Electric Program Streamlining and Improvement, 73433-73443 [2022-25554]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Utilities Service

[Federal Register Volume 87, Number 229 (Wednesday, November 30, 2022)]
[Rules and Regulations]
[Pages 73433-73443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25554]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 87, No. 229 / Wednesday, November 30, 2022 / 
Rules and Regulations

[[Page 73433]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Parts 1710, 1714, 1717, 1724, and 1730

[Docket No. RUS-22-ELECTRIC-0031]
RIN 0572-AC57


Electric Program Streamlining and Improvement

AGENCY: Rural Utilities Service, U.S. Department of Agriculture (USDA).

ACTION: Final rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: The Rural Utilities Service (RUS or Agency), a Rural 
Development agency of the United States Department of Agriculture 
(USDA), is issuing a final rule with comment. The intent of this rule 
is to revise several regulations to streamline procedures for Electric 
Program borrowers, including its loan application requirements, 
approval of work plans and load forecasts, use of approved contracts 
and system design procedures and reporting requirements.

DATES: This final rule with comment is effective February 28, 2023. 
Comments are due on or before January 30, 2023.

ADDRESSES: You may submit comments, identified by docket number RUS-22-
ELECTRIC-0031 and Regulatory Information Number (RIN) number 0572-AC57 
through https://www.regulations.gov.
    Instructions: All submissions received must include the Agency name 
and docket number or RIN for this rulemaking. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Robert Coates, Branch Chief, Policy 
and Outreach Branch, Office of Customer Service and Technical 
Assistance, Rural Utilities Service, U.S. Department of Agriculture, 
STOP 1569, 1400 Independence Ave. SW, Washington, DC 20250-0787, 
telephone: (202) 720-1900. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Rural Development is a mission area within the U.S. Department of 
Agriculture (USDA) comprising the Rural Utilities Service, Rural 
Housing Service, and Rural Business-Cooperative Service. Rural 
Development's mission is to increase economic opportunity and improve 
the quality of life for all rural Americans. Rural Development meets 
its mission by providing loans, loan guarantees, grants, and technical 
assistance through numerous programs aimed at creating and improving 
housing, business, and infrastructure throughout rural America. The 
Rural Utilities Service (RUS) loan, loan guarantee, and grant programs 
act as a catalyst for economic and community development. By financing 
improvements to rural electric, water and waste, and telecommunications 
and broadband infrastructure, RUS also plays a significant role in 
improving other measures of quality of life in rural America, including 
public health and safety, environmental protection and culture and 
historic preservation.
    RUS Electric Program loans, loan guarantees and grants finance the 
construction and improvement of rural electric infrastructure. In an 
effort by the RUS Electric Program to administer its program in an 
efficient and effective manner while improving its customer service and 
experience, and in response to requests from the RUS Electric Program 
borrowers, the Electric Program undertook a systematic review of 
regulations and procedures in place to administer its program. The 
Electric Program has completed two streamlining efforts to date:
    (a) On July 9, 2019, Streamlining Electric Program Procedures (84 
FR 32607) was published in the Federal Register. That regulation 
streamlined some pre- and post-loan procedures to adopt efficiencies 
and to reduce regulatory burden on Electric Program borrowers while 
still ensuring RUS loans remained adequately secured and ensuring that 
loan funds would be repaid in the time agreed upon.
    (b) On July 9, 2021, Streamlining Electric Program Procedures (86 
FR 24857) was published in the Federal Register. That regulation 
streamlined its procedures for borrowers, including its loan 
application requirements, approval of construction work plans, contract 
bidding procedures, contact approval procedures, system operation and 
maintenance reviews, long-range engineering plans and system design 
procedures. It also removed unnecessary sections from the regulations.
    This rulemaking is part of the Electric Program's continuing effort 
to improve customer service for its borrowers and to create a more 
efficient work process for its staff. This rulemaking will continue to 
streamline Electric Program procedures and revise regulations, 
including removing unnecessary and outdated regulations and simplifying 
other policies and procedures that impose burdensome requirements on 
borrowers and applicants.
    To implement this change, the Agency will publish this as a final 
rule with comment. The Administrative Procedure Act exempts from prior 
notice rules, any actions, ``relating to agency management or personnel 
or to public property, loans, grants, benefits, or contracts'' (5 
U.S.C. 553(b)(A)).

II. Summary of Changes to Rule

Part 1710--General and Pre-Loan Policies and Procedures Common to 
Electric Loans and Guarantees

    (a) Section 1710.1 was modified to remove outdated references and 
bulletins.
    (b) Section 1710.2 was modified to delete the definitions for 
approved load forecast workplan, load forecast workplan, and PRS 
workplan. The requirement for borrowers to maintain a load forecast 
workplan has been eliminated. This reduces the number of documents that 
must be submitted by the applicants/borrowers and reviewed by Agency 
employees. In addition, Sec. Sec.  1710.200; 1710.202(a) and (b); 
1710.203(a), (b), and (e); 1710.205; and 1710.209 have been revised to 
remove the references to load forecast workplans.
    (c) Section 1710.101(a) and (b) were updated to include Tribes as 
eligible entities to receive RUS funding and added Tribes to the list 
of entities that receive preference from RUS in making loans. These 
changes were made for

[[Page 73434]]

