3726 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations

expenses. Accordingly, the Department

returned the recommendation to the

Committee for reconsideration.

The Committee conducted a

telephone vote on November 21, 1994,

and approved by a majority vote a

revised budget with an additional

$20,000 for salaries. There were two

Committee members who were

unavailable to vote. The Committee’s

recommended revised total expense

amount is $74,427, which is $29,117

less in expenses than the previous year.

The Committee also recommended

not to have an assessment rate for the

1995 fiscal year. The $2,500 in interest

income and $71,927 from the

Committee’s authorized reserves will

adequately cover estimated expenses.

Major expense categories for the 1995

fiscal year include $24,000 for the

Western Grape Leaf Skeletonizer

project, $12,487 for salaries, $20,000 for

salaries of Los Angeles Market

inspectors and $4,440 for rent. Funds in

the reserve at the end of the 1995 fiscal

year are estimated at $93,431.

This action will not impose additional

costs on handlers. The Administrator of

the AMS has determined that this action

will not have a significant economic

impact on a substantial number of small

entities.

After consideration of all relevant

matter presented, including the

information and recommendations

submitted by the Committee and other

available information, it is hereby found

that this rule as hereinafter set forth will

tend to effectuate the declared policy of

the Act.

Pursuant to 5 U.S.C. 553, it is also

found and determined upon good cause

that it is impracticable, unnecessary,

and contrary to the public interest to

give preliminary notice prior to putting

this rule into effect and that good cause

exists for not postponing the effective

date of this action until 30 days after

publication in the Federal Register

because: (1) The Committee needs to

have sufficient funds to pay its expenses

which are incurred on a continuous

basis; (2) the fiscal year for the

Committee begins January 1, 1995, (3)

handlers are aware of this action which

is similar to budgets issued in past

years; and (4) this interim final rule

provides a 30-day comment period, and

all comments timely received will be

considered prior to finalization of this

action.

List of Subjects in 7 CFR Part 925

Grapes, Marketing agreements and

orders, Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, 7 CFR Part 925 is amended as

follows:

PART 925—GRAPES GROWN IN A

DESIGNATED AREA OF

SOUTHEASTERN CALIFORNIA

1. The authority citation for 7 CFR

Part 925 continues to read as follows:

Authority: 7 U.S.C. 601–674.

Note: This section will not appear in the

annual Code of Federal Regulations.

2. A new § 925.214 is added to read

as follows:

§ 925.214 Expenses.

Expenses of $74,427 by the California

Desert Grape Administrative Committee

are authorized for the fiscal year ending

December 31, 1995. Unexpended funds

may be carried over as a reserve.

Dated: January 12, 1995.

Sharon Bomer Lauritsen,

Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95–1234 Filed 1–18–95; 8:45 am]

BILLING CODE 3410–02–P

Rural Utilities Service

7 CFR Parts 1710, 1712, 1714, 1717,

1719, and 1785

RIN 0572–AA69

Loan Policies and Procedures for

Electric Loans

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

SUMMARY: The Rural Utilities Service

(RUS) hereby amends its regulations for

electric loans. Key provisions of this

regulation include: Lengthening the

allowable construction financing period

for most electric loans; clarifying RUS

requirements for supplemental

financing concurrent with municipal

rate loans; substantially modifying the

requirement that borrowers develop and

maintain certain levels of equity; and

clearly setting forth the documents

required for a complete loan

application. In addition, this regulation

eliminates some policies and

procedures that have become obsolete.

This regulation is intended to simplify

loan application procedures for

borrowers and reduce administrative

costs to the Government.

EFFECTIVE DATE: This rule is effective

February 21, 1995.

FOR FURTHER INFORMATION CONTACT: Sue

Arnold, Financial Analyst, U.S.

Department of Agriculture, Rural

Utilities Service, room 2230–s, 14th

Street and Independence Avenue, SW.,

Washington, DC 20250–1500.

Telephone: 202–720–0736. FAX 202–

742–4120.

SUPPLEMENTARY INFORMATION: 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). The Administrator

of RUS has determined that the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.) does not apply to this rule. 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. 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.

This rule is excluded from the scope of

Executive Order 12372,

Intergovernmental Consultation, which

may require consultation with State and

local officials. A Notice of Final Rule

titled Department Programs and

Activities Excluded from Executive

Order 12372 (50 FR 47034) exempts

electric loans and loan guarantees made

pursuant to the Rural Electrification Act

of 1936, as amended (7 U.S.C. 901 et

seq.) (RE Act), from coverage under this

Order. This rule has been reviewed

under Executive Order 12778, Civil

Justice Reform. This rule: (1) Will not

preempt any state or local laws,

regulations, or policies, unless they

present an irreconcilable conflict with

this rule; (2) Will not have any

retroactive effect; and (3) Will not

require administrative proceedings

before any parties may file suit

challenging the provisions of this rule.

Information Collection and

Recordkeeping Requirements

The existing recordkeeping and

reporting burdens contained in this rule

were approved by OMB pursuant to the

Paperwork Reduction Act of 1980 (44

U.S.C. 3501 et seq.), under control

numbers 0572–0017, 0572–0032, and

0572–0103.

Send questions or comments

regarding these burdens or any other

aspect of these collections of

information, including suggestions for

reducing the burden, to the Office of
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations 3727

Information and Regulatory Affairs,

Office of Management and Budget,

Attention: Desk Officer for USDA, room

3201, NEOB, Washington, DC 20503.

Background

On August 5, 1994, at 59 FR 39972,

the Rural Electrification Administration

(REA) proposed several amendments to

pre-loan regulations affecting both

insured and guaranteed electric loans

pursuant to the Rural Electrification Act

of 1936, as amended (7 U.S.C. 901 et

seq.) (RE Act). These amendments are

intended to enhance the delivery of

customer service by facilitating the

application process for borrowers, and

reducing administrative costs to the

Government. Key provisions of the

proposed rule include lengthening the

allowable construction financing period

for many electric loans; substantially

revising the requirement that borrowers

achieve and maintain certain levels of

equity; and clearly listing the

documents required for a complete loan

application.

Since publication of the proposed

rule, the Federal Crop Insurance Reform

and Department of Agriculture

Reorganization Act of 1994 (Pub. L.

103–354, 108 Stat. 3178)

(Reorganization Act) has been enacted.

The Reorganization Act requires in

section 232(a) that the Secretary of

Agriculture (Secretary) establish and

maintain within the Department of

Agriculture the Rural Utilities Service

(RUS). Section 232(c)(1)(A) requires that

the Secretary carry out through RUS

electric loan programs authorized under

the RE Act. Secretary’s Memorandum

1010–1, Reorganization of the

Department of Agriculture, issued

October 20, 1994, abolished REA and

established RUS. On December 27,

1994, the Department of Agriculture

published a notice in the Federal

Register at 59 FR 66517 announcing this

reorganization. In other words, RUS is

the successor to REA with respect to

electric loan and loan guarantee

programs under the RE Act.

Rules formerly published by REA

were reassigned to RUS pursuant to a

final rule published in the Federal

Register on December 27, 1994, at 59 FR

66438. Therefore, this final rule

culminating a rulemaking proceeding

initiated by REA is being published by

RUS. According to 7 CFR 1710.3 of the

rule changing nomenclature, the terms

‘‘RUS bulletin’’ and ‘‘RUS form’’ have

the same meaning as the terms ‘‘REA

bulletin’’ and ‘‘REA form, ‘‘

respectively.

