[Federal Register Volume 76, Number 95 (Tuesday, May 17, 2011)]
[Proposed Rules]
[Pages 28333-28335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-11910]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 76, No. 95 / Tuesday, May 17, 2011 / Proposed 
Rules  

[[Page 28333]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Parts 1724 and 1726

RIN 0572-AC20


Electric Engineering, Architectural Services, Design Policies and 
Construction Standards

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Utilities Service (RUS) proposes to amend the 
contract threshold amounts that require borrowers to use certain 
prescribed agency contract forms and to amend the contract dollar 
amounts that require RUS review of contracts prior to the contract 
being effective. Also, RUS proposes to raise the threshold amounts 
requiring RUS borrowers to use certain required procurement methods for 
materials, equipment and contract services that otherwise would require 
RUS prior approval. The changes in the threshold amounts would reduce 
the number of contracts reviewed by the RUS.

DATES: Written comments must be received by RUS or be postmarked no 
later than July 18, 2011.

ADDRESSES: Submit comments by either of the following methods:
    Federal eRulemaking Portal: Go to http://www.regulations.gov and, 
in the lower ``Search Regulations and Federal Actions'' box, select 
``Rural Utilities Service'' from the agency drop-down menu, then click 
on ``Submit.'' In the Docket ID column, select RUS-10-Electric-0001 to 
submit or view public comments and to view supporting and related 
materials available electronically. Information on using 
Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``User Tips'' link.
    Postal Mail/Commercial Delivery: Please send your comment addressed 
to Michele Brooks, Director, Program Development and Regulatory 
Analysis, USDA--Rural Utilities Service, 1400 Independence Avenue, STOP 
1522, Room 5162, Washington, DC 20250-1522. Please state that your 
comment refers to Docket No. RUS-10-Electric-0001.
    Other Information: Additional information about Rural Development 
and its programs is available on the Internet at http://www.rurdev.usda.gov/index.html.

FOR FURTHER INFORMATION CONTACT: Lou Riggs, USDA--Rural Utilities 
Service, 1400 Independence Avenue, SW., Stop 1569, Washington, DC 
20250-1569. Telephone (202) 690-0551 or e-mail to 
[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.

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 in Sec.  3 of the Executive Order. In 
addition, all state and local laws and regulations that conflict with 
this proposed rule will be preempted; no retroactive effect will be 
given to the proposed rule; and in accordance with Sec.  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 litigation 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 proposed rule since the Agency 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 subject matter of this rule.

Information Collection and Recordkeeping Requirements

    This proposed rule contains no additional reporting or 
recordkeeping burdens under Office of Management and Budget (OMB) 
control numbers 0572-0107 and 0572-0118 that would require approval 
under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

Executive Order 13132

    This proposed rule will 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. Under Executive Order 13132, this 
proposed rule does not have sufficient federalism implications 
requiring the preparation of a Federalism Assessment.

Catalog of Federal Domestic Assistance

    The program described by this proposed 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 the Internet and the General Services Administration's 
(GSA) free CFDA Web site at http://www.cfda.gov. The CFDA Web site also 
contains a PDF file version of the Catalog that, when printed, has the 
same layout as the printed document that the Government Printing Office 
(GPO) provides. GPO prints and sells the CFDA to interested buyers. For 
information about purchasing the Catalog of Federal Domestic Assistance 
from GPO, call the Superintendent of Documents at 202-512-1800 or toll 
free at 866-512-1800, or access GPO's online bookstore at http://bookstore.gpo.gov.

Executive Order 12372

    This proposed rule is not subject to the provisions of Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' as 
implemented under USDA's regulations at 7 CFR Part 3015.

Unfunded Mandates

    This proposed 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 proposed rule is not subject to the requirements of 
Sec. Sec.  202 and 205 of the Unfunded Mandates Reform Act of 1995.

[[Page 28334]]

National Environmental Policy Act Certification

    This proposed rule has been examined under RUS environmental 
regulations at 7 CFR Part 1794. The Administrator has determined that 
this proposed rule is not a major Federal action significantly 
affecting the environment. Therefore, in accordance with the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), an 
Environmental Impact Statement or Assessment is not required.

