[Federal Register Volume 88, Number 40 (Wednesday, March 1, 2023)]
[Rules and Regulations]
[Pages 12806-12810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04016]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1710
[Docket No. RUS-22-ELECTRIC-0057]
RIN # 0572-AC60
Electric Program Coverage Ratios Clarification and Modifications
AGENCY: Rural Utilities Service, U.S. Department of Agriculture (USDA).
ACTION: Final rule; request for comment.
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SUMMARY: The Rural Utilities Service (RUS), a Rural Development (RD)
agency of the United States Department of Agriculture (USDA), is
issuing a final rule with comment. The intent of this rule is to modify
its coverage ratio requirements, add an additional set of ratios, and
update and add definitions. The effect of this action is to reduce the
regulatory impact on RUS Electric Program borrowers, ensure that loan
funds will be repaid in the time agreed upon, facilitate the lending
for construction of rural electric infrastructure, and allow RUS to
focus on feasibility and security issues while increasing customer
efficiency, customer satisfaction and service.
DATES: This final rule is effective May 30, 2023.
Comments must be submitted on or before May 1, 2023.
ADDRESSES: You may submit comments, identified by Docket Number (RUS-
22-ELECTRIC-0057) or the RIN #(0572-AC60).
Federal eRulemaking Portal: http://www.regulations.gov.
Follow instructions for sending comments. In the ``Search Documents''
box, enter the Docket Number (RUS-22-ELECTRIC-0057) or the RIN # (0572-
AC60), and click the ``Search'' button. To submit a comment, choose the
``Comment Now!'' button. 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 FAQ page.
Instructions: All submissions received must include the agency name
and docket number or Regulatory Information Number (RIN) for this
rulemaking. All comments received will be posted without change to
www.regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Mark Bartholomew, Rural Utilities
Service Electric Program, Rural Development, United States Department
of Agriculture, 1400 Independence
[[Page 12807]]
Avenue SW, STOP 1560, Washington, DC 20250; 704-544-4612
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Rural Development (RD) is a mission area within the U.S. Department
of Agriculture (USDA) comprising the Rural Utilities Service (RUS),
Rural Housing Service, and Rural Business-Cooperative Service. RD's
mission is to increase economic opportunity and improve the quality of
life for all rural Americans. RD meets its mission by providing loans,
loan guarantees, grants, and technical assistance through numerous
programs aimed at creating and improving housing, business, and
infrastructure throughout rural America. RUS loan, loan guarantee, and
grant programs act as a catalyst for economic and community
development. By financing improvements to rural electric, water and
waste, and telecommunications and broadband infrastructure, RUS also
plays a significant role in improving other measures of quality of life
in rural America, including public health and safety, environmental
protection, and cultural and historic preservation. The RUS Electric
Program provides funding to maintain, expand, upgrade, and modernize
America's rural electric infrastructure. The loans and loan guarantees
finance the construction or improvement of electric distribution,
transmission, and generation facilities in rural areas.
This rulemaking is part of the RUS Electric Program's continuing
effort to improve customer service for its borrowers and to create a
more efficient work process for its staff. This rulemaking will
continue to streamline RUS Electric Program procedures and revise
regulations, including removing unnecessary and outdated regulations
and simplifying other policies and procedures that impose burdensome
requirements on borrowers and applicants.
The intent of these proposed changes is to provide an additional
method for complying with RUS's coverage ratio requirements. The goal
is to (1) reduce the regulatory impact on RUS Electric Program
borrowers, (2) ensure that loan funds will be repaid in the time agreed
upon, and (3) that the RUS loans remain adequately secured. RUS expects
that these actions will enhance RUS and customer efficiency, thereby
increasing customer satisfaction and service. RUS uses these ratios as
part of its loan application review and/or its annual review of the
Financial and Operating Report data to monitor the financial stability
of the borrowers to ensure loan security.
