[Federal Register Volume 74, Number 129 (Wednesday, July 8, 2009)]
[Rules and Regulations]
[Pages 32406-32410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15888]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1730

RIN 0572-AC07


Interconnection of Distributed Resources

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Utilities Service, an agency delivering the U.S. 
Department of Agriculture's Rural Development Utilities Programs, 
hereinafter referred to as RUS, is amending its regulation to require 
electric program borrowers establish and maintain a written standard 
policy relating to the Interconnection of Distributed Resources (IDR). 
The intended effect is that owners of distributed resources know what 
they have to do to connect their facilities to the electric power 
systems of borrower electric cooperatives.

DATES: Effective Date: August 7, 2009. Incorporation by reference of a 
certain publication listed in this final rule is approved by the 
Director of the Federal Register as of August 7, 2009.

FOR FURTHER INFORMATION CONTACT: Donald Junta, USDA--Rural Development 
Utilities Programs, 1400 Independence Avenue, SW., Washington, DC 
20250-1569, telephone (202) 720-3720 or e-mail to 
[email protected].

SUPPLEMENTARY INFORMATION: 

[[Page 32407]]

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.

Catalog of Federal Domestic Assistance

    The program described by this final 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 
(202) 512-1800 or at http://www.cfda.gov.

Executive Order 12372

    This final rule is excluded from the scope of Executive Order 
12372, ``Intergovernmental Review of Federal Programs,'' as implemented 
under USDA's regulations at 7 CFR part 3015.

Executive Order 13132, Federalism

    The policies contained in this final 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 
direct final rule impose substantial direct compliance costs on State 
and local governments. Therefore, consultation with States is not 
required.

Information Collection and Recordkeeping Requirements

    The information and collection and recordkeeping requirements 
contained in this rule have been approved by the Office of Management 
and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 
(44 U.S.C. chapter 35) and have been assigned OMB Control Number 0572-
0141.

National Environmental Policy Act Certification

    The Agency has determined that this final 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.

Regulatory Flexibility Act Certification

    Pursuant to 5 U.S.C. 553(a)(2), this final rule 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 final 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.

Unfunded Mandates

    This final rule contains no Federal mandates (under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995) for 
State, local, and Tribal governments for the private sector. Thus, this 
rule is not subject to the requirements of sections 202 and 205 of the 
Unfunded Mandates Reform Act of 1995.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. The Agency has determined that this final rule 
meets the applicable standards in Sec.  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, must be exhausted before an 
action against the Department or its agencies may be initiated.

Background

    On August 13, 2008, at 73 FR 47101, the Agency published a 
rulemaking proposing to amend 7 CFR Part 1730 by adding a Subpart C 
titled ``Interconnection of Distributed Resources''. This rule will 
require that electric program borrowers shall be responsible for 
establishing and maintaining a written standard policy relating to the 
interconnection of distributed resources (IDR). This rule will allow 
owners of distributed resources to ascertain the requirements of 
borrower electric cooperatives regarding connection to the electric 
cooperative facilities by referring to written borrower standards for 
IDR.
    Prospective owners of distributed resources often do not know what 
they must do to connect their facilities to the electric power system 
of a borrower electric cooperative. The purpose of this action is to 
allow the owners of distributed resources to know exactly what they 
must do to connect their facilities with the electric power systems of 
borrower electric cooperatives.
    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 at 7 CFR 1710.2.
    RUS borrowers have a legal obligation to RUS to maintain their 
respective systems. In satisfying this legal obligation, 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 financial 
assistance. The scope of this legal obligation is frequently measured 
against prudent utility practices (PUP). Accordingly, RUS expects and 
this rule provides for borrowers to be aware of and follow developing 
IDR standards using PUP. Voluntary standards using PUP are emerging 
within the private sector and the requirements of this final rule are 
consistent with those voluntary standards.
    This rule refers to a national series of standards published by the 
Institute of Electrical and Electronic Engineers (IEEE). It also allows 
individual borrowers to create their own additional technical 
requirements to meet local conditions that are consistent with PUP. The 
regulation applies to IDR having an installed capacity of not more than 
10 megavolt amperes (MVA). This specific value was chosen to correspond 
with the national series of standards published by IEEE.
    This regulation provides that borrowers may in their written 
interconnection policies require appropriate liability insurance for 
distributed resource facilities that are interconnected to borrowers' 
electric systems. It is expected that what is appropriate may vary 
depending on the type and size of the IDR asset. Current Federal 
regulations do not specify the amount of liability insurance required 
except when the distributed resource facility is owned by a RUS 
borrower, contractor, engineer, or architect.