E-Government Act Compliance

    RUS is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

Background

    The Rural Electrification Act of 1936 (7 U.S.C. 901-950bb (REAct)), 
as amended, establishes the authority for RUS to provide loans and loan 
guarantees to eligible entities for furnishing electric service to 
rural areas. The standard loan agreement between RUS and its electric 
borrowers provides that, in accordance with applicable RUS regulations, 
the borrower shall use standard forms of contracts promulgated by RUS 
for construction, procurement, engineering services and architectural 
services for transactions above the established threshold dollar levels 
(``threshold levels'').
    Electric borrowers are also expected to obtain RUS approvals for 
procuring materials, equipment and contracting services for use in the 
electric systems where the contract amount exceeds specified threshold 
levels.
    Threshold levels that apply to contracts entered into by borrowers 
were initially established to capture significant transactions that 
could adversely affect RUS loan security. The threshold levels were 
most recently revised in 1995. Cost increases and inflation over time 
have greatly increased the need for more approvals than is consistent 
with the earlier threshold levels. The result has been increased delay 
to the borrowers in receiving RUS approvals and increased workloads at 
RUS. Inflation is not the only relevant variable in the RUS proposal to 
modify the threshold levels. In this proposed rule RUS has also 
considered the level of sophistication in borrowers' operations, RUS 
staff constraints and competing priorities within RUS. The need to 
adjust the threshold levels is a result of these considerations.
    In response to borrowers' requests and mindful of the directives in 
Executive Order 13563 of January 18, 2011, to determine if any 
regulations should be modified to make agencies' regulations less 
burdensome in achieving their objectives, RUS undertook an examination 
of certain thresholds used in determining when the use of prescribed 
forms and approvals would apply. RUS examined the number of contracts 
it reviewed over the last several years. RUS also reviewed the rate of 
inflation factors published in the Handy-Whitman Index of Public 
Utility Construction Costs in order to adjust for inflation occurring 
after the existing requirements were established.
    As a result of this review, RUS determined that although it remains 
necessary and appropriate to continue these requirements as one means 
of oversight of its borrowers' financial and operational activities, 
the existing threshold levels should be raised. Raising these threshold 
levels will reduce the volume of contracts that borrowers will be 
required to submit for RUS approvals. Doing so will reduce the 
paperwork burdens on borrowers and the administrative burdens on RUS.
    RUS is proposing to revise these threshold levels an average of 300 
percent. RUS estimates that the revision will reduce the volume of 
contracts it receives pursuant to these requirements by 50 percent.

List of Subjects

7 CFR Part 1724

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

7 CFR Part 1726

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

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

PART 1724--ELECTRIC ENGINEERING, ARCHITECTURAL SERVICES AND DESIGN 
POLICIES AND PROCEDURES

    1. The authority citation for part 1724 continues to read as 
follows:

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

 Subpart E--Electric System Design

    2. Section 1724.54 is amended by revising paragraph (e)(2) and 
paragraph (g)(2) to read as follows:


Sec.  1724.54  Requirements for RUS approval of plans and 
specifications.

* * * * *
    (e) * * *
    (2) The borrower shall obtain RUS approval, prior to issuing 
invitations to bid, of the terms and conditions for all generating 
plant equipment or construction contracts which will cost $5,000,000 or 
more. Unless RUS approval is required by paragraph (a) of this section, 
plans and specifications for generating plant equipment and 
construction do not require RUS approval.
* * * * *
    (g) * * *
    (2) The borrower shall obtain RUS approval, prior to issuing 
invitations to bid, of the terms and conditions for communications and 
control facilities contracts which will cost $1,500,000 or more. Unless 
RUS approval is required by paragraph (a) of this section, plans and 
specifications for communications and control facilities do not require 
RUS approval.
* * * * *

PART 1726--ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES

    3. The authority citation for part 1726 continues to read as 
follows:

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

 Subpart A--General

    4. Section 1726.14 is amended by revising the definition of ``minor 
modification or improvement'' to read as follows:


Sec.  1726.14  Definitions.

* * * * *
    Minor modification or improvement means a project the cost of which 
is $150,000 or less, exclusive of the cost of owner furnished 
materials.
* * * * *

Subpart B--Distribution Facilities

    5. Section 1726.50 is amended by revising paragraph (a) to read as 
follows:


Sec.  1726.50  Distribution line materials and equipment.

    (a) Contract forms. (1) The borrower shall use RUS Form 198, 
Equipment Contract, for purchases of equipment where the total cost of 
the contract is $1,000,000 or more.
    (2) The borrower may, in its discretion, use RUS Form 198, 
Equipment Contract, or a written purchase order equal to $1,000,000 or

[[Page 28335]]

less for purchases of equipment, and for all materials.
* * * * *
    6. Section 1726.51 is amended by revising paragraphs (a)(1), (b)(1) 
and (b)(2) to read as follows:


Sec.  1726.51  Distribution line construction.

    (a) * * *
    (1) The borrower may use RUS Form 790, Electric System Construction 
Contract--Non-Site Specific Construction, under the following 
circumstances:
    (i) For contracts for which the borrower supplies all materials and 
equipment; or
    (ii) For non-site specific construction contracts accounted for 
under the work order procedure; or
    (iii) If neither paragraph (a)(1)(i) or (a)(1)(ii) of this section 
are applicable, the borrower may use RUS Form 790 for contracts, up to 
a cumulative total of $500,000 or one percent of net utility plant 
(NUP), whichever is greater, per calendar year of distribution line 
construction, exclusive of the cost of owner furnished materials and 
equipment.
* * * * *
    (b) * * *
    (1) It is the responsibility of each borrower to determine the 
procurement method that best meets its needs to award contracts in 
amounts of up to a cumulative total of $750,000 or one percent of NUP, 
whichever is greater, per calendar year of distribution line 
construction (including minor modifications or improvements), exclusive 
of the cost of owner furnished materials and equipment.
    (2) In addition to the cumulative total stipulated in paragraph 
(b)(1) of this section, a borrower may use Multiparty Unit Price 
Quotations to award contracts in amounts of up to a cumulative total of 
$1,000,000 or 1.5 percent of NUP, whichever is greater, per calendar 
year of distribution line construction (including minor modifications 
or improvements), exclusive of the cost of owner furnished materials 
and equipment.
* * * * *

