Post-Loan Policies and Procedures for Insured Electric Loans

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

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

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