Discussion of Comments and Changes

    RUS received 2 letters and 3 comments electronically through the 
Federal eRulemaking Portal on this proposed rule by the comment 
deadline of October 14, 2008. Comments were received from the National 
Rural Electric Cooperative Association (NRECA) Transmission and 
Distribution Engineering Committee, System

[[Page 32408]]

Planning Subcommittee, Keyes & Fox, LLP, and three individuals.
    NRECA proposed that the statement ``the Agency expects that 
borrower ownership of distributed resources will be uncommon'' be 
deleted from the background section. RUS accepted this proposed change 
and deleted the statement.
    NRECA also proposed that ``Compliance with the State requirements 
is adequate to comply with the rule.'' RUS rejected this proposed 
change because the intent of this rule is to facilitate the development 
of an appropriate minimum threshold of disclosure and uniformity in our 
borrowers' approach to interconnection policies. We recognize that in 
some States the requirements may be less than what would otherwise be 
determined appropriate threshold requirements. To accept this proposed 
change would negate one of the primary expected benefits of this 
rulemaking.
    NRECA also proposed that ``Borrowers may follow their State's 
requirements without seeking an individual waiver from the 
Administrator where the State requirements are inconsistent with the 
rule.'' The final rule provides that where a State standard is higher 
than what is provided in this regulation, the higher standard would 
apply; the benefit of strict uniformity is not so great as to justify 
unnecessary conflict with State regulation in the area of IDR. Where a 
given State standard is lower, it is the Agency's intent to facilitate 
the establishment of a uniform minimum threshold but case by case 
waiver authority is retained.
    NRECA also proposed that in the definitions Sec.  1730.62, the 
regulation should only apply to installations ``directly connected to 
distribution systems,'' instead of ``not directly connected to a bulk 
power transmission system.'' RUS rejected this proposed change because 
the definition used in the regulation is that used in the series of 
standards published by the Institute of Electrical and Electronics 
Engineers, Inc. (IEEE) titled ``1547, Series of Interconnection 
Standards''.
    NRECA proposed that in Sec.  1730.63(a)(2) the phrase ``and the 
process to determine the costs'' be added to the first sentence. RUS 
accepts this change because it allows for the fact that the exact cost 
of an interconnection may not be known initially; the process to 
determine the final cost will be explained to the applicant during the 
application stage.
    NRECA proposed that in Sec.  1730.63(a)(5) IDR policies be 
reconsidered and updated every five years instead of every three years. 
RUS accepted this proposed change to be consistent with the IEEE 
standard revision or reaffirmation schedule.
    NRECA proposed that in Sec.  1730.63(b)(2) that IEEE 1547.1 
(Standard Conformance Test Procedures for Equipment Interconnecting 
Distributed Resources with Electric Power Systems) be added to the 
requirement. RUS rejected this proposed change because by specifying 
IEEE 1547.1 and not other IEEE 1547 standards, RUS would not be 
including these other IEEE 1547 standards in the requirement. It is not 
the Agency's intent to establish standards that conflict with IEEE 
1547, or foster the development of borrower policies that are at odds 
with IEEE 1547.
    NRECA proposed that the requirements in Sec.  1730.63(b)(3) 
regarding disconnect facilities (lockable disconnect, visible open, and 
fusing) be deleted. RUS accepted the proposed change that the fusing 
requirement be deleted because IEEE 1547 does not mention fusing in its 
phrase ``readily accessible, lockable, visible-break isolation 
device.'' However RUS rejected the other parts of the proposed change 
regarding deleting the lockable disconnect and a visible open 
requirement. This standard is incorporated in IEEE 1547 and to not 
include these requirements could place service personnel at risk.
    NRECA proposed that if the regulation did contain a requirement for 
a disconnect device, it should not apply to small inverter based 
installations meeting UL 1741 (Underwriters Laboratory Standard for 
Inverters, Converters, Controllers and Interconnection System Equipment 
for Use with Distributed Energy Resources). RUS rejected this proposed 
change. Were a disconnect not to be required service personnel would 
have to rely on a solid state device to remove the IDR facility from a 
deenergized line while working on the line and could be at risk should 
such devices fail. This is contrary to standard work rules requiring 
visible open disconnect devices and grounds before a line may be worked 
on as a deenergized line.
    NRECA proposed to add the phrase ``as determined by the borrower'' 
to the liability insurance requirement in Sec.  1730.63(c)(1). RUS 
rejected a change that gave unfettered discretion to the borrower, in 
favor of an amendment that subjects the borrower's discretion to an 
``appropriate'' test. We recognize that the amount of liability 
insurance that is appropriate may vary by industry or region, or size 
and operating characteristics of the IDR.
    NRECA proposed that we delete the Sec.  1730.63(c)(4) requirement 
that ``the Responsible Party must demonstrate the financial and 
managerial capability to develop, construct and operate the distributed 
resources.'' RUS elected to modify this requirement. As originally 
proposed, the entire burden falls to the Responsible Party, but the 
capability can in some cases be contracted to a third party who is more 
appropriate to the task. The intent of the rule is to accomplish the 
end result that the facility be capably developed, constructed and 
operated. We fully expect that the appropriate party for this 
responsibility can vary depending on the size and ownership profile of 
the IDR, but do retain the fundamental requirement that the 
responsibility for these variables be addressed for each IDR facility 
that falls under this rule
    Keyes & Fox, LLP proposed that the rule not require a Responsible 
Party to carry a minimum level of liability insurance. RUS rejected 
this proposed change as it was felt that appropriate levels of 
liability insurance are consistent with the intent of this rulemaking.
    Keyes & Fox, LLP proposed that Sec.  1730.63(b)(3) not require 
installation of an external disconnect switch. RUS rejected this 
proposed change because an external disconnect device is referred to in 
IEEE 1547 and to not have an external disconnect device could place 
service personnel at risk.
    An individual proposed that the address of the IEEE Operations 
Center be substituted for the IEEE corporate address in Sec.  
1730.63(b)(2) for obtaining a copy of IEEE 1547. RUS accepted this 
proposed change as the IEEE Operations Center is the more appropriate 
address for where IEEE documents may be obtained.
    An individual proposed that in Sec.  1730.62, that the definition 
of 10 MVA be changed to 100 kW. RUS rejected this proposed change 
because 10 MVA is the quantity that is used in IEEE 1547 and it is our 
intent that this rule not conflict with this nationally recognized 
series of standards.
    An individual proposed that in Sec.  1730.62, that the definition 
of 10 MVA be changed to 10 kVA. RUS rejected this proposed change 
because 10 MVA is the quantity that is used in IEEE 1547 and it is our 
intent that this rule not conflict with this nationally recognized 
series of standards.

