[Federal Register Volume 64, Number 248 (Tuesday, December 28, 1999)]
[Rules and Regulations]
[Pages 72488-72490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33639]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1721
Post-Loan Policies and Procedures for Insured Electric Loans
AGENCY: Rural Utilities Service, USDA.
ACTION: Direct final rule.
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SUMMARY: As a part of its ongoing program to streamline regulations,
the Rural Utilities Service (RUS) is amending its regulation on the
advance of funds to reflect an increase in the threshold limit from
$25,000 to $100,000 for which plant investments may be made in the
borrowers' systems and be eligible for insured loan fund financing
without being included in an RUS-approved construction work plan (CWP).
In addition, RUS has determined to no longer limit borrowers to 130
percent of the project cost estimate for projects in the CWP or
amendment and approved loan, as amended, for which prior RUS approval
must be obtained. These changes will have the effect of reducing the
number of actions by borrowers that would otherwise require RUS
approval and will reduce administrative costs to borrowers and to the
agency.
DATES: This rule will become effective February 11, 2000 unless we
receive written adverse comments or notice of intent to submit adverse
comments on or before January 27, 2000. If we receive such comments or
notice, we will publish a timely withdrawal of the Direct Final Rule in
the Federal Register stating that the rule will not become effective
until we have addressed the comments received and published a final
rule. A second public comment period will not be held. Parties
interested in commenting on this action should do so at this time.
ADDRESSES: Submit adverse comments or notice of intent to submit
adverse comments to F. Lamont Heppe, Jr., Director, Program Development
and Regulatory Analysis, U.S. Department of Agriculture, Rural
Utilities Service, Stop 1522, 1400 Independence Ave., SW., Washington,
DC 20250-1522. RUS requests a signed original and three copies of all
comments (7 CFR 1700.4). Comments will be available for public
inspection during regular business hours (7 CFR 1.27(b)).
FOR FURTHER INFORMATION CONTACT: Charles M. Philpott, Chief,
Engineering Branch, Northern Regional Division, U.S. Department of
Agriculture , Rural Utilities Service, Room 4034 South Bldg., 1400
Independence Ave., SW., Washington, DC 20250-1522. Telephone: (202)
720-1432. E-mail: cphilpot@rus.usda.gov.
SUPPLEMENTARY INFORMATION:
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 (OMB).
Executive Order 12988
This 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 this
rule and (3) in accordance with Sec. 212(e) of the Department of
Agriculture Reorganization Act of 1994 (7 U.S.C. Sec. 6912(e))
administrative appeal procedures, if any are required, must be
exhausted prior to initiating litigation against the Department or its
agencies.
Regulatory Flexibility Act Certification
The Administrator of RUS has determined that this rule relating to
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. RUS borrowers, as a result
of obtaining federal financing, received economic benefits that exceed
any direct economic costs associated with complying with RUS
regulations and requirements.
Information Collection and Recordkeeping Requirements
The Office of Management and Budget has approved the reporting and
recordkeeping requirements contained in 7 CFR part 1721 under the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) and assigned
control number 0572-0032. This rule contains no additional information
collection or recordkeeping requirements.
National Environmental Policy Act Certification
The Administrator of RUS 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 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 local, and tribal governments or the private sector. A final rule
related notice entitled, ``Department Programs and Activities Excluded
from Executive
[[Page 72489]]
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, this rule
is not subject to the requirements of section 202 and 205 of the
Unfunded Mandates Reform Act of 1995.
Background
RUS is amending its regulations to change the definition of a minor
project from the current threshold level of $25,000 or less, to a
project costing $100,000 or less. Section 1721.1 restricts borrowers to
advances of insured loan funds for projects, except for minor projects,
that are included in an RUS approved borrower's construction work plan
(CWP) or CWP amendment. A minor project is defined as a project costing
$25,000 or less. A minor project is eligible for insured loan funding
without being included in an RUS-approved CWP or amendment. In RUS'
review of the impact of this rule on borrowers, we have determined that
the $25,000 limit for a minor project is creating unneeded paperwork
and cost burdens on borrowers requiring unnecessary CWP amendments to
be approved by RUS, without producing significant benefits. The
increase to $100,000 for a minor project will allow borrowers greater
flexibility in their construction programs and reduce the number of CWP
amendments requiring RUS approval. The level of $100,000 is considered
reasonable and adequate for purposes of monitoring borrowers'
construction programs and will provide sufficient safeguards to assure
that RUS loan funds are being used for intended loan purposes.