The period for public comments on

the REA proposed rule expired October

4, 1994. Twenty-one comments were

received from individual borrowers,

associations representing borrowers, a

lender that provides supplemental

financing to electric borrowers, and an

engineering consulting firm. In general,

comments expressed support for the

proposed rule. A number of comments

addressed specific provisions.

Loan Period

The first of the amendments in the

proposed rule lengthens the allowable

loan period to 4 years for both insured

and guaranteed loans for the

construction of distribution and

transmission facilities and for

improvements to generation facilities.

The loan period, sometimes referred to

as the financing period, means the

period of time during which the

facilities included in a loan application

will be constructed. In the past, loans to

distribution borrowers were limited to a

2 year loan period, and loans to power

supply borrowers to a 3 year period.

Some borrowers needed to apply for

loans every 2 or 3 years in order to meet

their financing needs. RUS believes that

allowing a longer loan period will, in

the long run, significantly reduce loan

application costs to Agency customers,

including RUS borrowers and

supplemental lenders, as well as loan

processing costs to the Government.

Borrowers will still have the option of

applying for loans for a shorter period,

if they so desire, and RUS reserves the

right to limit loans to a period of less

than 4 years under certain

circumstances.

Most commentors supported the

changes proposed. Several requested

that RUS allow more loan fund

advances on a municipal rate loan made

for a longer loan period. The proposed

rule at 7 CFR 1714.6(a)(2) would allow

up to 6 advances from a municipal rate

loan if the loan period is 2 years or less,

and up to 8 advances if the loan period

is longer than 2 years. A limit on the

number of loan fund advances from

municipal rate loans was first set forth

in the rule published December 20,

1993, at 58 FR 66260, that established

the municipal rate loan program. As

noted in the preamble to this rule at 58

FR 66261, the limit was intended to

provide borrowers with financial

flexibility, while minimizing the

administrative costs to the Government

of tracking multiple advances, each

bearing its own interest rate, interest

rate term, and rollover maturity date.

Agency research conducted before

publication of the 1993 rule indicated

that the vast majority of loans were fully

advanced in 6 or fewer advances.

The comment period on the 1993 rule

closed on March 21, 1994, and no

comments on were received on limiting

the number of advances. RUS believes

that 8 advances from a municipal rate

loan with a 4 year loan period will

allow the borrowers sufficient

flexibility. Because hardship rate loans

and guaranteed loans bear a single

interest rate for the entire amount, and

there are no interest rate terms or

rollover maturity dates associated with

these loans, there is no limit on the

number of advances.

One commentor, an engineering

consulting firm, opposed a 4 year loan

period. The commentor questioned

RUS’ ability to maintain adequate

engineering oversight over facilities

constructed under a longer construction

work plan (CWP). RUS is confident that

electric system reliability will not suffer

as a result of a longer financing period.

RUS reserves in, § 1710.106(f), the right

to approve a loan period shorter than

the period requested by the borrower if

a loan for the longer period would fail

to meet RUS requirements for loan

feasibility and security.

Fund Advance Period

In conjunction with lengthening the

allowable loan period, the rule proposed

lengthening the fund advance period,

which is the period during which RUS

may advance funds to the borrower from

an insured loan. Agency policy first

promulgated in 1984 provides that the

fund advance period terminates

automatically 4 years after the date of

the loan contract. To allow borrowers to

complete construction projects based on

a loan period of more than 2 years, the

rule proposed, in § 1714.56, that funds

from insured loans approved on or after

the effective date of the rule may be

advanced for a period beginning on the

date of the loan note and lasting 1 year

longer than the loan period, provided

that the fund advance period may not be

shorter than 4 years. In other words, if

the loan period is 3 years or less, the

fund advance period would terminate 4

years after the date of the loan note; if

the loan period is 4 years, the fund

advance period would terminate 5 years

after the date of the note. The

Administrator may approve an

extension of the fund advance period if

the borrower meets the requirements of

§ 1714.56(c).

Several commentors expressed

support for the proposed change. One

commentor suggested that the fund

advance period be calculated from the

date of the first advance, rather than

from the date of the loan note. RUS

believes, as stated in the preamble to the

proposed rule, that, dating the fund

advance period from the date of the loan

note assists both the borrower and RUS,
3728 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations

by providing a fixed date that is

determined as early as possible.

On April 7, 1993, at 58 FR 18043,

REA published a proposed amendment

to 7 CFR part 1785, where provisions for

automatic termination of the insured

electric loans were originally published,

that would, in effect, redesignate

subpart A as 7 CFR 1785 subpart F.

Since automatic termination of the fund

advance period on insured electric loans

is more closely related to the subject

matter of part 1714 than of part 1785,

RUS has determined that setting out the

requirements in detail in part 1714

would better serve the public.

Therefore, the rule published today

removes subpart A (proposed subpart F)

of part 1785.

Supplemental Financing

Another amendment in the proposed

rule clarifies policy on supplemental

financing requirements. Except in cases

of financial hardship, applicants for a

municipal rate insured loan are required

to obtain a portion of their loan funds

from a supplemental source without an

RUS guarantee. The method for

determining the supplemental financing

percentage for each individual loan is

set forth in 7 CFR 1710.110(c) (1) and

(2). For most borrowers, this percentage

is based on the borrower’s plant revenue

ratio (PRR), as defined in § 1710.2. To

clarify the requirement for those

borrowers whose PRR changes between

the time of the loan application and the

time of loan approval, the rule proposed

to codify the policy of using the PRR

based on the most recent year-end data

available on the date of loan approval.

The rule further proposed to clarify

policies in cases where termination or

rescission of an insured loan, or its

associated supplemental loan,

substantially affects the overall

proportion of RUS and supplemental

financing to a borrower. Under

longstanding policy, the amount of

supplemental financing required on that

borrower’s next municipal rate loan is

adjusted to maintain the overall

proportion of RUS to supplemental

financing. The rule published today

clarifies that the adjustment will only be

made following rescission or

termination of more than 5 percent of an

insured loan subject to supplemental

financing. No adjustment will be made

based on rescission of a hardship rate

loan where no supplemental financing

was required. The amendment will also

set forth the formula used to compute

the adjustment.

Most commentors supported the

proposed changes. One commentor

suggested an alternative to PRR in

determining the amount of

supplemental financing required. RUS

is analyzing other possible methods of

targeting assistance to needy

communities. Changes in the

methodology for determining the

supplemental financing proportions

may be proposed at a later date.

Amortization of Principal

In conjunction with lengthening the

allowable loan period, the agency

proposed that principal amortization on

advances made more than 2 years after

the date of the note begin with the loan

payment billed in the next full month

after the month of the advance. For

example, principal amortization on

funds advanced any time during the

month of June of the third year after the

date of the note would begin with the

bill sent to the borrower in July of that

year. In cases of financial hardship, the

Administrator may approve a principal

deferment period of up to 2 years for

any advances made after the second

year of the loan.

Most commentors expressed support

for the proposed provisions. One

commentor believed that provisions

concerning amortization are more

restrictive than provisions for deferral of

principal permitted by section 12 of the

RE Act. Section 12 deferrals of principal

are permitted for the specific purposes

set forth in the RE Act. Regulatory

provisions for amortization, on the other

hand, apply uniformly to all loans. RUS

believes that the provisions in the

proposed rule concerning amortization

of principal are appropriate.

