[Federal Register Volume 63, Number 15 (Friday, January 23, 1998)]
[Rules and Regulations]
[Pages 3449-3453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1661]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 63, No. 15 / Friday, January 23, 1998 / Rules
and Regulations
[[Page 3449]]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1730
RIN 0572-AA74
Electric System Operations and Maintenance
AGENCY: Rural Utilities Service, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Utilities Service (RUS) is amending its regulations
by adding a new part on electric system operations and maintenance.
This action codifies and clarifies RUS policy relating to the
operations and maintenance of electric systems by RUS electric
borrowers. This rule also contains provisions relating to the review
and evaluation of borrowers' electric systems and facilities operations
and maintenance practices. These policies are presently contained in
RUS Bulletin 161-5, which will be rescinded when the final rule becomes
effective. This action clarifies the policies, procedures, and
requirements, facilitates understanding and compliance, and improves
program effectiveness with respect to electric system operations and
maintenance.
EFFECTIVE DATE: This rule is effective February 23, 1998.
FOR FURTHER INFORMATION CONTACT: Mr. Fred J. Gatchell, Deputy Director,
Electric Staff Division, Rural Utilities Service, U.S. Department of
Agriculture, Stop 1569, 1400 Independence Ave., SW., Washington, DC
20250-1569, telephone (202) 720-1398, e-mail fgatchel@rus.usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not significant for the
purposes of Executive Order 12866 and therefore has not been reviewed
by the Office of Management and Budget (OMB).
Regulatory Flexibility Act Certification
The Administrator of RUS has determined that a rule relating to the
RUS electric loan program is not a rule as defined in the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), and, therefore, the Regulatory
Flexibility Act does not apply to this rule.
National Environmental Policy Act Certification
The Administrator 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, the United
States Government Printing Office, Washington, DC 20402-9325.
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. A Final Rule-Related Notice entitled,
``Department Programs and Activities Excluded from Executive Order
12372,'' (50 Fed. Reg. 47034) exempted RUS loans and loan guarantees
from coverage under this order.
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 in section 3 of the Executive Order.
National Performance Review
This regulatory action is being taken as part of the National
Performance Review program to eliminate unnecessary regulations and
improve those that remain in force.
Information Collection and Recordkeeping Requirements
The recordkeeping and reporting burdens contained in this rule were
approved by OMB pursuant to the Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35) under control number 0572-0025.
Unfunded Mandates
This rule contains no Federal mandates (under the regulatory
provision of Title II of the Unfunded Mandates Reform Act) for State,
local, and tribal governments or the private sector. Thus, this rule is
not subject to the requirements of section 202 and 205 of the Unfunded
Mandates Reform Act.
Background
RUS has promulgated policies and procedures regarding the review
and evaluation of the operations and maintenance practices of RUS
financed electric systems. These policies and procedures are presently
contained in RUS Bulletin 161-5, Electric System Review and Evaluation.
The security instrument and loan contract between RUS and electric
borrowers set certain standards for the operation and maintenance of
each borrower's electric system. The purpose of this rule is to
implement the operations and maintenance provisions of the security
instrument and loan contract between RUS and electric borrowers and to
consolidate and clarify RUS policies and procedures with respect to
electric system operations and maintenance. Most of the provisions of
this rule represent policies and requirements that have been in effect
for some time. One new provision expands the requirement for electric
system review and evaluation of borrower's electric systems to include
power supply borrowers in addition to the distribution borrowers
presently covered by Bulletin 161-5. Proper operation and maintenance
practices are equally significant for power supply borrowers, so RUS
believes that power supply borrowers' operation and maintenance
practices should be covered under the review and evaluation
requirements of this rule. RUS Form 300, Review Rating Summary, has
also been updated and revised based on RUS' experience using this form.
[[Page 3450]]
Comments
On April 16, 1997, RUS published a proposed rule at 62 Fed. Reg.
18544. Comments were received from ten parties, including two
cooperative associations, a borrower engineering committee, two
distribution borrowers, and five power supply borrowers. RUS considered
all comments received. The significant and most commonly made comments
are addressed herein.
Several commenters requested that RUS provide more guidance and
supplemental information regarding these requirements, especially the
ratings of the items on RUS Form 300, Review Rating Summary. RUS is
currently preparing Bulletin 1730-1, ``Electric System Operation and
Maintenance (O&M),'' which will provide guidelines related to O&M,
including a rating guide for RUS Form 300.