clarification and to codify current practices.
    (d) Section 1710.105 was updated to include Tribal areas as places 
where borrowers may need to obtain Tribal approval prior to loans being 
approved or funds advanced. It was also updated to include 
reaffirmation of the project and its financing from Tribal authorities 
prior to additional loan funds being advanced when the borrower has 
failed to proceed with the project in a timely manner. These changes 
will help ensure that projects are feasible, as without the commitment 
of support from the Tribal entity, the viability of those projects 
could be in question. These changes are also aligned with the 
Administration's priorities.
    (e) Section 1710.106(a)(3) was modified to include headquarters 
office and other headquarters facilities which reflects RUS's current 
acceptance of financing headquarters office and other headquarters 
facilities. This update codifies the Agency's current practice of 
funding headquarters buildings as a typical project instead of only in 
cases of financial hardship. Thus, the provisions of Sec.  
1710.106(b)(1) was moved to a new Sec.  1710.106(a)(3). Paragraphs 
(c)(2) and (3) were updated to correct punctuation.
    (f) Sections 1710.202(a) and 1710.203(a) through (e) were modified 
to define a current load forecast as having been prepared within the 
last 2 years. The 2 years is being added to provide clarity and 
consistency. A load forecast is a primary support document for 
developing construction workplans and should be current.
    (g) Section 1710.205 was modified to include information that is 
required to be included in the load forecast. It is being included in 
this section due to Sec. Sec.  1710.206 and 1710.209 being deleted as 
the requirement for borrowers to maintain a load forecast workplan has 
been eliminated. These deleted sections will be reserved.
    (h) Sections 1710.400(b)(2), 1710.404, 1710.408(h) and 1710.500(a) 
were modified to address spelling, punctuation errors, and formatting 
and to correct an email address.
    (i) Section 1710.501(a)(1)(v) was updated to replace DUNS number 
with Unique Entity Identifier. Paragraphs (a)(1)(viii), (x), (xiii), 
and (xvi), and (a)(2) and (8) were updated to require that borrowers 
indicate if Tribal approval is needed and to provide Tribal resolutions 
when needed. These changes help ensure compliance with Tribal law when 
doing business on Tribal land and help develop strong working 
partnerships with Tribes. These changes are also in line with the 
Administration's priorities. Paragraph (a)(4) was deleted due to being 
outdated and no longer relevant. The RUS Form 740g is no longer being 
required because it duplicates information provided in the Construction 
Workplan (CWP) or CWP Amendment and on the RUS Form 740c. This change 
reduces the number of forms submitted by applicants/borrowers and 
reviewed by Agency staff. The references to Form 740g are being removed 
from 7 CFR 1717.855(g) and 1724.54(f)(2).
    (j) In 7 CFR 1714, subpart B was removed in its entirety and 
incorporated into 7 CFR 1710 as subpart J. The word ``Insured'' was 
removed from the titles of the Subpart and of 7 CFR 1714.55 (now Sec.  
1710.601). Outdated language from 7 CFR 1714.58 (now Sec.  1710.604) 
was removed and the rules on principal deferment were revised. The 
outdated language that was removed referred to loans approved before 
and after February 21, 1995. Principal deferment was revised to include 
a written request from the borrower to the Administrator to defer 
amortization of the principal. Additionally, 7 CFR 1714.59(a) (now 
Sec.  1710.605(a)) was revised to allow the borrower to request a 
rescission of a loan without the additional requirement of a formal 
Board Resolution. 7 CFR part 1714, subpart B referred only to insured 
loans but these processes are related to all loans and were added to 7 
CFR part 1710, subpart J. These changes will help to eliminate possible 
confusion and conflicts in the regulations. Removing the requirement 
for a formal Board Resolution permits the General Manager, Board 
President or other individual authorized by the Board of Directors to 
request such rescission without having to have a formal resolution 
prepared.
    (k) Section 1717.616 was revised to include language from Bulletin 
1717 M-2, Sale or Transfer of Capital Assets by Electric Borrowers. 
This language was removed from the bulletin because the purpose of 
bulletins is to provide additional guidance, not requirements. 
Therefore, the Agency made these changes to codify the requirements in 
the regulation.
    (l) Section 1717.855(g) was updated to remove reference to the Form 
740g as referenced in (i) above.
    (m) Section 1724.9 was updated to add ``or any successor 
regulations that implement the provisions of the National Environmental 
Policy Act''. This update was made to provide flexibility should 7 CFR 
part 1970 change.
    (n) Section 1724.40 was updated to include a web page for copies of 
the bulletins in lieu of a physical mailing address.
    (o) Section 1724.51(f)(1) was updated to clarify that the provision 
does not apply to cybersecurity projects.
    (p) Section 1724.54(d)(1)(ii) was updated to provide an additional 
option for the required notification. Paragraphs (e)(2) and (g)(2) were 
updated to provide clarification that this provision may have been 
waived for those borrowers who have indentures or other specialized 
loan security documents. Paragraph (f)(2) was updated to remove the 
reference to RUS Form 740g which will no longer be used. Paragraph 
(g)(1) was updated to clarify that the provision does not apply to 
cybersecurity projects.
    (q) Section 1724.70(b) was updated to incorporate the program's 
streamlining measures that a borrower may deviate from the standard RUS 
contract without RUS approval provided that essential terms remain in 
the contract.
    (r) Section 1724.71(a), (b), and (c) was updated to clarify that a 
borrower that is subject to an indenture is not subject to the 
provisions in the standard RUS loan contract. These changes are related 
to those made in Sec.  1724.70(b).
    (s) Sections 1730.27 and 1730.28 were updated to remove obsolete 
dates and outdated language. These changes were made to help alleviate 
confusion for borrowers.
    (t) Section 1730.63(a)(5) was modified to change the update period 
of Interconnection of Distributed Resources (IDR) policy compliance 
from five years to as needed. The IDR policy generally does not change 
once implemented. This change will provide the borrower with more 
flexibility. Paragraph (b)(2) was deleted in order to remove outdated 
IDR language.
    (u) Section 1730.65 was modified to eliminate obsolete compliance 
dates. This change will help alleviate confusion for applicants and 
borrowers as it will now be clear that the letter of certification is 
required for everyone.

III. Executive Orders and Acts

Executive Order 12866

    This final rule has been determined to be non-significant for 
purposes of Executive Order (E.O.) 12866 and therefore has not been 
reviewed by the Office of Management and Budget (OMB).

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

[[Page 73435]]

Assistance Listing Number (Formally Known as the Catalog of Federal 
Domestic Assistance)

    The Assistance Listing Number assigned to the Rural Electrification 
Loans and Loan Guarantees Program is 10.850. The Assistance Listings 
are available on the internet at https://sam.gov/.