Subpart C--Substation and Transmission Facilities

    7. Section 1726.76 is amended by revising paragraph (a) to read as 
follows:


Sec.  1726.76  Substation and transmission line materials and 
equipment.

    (a) Contract forms. (1) The borrower shall use RUS Form 198, 
Equipment Contract, for purchases of equipment where the total cost of 
the contract is $1,000,000 or more.
    (2) The borrower may, in its discretion, use RUS Form 198, 
Equipment Contract, or a written purchase order for purchases of 
equipment of less than $1,000,000 and for all materials.
* * * * *
    8. Section 1726.77 is amended by revising paragraphs (b)(1) and (c) 
to read as follows:


Sec.  1726.77  Substation and transmission line construction.

* * * * *
    (b) * * *
    (1) It is the responsibility of each borrower to determine the 
procurement method that best meets its needs to award contracts not 
requiring RUS approval in amounts of up to a cumulative total of 
$750,000 or one percent of NUP (not to exceed $5,000,000), whichever is 
greater, per calendar year of substation and transmission line 
construction (including minor modifications or improvements), exclusive 
of the cost of owner furnished materials and equipment.
* * * * *
    (c) Contract approval. Individual contracts in the amount of 
$750,000 or more or one percent of NUP (not to exceed $1,500,000 for 
distribution borrowers or $4,500,000 for power supply borrowers), 
whichever is greater, exclusive of the cost of owner furnished 
materials and equipment, are subject to RUS approval.

Subpart D--Generation Facilities

    9. Section 1726.125 is amended by revising paragraphs (a), (b)(1), 
and (b)(2) to read as follows:


Sec.  1726.125  Generating plant facilities.

* * * * *
    (a) Contract forms. (1) The borrower shall use RUS Form 198, 
Equipment Contract, for the purchase of generating plant equipment in 
the amount of $5,000,000 or more and for any generating plant equipment 
contract requiring RUS approval.
    (2) The borrower shall use RUS Form 200, Construction Contract--
Generating, for generating project construction contracts in the amount 
of $5,000,000 or more and for any generating project construction 
contract requiring RUS approval.
    (3) The borrower may, in its discretion, use other contract forms 
or written purchase order forms for those contracts in amounts of 
$5,000,000 or less and that do not require RUS approval.
    (b) Procurement procedures. (1) It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
to award contracts in amounts of less than $5,000,000 each.
    (2) If the amount of the contract is $5,000,000 or more or if the 
contract requires RUS approval, the borrower must use formal or 
informal competitive bidding to award the contract.
* * * * *

Subpart E--Buildings

    10. Section 1726.150 is amended by revising paragraph (b) to read 
as follows:


Sec.  1726.150  Headquarters buildings.

* * * * *
    (b) Procurement procedures. A borrower may use Multiparty Lump Sum 
Quotations to award contracts in amounts of up to a cumulative total of 
$750,000 or one percent of NUP (not to exceed $5,000,000), whichever is 
greater, per calendar year of headquarters construction (including 
minor modifications or improvements.) The borrower shall use formal 
competitive bidding for all other headquarters contract construction.
* * * * *

Subpart F--General Plant

    11. Section 1726.176 is amended by revising paragraphs (b)(2)(i) 
and (b)(3) to read as follows:


Sec.  1726.176  Communications and control facilities.

* * * * *
    (b) * * *
    (2) Procurement procedures. (i) It is the responsibility of each 
borrower to determine the procurement method that best meets its needs 
to award contracts not requiring RUS approval in amounts of up to a 
cumulative total of $750,000 or one percent of NUP (not to exceed 
$5,000,000), whichever is greater, per calendar year of communications 
and control facilities construction (including minor modifications or 
improvements), exclusive of the cost of owner furnished materials and 
equipment.
* * * * *
    (3) Contract approval. Individual contracts in amounts of $750,000 
or more or one percent of NUP (not to exceed $1,500,000 for 
distribution borrowers or $4,500,000 for power supply borrowers), 
whichever is greater, exclusive of the cost of owner furnished 
materials and equipment, are subject to RUS approval.

    Dated: May 6, 2011.
Jonathan Adelstein,
Administrator, Rural Utilities Service.
[FR Doc. 2011-11910 Filed 5-16-11; 8:45 am]
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