Some commenters requested that RUS provide for an ``alternative
dispute resolution'' procedure if a borrower disagrees with a rating or
determination made by RUS. This type of disagreement has rarely
occurred, and RUS believes that an adequate appeal avenue already
exists. Any disagreements with the RUS staff's rating can always be
appealed with the Regional Director or the Administrator.
One commenter requested that this rule address more operational
concerns, such as momentary interruptions, voltage stability, job
training and safety, and lightning protection. It was also suggested
that RUS require that an O&M survey be completed prior to beginning a
new construction work plan (CWP) or long-range engineering plan (LRP).
RUS encourages borrowers to expand and elaborate on the O&M
requirements prescribed by this rule to meet their specific needs;
however, RUS has decided not to expand the requirements of this rule in
these areas.
Some commenters recommended that the O&M reviews be limited to
specific areas where a borrower has experienced problems, to borrowers
with specific financial problems, or to certain specific types of
facilities. RUS believes that all aspects of all borrowers' O&M should
be reviewed periodically and these reviews should cover all facilities.
These reviews can reveal potential problem areas that can be corrected
before they manifest themselves as operational or financial
difficulties. Therefore, RUS has not changed the scope of this rule.
Several commenters pointed out that the proposed rule does not
adequately address borrowers who own but do not operate certain
facilities. The rule has been changed to address this situation.
Several commenters requested that the frequency of inspection and
test be determined giving due consideration to the manufacturer's
recommendations, but that borrowers should not be specifically required
to blindly follow such recommendations. RUS agrees and has revised the
rule accordingly.
Some commenters requested that RUS clarify the requirement to
evaluate compliance with the prior editions of the National Electrical
Safety Code (NESC) and the National Electrical Code (NEC), when
applicable. The rule has been clarified with respect to the NEC. Since
the NESC itself specifically addresses facilities that comply with
prior editions of the NESC, no change is needed in the rule with
respect to the NESC.
Several commenters requested that RUS eliminate duplication of
reviews made by other Federal agencies and State commissions, etc. The
rule has been changed to indicate that RUS will not duplicate these
reviews, but may review the reports of these other reviewers. Since
some of these other reviews may target a specific area (e.g., safety),
and the RUS' review covers a wider range of areas (e.g., safety,
reliability, economy, etc.), the RUS review may partially overlap the
reviews of others.
Several commenters requested that RUS eliminate the requirement for
an explanation of the borrower's rating of acceptable items. It is not
RUS' intent to require an extensive discussion of these items, but
simply an explanation of how the borrower arrived at its rating. RUS
believes that this should involve little extra effort and should
improve the overall value of the review, so no change has been made to
this requirement.
One commenter suggested that RUS require that the borrower's Board
of Directors be appraised of the findings of the O&M review. Item 15 of
RUS Form 300 calls for the date that the O&M review was reviewed by the
Board of Directors. For purposes of clarifying the rule, a specific
provision has been added to the rule requiring discussion of the O&M
review with the Board of Directors.
One commenter suggested that RUS not require a corrective action
plan (CAP) in all cases where there is an unsatisfactory (i.e., 0 or 1)
rating. RUS considers any unsatisfactory rating to be a potentially
serious problem, so a CAP should be prepared. However, if the
correction of the deficiency is already underway or can be accomplished
in a short time or simply, the CAP may be very short and simple, such
as referring to an item in an approved CWP. The rule does not specify
the format or amount of detail required for a CAP, so that borrowers
have sufficient flexibility to tailor it to the seriousness and
complexity of the problem. No change has been made to this requirement.
A number of commenters requested that RUS clarify or eliminate
various items on the RUS Form 300. RUS has reviewed these items and has
determined that requiring ``Staff Hours'' under part IV, Operations and
Maintenance Budgets, is confusing, burdensome, and of limited benefit.
This item has been deleted. RUS believes that Bulletin 1730-1,
``Electric System Operation and Maintenance (O&M),'' should provide
additional guidance.
Some commenters are concerned that RUS requirements with respect to
O&M may require excessive and unavailable funding. RUS recognizes that
correcting operating and maintenance deficiencies may indeed be
expensive, especially if the system has been allowed to deteriorate.