Final Maturity

Another amendment makes technical

changes in the method used to evaluate

final maturity of loans. RUS loans must

be repaid with interest within a period,

up to 35 years, that approximates the

expected useful life of the facilities

financed. The old rule based expected

useful life on the weighted average of

the depreciation rates proposed by the

borrower. The amendment provides that

final maturity will based on the

weighted average useful life of the

facilities financed, instead of

depreciation rates.

One commentor objected to the

proposed change, stating that the agency

should continue to base final maturity

on depreciation rates, and that

depreciation rates should be modified to

more accurately reflect useful life. RUS

agrees that depreciation rates should

reflect useful life. However, basing loan

maturity directly on useful life is a more

straightforward approach that RUS

believes will reduce administrative

costs for both the borrowers and the

Government.

To facilitate the determination of the

final maturity, RUS is incorporating into

the final rule published today, a

provision from a proposed rule

published by REA on August 20, 1993,

at 58 FR 44288. According to this

proposed rule, Long-Range Financial

Forecasts of Electric Borrowers, for the

purpose of determining final loan

maturity, the borrower may either (1)

Certify that at least 90 percent of the

loan funds are for facilities that have a

useful life of 33 years or longer, or (2)

Submit a schedule showing the costs

and useful life of those facilities with a

useful life of less than 33 years. Loan

maturity will be based on the weighted

average of these useful lives.

Since exact useful life is often

difficult to predict, RUS may add up to

two years to the composite average

useful life in order to compute loan

maturity. In other words, if the weighted

average useful life of the facilities is 33

years, the final maturity for the loan

may be up to 35 years.

The comment period on the 1993

proposed rule, as extended by a notice

published September 30, 1993, at 58 FR

48800, closed on October 20, 1993. No

commentors objected to the proposed

method of approximating the useful life

of the facilities financed. Accordingly,

the rule published today includes this

methodology in paragraph 1710.115(b).

To set forth the specific loan application

document for the information about

useful life, a new paragraph

1710.401(a)(3)(ii) is added requiring that

Form 740c, Cost Estimates and Loan

Budget for Electric Borrowers, include

as a note, either a certification that at

least 90 percent of the loan funds are for

facilities that have a useful life of 33

years or longer, or a schedule showing

the costs and useful life of those

facilities with a useful life of less than

33 years. The paragraphs designated in

the proposed rule as 1710.401(a)(3)(ii)

and (iii) are included in the final rule as

1710.401(a)(3)(iii) and (iv), respectively.

Language in paragraph 1710.401(c)(1) of

the proposed rule requiring a proposed

schedule of the useful life of facilities as

part of the Long-range financial forecast

is removed from this final rule. A final

rule on long-range financial forecasts

will be published at a later date.

Equity

The rule proposed replacing the

requirement that certain borrowers

prepare a formal equity development

plan with a more general requirement

that the borrower’s capitalization is

adequate to enable the borrower to meet

its financial needs and to provide

electric service consistent with the RE

Act. Capital structure will be measured
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations 3729

by equity as a percentage of total assets

and will be a factor in RUS’s evaluation

of loan feasibility pursuant to  1710.112,

in determining borrower eligibility for

advance approval of a lien

accommodation pursuant to 7 CFR

1717.854, and in evaluating certain

other borrower requests under the

mortgage.

Most commentors expressed support

for this proposal. One commentor

opposed the proposal, arguing that the

requirement to prepare and follow an

equity development plan better supports

borrowers requesting rate increases from

state public utility commissions, and

better positions borrowers to obtain

financing at market rates and replace

old plant with new more expensive

plant. RUS agrees that reasonable levels

of equity are an important component of

credit quality. However, as stated in the

preamble to the proposed rule, agency

experience with equity development

plans has demonstrated that such plans

are an unnecessary and burdensome

means of achieving the desired result.

One commentor requested that those

borrowers who have adopted equity

development plans as a condition for

obtaining an electric loan be permitted

to amend these plans pursuant to the

new rule. RUS points out that the new

rule establishes, in § 1710.112(b)(10), a

new loan feasibility criterion addressing

the borrower’s capitalization. It would

not be feasible to revisit each loan that

required an equity development plan as

a condition of loan approval in the light

of the new loan feasibility criterion.

Credit Reform

A policy change mandated by the

Federal Credit Reform Act of 1990 (2

U.S.C. 661f), affects loans approved on

or after October 1, 1991. The Federal

Credit Reform Act requires Federal

agencies to match funds obligated,

disbursed, and collected with their

intended purposes. Therefore, the rule

proposed, in § 1710.106(f), that

advances of funds from a loan made on

or after that date be made only for

primary budget purposes included in

that particular loan, unless the borrower

applies for and RUS approves a budget

transfer. Primary budget purposes as

listed in RUS Bulletin 26–1, Budgetary

Control and Advance of Loan Funds,

and on RUS Form 595, Financial

Requirement and Expenditure

Statement, are (1) Distribution, (2)

Transmission, (3) Generation, (4)

Headquarters Facilities, (5)

Acquisitions, and (6) All Other.

Only one comment addressed this

provision. The commentor recognized

the requirements of Federal Credit

Reform, but hopes that RUS can find a

way to be flexible. The rule provides

this flexibility by providing that RUS

may approve a budget transfer.

Loan Application Documents

Finally, the rule proposed to add new

subpart I to part 1710 to set forth a list

of the documents and procedures

required for a loan application. This list

is intended to facilitate the application

process for borrowers and supplemental

or other lenders. The general

requirement to submit each of the

documents is set forth in existing part

1710 or in other RUS regulations. The

proposed new subpart I is simply a

summary list for the convenience of the

public. RUS is exploring possibilities for

electronic submission of certain

documents.

Most commentors expressed support

for such a list. Several had specific

suggestions for the list. A few

commentors suggested a materiality

threshold for determining whether the

lists of pending actions by third parties

and pending regulatory actions

(§ 1710.401(a)(1)(iv) and (v),

respectively), are required. Another

would like a clear definition of a

material change to real property

(§ 1710.401(a)(7)). RUS believes that the

nature of these matters precludes any

rule of thumb for determining

materiality. This suggestion cannot be

accepted.

However, another commentor

suggested that the borrower be allowed

to combine into a single statement from

counsel information on pending

litigation and the state regulatory

approvals (§§ 1710.401(a)(6) and (15),

respectively). RUS has no objection to

accepting, in a single statement,

information from counsel required by

§ 1710.401(a)(6), (7), and (15), and

clarification has been added to

§ 1710.401(a)(6).

One commentor requested that the

borrower be required to submit the rate

disparity and consumer income data

needed for certain municipal rate loans

subject to the interest rate cap and for

some hardship rate loans to RUS prior

to submitting the loan application.

Language in § 1710.401(a)(8) encourages

borrowers to provide this information to

the RUS general field representative

prior to submitting the application.

One commentor questioned the

reference to subpart H of part 1710 in

connection with the requirement to

submit a Demand Side Management

Plan (§ 1710.401(c)(2)(iv)). Subpart H of

part 1710, Demand Side Management

and Renewable Energy Systems, was

published January 4, 1994, at 59 FR 494.

Another suggested that RUS establish a

threshold level test for determining the

need for RUS approval of security

offered to a supplemental lender

(§ 1710.405(b)). RUS believes that the

right to approve collateral offered to a

supplemental lender is necessary for

RUS to protect its loan security.

One commentor requested that RUS

provide the borrower with written

grounds if a loan cannot be approved.

Such language has been added to

§ 1710.406(b). See also §§ 1710.401(d)(3)

and (4) and .401(e).

