loan or grant between October 12, 2004 and July 12, 2005 shall 
perform an initial VRA of its electric system in accordance with Sec.  
1730.27(a).
    (d) Each applicant that submits an application for an RUS electric 
program loan or grant on or after July 12, 2005 shall include with its 
application package a letter certification that such applicant has 
performed an initial VRA of its electric system. Additional or periodic 
VRA's may be necessary if significant changes occur in the borrower's 
system, and records of such additional assessments shall be maintained 
by the borrower.
    (e) The VRA shall include identifying:
    (1) Critical assets or facilities considered necessary for the 
reliability and security of the electric power grid as described in 
Sec.  1730.21(c);
    (2) Facilities that if damaged or destroyed would cause significant 
risk to the safety and health of the public;
    (3) Critical assets or infrastructure owned or served by the 
borrower's electric system that are determined, identified and 
communicated as elements of national security by the consumer, State or 
Federal government;
    (4) External system impacts (interdependency) with loss of 
identified system components;
    (5) Threats to facilities and assets identified in paragraphs 
(e)(1), (e)(2), (e)(3), and (e)(4) of this section;
    (6) Criticality and risk level of the borrower's system;
    (7) Critical asset components and elements unique to the RUS 
borrower's system; and
    (8) Other threats, if any, identified by an individual borrower.


Sec.  1730.28  Emergency Restoration Plan (ERP).

    (a) Each borrower with an approved RUS electric program loan as of 
October 12, 2004 shall have a written ERP no later than January 12, 
2006. The ERP should be developed by the borrower individually or in 
conjunction with other electric utilities (not all having to be RUS 
borrowers) through the borrower's unique knowledge of its system, 
prudent utility practices (which includes development of an ERP) and 
the borrower's completed VRA. If a joint electric utility ERP is 
developed, each RUS borrower shall prepare an addendum to meet the 
requirements of paragraphs (e), (f), and (g) of this section as it 
relates to its system.
    (b) Each applicant that has submitted an application for an RUS 
electric program loan or grant prior to October 12, 2004, but whose 
application has not been approved by RUS by such date, shall have a 
written ERP in accordance with Sec.  1730.28(a).
    (c) Each applicant that submits an application for an RUS electric 
program loan or grant between October 12, 2004 and January 12, 2006, 
shall have a written ERP in accordance with Sec.  1730.28(a).

[[Page 60542]]

    (d) Each applicant that submits an application for an RUS electric 
program loan or grant on or after January 12, 2006 shall include with 
its application package a letter certification that such applicant has 
a written ERP.
    (e) The ERP shall include:
    (1) A list of key contact emergency telephone 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); and
    (5) Other items, if any, identified by the borrower as essential 
for inclusion in the ERP.
    (f) The ERP must be approved and signed by the borrower's Manager 
or Chief Executive Officer, and approved by the borrower's Board of 
Directors.
    (g) Copies of the most recent approved ERP must be made readily 
available to key personnel at all times.
    (h) The ERP shall be Exercised at least annually to ensure 
operability and employee familiarity. Completion of the first exercise 
of the ERP must occur on or before January 12, 2007.
    (i) If modifications are made to an existing ERP:
    (1) The modified ERP must be prepared in compliance with the 
provisions of paragraphs (e), (f), and (g) of this section; and
    (2) Additional Exercises may be necessary to maintain employee 
operability and familiarity.
    (j) Each borrower shall maintain records of such Exercises.


Sec.  1730.29  Grants and Grantees.

    For the purposes of this part, the terms ``borrower'' shall include 
recipients of RUS electric program grants, and ``applicant'' shall 
include applicants for such grants. References to ``security 
documents'' shall, with respect to recipients of RUS electric program 
grants, include grant agreements and other grant-related documents.

    Dated: September 24, 2004.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 04-22779 Filed 10-8-04; 8:45 am]
BILLING CODE 3410-15-P