[Federal Register Volume 69, Number 215 (Monday, November 8, 2004)]
[Proposed Rules]
[Pages 64689-64690]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24789]


 ========================================================================
 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. 69, No. 215 / Monday, November 8, 2004 / 
Proposed Rules  

[[Page 64689]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1717

RIN 0572-AB97


Elimination of Operational Controls

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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SUMMARY: Rural Utilities Service (RUS), an agency delivering the United 
States Department of Agriculture's Rural Development utilities 
programs, proposes to amend 7 CFR Part 1717, Subpart M, Operational 
Controls (Subpart M), by eliminating the provisions thereof.
    Subpart M was promulgated as a compliment to the ``new'' 
distribution borrower loan documents established in 1995, and was 
intended to cut back the broad reach of certain of the operational 
controls contained in the loan documents executed prior to 1995. Since 
1995, approximately 88 percent of distribution borrowers have 
transitioned to the new forms of mortgage and loan contract, either by 
receiving new loans from RUS or by executing new documents for existing 
loans. Operational controls for these borrowers are contained in the 
new forms of loan contract and mortgage, and in other RUS regulations. 
Operational controls for the remaining distribution borrowers are 
contained in the pre-1995 loan documents, Subpart M, and other RUS 
regulations.
    This amendment will eliminate the provisions of Subpart M, thereby 
removing a confusing and cumbersome dual system of operational 
controls. Distribution borrowers subject to the pre-1995 documents may 
transition to the new loan documents. For those borrowers that do not 
transition, operational control decision making will be made on a case-
by-case basis, using, to the extent possible, the level of control 
contained in the new loan contract and mortgage.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent no later than January 7, 2005.

ADDRESSES: Submit comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instruction for submitting 
comments.
     Agency Web site: http://www.usda.gov/rus/index2.Comments.htm. Follow the instructions for submitting comments.
     E-mail: [email protected]. Include in the subject line 
of the message ``7 CFR 1717.''
     Mail: Addressed to Richard Annan, Acting Director, Program 
Development and Regulatory Analysis, Rural Utilities Service, United 
States Department of Agriculture, 1400 Independence Avenue, STOP 1522, 
Washington, DC 20250-1522. RUS requests a signed original and three 
copies of all comments (7 CFR 1700.4).
     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, DC 20250-1522.
     All comments received will be made available for public 
inspection at room 5168, South Building, Washington, DC, between the 8 
a.m. and 4 p.m. (7 CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Doris A. Nolte, Chief, Policy Analysis 
and Loan Management Staff, Rural Utilities Service, Electric Program, 
Room 5155 South Building, Stop 1560, 1400 Independence Ave., SW., 
Washington, DC 20250-1560, Telephone: 202-720-0424, FAX: 202-690-0717, 
E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This 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 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 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 appeals procedures, if any are required, must be 
exhausted before an action against the Department or its agencies may 
be initiated.

Regulatory Flexibility Act Certification

    Pursuant to 5 U.S.C. 553(a)(2), this proposed rule related to loans 
is exempt from the rulemaking requirements of the Administrative 
Procedure Act, 5 U.S.C. 551 et seq., including the requirement to 
provide prior notice and an opportunity for public comment. Because 
this proposed rule is not subject to a requirement to provide prior 
notice and an opportunity for public comment pursuant to 5 U.S.C. 553, 
or any other law, the analytical requirements of the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq. are inapplicable.

Information Collection and Recordkeeping Requirements

    This rule contains no additional information collection or 
recordkeeping requirements that require approval 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 of 1995) 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.

[[Page 64690]]

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, U.S. 
Government Printing Office, Washington, DC 20402-9325, telephone number 
(202) 512-1800.

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.
    Background: On July 18, 1995, RUS published a final rule (60 FR 
36882) establishing new RUS policies and requirements for mortgages 
used to secure direct and guaranteed loans made to electric 
distribution borrowers. The final rule became effective on August 17, 
1995. On December 29, 1995, RUS published a final rule (60 FR 67396) to 
establish new RUS policies and requirements for loan contracts 
ordinarily required for loans made to electric distribution borrowers; 
this rule became effective on January 29, 1995. These new policies and 
requirements reduced RUS oversight of borrowers' operational decisions, 
allowing RUS to tailor its operational control to a borrower's 
individual lending circumstances and credit risks.
    The ``new'' forms of mortgages and loan contracts (Current 
Documents) used by RUS for distribution loans and loan guarantees made 
after January 29, 1996 reflect these policies and requirements. 
Distribution borrowers (Legacy Borrowers) with loans and loan 
guarantees made prior to January 29, 1996 under the ``old'' forms of 
mortgages and loan contracts (Legacy Documents) have been encouraged to 
execute the Current Documents, and to date approximately 88% of Legacy 
Borrowers have replaced their Legacy Documents with Current Documents, 
either by obtaining a new loan or loan guarantee from RUS or by 
substituting New Documents for Legacy Documents.
    The December 29, 1995 rulemaking also established Subpart M. The 
purpose of Subpart M was to cut back the broad reach of certain 
operational controls contained in the Legacy Documents through waivers 
and exemptions, thereby bringing the operational controls applicable to 
Legacy Borrowers more in line with those applicable to distribution 
borrowers under the Current Documents.
    RUS believes that maintaining two sources of operational controls 
(i.e. the Current Documents, and the Legacy Documents supplemented by 
Subpart M) creates a confusing dual system that is no longer necessary 
to provide RUS with an appropriate level of operational control over 
its distribution loans and loan guarantees. As stated above, the vast 
majority of RUS electric borrowers have transitioned to the Current 
Documents, and all future loans and loan guarantees to Legacy Borrowers 
will be made using the Current Documents. Legacy Borrowers who do not 
anticipate new RUS loans may, by request, execute the Current Documents 
for their existing loans, and are encouraged to do so. For those Legacy 
Borrowers who chose to retain the Legacy Documents, RUS will conduct 
operational control decision making on a case-by-case basis, taking 
into consideration the unique characteristics of each Legacy Borrower 
and, in most cases, applying that level of operational controls 
contemplated in the Current Documents. For these reasons, RUS proposes 
to eliminate the provisions of, and reserve, Subpart M.

List of Subjects in 7 CFR Part 1717

    Administrative practice and procedure, Electric power, Electric 
power rates, Intergovernmental relations, Investments, Loan programs-
energy, Reporting and recordkeeping requirements, Rural areas.

    For the reasons set forth in the preamble, chapter XVII of title 7 
of the Code of Federal Regulations, is proposed to be amended as 
follows:

PART 1717--POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND 
GUARANTEED ELECTRIC LOANS

    1. The authority citation for part 1717 continues to read as 
follows:

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

Subpart M--Operational Controls

    2. Subpart M is removed and reserved.

    Dated: October 29, 2004.
Curtis M. Anderson,
Acting Administrator, Rural Utilities Service.
[FR Doc. 04-24789 Filed 11-5-04; 8:45 am]
BILLING CODE 3410-15-P