List of Subjects in 7 CFR Part 1730

    Electric power; Incorporation by reference; Loan program--energy; 
Reporting and recordkeeping requirements; Rural areas.


[[Page 32409]]



0
For reasons set forth in the preamble, the Agency amends 7 CFR, Chapter 
XVII, part 1730 by adding subpart C as 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.


0
2. Add Subpart C to read as follows:
Subpart C--Interconnection of Distributed Resources
Sec.
1730.60 General.
1730.61 RUS policy.
1730.62 Definitions.
1730.63 IDR policy criteria.
1730.64 Power purchase agreements.
1730.65 Effective dates.
1730.66 Administrative waiver.
1730.67-99 [Reserved]
1730.100 OMB Control Number.

Subpart C--Interconnection of Distributed Resources


Sec.  1730.60  General.

    Each electric program distribution borrower (as defined in Sec.  
1710.2) is responsible for establishing and maintaining a written 
standard policy relating to the Interconnection of Distributed 
Resources (IDR) having an installed capacity of not more than 10 
megavolt amperes (MVA) at the point of common coupling.


Sec.  1730.61  RUS policy.

    The Distributed Resource facility must not cause significant 
degradation of the safety, power quality, or reliability on the 
borrower's electric power system or other electric power systems 
interconnected to the borrower's electric power system. The Agency 
encourages borrowers to consider model policy templates developed by 
knowledgeable and expert institutions, such as, but not limited to the 
National Association of Regulatory Utility Commissioners, the Federal 
Energy Regulatory Commission and the National Rural Electric 
Cooperative Association. The Agency encourages all related electric 
borrowers to cooperate in the development of a common Distributed 
Resource policy.


Sec.  1730.62  Definitions.