Conforming Amendments to RUS

Regulations

The rule published today includes

conforming amendments to

§§ 1710.7(d)(1)(vi), 1717.856(d), and

1717.860(e) to reflect the elimination of

the requirement to submit an equity

development plan.

Other Regulations

On August 27, 1991, at 56 FR 42461,

REA published 7 CFR Parts 1712 and

1719 that established pre- and post-loan

policies for 90 percent REA guarantees

of certain loans from qualified private

lenders. This program was authorized

under section 314 of the RE Act. The

Rural Electrification Loan Restructuring

Act of 1993, Pub. L. 103–129, signed by

President Clinton on November 1, 1993,

amended section 314 of the RE Act to

abolish this 90 percent guarantee

program. RUS is, therefore, removing 7

CFR parts 1712 and 1719. Regulations

affecting loan guarantees under sections

306, 306A, and 311 of the RE Act will

be published at a later date.

Other Issuances

Electric Operations Manual, EOM–1

Guide for the Preparation of Electric

Distribution Loan Applications is

rescinded effective February 21, 1995.

In addition, this rule consolidates,

updates, and, in some instances, revises

information contained in the following

RUS Bulletins:

20–5 Extensions of Payments of Principal

and Interest

20–9 Loan Payments and Statements

26–1 Budgetary Control and Advance of

Electric Loan Funds

86–3 Headquarters Facilities for Electric

Borrowers

When this regulation and other

related rules are effective, these

publications will be rescinded, in whole

or in part, or revised.

Finally, RUS is rescinding RUS

Bulletins 101–3, Business Management

for Board Members of Electric

Cooperatives, and 103–1, A Practical

Approach to Making Policy, effective

February 21, 1995. These bulletins were

last issued in 1978 and 1959,

respectively, and RUS believes the
3730 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations

information they contain is obsolete and

unnecessary.

List of Subjects

7 CFR Part 1710

Electric power, Electric utilities, Loan

programs—energy, Rural areas.

7 CFR Part 1712

Administrative practice and

procedure, Electric power, Electric

utilities, Guaranteed program, Loan

programs—energy, Reporting and

recordkeeping requirements, Rural

areas.

7 CFR Part 1714

Electric power, Loan programs—

energy, Rural areas.

7 CFR Part 1717

Administrative practice and

procedure, Electric power, Electric

utilities, Intergovernmental relations,

Investments, Lien accommodation, Lien

subordination, Loan programs—energy,

Reporting and recordkeeping

requirements, Rural development.

7 CFR Part 1719

Administrative practice and

procedure, Electric power, Electric

utilities, Guaranteed program, Loan

programs—energy, Reporting and

recordkeeping requirements, Rural

areas.

7 CFR Part 1785

Electric power, Loan programs—

energy, Rural areas.

For the reasons set out in the

preamble and under the authority of 7

U.S.C. 90 et seq., RUS amends 7 CFR

Chapter XVII as follows:

PART 1710—GENERAL AND PRELOAN 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. 901–950(b); Public Law

99–591, 100 Stat. 3341–16; Public Law 103–

354, 108 Stat. 3178.

2. Section 1710.2 is amended by

removing the existing definition of

‘‘Loan Period’’ and adding two new

definitions in alphabetical order to read

as follows:

§ 1710.2 Definitions and rules of

construction.

(a) * * *

Fund advance period means the

period of time during which the

Government may advance loan funds to

the borrower. See 7 CFR 1714.56.

* * * * *

Loan period means the period of time

during which the facilities included in

a loan application will be constructed.

It commences with the date shown on

page 1, in the block headed ‘‘Cost

Estimates as of,’’ of RUS Form 740c,

Cost Estimates and Loan Budget for

Electric Borrowers, which is the same as

the date on the Financial and Statistical

Report submitted with the loan

application. The loan period may be up

to 4 years for distribution borrowers

and, except in the case of a loan for new

generating and associated transmission

facilities, up to 4 years for the

transmission facilities and

improvements or replacements of

generation facilities for power supply

borrowers. The loan period for new

generating facilities is determined on a

case by case basis.

* * * * *

3. Section 1710.7 is amended by

removing and reserving paragraph

(d)(1)(vi).

4. Section 1710.106 is amended by

redesignating paragraph (d) as

paragraph (e) and adding new

paragraphs (d) and (f) to read as follows:

§ 1710.106 Uses of loan funds.

* * * * *

(d) A distribution borrower may

request a loan period of up to 4 years.

Except in the case of loans for new

generating and associated transmission

facilities, a power supply borrower may

request a loan period of not more than

4 years for transmission and substation

facilities and improvements or

replacements of generation facilities.

The loan period for new generating

facilities is determined on a case by case

basis. The loan period for DSM

activities will be determined in

accordance with § 1710.355. The

Administrator may approve a loan

period shorter than the period requested

by the borrower, if in the

Administrator’s sole discretion, a loan

made for the longer period would fail to

meet RUS requirements for loan

feasibility and loan security set forth in

§§ 1710.112 and 1710.113, respectively.

* * * * *

(f)(1) For borrowers having one or

more loans approved on or after October

1, 1991, advances of funds will be made

only for the primary budget purposes

included in the loan as shown on RUS

Form 740c as amended and approved by

RUS, or on a construction work plan or

a construction work plan amendment

approved by RUS. Each advance will be

charged to the oldest outstanding note(s)

having unadvanced funds for the

primary budget purpose for which the

request for advances was made,

regardless of whether such notes are

associated with loans approved before

or after October 1, 1991, unless any

conditions on advances under any of

these notes have not been met by the

borrower.

(2) For borrowers whose most recent

loan was approved before October 1,

1991, advances will be made on the

oldest outstanding note having

unadvanced funds, unless any

conditions on advances under such note

have not been met by the borrower.

5. Section 1710.110 is amended by

revising paragraph (c)(1)(ii) and adding

a new paragraph (c)(3) to read as

follows:

§ 1710.110 Supplemental financing.

* * * * *

(c) Supplemental financing required

for municipal rate loans—(1)

Distribution borrowers.

* * * * *

(ii) All other distribution borrowers

must obtain supplemental financing

according to their plant revenue ratio

(PRR), as defined in § 1710.2, based on

the most recent year-end data available

on the date of loan approval, as follows:

PRR Supplemental loan

percentage

9.00 and above ............... 10

8.01–8.99 ........................ 20

8.00 and below ............... 30

* * * * *

(3) Subsequent loans. (i) If more than

5 percent of an insured loan made prior

to November 1, 1993, or of a municipal

rate loan is terminated or rescinded, the

amount of supplemental financing

required in the borrower’s next loan

after the rescission for which

supplemental financing is required,

pursuant to paragraph (a) of this section,

will be adjusted to average the actual

supplemental financing portion on the

terminated or rescinded loan with the

supplemental financing portion that

would have been required on the new

loan according to paragraphs (c)(1) and

(2) of this section, in accordance with

the formulas set forth in paragraphs

(c)(3)(ii) and (iii) of this section.

(ii) If a borrower’s supplemental

financing requirement as set forth in

paragraphs (a), (c)(1), and (c)(2) of this

section has not changed between the

most recent loan and the loan being

considered, then the amount of

supplemental financing required for the

new loan will be computed as follows:

Supplemental financing amount, new

loan = [(A + B) × C] ¥ D

where:
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations 3731

A = The total funds ($) actually

advanced from the first loan,

including both RUS loan funds and

funds from the supplemental loan,

plus any unadvanced funds still

available to the borrower after the

rescission.