Executive Order 12372, Intergovernmental Review of Federal Programs

    This rule is excluded from the scope of E.O. 12372, 
Intergovernmental Consultation, which may require a consultation with 
State and local officials. See the final rule related notice entitled, 
``Department Programs and Activities Excluded from E.O. 12372'' (50 FR 
47034) advising that RUS loans and loan guarantees were not covered by 
E.O. 12372.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    The Agency has determined that this final rule has a substantial 
direct effect on one or more Indian tribe(s) or on either the 
relationship or the distribution of powers and responsibilities between 
the Federal Government and Indian Tribes. Thus, this final rule is 
subject to the requirements of E.O. 13175. Tribal specific amendments 
in Sec. Sec.  1710.101(a) and (b), 1710.105(a) and (b), and 1710.501 
were based on feedback from Tribal Leaders heard during virtual Tribal 
Consultation events hosted by USDA in March of 2021 and April of 2022. 
For additional information Tribes can contact USDA's Office of Tribal 
Relations or USDA Rural Development's Tribal Coordinator at (720) 544-
2911 or [email protected]. If Tribes request consultation on provisions not 
required by law, Rural Development will collaborate with the Office of 
Tribal Relations to ensure that meaningful consultation occurs.

Executive Order 12988, Civil Justice Reform

    This final rule has been reviewed under E.O. 12988, Civil Justice 
Reform. In accordance with this final 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) Administrative proceedings of the National Appeals Division (7 CFR 
part 11) must be exhausted before bringing suit in court challenging 
action taken under this rule.

National Environmental Policy Act

    In accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, this final rule has been reviewed in accordance with 
7 CFR part 1970 (``Environmental Policies and Procedures''). The Agency 
has determined that (i) this action meets the criteria established in 7 
CFR 1970.53(f); (ii) no extraordinary circumstances exist; and (iii) 
the action is not ``connected'' to other actions with potentially 
significant impacts, is not considered a ``cumulative action'' and is 
not precluded by 40 CFR 1506.1. Therefore, the Agency has determined 
that the action does not have a significant effect on the human 
environment, and therefore neither an Environmental Assessment nor an 
Environmental Impact Statement is required.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, RUS 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with Federal mandates that may 
result in expenditures to State, local, or Tribal governments, in the 
aggregate, or to the private sector, of $100 million or more in any one 
year. When such a statement is needed for a rule, section 205 of the 
UMRA generally requires RUS to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, most 
cost-effective, or least burdensome alternative that achieves the 
objectives of the rule.
    This final rule contains no Federal mandates (under the regulatory 
provisions of title II of the UMRA) for State, local, and Tribal 
governments or the private sector. Therefore, this final rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act (APA) or any other statute. This final 
rule; however, is not subject to the APA under 5 U.S.C. 553(a)(2) and 5 
U.S.C. 553(b)(3)(A) nor any other statute.

Executive Order 13132, Federalism

    It has been determined, under E.O. 13132, Federalism, that the 
policies contained in this final rule do not have any substantial 
direct effect on States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
final rule impose substantial direct compliance costs on State and 
local governments. Therefore, consultation with the States is not 
required.

E-Government Act Compliance

    The Agency is committed to complying with the E-Government Act of 
2002, Public Law 107-347, which requires Government agencies in general 
to provide the public the option of submitting information or 
transacting business electronically to the maximum extent possible and 
to promote the use of the internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

Information Collection and Recordkeeping Requirements

    The information collection and record-keeping requirements 
contained in this rule are approved by the Office of Management and 
Budget (OMB) under OMB Control Numbers 0572-0032, 0572-0089, 0572-0100, 
0572-0118, 0572-0140, and 0572-0141.

Civil Rights Impact Analysis

    Rural Development, a mission area for which RUS is an agency, has 
reviewed this rule in accordance with USDA Regulation 4300-4, Civil 
Rights Impact Analysis,'' to identify any major civil rights impacts 
the rule might have on program participants on the basis of age, race, 
color, national origin, sex, or disability. After review and analysis 
of the rule and available data, it has been determined that based on 
the analysis of the program purpose, application submission and 
eligibility criteria, issuance of this final rule is not likely to 
negatively impact very low, low and moderate-income populations, 
minority populations, women, Indian Tribes or persons with disability, 
by virtue of their race, color, national origin, sex, age, disability, 
or marital or familial status. No major civil rights impact is likely 
to result from this rule.

USDA Non-Discrimination Statement

    In accordance with Federal civil rights laws and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its

[[Page 73436]]

Mission Areas, agencies, staff offices, employees, and institutions 
participating in or administering USDA programs are prohibited from 
discriminating based on race, color, national origin, religion, sex, 
gender identity (including gender expression), sexual orientation, 
disability, age, marital status, family/parental status, income derived 
from a public assistance program, political beliefs, or reprisal or 
retaliation for prior civil rights activity, in any program or activity 
conducted or funded by USDA (not all bases apply to all programs). 
Remedies and complaint filing deadlines vary by program or incident.
    Program information may be made available in languages other than 
English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, or staff office; the USDA TARGET 
Center at (202) 720-2600 (voice and TTY); or the 711 Relay Service.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, https://www.usda.gov/sites/default/files/documents/usda-program-discrimination-complaint-form.pdf, which can be 
obtained online at https://www.usda.gov/sites/default/files/documents/usda-program-discrimination-complaint-form.pdf, from any USDA office, 
by calling (866) 632-9992, or by writing a letter addressed to USDA. 
The letter must contain the complainant's name, address, telephone 
number, and a written description of the alleged discriminatory action 
in sufficient detail to inform the Assistant Secretary for Civil Rights 
(ASCR) about the nature and date of an alleged civil rights violation. 
The completed AD-3027 form or letter must be submitted to USDA by:
    (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 
20250-9410; or
    (2) Fax: (833) 256-1665 or (202) 690-7442; or
    (3) Email: [email protected].

List of Subjects

7 CFR Part 1710

    Electric power, Grant programs-energy, 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 
power rates, Electric utilities, Intergovernmental relations, 
Investments, Loan programs-energy, Reporting and recordkeeping 
requirements, Rural areas.

7 CFR Part 1724 and 1730

    Electric power, Loan programs-energy, Reporting and recordkeeping 
requirements, Rural areas.

    For the reasons set forth in the preamble, RUS amends 7 CFR parts 
1710, 1714, 1717, 1724, and 1730 as follows:

PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO 
ELECTRIC LOANS AND GUARANTEES

0
1. The authority citation for part 1710 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart A--General

0
2. Revise Sec.  1710.1 to read as follows:


Sec.  1710.1  General statement.

    This part establishes general and pre-loan policies and 
requirements that apply to both insured and guaranteed loans to finance 
the construction and improvement of electric facilities in rural areas, 
including generation, transmission, and distribution facilities.