RUS is further amending its regulations to eliminate the
requirement that funding requests from borrowers not exceed 130 percent
of the project cost estimate, previously approved by RUS in the
borrowers' CWP or CWP amendment and in an approved loan.
Under Sec. 1721.1, the ``130 percent rule'' applies to each major
project included in the borrower's CWP and RUS approved loan. In RUS'
review of compliance with this rule, we have determined that the
majority of cases of noncompliance occur when borrowers exceed 130
percent of the cost estimate for projects coded in the 100 and 600
series. These project codes relate to the construction of distribution
line extensions and the installation of miscellaneous line equipment
required to provide electric service to new customers. Since a borrower
cannot accurately predict the number of new customers, significant cost
variations can and do occur in these projects from the time the cost
estimates were originally prepared in the CWP. In view of this, RUS is
amending the rule to remove the 130 percent limitation for the projects
coded 100 and 600.
Further, in reviewing the 130 percent rule as applied to the
remaining major project codes in the CWP and approved loan, most
borrowers are either providing good cost estimates for the projects in
the CWP and loan or are amending the CWP, as needed, based on factors
other than an increase in cost. Therefore, RUS is amending the
regulation to eliminate the ``130 percent rule'' in its entirety for
all major projects included in the borrowers' CWPs and RUS-approved
insured loans.
RUS believes that the changes under this rule will reduce
administrative costs to borrowers and to the Government and will relax
the RUS requirements under which borrowers may qualify for RUS insured
fund financing.
List of Subjects in 7 CFR Part 1721
Electric power, Loan programs--energy, Rural areas.
For the reasons set forth in the preamble, RUS amend 7 CFR chapter
XVII as follows:
PART 1721--POST-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC
LOANS
1. The authority citation for part 1721 is revised to read as
follows:
Authority: 7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.
2. Section 1721.1 is revised to read as follows:
Sec. 1721.1 Advances.
(a) Purpose and amount. With the exception of minor projects,
insured loan funds will be advanced only for projects which are
included in an RUS approved borrower's construction work plan (CWP) or
approved amendment and in an approved loan, as amended. Loan fund
advances can be requested in an amount representing actual costs
incurred.
(b) Minor project. Minor project means a project costing $100,000
or less. Such a project qualifies for advance of loan funds even though
it may not have been included in an RUS-approved borrower's CWP,
amendment to such CWP, or approved loan. Total advances requested shall
not exceed the total loan amount. All projects for which loan fund
advances are requested must be constructed to achieve purposes
permitted by terms of the loan contract between the borrower and RUS.
(c) Certification. Pursuant to the applicable provisions of the RUS
loan contract, borrowers shall certify with each request for funds to
be approved for advance that such funds are for projects in compliance
with this section and shall also provide for those that cost in excess
of $100,000, a contract or work order number as applicable and a CWP
cross-reference project coded identification number. For a minor
project not included in an RUS approved borrower's CWP, the Borrower
shall describe the project and do one of the following to satisfy RUS'
environmental requirements (see 7 CFR part 1794).
(1) If applicable, state that the project is a categorical
exclusion of a type described in Sec. 1794.21(b), which normally does
not require preparation of an Environmental Report (ER); or
(2) If applicable, state that the project is a categorical
exclusion of a type that normally requires an ER and then:
(i) Submit the ER with the request for funds to be approved for
advance, or
(ii) If applicable, certify that it has analyzed the minor project
with respect to a comprehensive service area environmental map and data
base collected and used in preparing the ER for its RUS-approved
borrower's CWP, and that on the basis of that information, the minor
project will not be located in an environmentally sensitive area or
location.
(d) Noncompliance. Where insured loan funds are found to have been
advanced in noncompliance with this section, borrowers will be required
to deposit the appropriate amount of the over-advance in the
construction fund-trustee account and pay any accrued and unpaid
interest to RUS. The Administrator will require borrowers, in order to
remedy such noncompliance, to pay an additional amount equal to the
interest on the funds over-advanced for the period such funds were
outstanding, calculated at a rate equal to the difference between the
RUS loan interest rate and the most recent rate at which RUS sold
Certificates of Beneficial Ownership (CBO's). While RUS will generally
permit the amount of over-advance deposited in the construction fund-
trustee account to be subsequently used by the borrower for RUS
approved projects, nothing in this section shall be construed to
preclude RUS from exercising any rights or
[[Page 72490]]
remedies which RUS may have pursuant to the loan contract.
Dated: December 21, 1999.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 99-33639 Filed 12-27-99; 8:45 am]
BILLING CODE 3410-15-P
