```

[Code of Federal Regulations]
[Title 7, Volume 11, Parts 1600 to 1899]
[Revised as of January 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1721]

[Page 234-235]
 
PART 1721--POST-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC LOANS

    Authority: 7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.

    Editorial Note: Nomenclature changes to part 1721 appear at 55 FR 
39397, Sept. 27, 1990.

                       Subpart A--Advance of Funds

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.

[[Page 235]]

    (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 remedies which RUS may have pursuant to 
the loan contract.

[64 FR 72489, Dec. 28, 1999]

    Effective Date Note: At 64 FR 72489, Dec. 28, 1999, Sec. 1721.1 was 
revised, effective Feb. 11, 2000. For the convenience of the user, the 
superseded text is set forth as follows:

Sec. 1721.1  Advances.

    (a) Purpose and amount. With the exception of minor construction, 
insured loan funds will be advanced only for projects which are included 
in an RUS approved Borrower's construction workplan or approved 
amendment and in an approved loan, as amended. Loan fund advances can be 
requested in an amount representing actual costs incurred but not to 
exceed 130 percent of the project cost estimate on the approved RUS Form 
740c, ``Costs Estimates and Loan Budget for Electric Borrowers,'' 
<SUP>1</SUP> as amended. Minor construction is defined as a project 
costing $25,000 or less. Such projects qualify for advance of loan funds 
even though they may not have been included in an RUS-approved 
Borrower's construction workplan, amendment to such workplan 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.
---------------------------------------------------------------------------

    \1\ A copy of these forms and publications may be obtained by 
writing the Rural Utilities Service, Washington, DC 20250.
---------------------------------------------------------------------------

    (b) 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 
$25,000 a contract or work order number as applicable and a workplan 
cross-reference identification.
    For a minor project not included in an RUS approved Borrower's 
construction workplan, the Borrower shall describe the project and do 
one of the following to satisfy RUS's environmental requirements (see 7 
CFR part 1794).
    (1) If applicable, state that the project is a categorical exclusion 
of a type described in 7 CFR 1794.31(b) which normally does not require 
preparation of a Borrower's Environmental Report (BER); or
    (2) If applicable, state that the project is a categorical exclusion 
of a type that normally requires a BER and then:
    (i) Submit the BER 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 BER for its RUS-approved 
Borrower's construction workplan, and that on the basis of that 
information the minor project will not be located in an environmentally 
sensitive area or location.
    (c) Noncompliance. Where insured loan funds are found to have been 
advanced in noncompliance with this rule, Borrowers will be required to 
return the appropriate amount of the over advance together with 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 returned to be 
requested subsequently by the Borrower for RUS approved projects, 
nothing herein contained shall be construed to preclude RUS from 
exercising any rights or remedies which RUS may have pursuant to the 
loan contract.

[50 FR 5368, Feb. 8, 1985. Redesignated at 55 FR 39395, Sept. 27, 1990]

Subpart B  [Reserved]

[[Page 236]]
```