Sec.  1710.2  [Amended]

0
3. Amend Sec.  1710.2 by removing the definitions for ``Approved load 
forecast work plan'', ``Load forecast work plan'', and ``PRS work 
plan''.

Subpart C--Loan Purposes and Basic Policies

0
4. Amend Sec.  1710.101 by revising paragraphs (a) introductory text 
and (b) to read as follows:


Sec.  1710.101  Types of eligible borrowers.

    (a) RUS makes loans to corporations, States, Tribes, territories, 
and subdivisions and agencies thereof; municipalities; people's utility 
districts; and cooperative, nonprofit, limited-dividend, or mutual 
associations that provide or propose to provide:
* * * * *
    (b) In making loans, RUS gives preference to States, Tribes, 
territories, and subdivisions and agencies thereof; municipalities; 
people's utility districts; and cooperative, nonprofit, or limited-
dividend associations. RUS does not make direct loans to individual 
consumers.
* * * * *

0
5. Revise Sec.  1710.105 to read as follows:


Sec.  1710.105  State and Tribal regulatory approvals.

    (a) In States or in Tribal areas where a borrower is required to 
obtain approval of a project or its financing from a State or Tribal 
regulatory authority, RUS requires that such approvals be obtained 
before the following types of loans are approved by RUS:
    (1) Loans requiring an Environmental Impact Statement;
    (2) Loans to finance generation and transmission facilities, when 
the loan request for such facilities is $25 million or more; and
    (3) Loans for the purpose of assisting borrowers to implement 
demand side management and energy conservation programs and on and off 
grid renewable energy systems.
    (b) In Tribal areas all borrowers are required to obtain approval 
of the project from the Tribal government or relevant Tribal regulatory 
body, before any loan is approved by RUS.
    (c) At minimum, in the case of all loans in States or Tribal areas 
where State regulatory approval is required of the project or its 
financing, such State or Tribal approvals will be required before loan 
funds are advanced.
    (d) In cases where State regulatory authority or Tribal government 
or relevant Tribal regulatory body approval has been obtained, but the 
borrower has failed to proceed with the project in a timely manner 
according to the schedule contained in the borrower's project design 
manual, or if there are cost overruns or other developments that 
threaten loan feasibility or security, RUS may require the borrower to 
obtain a reaffirmation of the project and its financing from the State 
or Tribal authority before any additional loan funds are advanced.

0
6. Amend Sec.  1710.106 by:
0
a. Revising paragraph (a)(3);
0
b. Removing paragraph (b)(1);
0
c. Redesignating paragraphs (b)(2) and (3) as paragraphs (b)(1) and 
(2); and
0
d. Revising paragraphs (c)(2) and (3).
    The revisions read as follows:


Sec.  1710.106  Uses of loan funds.

    (a) * * *
    (3) Headquarters Offices, Warehouse, and garage facilities. The 
purchase,

[[Page 73437]]

remodeling, or construction of headquarters office, other headquarters 
facilities, warehouse, and garage facilities required for the operation 
of a borrower's system. See paragraph (b) of this section.
* * * * *
    (c) * * *
    (2) Facilities to serve consumers who are not RE Act beneficiaries 
unless those facilities are necessary and incidental to providing or 
improving electric service in rural areas (See Sec.  1710.104).
    (3) Any facilities or other purposes that a State regulatory 
authority having jurisdiction will not approve for inclusion in the 
borrower's rate base or will not otherwise allow rates sufficient to 
repay with interest the debt incurred for the facilities or other 
purposes.
* * * * *

Subpart E--Load Forecasts

0
7. Amend Sec.  1710.200 by revising the first sentence to read as 
follows:


Sec.  1710.200  Purpose

    This subpart contains RUS policies for the preparation, review, 
approval and use of load forecasts. * * *

0
8. Amend Sec.  1710.202 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1710.202  Requirement to prepare a load forecast--power supply 
borrowers.

    (a) A power supply borrower with a total utility plant of $500 
million or more must maintain and provide a current (prepared within 
the last 2 years) load forecast in support of any request for RUS 
financial assistance.
    (b) A power supply borrower that is a member of another power 
supply borrower that has a total utility plant of $500 million or more 
must provide an approved load forecast in support of any request for 
RUS financial assistance. The member power supply borrower may comply 
with this requirement by participation in and inclusion of its load 
forecasting information in the load forecast of its power supply 
borrower.
* * * * *

0
9. Revise Sec.  1710.203 to read as follows:


Sec.  1710.203  Requirement to prepare a load forecast--distribution 
borrowers.

    (a) A distribution borrower that is a member of a power supply 
borrower, with a total utility plant of $500 million or more must 
provide a current (prepared within the last 2 years) load forecast in 
support of any request for RUS financial assistance. The distribution 
borrower may comply with this requirement by participation in and 
inclusion of its load forecasting information in the approved load 
forecast of its power supply borrower.
    (b) A distribution borrower that is a member of a power supply 
borrower which is itself a member of another power supply borrower that 
has a total utility plant of $500 million or more must provide a 
current (prepared within the last 2 years) load forecast in support of 
any request for RUS financial assistance. The distribution borrower may 
comply with this requirement by participation in and inclusion of its 
load forecasting information in the load forecast of its power supply 
borrower.
    (c) A distribution borrower that is a member of a power supply 
borrower with a total utility plant of less than $500 million must 
provide a current (prepared within the last 2 years) load forecast that 
meets the requirements of this subpart in support of an application for 
any RUS loan or loan guarantee that exceeds $3 million or 5 percent of 
total utility plant, whichever is greater. The distribution borrower 
may comply with this requirement by participation in and inclusion of 
its load forecasting information in the load forecast of its power 
supply borrower.
    (d) A distribution borrower with a total utility plant of less than 
$500 million and that is unaffiliated with a power supply borrower must 
provide a current (prepared within the last 2 years) load forecast that 
meets the requirements of this subpart in support of an application for 
any RUS loan or loan guarantee which exceeds $3 million or 5 percent of 
total utility plant, whichever is greater.
    (e) A distribution borrower with a total utility plant of $500 
million or more must provide a current (prepared within the last 2 
years) load forecast in support of any request for RUS financing 
assistance. The distribution borrower may comply with this requirement 
by participation in and inclusion of its load forecasting information 
in the load forecast of its power supply borrower.