Nevertheless, proper O&M of borrowers' systems is essential to the
success of the rural electric program and to protecting the property
that is the security for the Government's loans and guarantees. It is
essential that each borrower budget sufficient resources to operate and
maintain its system efficiently and properly.
One commenter stated that ``this wasteful activity [the proposed
rule] is unneeded, unnecessary and without common sense.'' RUS
disagrees. As stated above, proper O&M of borrowers' systems is
essential to the success of the rural electric program and to
protecting the property that is the security for the Government's loans
and guarantees. This rule is intended to clearly outline RUS policies
and procedures and the borrowers' responsibilities with respect to O&M.
List of Subjects in 7 CFR Part 1730
Electric power, Loan programs--energy, Reporting and recordkeeping
requirements, Rural areas.
In view of the above, RUS hereby amends 7 CFR chapter XVII by
adding part 1730 to read as follows:
PART 1730--ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE
Subpart A--General
Sec.
1730.1 Introduction.
1730.2 RUS policy.
1730.3 RUS addresses.
1730.4 Definitions.
1730.5-1730.19 [Reserved]
[[Page 3451]]
Subpart B--Operations and Maintenance Requirements
1730.20 General.
1730.21 Inspections and tests.
1730.22 Borrower analysis.
1730.23 Review rating summary, RUS Form 300.
1730.24 RUS review and evaluation.
1730.25 Corrective action.
1730.26 Engineer's certification.
1730.27-1730.99 [Reserved]
Appendix A to Subpart B of Part 1730--Review Rating Summary, RUS
Form 300
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Subpart A--General
Sec. 1730.1 Introduction.
(a) This part contains the policies and procedures of the Rural
Utilities Service (RUS) related to electric borrowers' operation and
maintenance practices and RUS' review and evaluation of such practices.
(b) The policies and procedures included in this part apply to all
electric borrowers (both distribution borrowers and power supply
borrowers) and are intended to clarify and implement certain provisions
of the security instrument and loan contract between RUS and electric
borrowers regarding operations and maintenance. This part is not
intended to waive or supersede any provisions of the security
instrument and loan contract between RUS and electric borrowers.
(c) The Administrator may waive, for good cause, on a case by case
basis, certain requirements and procedures of this part.
Sec. 1730.2 RUS policy.
It is RUS policy to require that all property of a borrower be
operated and maintained properly in accordance with the requirements of
each borrower's loan documents. It is also RUS policy to provide
financial assistance only to borrowers whose operations and maintenance
practices and records are satisfactory or to those who are taking
corrective actions expected to make their operations and maintenance
practices and records satisfactory to RUS.
Sec. 1730.3 RUS addresses.
(a) Persons wishing to obtain forms referred to in this part should
contact: Program Support and Regulatory Analysis, Rural Utilities
Service, U.S. Department of Agriculture, Stop 1522, 1400 Independence
Ave., SW., Washington, DC 20250-1522, telephone (202) 720-8674.
Borrowers or others may reproduce any of these forms in any number
required.
(b) Documents required to be submitted to RUS under this part are
to be sent to the office of the borrower's assigned RUS General Field
Representative (GFR) or such other office as designated by RUS.
Sec. 1730.4 Definitions.
Terms used in this part have the meanings set forth in 7 CFR Part
1710.2. References to specific RUS forms and other RUS documents, and
to specific sections or lines of such forms and documents, shall
include the corresponding forms, documents, sections and lines in any
subsequent revisions of these forms and documents. In addition to the
terms defined in 7 CFR Part 1710.2, the term Prudent Utility Practice
has the meaning set forth in Article 1, Section 1.01 of Appendix A to
Subpart B of 7 CFR Part 1718--Model Form of Mortgage for Electric
Distribution Borrowers, for the purposes of this Part.
Secs. 1730.5-1730.19 [Reserved]
Subpart B--Operations and Maintenance Requirements
Sec. 1730.20 General.
Each distribution borrower and power supply borrower 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, for maintaining records of
the physical and electrical condition 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 in accordance with the requirements of this
part. 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.
Sec. 1730.21 Inspections and tests.
(a) Each borrower shall conduct all necessary inspections and tests
of the component parts of its electric system, and maintain adequate
records of such inspections and tests.
(b) The frequency of inspection and testing will be determined by
the borrower in conformance with applicable laws, regulations, national
standards, and Prudent Utility Practice. The frequency of inspection
and testing will be determined giving due consideration to the type of
facilities or equipment, manufacturer's recommendations, age, operating
environment and hazards to which the facilities are exposed,
consequences of failure, and results of previous inspections and tests.