    ``Distributed Resources'' as used in this subpart means sources of 
electric power that are not directly connected to a bulk power 
transmission system, having an installed capacity of not more than 10 
MVA, connected to the borrower's electric power system through a point 
of common coupling. Distributed resources include both generators and 
energy storage technologies.
    ``Responsible Party'' as used in this subpart means the owner, 
operator or any other person or entity that is accountable to the 
borrower under the borrower's interconnection policy for Distributed 
Resources.


Sec.  1730.63  IDR policy criteria.

    (a) General. (1) The borrower's IDR policy and procedures shall be 
readily available to the public and include, but not limited to, a 
standard application, application process, application fees, and 
agreement.
    (2) All costs to be recovered from the applicant regarding the 
application process or the actual interconnection and the process to 
determine the costs are to be clearly explained to the applicant and 
authorized by the applicant prior to the borrower incurring these 
costs. The borrower may require separate non-refundable deposits 
sufficient to insure serious intent by the applicant prior to 
proceeding either with the application or actual interconnection 
process.
    (3) IDR policies must be approved by the borrower's Board of 
Directors.
    (4) The borrower may establish a new rate classification for 
customers with Distributed Resources.
    (5) IDR policies must provide for reconsideration and updates every 
five years or more frequently as circumstances warrant.
    (b) Technical requirements. (1) IDR policies must be consistent 
with prudent electric utility practice.
    (2) IDR policies must incorporate the Institute of Electrical and 
Electronic Engineers (IEEE): IEEE 1547TM--Standard for 
Interconnecting Distributed Resources with Electric Power Systems, 
approved June 12, 2003, and IEEE 1547.1TM--Standard 
Conformance Test Procedures for Equipment Interconnecting Distributed 
Resources with Electric Power Systems, approved June 9, 2005. Copies of 
the IEEE Standards 1547TM and 1547.1TM may be 
obtained from the IEEE Operations Center, 445 Hoes Lane, Piscataway, NJ 
08854-4141, telephone 1-800-678-4333 or online at http://www.standards.ieee.org. Copies of the material are available for 
inspection during normal business hours at RUS, Room 1265, U.S. 
Department of Agriculture, Washington, DC 20250. Telephone (202) 720-
3720, e-mail [email protected], or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.
    (3) IDR policies must provide for appropriate electric power system 
disconnect facilities, as determined by the borrower, which shall 
include a lockable disconnect and a visible open, that are readily 
accessible to and operable by authorized personnel at all times.
    (4) IDR policies must provide for borrower access to the 
Distributed Resources facility during normal business hours and all 
emergency situations.
    (c) Responsible Party obligations. IDR policies must provide for 
appropriate Responsible Parties to assume the following risks and 
responsibilities:
    (1) A Responsible Party must agree to maintain appropriate 
liability insurance as outlined in the borrower's interconnection 
policy.
    (2) A Responsible Party must be responsible for the Distributed 
Resources compliance with all national, State, local government 
requirements and electric utility standards for the safety of the 
public and personnel responsible for utility electric power system 
operations, maintenance and repair.
    (3) A Responsible Party must be responsible for the safe and 
effective operation and maintenance of the facility.
    (4) Only Responsible Parties may apply for interconnection and the 
Responsible Party must demonstrate that the facility will be capably 
developed, constructed and operated, maintained, and repaired.


Sec.  1730.64  Power purchase agreements.

    Nothing in this subpart requires the borrower to enter into 
purchase power arrangements with the owner of the Distributed 
Resources.


Sec.  1730.65  Effective dates.

    (a) All electric program borrowers with an approved electric 
program loan as of July 8, 2009 shall have an IDR policy board approved 
and in effect no later than July 8, 2011.
    (b) All other electric program borrowers that have pending 
applications or submit an application to the Agency for financial 
assistance on or after July 8, 2009 shall provide a letter of 
certification executed by the General Manager that the borrower meets 
the requirements of this subpart before such loan may be approved.


Sec.  1730.66  Administrative waiver.

    The Administrator may waive in all or part, for good cause, the 
requirements and procedures of this subpart.

[[Page 32410]]

Sec. Sec.  1730.67-1730.99  [Reserved]


Sec.  1730.100  OMB Control Number.

    The Information collection requirements in this part are approved 
by the Office of Management and Budget and assigned OMB control number 
0572-0141.

    Dated: June 25, 2009.
James R. Newby,
Acting Administrator, Rural Utilities Service.
[FR Doc. E9-15888 Filed 7-7-09; 8:45 am]
BILLING CODE 3410-15-P