0
10. Amend Sec.  1710.205 by revising paragraphs (a) and (c) to read as 
follows:


Sec.  1710.205  Minimum requirements for all load forecasts.

    (a) Contents of load forecast. All load forecasts submitted by 
borrowers for approval must include:
    (1) Scope of the load forecast. The narrative shall address the 
overall approach, time periods, and expected internal and external uses 
of the forecast. Examples of internal uses include providing 
information for developing or monitoring demand side management 
programs, supply resource planning, load flow studies, wholesale power 
marketing, retail marketing, cost of service studies, rate policy and 
development, financial planning, and evaluating the potential effects 
on electric revenues caused by competition from alternative energy 
sources or other electric suppliers. Examples of external uses include 
meeting State and Federal regulatory requirements, obtaining financial 
ratings, and participation in reliability council, power pool, regional 
transmission group, power supplier or member system forecasting and 
planning activities.
    (2) Resources used to develop the load forecast. The discussion 
shall identify and discuss the borrower personnel, consultants, data 
processing, methods, and other resources used in the preparation of the 
load forecast. The borrower shall identify the borrower's members and, 
as applicable, member personnel that will serve as project leaders or 
liaisons with the authority to make decisions and commit resources 
within the scope of the current and future load forecasts.
    (3) A comprehensive description of the database used in the study. 
The narrative shall describe the procedures used to collect, develop, 
verify, validate, update, and maintain the data. A data dictionary 
thoroughly defining the database shall be included. The borrower shall 
make all or parts of the database available or otherwise accessible to 
RUS in electronic format if requested.
    (4) A narrative for each new load forecast or update of a load 
forecast. The narrative shall discuss the methods and procedures used 
in the analysis and modeling of the borrower's electric system loads. 
The narrative shall also describe the borrower's system, service 
territory, and consumers.
    (5) A narrative discussing the borrower's past, existing, and 
forecast of future electric system loads. The narrative must identify 
and explain substantive assumptions and other pertinent information 
used to support the estimates presented in the load forecast.
    (6) A narrative discussing load forecast uncertainty or alternative 
futures that may determine the borrower's actual loads. The narrative 
shall describe examples of uncertainties such as economic scenarios, 
weather conditions, and others that borrowers may decide to address in 
their analysis including:
    (i) Most-probable assumptions, with normal weather;
    (ii) Pessimistic assumptions, with normal weather;
    (iii) Optimistic assumptions, with normal weather;

[[Page 73438]]

    (iv) Most-probable assumptions, with severe weather;
    (v) Most-probable assumptions, with mild weather;
    (vi) Impacts of wholesale or retail competition; or
    (vii) New environmental requirements.
    (7) A summary of the forecast's results on an annual basis. Include 
alternative futures, as applicable: This summary shall be designed to 
accommodate the transfer of load forecast information to a borrower's 
other planning or loan support documents. Computer-generated forms or 
electronic submissions of data are acceptable. Graphs, tables, 
spreadsheets or other exhibits shall be included throughout the 
forecast as appropriate.
    (8) A narrative discussing the coordination activities conducted 
between a power supply borrower and its members, as applicable, and 
between the borrower and RUS.
    (9) Borrowers with a residential demand of 50 percent or more of 
total kWh should include in the Load Forecast a Residential Consumer 
Survey that is performed at least every 5 years to obtain data on 
appliance and equipment saturation and electricity demand. Any such 
borrower that is experiencing or anticipates changes in usage patterns 
shall consider surveys on a more frequent schedule. Power supply 
borrowers shall coordinate such surveys with their members.
    (10) Residential consumer surveys may be based on the aggregation 
of member-based samples or on a system-wide sample, provided that the 
latter provides relevant regional breakdowns as appropriate.
    (11) A load forecast for a power supply borrower and its members 
must cover all member systems, including those that are not borrowers. 
Each borrower is individually responsible for forecasting all its RE 
Act beneficiary and non-RE Act beneficiary loads.
    (12) A narrative description of the borrower's load forecast 
including future load projections, forecast assumptions, and the 
methods and procedures used to develop the forecast.
    (13) Projections of usage by consumer class, number of consumers by 
class, annual system peak demand, and season of peak demand for the 
number of years agreed upon by RUS and the borrower.
    (14) A summary of the year-by-year results of the load forecast in 
a format that allows efficient transfer of the information to other 
borrower planning or loan support documents.
    (15) The load impacts of a borrower's demand side management and 
energy efficiency and conservation program activities, if applicable.
    (16) Graphic representations of the variables specifically 
identified by management as influencing a borrower's loads.
    (17) A database that tracks all relevant variables that might 
influence a borrower's loads.
* * * * *
    (c) Documentation retention. The borrower must retain its latest 
load forecasts and supporting documentation.
* * * * *


Sec.  1710.206  [Removed and Reserved]

0
11. Remove and reserve Sec.  1710.206.


Sec.  1710.209  [Removed and Reserved]

0
12. Remove and Reserve Sec.  1710.209.

Subpart H--Energy Efficiency and Conservation Loan Program

0
13. Amend Sec.  1710.400 by revising paragraph (b)(2) to read as 
follows:


Sec.  1710.400  Purpose.

* * * * *
    (b) * * *
    (2) Although not a goal, RUS recognizes that there will be a 
reduction of greenhouse gases with energy efficiency improvements.

0
14. Amend Sec.  1710.404 by:
0
a. Removing the definition for ``Certified energy auditor for 
commercial and industrial energy efficiency improvements''; and
0
b. Adding a definition for ``Certified energy auditor'' in alphabetical 
order.
    The addition reads as follows:


Sec.  1710.404  Definitions.