The records of such inspections and tests will be retained in
accordance with applicable regulatory requirements and Prudent Utility
Practice. The retention period should be of a sufficient time period to
identify long-term trends. Records must be retained at least until the
applicable inspections or tests are repeated.
(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. 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.
Sec. 1730.22 Borrower analysis.
(a) Each borrower shall periodically analyze in writing its
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 condition or the operational effectiveness of the system or
suggest a need for changes in operations or maintenance practices. 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 operations and maintenance policies,
practices, and procedures are to be reviewed and evaluated by RUS, the
borrower shall:
(1) Conduct the analysis required by paragraph (a) of this section
not more
[[Page 3452]]
than 90 days prior to the scheduled RUS review;
(2) Complete RUS Form 300, Review Rating Summary, and other related
forms, prior to RUS' review and evaluation; and
(3) Make available to RUS the borrower's completed RUS Form 300
(including a written explanation of the basis for each rating) and
records related to the operations and maintenance of the borrower's
system.
(c) For those facilities not included on the RUS Form 300 (e.g.,
generating plants), the borrower shall prepare and complete an
appropriate supplemental form for such facilities.
Sec. 1730.23 Review rating summary, RUS Form 300.
RUS Form 300 in Appendix A shall be used when required by this
part.
Sec. 1730.24 RUS review and evaluation.
RUS will initiate and conduct a periodic review and evaluation of
the operations and maintenance practices of each borrower for the
purpose of assessing loan security and determining borrower compliance
with RUS policy as outlined in this part. This review will normally be
done at least once every three years. The borrower will make available
to RUS the borrower's policies, procedures, and records related to the
operations and maintenance of its complete system. Reports made by
other inspectors (e.g., other Federal agencies, State inspectors, etc.)
will also be made available, as applicable. RUS will not duplicate
these other reviews but will use their reports to supplement its own
review. RUS may inspect facilities, as well as records, and may also
observe construction and maintenance work in the field. Key borrower
personnel responsible for the facilities being inspected are to
accompany RUS during such inspections, unless otherwise determined by
RUS. RUS personnel may prepare an independent summary of the operations
and maintenance practices of the borrower. The borrower's management
will discuss this review and evaluation with its Board of Directors.
Sec. 1730.25 Corrective action.
(a) For any items on the RUS Form 300 rated unsatisfactory (i.e., 0
or 1) by the borrower or by RUS, the borrower shall prepare a
corrective action plan (CAP) outlining the steps (both short term and
long term) the borrower will take to improve existing conditions and to
maintain an acceptable rating. The CAP must include a time schedule and
cost estimate for corrective actions, and must be approved by the
borrower's Board of Directors. The CAP must be submitted to RUS for
approval within 90 days after the completion of RUS' evaluation noted
in Sec. 1730.24.
(b) The borrower must periodically report to RUS in writing
progress under the CAP. This report must be submitted to RUS every six
months until all unsatisfactory items are corrected unless RUS
prescribes a different reporting schedule.
Sec. 1730.26 Engineer's certification.
Where provided for in the borrower's loan documents, RUS may
require the borrower to provide an ``Engineer's Certification'' as to
the condition of the borrower's system (including, but not limited to,
all mortgaged property.) Such certification shall be in form and
substance satisfactory to RUS and shall be prepared by a professional
engineer satisfactory to RUS. If RUS determines that the Engineer's
Certification discloses a need for improvements to the condition of its
system or any other operations of the borrower, the borrower shall,
upon notification by RUS, promptly undertake to accomplish such
improvements.