There are no alternatives except to maintain the current RUS
Electric Program ratio coverage regulations. The proposed changes will
improve customer experience and customer service, and allow RUS to
better focus on feasibility and security issues while lessening the
burdens on the RUS Electric Program borrowers. These changes provide
added flexibility to borrowers to be in complaince with mortgage
requirements without increasing rates to meet their operating coverage
ratios when the borrower has cash reserves to cover debt service
payments. This action should not impose additional costs on applicants
or on electric borrowers as the additional ratios are already
calculated as part of a Borrower's Statistical Profile which is
currently calculated utilizing the data provided on the borrower's RUS
Financial and Operating Reports. These changes will positively affect
the RUS Electric borrower experience and enhance RUS customer service
by removing unnecessary and burdensome requirements for electric
borrowers and applicants, minimizing the regulatory impact of applying
for loans made or guaranteed by RUS, and facilitating lending for
construction of rural electric infrastructure.
II. Summary of Changes to Rule
7 CFR 1710.2 Definitions and Rules of Construction
The definitions MTIER (Modified Times Interest Earned Ratio) and
MDSC (Modified Debt Service Coverage) are not currently in the
regulation and are added to assist applicants in better understanding
the program's requirements.
The definitions of TIER (Times Interest Earned Ratio Debt Service
Coverage), OTIER (Operating Times Interest Earned Ratio), DSC (Debt
Service Coverage) and ODSC (Operating Debt Service Coverage) are
updated to remove outdated sections and references and by reorganizing
remaining sections accordingly and improving logical flow.
7 CFR 1710.114 TIER, DSC, OTIER and ODSC Requirements
Paragraphs (a) and (b) will be modified to remove outdated language
and to reflect RUS' current Financial and Operating Reports.
Paragraph (b)1 will be modified to allow Modified Times Interest
Earned Ratio (MTIER) and Modified Debt Service Coverage (MDSC) to be
considered if a borrower does not meet the coverage requirements for
Operating Times Interest Earned Ratio (OTIER) and Operating Debt
Service Coverage (ODSC). This allows more flexibility to borrowers
regarding the coverage requirements.
III. Executive Orders and Acts
Executive Order 12866--Classification
This rule has been determined to be non-significant for purposes of
Executive Order (E.O.) 12866 and, therefore, has not been reviewed by
the Office of Management and Budget (OMB).
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Assistance Listing Number (Formally Known as the Catalog of Federal
Domestic Assistance)
The Assistance Listing Number assigned to the Rural Electrification
Loans and Loan Guarantees Program is 10.850. The Assistance Listings
are available on the internet at https://sam.gov/.
Executive Order 12372, Intergovernmental Review of Federal Programs
This rule is excluded from the scope of E.O. 12372,
Intergovernmental Consultation, which may require a consultation with
State and local officials. See the final rule related notice entitled,
``Department Programs and Activities Excluded from E.O. 12372'' (50 FR
47034) advising that RUS loans and loan guarantees were not covered by
E.O. 12372.
Paperwork Reduction Act
This rule contains no new reporting or recordkeeping burdens under
OMB control number 0572-0032 that would require approval under the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
National Environmental Policy Act
In accordance with the National Environmental Policy Act of 1969,
Public Law 91-190, this final rule has been reviewed in accordance with
7 CFR part 1970 (``Environmental Policies and Procedures''). RUS has
determined that (i) this action meets the criteria established in 7 CFR
1970.53(f); (ii) no extraordinary circumstances exist; and (iii) the
action is not ``connected'' to other actions with potentially
significant impacts, is not considered a ``cumulative action'' and is
not precluded by 40 CFR 1506.1. Therefore,
[[Page 12808]]
RUS has determined that the action does not have a significant effect
on the human environment, and therefore neither an Environmental
Assessment nor an Environmental Impact Statement is required.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally
requires an agency to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act (APA) or any other statute. The
Administrative Procedure Act exempts from notice and comment
requirements rules ``relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts'' (5 U.S.C.
553(a)(2)). This final rule is not subject to the APA under 5 U.S.C.
553(a)(2) and 5 U.S.C. 553(b)(3)(A) nor any other statute.
Executive Order 12988--Civil Justice Reform
This rule has been reviewed under E.O. 12988, Civil Justice Reform.