B = The total amount ($) for facilities of

the new loan request, including

both RUS loan funds and funds

from supplemental loans.

C = The proportion (%) of supplemental

financing required on the loans

according to paragraphs (a), (c)(1)

and (c)(2) of this section.

D = The amount ($) of supplemental

funds actually advanced on the first

loan, plus any unadvanced

supplemental funds still available

to the borrower after the rescission.

(iii) If a borrower’s supplemental

financing requirement as set forth in

paragraphs (a), (c)(1), and (c)(2) of this

section has changed between the most

recent loan and the loan being

considered, then the amount of

supplemental financing required for the

new loan will be the weighted average

of the portions otherwise applicable on

the two loans and will be computed as

follows:

Supplemental financing amount, new

loan = (A×C1)+(B×C2)¥D

where:

A = The total funds ($) actually

advanced from the first loan,

including both RUS loan funds and

funds from the supplemental loan,

plus any unadvanced funds still

available to the borrower after the

rescission.

B = The total amount ($) for facilities of

the new loan request, including

both RUS funds and funds from

supplemental loans.

C1 = The proportion (%) of

supplemental financing required on

the old loan according to

paragraphs (a), (c)(1) and (c)(2) of

this section.

C2 = The proportion (%) of

supplemental financing required on

the new loan according to

paragraphs (a), (c)(1) and (c)(2) of

this section.

D = The amount ($) of supplemental

funds actually advanced on the first

loan, plus any unadvanced

supplemental funds still available

to the borrower after the rescission.

* * * * *

6. Section 1710.112 is amended by

adding a new paragraph (b)(10) to read

as follows:

§ 1710.112 Loan feasibility.

* * * * *

(b) * * *

(10) The borrower’s projected

capitalization, measured by its equity as

a percentage of total assets, is adequate

to enable the borrower to meet its

financial needs and to provide service

consistent with the RE Act. Among the

factors to be considered in reviewing the

borrower’s projected capitalization are

the economic strength of the borrower’s

service territory, the inherent cost of

providing service to the territory, the

disparity in rates between the borrower

and neighboring utilities, the intensity

of competition faced by the borrower

from neighboring utilities and other

power sources, and the relative amount

of new capital investment required to

serve existing or new loads.

7. Section 1710.115 is amended by

revising paragraph (b) to read as follows:

§ 1710.115 Final maturity.

* * * * *

(b) Loans made or guaranteed by RUS

for facilities owned by the borrower

generally must be repaid with interest

within a period, up to 35 years, that

approximates the expected useful life of

the facilities financed. The expected

useful life shall be based on the

weighted average of the useful lives that

the borrower proposes for the facilities

financed by the loan, provided that the

proposed useful lives are deemed

appropriate by RUS. RUS Form 740c,

Cost Estimates and Loan Budget for

Electric Borrowers, submitted as part of

the loan application must include, as a

note, either a statement certifying that at

least 90 percent of the loan funds are for

facilities that have a useful life of 33

years or longer, or a schedule showing

the costs and useful life of those

facilities with a useful life of less than

33 years. The useful lives proposed by

the borrower for the facilities financed

must be consistent with the borrower’s

proposed depreciation rates for these

facilities. In states where the borrower

must obtain state regulatory authority

approval of depreciation rates for rate

making purposes, the depreciation rates

used for the purposes of this paragraph

shall be the rates currently approved by

the state authority or rates for which the

borrower plans to seek state authority

approval, provided that these rates are

deemed appropriate by RUS. In other

states, if the rates proposed by the

borrower are not deemed appropriate by

RUS, RUS will base expected useful life

on the depreciation rates listed in

Bulletin 183–1, or its successor, revising

such rates as necessary to reflect current

industry practice (for availability of

bulletins, see § 1710.5.). Final maturities

for loans for the implementation of

programs for demand side management

and energy resource conservation and

on and off grid renewable energy

sources not owned by the borrower will

be determined by RUS. Due to the

uncertainty of predictions over an

extended period of time, RUS may add

up to 2 years to the composite average

useful life of the facilities in order to

determine final maturity.

* * * * *

§ 1710.116 [Removed and Reserved]

8. Section 1710.116 is removed and

reserved.

9. Section 1710.251 is amended by

revising paragraph (b) to read as follows:

§ 1710.251 Construction work plans—

distribution borrowers.

* * * * *

(b) A distribution borrower’s CWP

shall cover a construction period of

between 2 and 4 years, and include all

facilities to be constructed which are

eligible for RUS financing, whether or

not RUS financial assistance will be

sought or be available for certain

facilities. Any RUS financing provided

for the facilities will be limited to a 4

year loan period. The construction

period covered by a CWP in support of

a loan application shall not be shorter

than the loan period requested for

financing of the facilities.

* * * * *

10. Section 1710.252 is amended by

revising paragraph (b) to read as follows:

§ 1710.252 Construction work plans—

power supply borrowers.

* * * * *

(b) Normally a power supply

borrower’s CWP shall cover a period of

3 to 4 years. While comprehensive

CWP’s are desired, if there are

extenuating circumstances RUS may

accept a single-purpose transmission or

generation CWP in support of a loan

application or budget reclassification.

The construction period covered by a

CWP in support of a loan application

shall not be shorter than the loan period

requested for financing of the facilities.

* * * * *

11. Subpart I is added to part 1710 to

read as follows:

Subpart I—Application Requirements and

Procedures for Insured and Guaranteed

Loans

Sec.

1710.400 Initial contact.

1710.401 Loan application documents.

1710.402–1710.403 [Reserved]

1710.404 Additional requirements.

1710.405 Supplemental financing

documents.

1710.406 Loan approval.

1710.407 Loan documents.
3732 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations

Subpart I—Application Requirements

and Procedures for Insured and

Guaranteed Loans

§ 1710.400 Initial contact.

(a) Loan applicants that do not have

outstanding loans from RUS should

write to the Rural Utilities Service

Administration, United States

Department of Agriculture, Washington,

DC 20250–1500. A field or headquarters

staff representative may be assigned by

RUS to visit the applicant and discuss

its financial needs and eligibility.

Borrowers that have outstanding loans

should contact their assigned RUS

general field representative (GFR) or, in

the case of a power supply borrower, the

Director, Power Supply Division.

Borrowers may consult with RUS field

representatives and headquarters staff,

as necessary.

(b) Before submitting an application

for an insured loan the borrower shall

ascertain from RUS the amount of

supplemental financing required, as set

forth in § 1710.110. If the borrower is

applying for either a municipal rate loan

subject to the interest rate cap or a

hardship rate loan, the application must

provide a preliminary breakdown of

residential consumers either by county

or by census tract. Final data must be

included with the application. See

§ 1710.401(a)(8).

§ 1710.401 Loan application documents.

(a) All borrowers. All applications for

electric loans shall include the

documents listed in this paragraph. The

first page of the application shall be a

list of the documents included in the

application. The borrower may use RUS

Form 726, Checklist for Electric Loan

Application, or a computer generated

equivalent as this list.

(1) Transmittal letter. A letter signed

by the borrower’s manager indicating

the actual corporate name and taxpayer

identification number of the borrower

and addressing the following items:

(i) The need for flood hazard

insurance;

(ii) Breakdown of requested loan

funds by state;

(iii) A listing of the counties served by

the borrower;

(iv) A listing of threatened actions by

third parties that could adversely affect

the borrower’s financial condition,

including annexations or other actions

affecting service territory, loads, or

rates; and

(v) A listing of pending regulatory

proceedings pertaining to the borrower.

