[Federal Register Volume 63, Number 192 (Monday, October 5, 1998)]
[Rules and Regulations]
[Pages 53276-53278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26484]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1710
RIN 0572-AA89
Long-Range Financial Forecasts of Electric Borrowers
AGENCY: Rural Utilities Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule amends the Rural Utilities Service's (RUS)
regulations on long-range financial forecasting. This final rule
provides that RUS may request a sensitivity study on a case-by-case
basis.
EFFECTIVE DATE: This final rule is effective November 4, 1998.
FOR FURTHER INFORMATION CONTACT: Alex Cockey, STOP 1560, Deputy
Assistant Administrator, Electric Program, Rural Utilities Service,
U.S. Department of Agriculture, 1400 Independence Ave., SW.,
Washington, DC 20250-1560, telephone number: (202) 720-9545, E-mail:
acockey@rus.usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be not significant for
purposes of Executive Order 12866 and, therefore, has not been reviewed
by OMB.
Executive Order 12988
This final rule has been reviewed in accordance with Executive
Order 12988, Civil Justice Reform. RUS has determined that this final
rule meets the applicable standards provided in section 3 of the
Executive Order.
In accordance with the Executive Order and the rule; (1) all State
and local laws and regulations that are in conflict with this rule will
be preempted; (2) no retroactive effect will be given to the rule; and
(3) administrative proceedings are required to be exhausted prior to
initial litigation against the Department (7 U.S.C. 6912).
Regulatory Flexibility Act Certification
The Administrator of RUS has determined the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) definition of the rule does not include
rules related to the RUS electric program, and therefore, the
Regulatory Flexibility Act does not apply to this rule.
Information Collection and Recordkeeping Requirements
The reporting and recordkeeping requirements contained in this
final rule were approved by the Office of Management and Budget (OMB)
[[Page 53277]]
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35,
as amended) under control number 0572-0032.
Send questions or comments regarding this burden or any other
aspect of this collection of information, including suggestions for
reducing the burden to F. Lamont Heppe, Jr., Director, Program
Development and Regulatory Analysis, Rural Utilities Service, USDA,
1400 Independence Ave., STOP 1522, Washington, DC 20250-1522.
National Environmental Policy Act Certification
The Administrator of RUS 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.
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
number (202) 512-1800.
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 FR 47034) determined that RUS loans and loan guarantees
were not covered by Executive Order 12372.
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 today's rule
is not subject to the requirements of section 202 and 205 of the
Unfunded Mandates Reform Act.
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.
Background
The Rural Utilities Services (RUS), makes loans, loan guarantees to
RUS electric borrowers, and provides accommodations of its lien in
order for the electric borrowers to provide electric service to new
consumers, and to improve the quality and quantity of electric service
to existing consumers in rural areas, as authorized by the Rural
Electrification Act of 1936, as amended, 7 U.S.C. 901 et seq. (RE Act).
RUS, pursuant to the RE Act, may make a loan only if the Administrator
of RUS determines that the security thereof is reasonably adequate and
such loan will be repaid within the time agreed.
RUS regulations establishing the requirement that borrowers submit
a long-range financial forecast as part of and to support a loan
application are contained at 7 CFR part 1710, subpart G. Part 1717,
subparts R and S of 7 CFR contains the policies for lien accommodations
and subordinations by RUS of its first lien on borrower's systems and
facilities. RUS requires borrowers to submit a long-range financial
forecast as part of certain applications requesting a lien
accommodation or subordination of its lien. A long-range financial
forecast demonstrates that a borrower's system is economically viable
currently and in the projected time period. This rule changes some of
the requirements regarding long-range financial forecasts.
On May 20, 1997, at 62 FR 27546, RUS published a proposed rule to
clarify the financial forecasting requirement for all electric
borrowers. The comment period on the proposed rule closed July 21,
1997. Comments received from one borrower regarding the proposed rule
are presented as follows:
The proposed rule eliminated the minimum dollar threshold that,
when met, necessitated a sensitivity analysis by the borrower. The
commenter proposed that the minimum dollar amounts be retained. The
commenter proposed that the dollar amounts be increased from $25
million to $40 million for power supply borrowers and from $3 million
to $5 million for distribution borrowers.
RUS has determined that setting arbitrary thresholds for requiring
sensitivity studies serves no useful purposes at this time. In some
cases the dollar amounts would create unnecessary work for a borrower
and for RUS if they remained. In other cases, where borrowers would
fall under the minimum dollar amounts, sensitivity analysis would still
be needed. RUS has concluded that the determination as to when a
sensitivity analysis should be required should be done on a case-by-
case basis at the time a borrower requests an action or approval by
RUS. RUS has, however, added examples of those factors that will be
taken into account in determining when a sensitivity analysis will be
required. It is not, of course, possible to anticipate all factors that
will affect the determination. Consequently, the factors listed are
examples and are not intended to limit the determination of RUS. The
variables to be tested by the sensitivity analysis will be determined
by RUS in consultation with the borrower, at an appropriate time.
List of Subjects in 7 CFR Part 1710
Electric power, Electric utilities, Loan programs--energy,
Reporting and recordkeeping, Rural areas.
For reasons set forth in the preamble, RUS hereby amends 7 CFR
chapter XVII as follows:
PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO
INSURED AND GUARANTEED ELECTRIC LOANS
1. The authority citation for part 1710 continues to read as
follows:
Authority: 7 U.S.C. 901-905(b), Pub. L. 99-591, 100 Stat. 3341;
Pub. L. 103-354, 108 Stat. 3178, (7 U.S.C. 6941 et seq.).
2. Section 1710.300 is amended by removing paragraph (f) and
revising paragraph (d)(5) to read as follows:
Sec. 1710.300 General.
* * * * *
(d) * * *
(5) A sensitivity analysis may be required by RUS on a case-by-case
basis taking into account such factors as the number and type of large
power loads, projections of future borrowings and the associated
interest, projected loads, projected revenues, and the probable future
competitiveness of the borrower. When RUS determines that a sensitivity
analysis is necessary for distribution borrowers, the variables to be
tested will be determined by the General Field Representative in
consultation with the borrower and the regional office. The regional
office will consult with the Power Supply Division in the case of
generation projects for distribution borrowers. For power supply
borrowers, the variables to be tested will be determined by the
borrower and the Power Supply Division.
* * * * *
[[Page 53278]]
3. Section 1710.302 is amended by revising paragraphs (b), (d)(1),
and (d)(5), to read as follows:
Sec. 1710.302 Financial forecasts--power supply borrowers.
* * * * *
(b) The financial forecast shall cover a period of 10 years. RUS
may request projections for a longer period of time if RUS deems
necessary.
* * * * *
(d) * * *
(1) Identify all plans for generation and transmission capital
additions and system operating expenses on a year-by-year basis,
beginning with the present and running for 10 years, unless a longer
period of time has been requested by RUS.
* * * * *
(5) Include sensitivity analysis if required by RUS pursuant to
Sec. 1710.300(d)(5).
* * * * *
Dated: September 28, 1998.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 98-26484 Filed 10-2-98; 8:45 am]
BILLING CODE 3410-15-P