In accordance with this rule: (1) unless otherwise specifically
provided, all State and local laws that conflict with this rule will be
preempted; (2) no retroactive effect will be given to this rule except
as specifically prescribed in the rule; and (3) administrative
proceedings of the National Appeals Division of the Department of
Agriculture (7 CFR part 11) must be exhausted before bringing suit in
court that challenges action taken under this rule.
Unfunded Mandate Reform Act (UMRA)
Title II of the UMRA, Public Law 104-4, establishes requirements
for Federal Agencies to assess the effects of their regulatory actions
on State, local, and Tribal governments and on the private sector.
Under Section 202 of the UMRA, Federal Agencies generally must prepare
a written statement, including cost-benefit analysis, for proposed and
Final Rules with ``Federal mandates'' that may result in expenditures
to State, local, or Tribal governments, in the aggregate, or to the
private sector, of $100 million or more in any one year. When such a
statement is needed for a rule, section 205 of the UMRA generally
requires a Federal agency to identify and consider a reasonable number
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives
of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and Tribal
governments or for the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Executive Order 13132--Federalism
It has been determined, under E.O. 13132, Federalism, that 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 the States is not required.
Executive Order 13175--Consultation and Coordination With Indian Tribal
Governments
This executive order imposes requirements on RUS in the development
of regulatory policies that have Tribal implications or preempt Tribal
laws. RUS has determined that the rule does not have a substantial
direct effect on one or more Indian Tribe(s) or on either the
relationship or the distribution of powers and responsibilities between
the Federal Government and Indian Tribes. Thus, this rule is not
subject to the requirements of Executive Order 13175. If Tribal leaders
are interested in consulting with RUS on this rule, they are encouraged
to contact USDA's Office of Tribal Relations or RD's Native American
Coordinator at: [email protected] to request such a consultation.
E-Government Act Compliance
Rural Development is committed to the E-Government Act of 2002,
Public Law 107-347, which requires government agencies in general to
provide the public the option of submitting information or transacting
business electronically to the maximum extent possible and 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.
Civil Rights Impact Analysis
Rural Development has reviewed this rule in accordance with USDA
Regulation 4300-004, ``Civil Rights Impact Analysis,'' to identify any
major civil rights impacts the rule might have on program participants
on the basis of age, race, color, national origin, sex, disability,
marital or familial status. Based on the review and analysis of the
rule and all available data, issuance of this final rule is not likely
to negatively impact low and moderate-income populations, minority
populations, women, Indian Tribes, or persons with disability, by
virtue of their age, race, color, national origin, sex, disability, or
marital or familial status.
USDA Non-Discrimination Statement
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its Mission Areas, agencies, staff
offices, employees, and institutions participating in or administering
USDA programs are prohibited from discriminating based on race, color,
national origin, religion, sex, gender identity (including gender
expression), sexual orientation, disability, age, marital status,
family/parental status, income derived from a public assistance
program, political beliefs, or reprisal or retaliation for prior civil
rights activity, in any program or activity conducted or funded by USDA
(not all bases apply to all programs). Remedies and complaint filing
deadlines vary by program or incident.
Program information may be made available in languages other than
English. Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language) should contact the
responsible Mission Area, agency, or staff office; the USDA TARGET
Center at (202) 720-2600 (voice and TTY); or the 711 Relay Service.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, USDA Program Discrimination Complaint Form,
which can be obtained online at
https://www.usda.gov/oascr/how-to-file-a-program-discrimination-complaint from any USDA office, by calling (866) 632-9992, or by
writing a letter addressed to USDA. The letter must contain the
complainant's name, address, telephone number, and a written
description of the alleged discriminatory action in sufficient detail
to inform the Assistant Secretary for Civil Rights (ASCR) about the
nature and date of an alleged civil rights violation. The completed AD-
3027 form or letter must be submitted to USDA by:
a. Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410; or
b. Fax: (833) 256-1665 or (202) 690-7442; or
c. Email: [email protected].