(2) Board resolution. This document

is the formal request by the borrower’s

board of directors for a loan from RUS.

The board resolution shall include:

(i) The requested loan amount, loan

term, final maturity, and method of

amortization (§ 1710.110(b));

(ii) The sources and amounts of any

supplemental or other financing;

(iii) Authorization for RUS to release

appropriate information to

supplemental or other lender(s), and

authorization for these lenders to release

appropriate information to RUS; and

(iv) For an insured loan, a statement

of whether the application is for a

municipal rate loan, with or without the

interest rate cap, or a hardship loan. If

the application is for a municipal rate

loan, the board resolution must indicate

whether the borrower intends to elect

the prepayment option. See 7 CFR

1714.4(c).

(3) RUS Form 740c, Cost Estimates

and Loan Budget for Electric Borrowers.

This form together with its attachments

lists the construction, equipment,

facilities and other cost estimates from

the construction work plan or

engineering and cost studies, and the

sources of financing for each

component. The date on page 1 of the

form is the beginning date of the loan

period and shall be the same as the date

on the Financial and Statistical Report

submitted with the application

(paragraph (a)(5) of this section). Form

740c also includes the following

information, exhibits, and attachments:

(i) Description of funds and materials.

This description details the availability

of materials and equipment, any

unadvanced funds from prior loans, and

any general funds the borrower

designates, to determine the amount of

such materials and funds to be applied

against the capital requirements

estimated for the loan period.

(ii) Useful life of facilities financed by

the loan. Form 740c must include, as a

note, either a statement certifying that at

least 90 percent of the loan funds are for

facilities that have a useful life of 33

years or longer, or a schedule showing

the costs and useful life of those

facilities with a useful life of less than

33 years. This statement or schedule

will be used to determine the final

maturity of the loan. See § 1710.115.

(iii) Reimbursement schedule. This

schedule lists the date, amount, and

identification number of each inventory

of work orders and special equipment

summary that form the basis for the

borrower’s request for reimbursement of

general funds on the RUS Form 740c.

See § 1710.109. If the borrower is not

requesting reimbursement, this schedule

need not be submitted.

(iv) Location of consumers. If the

application is for a municipal rate loan

subject to the interest rate cap, or for a

loan at the hardship rate, and the

average number of consumers per mile

of the total electric system exceeds 17,

Form 740c must include, as a note, a

breakdown of funds included in the

proposed loan to furnish or improve

service to consumers located in an

urban area. See 7 CFR 1714.7(c) and

1714.8(d). This breakdown must

indicate the method used by the

borrower for allocating loan funds

between urban and non urban

consumers.

(4) RUS Form 740g, Application for

Headquarters Facilities. This form lists

the individual cost estimates from the

construction work plan or other

engineering study that support the need

for RUS financing for any warehouse

and service type facilities included, and

funding requested for such facilities

shown on RUS Form 740c. If no loan

funds are requested for headquarters

facilities, Form 740g need not be

submitted.

(5) Financial and statistical report.

Distribution borrowers shall submit

these data on RUS Form 7; power

supply borrowers shall use RUS Form

12. The form shall contain the most

recent data available, which shall not be

more than 60 days old when received by

RUS.

(6) Pending litigation statement. A

statement from the borrower’s counsel

listing any pending litigation, including

levels of related insurance coverage and

the potential effect on the borrower.

This statement and the statements from

counsel required by paragraphs (a)(7)

and (15) of this section may be

combined into a single document.

(7) Mortgage information. A new

mortgage will be required if this is a

borrower’s first application for a loan

under the RE Act. A restated mortgage,

or a mortgage supplement will be

required if there has been a material

change to the real property owned by

the borrower since the most recent RUS

loan, loan guarantee, or lien

accommodation, if the requested loan

would cause the borrower to exceed its

previously authorized debt limit, or if

RUS otherwise determines it necessary.

If there has been no material change to

the real property owned by the borrower

since the most recent RUS loan or loan

guarantee, the borrower must submit an

opinion of its counsel to that effect. If

a new or restated mortgage or a

mortgage supplement is required, the

borrower must provide the following:

(i) Property schedule. For a new or

restated mortgage or for a mortgage

supplement, the following information

shall be submitted in a form satisfactory

to RUS:
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations 3733

(A) A listing of the counties where the

borrower’s existing electric facilities and

new facilities are or will be located;

(B) A listing and description of all real

property owned by the borrower; and

(C) An opinion of the borrower’s

counsel certifying that the property

schedule is complete and adequate for

inclusion in a security instrument to be

executed by the borrower to secure an

RUS loan.

(ii) Maximum debt limit. For a new

mortgage, or if the proposed loan would

result in the borrower’s existing

mortgage debt limit being exceeded, a

resolution of the borrower’s board of

directors, and any other authorizations

or certifications required by State law,

certifying that a new debt limit has been

legally established that is adequate to

accommodate existing indebtedness and

the proposed new financing, including

any concurrent loans.

(8) Rate disparity and consumer

income data. If the borrower is applying

under the rate disparity and consumer

income tests for either a municipal rate

loan subject to the interest rate cap or

a hardship rate loan, the application

must provide a breakdown of residential

consumers either by county or by

census tract. In addition, if the borrower

serves in 2 or more states, the

application must include a breakdown

of all ultimate consumers by state. This

breakdown may be a copy of Form EIA

861 submitted by the Borrower to the

Department of Energy or in a similar

form. See 7 CFR 1714.7(b) and

1714.8(a). To expedite the processing of

loan applications, RUS strongly

encourages distribution borrowers to

provide this information to the GFR

prior to submitting the application.

(9) Standard Form 100—Equal

Employment Opportunity Employer

Report EEO—1. This form, required by

the Department of Labor, sets forth

employment data for borrowers with

100 or more employees. A copy of this

form, as submitted to the Department of

Labor, is to be included in the

application for an insured loan if the

borrower has more than 100 employees.

See § 1710.122.

(10) Form AD–1047, Certification

Regarding Debarment, Suspension, and

Other Responsibility Matters—Primary

Covered Transactions. This statement

certifies that the borrower will comply

with certain regulations on debarment

and suspension required by Executive

Order 12549, Debarment and

Suspension (3 CFR, 1986 Comp., p.

189). See 7 CFR part 3017 and

§ 1710.123.

(11) Uniform Relocation Act

assurance statement. This assurance,

which need not be resubmitted if

previously submitted, provides that the

borrower shall comply with 49 CFR part

24, which implements the Uniform

Relocation Assistance and Real Property

Acquisition Policy Act of 1970, as

amended by the Uniform Relocation Act

Amendments of 1987 and 1991. See

§ 1710.124.

(12) Lobbying. The following

information on lobbying is required

pursuant to 7 CFR part 3018 and

§ 1710.125. Borrowers applying for both

insured and guaranteed financing

should consult RUS before submitting

this information.

(i) Certification regarding lobbying.

This statement certifies that the

borrower shall comply with certain

requirements with respect to restrictions

on lobbying activities.

(ii) Standard Form LLL—Disclosure of

Lobbying Activities. This disclosure

form is required from those borrowers

engaged in lobbying activities.

(13) Federal debt delinquency

requirements. See 1710.126. The

following documents are required:

(i) Report on Federal debt

delinquency. This report indicates

whether or not a borrower is delinquent

on any Federal debt.