* * * * *
    Certified energy auditor means:
    (1) A certified energy auditor for commercial and industrial energy 
efficiency improvements shall mean an energy auditor who meets at least 
one of the following criteria:
    (i) An individual possessing a current commercial or industrial 
energy auditor certification from a national, industry-recognized 
organization;
    (ii) A Licensed Professional Engineer in the State in which the 
audit is conducted with at least 1 year experience and who has 
completed at least two similar type Energy Audits;
    (iii) An individual with a four-year engineering or architectural 
degree with at least 3 years experience and who has completed at least 
five similar type Energy Audits; or
    (iv) Beginning in calendar year 2015, an energy auditor 
certification recognized by the Department of Energy through its Better 
Buildings Workforce Guidelines project.
    (2) A certified energy auditor for residential energy efficiency 
improvements shall mean an energy auditor that meets one of the 
following criteria:
    (i) The workforce qualification requirements of the Home 
Performance with Energy Star Program, as outlined in Section 3 of the 
Home Performance with Energy Star Sponsor Guide; or
    (ii) An individual possessing a current residential energy auditor 
or building analyst certification from a national, industry-recognized 
organization.
* * * * *

0
15. Amend Sec.  1710.408 by revising the second sentence of paragraph 
(h) to read as follows:


Sec.  1710.408  Quality assurance plan.

* * * * *
    (h) * * * In these cases, utilities shall monitor the work done by 
the contractors and confirm that the contractors are performing quality 
work. * * *
* * * * *

Subpart I--Application Requirements and Procedures for Loans

0
16. Amend Sec.  1710.500 by revising the first sentence of paragraph 
(a) to read as follows:


Sec.  1710.500  Initial contact.

    (a) Loan applicants that do not have outstanding loans from RUS 
should contact the Rural Utilities Service via Email at 
[email protected], call RUS at (202) 720-9545 or write to the Rural 
Utilities Service Administrator, United States Department of 
Agriculture, 1400 Independence Ave. SW, STOP 1560, Room 4121, 
Washington, DC 20250-1560. * * *
* * * * *

0
17. Amend Sec.  1710.501 by:
0
a. Revising paragraphs (a)(1)(v), (viii), (x), (xiii), and (xvi) and 
(a)(2) and (8);
0
b. Removing paragraph (a)(4): and
0
c. Redesignating paragraphs (a)(5) through (17) as paragraphs (a)(4) 
through (16).
    The revisions read as follows:


Sec.  1710.501  Loan application documents.

    (a) * * *
    (1) * * *
    (v) The Borrower's Unique Entity Identifier;
* * * * *
    (viii) List of current counties and Tribal lands where real 
property is located;
* * * * *

[[Page 73439]]

    (x) Identify any new counties and Tribal lands with property since 
last loan;
* * * * *
    (xiii) Identify any State or Tribal regulatory approvals needed;
* * * * *
    (xvi) Breakdown of loan funds by State and Tribal lands;
* * * * *
    (2) Special resolutions. Included any special resolutions required 
by Federal, State, or Tribal Authorities and any others as identified 
and required by the RUS General Field Representative (for example, use 
of contractors, corrective action plans, etc.). Resolutions of support 
from Tribal government or Tribal regulatory authority are required by 
any non-Tribal applicant intending to serve Tribal areas before any 
loan is approved by RUS.
* * * * *
    (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, Tribal land, 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.
* * * * *

0
18. Add subpart J to read as follows:
Subpart J--Terms of Loans Common to Electric Loans and Guarantees
Sec.
1710.601 Advance of funds from loans.
1710.602 Fund advance period.
1710.603 Sequence of advances.
1710.604 Amortization of principal.
1710.605 Rescission of loans.

Subpart J--Terms of Loans Common to Electric Loans and Guarantees


Sec.  1710.601  Advance of funds from 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 form. 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 this part concurrent loan guaranteed by RUS is available to the 
borrower under terms and conditions satisfactory to RUS.


Sec.  1710.602  Fund advance period.

    (a) The fund advance period begins on the date of the loan note and 
will last no longer than five years, after September 30 of the fifth 
year after the fiscal year of obligation. The fiscal year of obligation 
is identified in loan documentation associated with each loan. The 
Administrator may extend the fund advance period on any loan if the 
borrower meets the requirements of paragraph (b) of this section. 
However, under no circumstances shall RUS ever make or approve an 
advance, regardless of the last day for an advance on the loan note or 
any extension by the Administrator, later than September 30 of the 
fifth year after the fiscal year of obligation if such date would 
result in the RUS obligating or permitting advance of funds contrary to 
the Anti-Deficiency Act.
    (b) The Administrator may agree to an extension of the fund advance 
period for loans if the borrower demonstrates, to the satisfaction of 
the Administrator, that the loan funds continue to be needed for 
approved loan purposes (e.g., facilities included in a RUS approved 
construction work plan). Policies for extension of the fund advance 
period following certain mergers, consolidations, and transfers of 
systems substantially in their entirety are set forth in 7 CFR 
1717.156.
    (1) To apply for an extension, the borrower must make a request to 
RUS prior to the last date for advance as noted in the borrower's loan 
documents and provide, 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) 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 
requested in writing prior to the last date for advance as provided in 
the borrower's loan documents.
    (3) Any request received after the last date for advance shall be 
rejected.
    (c) RUS will rescind the balance of any loan funds not advanced to 
a borrower as of the final date approved for advancing funds.


Sec.  1710.603  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) Fifty (50) percent of the RUS insured loan funds.
    (2) One hundred (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.


Sec.  1710.604  Amortization of principal.

    (a) 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 (b) 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.
    (b) For advances made 2 years or more after the date of the note, 
the Administrator may, upon written request from the borrower, 
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 Rural Electrification Act. Such deferral shall not extend the loan 
maturity period.


Sec.  1710.605  Rescission of loans.

    (a) A borrower may request rescission of a loan with respect to any 
funds unadvanced by submitting a letter signed by the General Manager, 
Board President or other individual authorized by the Board of 
Directors to request such rescission.
    (b) RUS may rescind loans pursuant to Sec.  1710.602(c).
    (c) Borrowers who prepay RUS loans at a discounted present value 
pursuant to subpart F of 7 CFR part 1786 are required to rescind the 
unadvanced balance of all outstanding electric notes pursuant to 7 CFR 
1786.158(j).

PART 1714--PRE-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC 
LOANS

0
19. The authority citation for part 1714 continues to read as follows:

    Authority: 7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.

[[Page 73440]]

Subpart B [Removed and Reserved]

0
20. Remove and reserve subpart B, consisting of Sec. Sec.  1714.50 
through 1714.59.