[[Page 12809]]
List of Subjects in 7 CFR Part 1710
Electric power, Grant programs-energy, Loan programs-energy,
Reporting and recordkeeping requirements, Rural areas.
For the reason set forth in the preamble, RUS amends 7 CFR part
1710 as follows:
PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO
ELECTRIC LOANS AND GUARANTEES
0
1. The authority citation for part 1710 continues to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.
Subpart A--General
0
2. Amend Sec. 1710.2 in paragraph (a) by:
0
a. Revising the definition of ``DSC'';
0
b. Adding definitions in alphabetical order for ``MDSC'' and ``MTIER'';
and
0
c. Revising the definitions of ``DSC'', ``ODSC'', ``OTIER'', and
``TIER''.
The revisions and additions read as follows
Sec. 1710.2 Definitions and rules of construction.
(a) * * *
DSC means Debt Service Coverage of the borrower calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.002
Where:
A = Depreciation and Amortization Expense of the borrower, which
equals Part A, Line 13b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Section A, Line
22b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 24b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers, except that interest expense
shall be increased by \1/3\ of the amount, if any, by which
restricted rentals of the borrower (Part L, Total Column c) of the
RUS Financial and Operating Report Electric Distribution for
distribution borrowers or Part H, Section K, Total Column c of the
RUS Financial and Operating Report Electric Power Supply for power
supply borrowers) exceed 2 percent of the borrower's equity (RUS
Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
C = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part A, Section A, Line
38b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers; and
D = Debt Service Billed (RUS + other), which equals the sum of all
payments of principal and interest required to be made on account of
total long-term debt of the borrower during the calendar year from
Total of Column D of Part N of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers or Total of
Column D of Part H, Section H of the RUS Financial and Operating
Report Electric Power Supply for power supply borrowers, plus \1/3\
of the amount, if any, by which restricted rentals of the borrower
(Part L, Line 3c of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part H, Section K, Line
4c of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers) exceed 2 percent of the borrower's
equity (RUS Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
* * * * *
MDSC means Modified Debt Service Coverage of the electric system
calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.003
Where:
A = Depreciation and Amortization Expense of the borrower, which
equals Part A, Line 13b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 22b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 24b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers, except that interest expense
shall be increased by \1/3\ of the amount, if any, by which
restricted rentals of the borrower (Part L, Line 3c of the RUS
Financial and Operating Report Electric Distribution for
distribution borrowers or Part H, Section K, Line 4c of the RUS
Financial and Operating Report Electric Power Supply for power
supply borrowers) exceed 2 percent of the borrower's equity (RUS
Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
C = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part A, Section A, Line
38b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers; and
D = Generation and Transmission Capital Credits of the borrower,
which equals Part A, Line 26b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers or Part A,
Section A, Line 35b of the RUS Financial and Operating Report
Electric Power Supply for power supply borrowers;
E = Other Capital Credits and Patronage Dividends of the borrower,
which equals Part A, Line 27b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers or Part A,
Section A, Line 36b of the RUS Financial and Operating Report
Electric Power Supply for power supply borrowers; and
F = Total Long-Term Debt Service Billed (RUS + other), which equals
the sum of all payments of principal and interest required to be
made on account of total long-term debt of the electric system
during the calendar year from Part N, Line 12d of the RUS Financial
and Operating Report Electric Distribution for distribution
borrowers or Part H, Section H, Line 12d of the RUS Financial and
Operating Report Electric Power Supply for power supply borrowers.
* * * * *
MTIER means Modified Times Interest Earned Ratio of the electric
system calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.004
Where:
A = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, except that
interest expense shall be increased by \1/3\ of the amount, if any,
by which restricted
[[Page 12810]]
rentals of the borrower (Part L, Line 3c of the RUS Financial and
Operating Report Electric Distribution for distribution borrowers)
exceed 2 percent of the borrower's equity (RUS Financial and
Operating Report Electric Distribution for distribution borrowers,
Part C, Line 36 [Total Margins & Equities] less Part C, Line 27
[Regulatory Assets];
C = Generation and Transmission Capital Credits of the borrower,
which equals Part A, Line 26b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers; and
D = Other Capital Credits and Patronage Dividends of the borrower,
which equals Part A, Line 27b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers.