(ii) Certification Regarding Federal

Government Collection Options. This

statement certifies that a borrower has

been informed of the collection options

the Federal Government may use to

collect delinquent debt. The Federal

Government is authorized by law to take

any or all of the following actions in the

event that a borrower’s loan payments

become delinquent or the borrower

defaults on its loans:

(A) Report the borrower’s delinquent

account to a credit bureau;

(B) Assess additional interest and

penalty charges for the period of time

that payment is not made;

(C) Assess charges to cover additional

administrative costs incurred by the

Government to service the borrower’s

account;

(D) Offset amounts owed directly or

indirectly to the borrower under other

Federal programs;

(E) Refer the borrower’s debt to the

Internal Revenue Service for offset

against any amount owed to the

borrower as an income tax refund;

(F) Refer the borrower’s account to a

private collection agency to collect the

amount due; and

(G) Refer the borrower’s account to

the Department of Justice for collection.

(14) Articles of incorporation and

bylaws. The following are required if

either document has been amended

since the last loan application was

submitted to RUS, or if this is a

borrower’s first application for a loan

under the RE Act:

(i) The borrower’s articles of

incorporation currently in effect, as filed

with the appropriate state office, setting

forth the borrower’s corporate purpose;

and

(ii) The bylaws currently in effect, as

adopted by the borrower’s board of

directors, setting forth the manner by

which the borrower’s organization will

be governed and regulated.

(15) State regulatory approvals. In

states in which regulatory authorities

have jurisdiction over the borrower’s

rates, the borrower must provide

satisfactory evidence, pursuant to

§§ 1710.105 and 1710.151(f), based on

the information available, such as an

opinion of counsel or of another

qualified source, that the state

regulatory authority will not exclude

from the borrower’s rate base any of the

facilities included in the loan request, or

otherwise prevent the borrower from

charging rates sufficient to repay with

interest the debt incurred for the

facilities.

(16) Seismic safety certifications. This

certification shall be included, if

required under 7 CFR part 1792.

(17) Rates. (i) A distribution borrower

shall explain any recent or planned

changes in retail rates, the status of any

pending rate cases before a state

regulatory authority, or other pertinent

rate information.

(ii) A power supply borrower shall

submit a schedule of its wholesale rates

currently in effect. Any changes in this

schedule are subject to RUS approval.

(18) Additional supporting data.

Additional supporting data may be

required by RUS depending on the

individual application or conditions.

Examples of such additional supporting

data include information about

acquisitions, headquarters facilities,

generation or transmission facilities,

large power loads or special loads.

(b) Distribution borrowers. In addition

to the items in paragraph (a) of this

section, applications for loans submitted

by distribution borrowers shall include

the borrower’s area coverage and line

extension policies. If there have been

any amendments to area coverage or

line extension policies since the last

loan application submitted to RUS, or if

this is a borrower’s first application for

a loan under the RE Act, the borrower

shall submit the board of directors’

approved policies on area coverage and

line extensions. See §§ 1710.103 and

1710.151(a).

(c) Primary support documents. In

addition to the loan application,

consisting of the documents required by

paragraphs (a) and (b) of this section, all
3734 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations

borrowers must also provide RUS with

the following primary support

documents pursuant to § 1710.152:

(1) Along with the loan application,

the borrower shall submit to RUS a

Long-Range Financial Forecast (LRFF),

that meets the requirements of subpart

G of this part. The forecast shall include

any sensitivity analysis or analysis of

alternative scenarios required by

subpart G of this part, and shall be

accompanied by a certified board

resolution adopting, and indicating the

board of directors’ approval of, the

LRFF, and directing management to take

whatever steps may be necessary,

including the filing for rate increases, to

achieve the TIER goals set forth in the

LRFF.

(2) Prior to RUS’s acceptance of the

loan application, the borrower shall

submit to RUS and receive approval of:

(i) Power Requirements Study (PRS)

that meets the requirements of subpart

E of this part, and is accompanied by a

certified board resolution adopting, and

indicating the board of directors’

approval of, the PRS.

(ii) Construction Work Plan (CWP)

and/or related engineering and cost

studies that meets the requirements of

subpart F of this part, and is

accompanied by a certified board

resolution adopting, and indicating the

board of directors’ approval of, the CWP

and/or engineering and cost studies.

(iii) Borrower’s Environmental Report

(BER), or other environmental

information as required by 7 CFR part

1794.

(iv) Demand Side Management Plan

and/or Integrated Resource Plan, if

required by subpart H of this part.

(d) Submission of documents. (1)

Generally, all information required by

paragraphs (a), (b), and (c)(1) of this

section is submitted to RUS in a single

application package. The information

required by paragraph (c)(2) of this

section is generally submitted to, and

approved by RUS before the application

is submitted.

(2) To facilitate loan review, RUS

urges borrowers to ensure that their

applications contain all of the

information required by this section

before submitting the application to

RUS. Borrowers may consult with RUS

field representatives and headquarters

staff as necessary for assistance in

preparing loan applications.

(3) RUS may, in its discretion, return

an application to the borrower if the

application is not materially complete to

the satisfaction of RUS within 10

months of receipt of any of the items

listed in paragraph (a) or (b) of this

section. RUS will generally advise the

borrower in writing at least 2 months

prior to returning the application as to

the elements of the application that are

not complete.

(4) If an application is returned, an

application for the same loan purposes

will be accepted by RUS if satisfactory

evidence is provided that all of the

information required by this section will

be submitted to RUS within a

reasonable time. An application for loan

purposes included in an application

previously returned to the borrower will

be treated as an entirely new

application.

(e) Complete applications. An

application is complete when all

information required by RUS to approve

a loan is materially complete in form

and substance satisfactory to RUS.

(f) Change in borrower circumstances.

A borrower shall, after submitting a loan

application, promptly notify RUS of any

changes in its circumstances that

materially affect the information

contained in the loan application or in

the primary support documents.

(g) Interest rate category. For pending

loans, RUS will promptly notify the

borrower if its eligibility for an interest

rate category changes pursuant to new

information from the Department of

Energy or the Bureau of the Census. See

7 CFR part 1714.

(Approved by the Office of Management and

Budget under control numbers 0572–0017,

0572–0032 and 0572–1013.)

§§ 1710.402–1710.403 [Reserved]

§ 1710.404 Additional requirements.

Additional requirements for insured

electric loans are set forth in 7 CFR part

1714.

§ 1710.405 Supplemental financing

documents.

(a) The borrower is responsible for

ensuring that the loan documents

required for supplemental financing

pursuant to § 1710.110 are executed in

a timely fashion. These documents are

subject to RUS approval.

(b) Security. Any security offered by

the borrower to a supplemental lender

is subject to RUS approval.

§ 1710.406 Loan approval.

(a) A loan is approved when the

Administrator signs the administrative

findings.

(b) If the loan is not approved, RUS

will notify the borrower of the reason.

§ 1710.407 Loan documents.

Following approval of a loan, RUS

will forward the loan documents to the

borrower for execution, delivery,

recording, and filing, as directed by

RUS.

PART 1712—[REMOVED]

12. Part 1712 is removed.

PART 1714—PRE-LOAN POLICIES

AND PROCEDURES FOR INSURED

ELECTRIC LOANS

13. The authority citation for part

1714 continues to read as follows:

Authority: 7 U.S.C. 901–950(b); Pub. L 99–

591, 100 Stat. 3341; Pub. L. 103–353, 108

Stat. 3178 (7 U.S.C. 6941 et seq).

14. Section 1714.6 is amended by

revising paragraph (a)(2) to read as

follows:

§ 1714.6 Interest rate term.