Secs. 1730.27-1730.99 [Reserved]
Appendix--A to Subpart B of Part 1730--Review Rating Summary, RUS
Form 300
Borrower Designation ________
Date Prepared ________
Ratings on form are:
0: Unsatisfactory--no records
1: Unsatisfactory--corrective action needed
2: Acceptable, but should be improved--see attached
recommendations
3: Satisfactory--no additional action required at this time
N/A: Not applicable
PART I--TRANSMISSION and DISTRIBUTION FACILITIES
1. Substations (Transmission and Distribution)
a. Safety, Clearance, Code Compliance--Rating: ________
b. Physical Condition: Structure, Major Equipment, Appearance--
Rating: ________
c. Inspection Records Each Substation--Rating: ________
d. Oil Spill Prevention--Rating: ________
2. Transmission Lines
a. Right-of-Way: Clearing, Erosion, Appearance, Intrusions--
Rating: ________
b. Physical Condition: Structure, Conductor, Guying--Rating:
________
c. Inspection Program and Records--Rating: ________
3. Distribution Lines--Overhead
a. Inspection Program and Records--Rating: ________
b. Compliance with Safety Codes: Clearances--Rating: ________
Compliance with Safety Codes: Foreign Structures--Rating:
________
Compliance with Safety Codes: Attachments--Rating: ________
c. Observed Physical Condition from Field Checking: Right-of-
Way--Rating: ________
Observed Physical Condition from Field Checking: Other--Rating:
________
4. Distribution--Underground Cable
a. Grounding and Corrosion Control--Rating: ________
b. Surface Grading, Appearance--
Rating: ________
c. Riser Poles: Hazards, Guying, Condition--Rating: ________
5. Distribution Line Equipment: Conditions and Records
a. Voltage Regulators--Rating: ________
b. Sectionalizing Equipment--
Rating: ________
c. Distribution Transformers--
Rating: ________
d. Pad Mounted Equipment--Safety: Locking, Dead Front,
Barriers--Rating: ________
Pad Mounted Equipment--Appearance: Settlement, Condition--
Rating: ________
e. Kilowatt-hour and Demand Meter Reading and Testing--Rating:
________
PART II--OPERATION AND MAINTENANCE
6. Line Maintenance and Work Order Procedures
a. Work Planning and Scheduling--
Rating: ________
b. Work Backlogs: Right-of-Way Maintenance--Rating: ________
Work Backlogs: Poles--Rating: ________
Work Backlogs: Retirement of Idle Services--Rating: ________
Work Backlogs: Other--Rating: ________
7. Service Interruptions
a. Average Annual Hours/Consumer by Cause (Complete for each of
the previous 5 years)
1. Power Supplier ________
2. Major Storm ________
3. Scheduled ________
4. All Other ________
5. Total ________
Rating: ________
b. Emergency Restoration Plan--Rating:________
8. Power Quality
General Freedom from Complaints--Rating:________
9. Loading and Load Balance
a. Distribution Transformer Loading--Rating:________
b. Load Control Apparatus--Rating:________
c. Substation and Feeder Loading--Rating:________
10. Maps and Plant Records
a. Operating Maps: Accurate and Up-to-Date--Rating:________
b. Circuit Diagrams--Rating:________
c. Staking Sheets--Rating:________
PART III--ENGINEERING
11. System Load Conditions and Losses
a. Annual System Loses, ________%--Rating:________
b. Annual Load Factor, ________%--Rating:________
[[Page 3453]]
c. Power Factor at Monthly Peak, ________%--Rating:________
d. Ratio of Individual Substation Peak kW to kVA, ________--
Rating:________
12. Voltage Conditions
a. Voltage Surveys--Rating:________
b. Substation Transformer Output Voltage Spread--Rating:________
13. Load Studies and Planning
a. Long Range Engineering Plan--Rating:________
b. Construction Work Plan--Rating:________
c. Sectionalizing Study--Rating:________
d. Load Data for Engineering Studies--Rating:________
e. Load Forecasting Data--Rating:________
PART IV--OPERATION AND MAINTENANCE BUDGETS
For Previous 2 Years:
Normal Operation--Actual $________
Normal Maintenance--Actual $________
Total--Actual $________
For Present Year:
Normal Operation--Budget $________
Normal Maintenance--Budget $________
Total--Budget $________
For Future 3 Years:
Normal Operation--Budget $________
Normal Maintenance--Budget $________
Additional (Deferred) Maintenance--Budget $________
Total--Budget $________
14. Budgeting:
Adequacy of Budgets For Needed Work--Rating:________
15. Date Discussed with Board of Directors ________
Remarks: ________
EXPLANATORY NOTES
Item No. ________ Comments ________
Rated by ________ ________ Title ________ Date ________
Reviewed by ________ Manager ________ Date ________
Reviewed by ________ RUS GFR ________ Date ________
Dated: January 14, 1998.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 98-1661 Filed 1-22-98; 8:45 am]
BILLING CODE 3510-15-P