* * * * *
ODSC means Operating Debt Service Coverage of the electric system
calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.005
Where:
A = Depreciation and Amortization Expense of the borrower, which
equals Part A, Line 13b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, except that
interest expense shall be increased by \1/3\ of the amount, if any,
by which restricted rentals of the borrower (Part L, Line 3c of the
RUS Financial and Operating Report Electric Distribution for
distribution borrowers) exceed 2 percent of the borrower's equity
(RUS Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets];
C = Patronage Capital & Operating Margins of the electric system,
which equals Part A, Line 21b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers, plus cash
received from the retirement of patronage capital by suppliers of
electric power and by lenders for credit extended for the Electric
System from Part I, Line 2c of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers; and
D = Debt Service Billed (RUS + other), which equals the sum of all
payments of principal and interest required to be made on account of
total long-term debt of the electric system during the calendar year
from Part N, Line 12d of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, plus \1/3\ of the
amount, if any, by which restricted rentals of the Electric System
(Part L, Line 3c of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers) exceed 2 percent of the
borrower's equity (RUS Financial and Operating Report Electric
Distribution for distribution borrowers, Part C, Line 36 [Total
Margins & Equities] less Part C, Line 27 [Regulatory Assets]).
* * * * *
OTIER means Operating Times Interest Earned Ratio of the electric
system calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.006
Where:
A = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, except that
interest expense shall be increased by \1/3\ of the amount, if any,
by which restricted rentals of the borrower (Part L, Line 3c of the
RUS Financial and Operating Report Electric Distribution for
distribution borrowers) exceed 2 percent of the borrower's equity
(RUS Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets]); and
B = Patronage Capital & Operating Margins of the electric system,
which equals Part A, Line 21b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers, plus cash
received from the retirement of patronage capital by suppliers of
electric power and by lenders for credit extended for the Electric
System from Part I, Line 2c of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers.
* * * * *
TIER means Times Interest Earned Ratio of the borrower calculated
as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.007
Where:
A = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 24b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers, except that interest expense
shall be increased by \1/3\ of the amount, if any, by which
restricted rentals of the borrower (Part L, Line 3c of the RUS
Financial and Operating Report Electric Distribution for
distribution borrowers or Part H, Section K, Line 4c of the RUS
Financial and Operating Report Electric Power Supply for power
supply borrowers) exceed 2 percent of the borrower's equity (RUS
Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]); and
B = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part A, Section A, Line
38b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers.
* * * * *
0
3. Amend Sec. 1710.114 by revising paragraphs (a), (b)(1), and (e)(2)
to read as follows:
Sec. 1710.114 TIER, DSC, OTIER and ODSC requirements.
(a) General. Requirements for coverage ratios are set forth in the
borrower's mortgage, loan contract, or other contractual agreements
with RUS. Nothing in this section, however, shall limit the
Administrator's ability to contractually agree to a different ratio
provided in this section when doing so would advance or protect the
interests of the government.
* * * * *
(b) * * *
(1) The minimum coverage ratios required of distribution borrowers
whether applied on an annual or average basis of the 2 best years out
of the 3 most recent calendar years, are a TIER of 1.25, DSC of 1.25.
Further, the minimum coverage ratios required of distribution borrowers
whether applied on an annual or average basis of the 2 best years out
of the 3 most recent calendar years are an OTIER and ODSC of 1.1 or an
MTIER and MDSC of 1.1.
* * * * *
(e) * * *
(2) With respect to any outstanding loan approved by RUS if, based
on actual or projected financial performance of the borrower, RUS
determines that the borrower may not achieve its required coverage
ratios in the current or future years, RUS may withhold the advance of
loan funds until the borrower has taken remedial action satisfactory to
RUS.
Andrew Berke,
Administrator, Rural Utilities Service.
[FR Doc. 2023-04016 Filed 2-28-23; 8:45 am]
BILLING CODE 3410-15-P