(a) * * *

(2) The following limits apply to the

number of advances of funds that may

be made to the borrower on any

municipal rate loan:

(i) If the loan period is 2 years or less,

not more than 6 advances;

(ii) If the loan period is more than 2

years, not more than 8 advances.

* * * * *

15. Subpart B is added to part 1714

to read as follows:

Subpart B—Terms of Insured Loans

Sec.

1714.50–1714.54 [Reserved]

1714.55 Advance of funds from insured

loans.

1714.56 Fund advance period.

1714.57 Sequence of advances.

1714.58 Amortization of principal.

1714.59 Rescission of loans.

Subpart B—Terms of Insured Loans

§ 1714.50–1714.54 [Reserved]

§ 1714.55 Advance of funds from insured

loans.

The borrower shall request advances

of funds as needed. Advances are

subject to RUS approval and must be

requested in writing on RUS Form 595

or an RUS approved equivalent. Funds

will not be advanced until the

Administrator has received satisfactory

evidence that the borrower has met all

applicable conditions precedent to the

advance of funds, including evidence

that the supplemental financing

required under 7 CFR part 1710 and any

concurrent loan guaranteed by RUS are

available to the borrower under terms

and conditions satisfactory to RUS.

§ 1714.56 Fund advance period.

(a) For loans approved on or after

February 21, 1995, the fund advance

period begins on the date of the loan

note and is one year longer than the

loan period, but not less than 4 years.

For example, the fund advance period

for a loan with a 2-year loan period
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Rules and Regulations 3735

terminates automatically 4 years after

the date of the loan note; a loan with a

4-year loan period terminates

automatically 5 years after the date of

the loan note. The Administrator may

extend the fund advance period on any

loan if the borrower meets the

requirements of paragraph (c) of this

section. As defined in 7 CFR 1710.2, the

loan period begins on the date shown on

page 1 of RUS Form 740c submitted

with the loan application.

(b) For loans approved on or after

June 1, 1984, and before February 21,

1995, the fund advance period begins on

the date of the loan contract, or the most

recent amendment thereto, and

terminates automatically 4 years from

the date of the loan contract, or the most

recent amendment thereto, except as

provided in paragraph (c) of this

section.

(c) The Administrator may agree to an

extension of the fund advance period for

loans approved on or after June 1, 1984,

if the borrower demonstrates to the

satisfaction of the Administrator that the

loan funds continue to be needed for

approved loan purposes (i.e., facilities

included in an RUS-approved

construction work plan).

(1) To apply for an extension, the

borrower must send to RUS, at least 120

days before the automatic termination

date, the following:

(i) A certified copy of a board

resolution requesting an extension of

the Government’s obligation to advance

loan funds;

(ii) Evidence that the unadvanced

loan funds continue to be needed for

approved loan purposes; and

(iii) Notice of the estimated date for

completion of construction.

(2) In the case of financial hardship,

as determined by the Administrator,

RUS may agree to an extension of the

fund advance period even though the

borrower has failed to meet the 120-day

requirement of paragraph (c)(1) of this

section.

(3) If the Administrator approves a

request for an extension, RUS will

notify the borrower in writing of the

extension and the terms and conditions

thereof. An extension will be effective

only if it is obtained in writing prior to

the automatic termination date.

(d) Advances of funds from loans

approved before June 1, 1984, are

generally made during the first 6 years

of the note.

(e) RUS will rescind the balance of

any loan funds not advanced to a

borrower as of the final date approved

for advancing funds.

§ 1714.57 Sequence of advances.

(a) Except as set forth in paragraph (b)

of this section, concurrent loan funds

will be advanced in the following order:

(1) 50 percent of the RUS insured loan

funds;

(2) 100 percent of the supplemental

loan funds;

(3) The remaining amount of the RUS

insured loan funds.

(b) At the borrower’s request and with

RUS approval, all or part of the

supplemental loan funds may be

advanced before funds in paragraph

(a)(1) of this section.

§ 1714.58 Amortization of principal.

(a) For insured loans approved on or

after February 21, 1995:

(1) Amortization of funds advanced

during the first 2 years after the date of

the note shall begin no later than 2 years

from the date of the note. Except as set

forth in paragraph (a)(2) of this section,

amortization of funds advanced 2 years

or more after the date of the note shall

begin with the scheduled loan payment

billed in the month following the month

of the advance.

(2) For advances made 2 years or more

after the date of the note, the

Administrator may authorize deferral of

amortization of principal for a period of

up to 2 years from the date of the

advance if the Administrator determines

that failure to authorize such deferral

would adversely affect either the

Government’s financial interest or the

achievement of the purposes of the RE

Act.

(b) For insured loans approved before

February 21, 1995, amortization of

principal shall begin 2 years after the

date of the note for advances made

during the first and second years of the

loan, and 4 years after the date of the

note for advances made during the third

and fourth years.

§ 1714.59 Rescission of loans.

(a) A borrower may request rescission

of a loan with respect to any funds

unadvanced by submitting a certified

copy of a resolution by the borrower’s

board of directors.

(b) RUS may rescind loans pursuant

to 1714.56.

(c) Borrowers who prepay RUS loans

at a discounted present value pursuant

to 7 CFR part 1786, subpart F, are

required to rescind the unadvanced

balance of all outstanding electric notes

pursuant to 7 CFR 1786.158(j).

PART 1717—POST-LOAN POLICIES

AND PROCEDURES COMMON TO

INSURED AND GUARANTEED

ELECTRIC LOANS

16. The authority citation for part

1717 continues to read as follows:

Authority: 7 U.S.C. 901–950b; Pub. L. 103–

354, 108 Stat. 3178 (7 U.S.C. 6941 et seq),

unless otherwise noted.

§§ 1717.856 and 1717.860 [Amended]

17. Part 1717 is amended by removing

and reserving §§ 1717.856(d) and

1717.860(e).

PART 1719—[REMOVED]

18. Part 1719 is removed.

PART 1785—LOAN ACCOUNT

COMPUTATIONS, PROCEDURES AND

POLICIES FOR ELECTRIC AND

TELEPHONE BORROWERS

19. The authority citation for part

1785 continues to read as follows:

Authority: 7 U.S.C. 901 et seq.; Title 1,

Subtitle D, sec. 1403, Omnibus Budget

Reconciliation Act of 1987, Pub. L. 100–203,

101 Stat. 1330; Pub. L. 103–354, 108 Stat.

3178 (7 U.S.C. 6941 et seq).

Subpart A [Removed and Reserved]

20. Subpart A of part 1785 is removed

and reserved.

Dated: January 9, 1995.

Bob J. Nash,

Under Secretary, Rural Economic and

Community Development.

[FR Doc. 95–1051 Filed 1–18–95; 8:45 am]

BILLING CODE 3410–15–P

NUCLEAR REGULATORY

COMMISSION

10 CFR Part 32

RIN 3150–AF26

Requirement to Report Transfers of

Devices to Generally Licensed Persons

AGENCY: Nuclear Regulatory

Commission.

ACTION: Final rule.

SUMMARY: The Nuclear Regulatory

Commission (NRC) is amending its

regulations governing the reporting of

transfers of devices to generally licensed

persons. The amendments relieve initial

distributors of the devices from their

requirement to provide copies of the

transfer reports to each appropriate NRC

Regional Office. Because the reports are

already sent to NRC Headquarters, it is

not necessary for each Regional office to

receive copies. These amendments

would reduce the administrative burden

on the initial distributors.