PART 1717--POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND 
GUARANTEED ELECTRIC LOANS

0
21. The authority citation for part 1717 continues to read as follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart M--Operational Controls

0
22. Revise Sec.  1717.616 to read as follows:


Sec.  1717.616  Sale, lease, or transfer of capital assets.

    (a) The term ``disposition'' in this part shall mean any sale, 
lease, or any other transaction in which the borrower transfers an 
interest in a capital asset to another entity or person.
    (b) A borrower may, without the prior approval of RUS, sell, lease, 
transfer, or otherwise dispose of any capital asset if the following 
conditions are met:
    (1) The borrower is not in default on any of its obligations to 
RUS;
    (2) In the most recent year for which data is available, the 
borrower has met its coverage ratios as set forth in 7 CFR 1710.114(b) 
or other financial requirements as established by their mortgages, loan 
contracts, or other security agreements;
    (3) The sale, lease, transfer, or disposition of assets will not 
reduce the borrower's existing or future requirements for energy or 
capacity being furnished to the borrower under any wholesale power 
contract which has been pledged as security to the government;
    (4) Fair market value is obtained for the assets;
    (5) No employee or board member of the organization has a direct 
personal financial interest in the disposition of the capital assets;
    (6) The aggregate value of assets sold, leased, transferred, or 
disposed of in any 12-month period is less than 10 percent of the 
borrower's net utility plant prior to the disposition, not to exceed 
$10,000,000.00; and
    (7) If the disposition of the capital asset:
    (i) Results in the borrower not retaining an interest in the asset; 
or
    (ii) Constitutes a ``capital lease'' under 7 CFR 1767.15(s)(1) and 
the borrower does not retain the right to utilize the asset during the 
term of the lease, and the borrower disposes of the proceeds, less 
ordinary and reasonable expenses incident to such disposition, in a 
manner consistent with paragraph (e) of this section.
    (c) The requirements for all dispositions include:
    (1) The borrower shall receive fair market value for the 
disposition of capital assets;
    (2) The sale shall be in the best interests of the creditors;
    (3) All approvals required by law, by the articles of 
incorporation, by the bylaws of the seller, or by all the creditors, 
shall be obtained prior to delivery of the assets;
    (4) In the case of dispositions involving exchanges or trades of a 
plant in place between an RUS borrower and a non-RUS borrower, the 
borrower must provide evidence, satisfactory to RUS, that the exchange 
or trade is equitable to the RUS borrower and that the plant acquired 
in the exchange or trade can be economically integrated into the 
borrower's system; and
    (5) Unless the seller, as an existing RUS borrower is dissolved, 
its electric system after the disposition will constitute a 
satisfactory operating unit and the disposition of the asset will not 
jeopardize the repayment of the seller's RUS loan and other loans or 
impair the collateral serving as security for all RUS loans. If the 
purchaser is a RUS borrower, the same determinations shall also be made 
with respect to the purchaser's operations and loan repayment.
    (d) The methods of handling disposition include:
    (1) Dispositions of capital assets generally shall be for cash 
except as otherwise approved by RUS in writing.
    (2) If the disposition of the assets is not subject to RUS approval 
as provided in paragraph (b) of this section but the purchaser requires 
the government to release its lien on the assets subject to the 
disposition, the following shall apply:
    (i) The borrower shall prepare either:
    (A) A transmittal letter to RUS requesting a partial release of the 
lien with respect to the assets to be disposed; or
    (B) RUS Form 369, Request for Approval to Sell Capital Assets, or 
its successor.
    (ii) The partial release of lien should be prepared by the attorney 
for the borrower or the purchaser. It is the borrower's responsibility 
to assure the accuracy and legal effectiveness of a proposed release. 
When a partial release of lien requires execution and acknowledgement 
by a creditor, such execution and acknowledgment by the other creditor 
should be obtained by the borrower.
    (iii) If the borrower elects to submit a transmittal letter to 
request the release of lien, the letter should contain the following 
information:
    (A) Insert address of property or assets being sold;
    (B) Name and address of purchaser;
    (C) Approximate original cost or book value;
    (D) The consideration the borrower is receiving in exchange for the 
disposition of the assets' prices;
    (E) A statement that the borrower received fair market value for 
the property being disposed;
    (F) A statement from the borrower that the net proceeds have been 
or will be deposited into the Construction Fund Trustee Account or will 
be applied as a prepayment on all debt secured under the mortgage or 
other security agreement applicable to the assets being disposed, 
equally and proportionally,
    (iv) A statement from the borrower's manager stating that there was 
no distribution of funds to any employees and/or board members. If any 
amount of funds arising from the disposition have been distributed to 
employees and/or board members, specific identification of the 
employees and/or board members, and reasons why funds were provided to 
those persons (if applicable) must be stated in the transmittal letter. 
Include borrower contact information, including email address, for 
questions.
    (v) A statement of how or if the disposition will affect the 
borrower's existing customers.
    (3) If the disposition does not fall within the ambit of paragraph 
(b) of this section so that RUS Approval is required, the following 
then apply:
    (i) If the Federal Government is the sole lien holder of the 
borrower's capital assets, approval of the disposition by the Federal 
Government will be indicated on RUS Form 369, when returned to the 
seller.
    (ii) If the Federal Government holds a lien jointly with 
supplemental lenders, joint approval for the disposition will be 
necessary and the borrower will forward the following:
    (A) Information should be forwarded directly to RUS and one copy to 
all supplemental lenders;
    (B) When approved by RUS, the information will be forwarded by RUS 
to the supplemental lenders (and a notice letter advising that RUS has 
forwarded this information to supplemental lenders will be issued by 
RUS to the borrower); and
    (C) The supplemental lenders will be instructed, in the RUS 
transmittal memorandum, to execute the

[[Page 73441]]

documents and return them to the seller. The supplemental lenders will 
also be instructed to notify RUS when the completed documents are 
returned to the seller.
    (e) The disposition of proceeds will be handled as follows:
    (1) The disposition of proceeds from the disposition of a capital 
asset shall be the same regardless of whether or not RUS approval of 
the sale is required.
    (2) If the gross proceeds from the disposition of the assets total 
less than $50,000 the borrower shall deposit the proceeds in its 
general fund account and are to be used for purposes related to the 
utility business as determined by the management of the borrower.
    (3) Proceeds from individual dispositions of property where the 
gross proceeds total $50,000 or more, should be distributed and 
accounted for as follows:
    (i) Deposited into the Construction Fund Trustee Account. When 
funds are deposited into the Construction Fund Trustee Account, the 
borrower shall notify RUS in writing so that the budget records can be 
adjusted. The funds are to be used for the construction or acquisition 
of the borrower's utility system;
    (ii) Paid to RUS and any secured supplemental lenders if the 
borrower has concurrent loans outstanding, by application of such funds 
as a prepayment on the notes of all lenders pro-rata according to the 
aggregate unpaid principal amount of the notes then outstanding, as 
designated by the noteholders, and in accordance with the borrower's 
loan documents;
    (iii) If the borrower has no concurrent supplemental loans 
outstanding, applied to RUS as a payment to be applied to the note or 
notes issued with respect to loans made or guaranteed by RUS, or any 
portion of a note with respect to a loan made by RUS, and designated by 
the borrower or RUS; or
    (iv) In the case of dispositions of SO2 allowances, the 
funds from the sale of allowances should be deposited into the 
Construction Fund Trustee Account. If any entity prefers to deposit the 
funds into the General Fund Account, specific RUS approval will be 
given on a case-by-case basis. Accompanying any request for approval to 
deposit the funds into the General Fund Account should be a completed 
RUS Form 369 along with a summary of the anticipated disposition of 
funds from the General Fund Account;
    (v) In the case of dispositions of equipment, materials, or scrap, 
all proceeds (regardless of the amount) from the sale should be 
deposited into the General Fund Account to be used for the purchase of 
other property useful in the mortgagor's utility business, not 
necessarily of the same kind as the property disposed, which is subject 
to the lien of the mortgage;
    (vi) The Administrator may allow a borrower to deposit the proceeds 
of the disposition of the asset directly into the General Funds Account 
instead of the Construction Fund Trustee Account if the borrower has no 
`Balance in Reserve' on its most recent loan advances 605 report and 
does not anticipate submitting any new loan applications to RUS. The 
borrower must receive written approval from RUS before it deposits any 
proceeds into its General Funds Account.
    (f) The borrower must provide the following to RUS for any 
disposition of a capital asset that does not fall within the scope of 
paragraph (b) of this section and requires RUS approval:
    (1) RUS Form 369 with original signature;
    (2) If the disposition involves a condemnation, the borrower must 
attach a copy of the petition or complaint in the condemnation suit to 
the RUS Form 369. Items 10, 11, and 12 of the RUS Form 369 may be 
completed by referring to the attachment. Item 14 need not be 
completed. The RUS Form 369 and a copy of the petition or complaint in 
condemnation cases should be submitted to RUS promptly after the 
petition or complaint has been received by the borrower;
    (3) If the purchaser will require the disposition of the asset be 
free and clear of liens, the partial release of the lien should be 
prepared by the attorney for the seller or purchaser. It will be the 
responsibility of the borrower and the borrower's attorney to ensure 
the accuracy and legal effectiveness of a proposed partial release of 
the lien;
    (4) If the disposition involves real estate or plant in place, in 
addition to the information required for all dispositions, the seller 
will provide a brief description of the property being disposed and a 
statement explaining why the asset is no longer needed for the 
borrower's system. The borrower shall also provide the following 
information to RUS for the disposition of real estate and plant in 
place:
    (i) Except in condemnation cases, a statement of agreement between 
the seller and the purchaser on the proposed selling price. When 
applicable, include adjustments such as capital additions and 
retirements, depreciation, taxes, distribution of membership fees, 
deposits and contributions, prepaid and delinquent bills and accounts, 
insurance, assignment of easements, the proposed closing date, and 
other pertinent information. Generally, the closing date selected 
should not be less than 90 days after the date the required information 
is forwarded to RUS;
    (ii) A complete legal description or real property supported by key 
and detail maps showing the location of lines or other capital assets 
to be disposed;
    (iii) A breakdown of consumers by classification showing number, 
mileage, average kWh usage, and revenues for the portion of lines being 
disposed;
    (iv) An inventory of lines on a priced assembly or record unit 
basis, or, in the case of facilities other than lines, a detailed 
breakdown of separable units and their costs;
    (v) Description and estimated costs of changes, if any, which must 
be made in the seller's system in order to maintain satisfactory 
operations after the sale has been completed;
    (vi) Other pertinent data such as the physical condition of the 
property to be disposed, a copy of the lease if facilities to be 
disposed of are on leased land, and the approval of applicable 
regulatory bodies where required;
    (vii) The retail rates to be applied to the consumers on the lines 
being disposed (comparative rate schedules); and
    (viii) If the purchaser is another RUS borrower or a borrower from 
a supplemental lender, a description and the estimated costs of the 
changes, if any, necessary to integrate the properties being acquired 
with the purchaser's existing system for satisfactory operations.
    (5) If the purchaser is to pay the seller in installments, such 
information should be noted on Item 9 of the RUS Form 369. A sales 
agreement between the seller and the purchaser, a note or other debt 
instrument in favor of the seller, and a security agreement in favor of 
the seller should be executed and collaterally assigned by the seller 
to the U.S. Government and the supplemental lenders, if applicable. The 
partial release of the lien will not be executed by RUS, if applicable, 
until the final installment payment has been received by the seller. 
The disposition of the proceeds from installment sales will be the same 
as from cash dispositions);
    (6) Dispositions involving exchanges or trades of real estate or 
plant in place between a borrower and a non-RUS borrower will be 
considered on an individual case-by-case basis.
    (g) Expenditures by the seller in conjunction with the dispositions 
of capital assets will be properly accounted for and all associated 
documents shall be retained for review

[[Page 73442]]

when RUS conducts its next Loan Fund and Accounting Review.

Subpart R--Lien Accommodations and Subordinations for 100 Percent 
Private Financing

0
23. Amend Sec.  1717.855 by revising paragraph (g) to read as follows:


Sec.  1717.855  Application contents: Advance approval--100 percent 
private financing of distribution, subtransmission and headquarters 
facilities, and certain other community infrastructure.

* * * * *
    (g) RUS Form 740c, Cost Estimates and Loan Budget for Electric 
Borrowers;
* * * * *

PART 1724--ELECTRIC ENGINEERING, ARCHITECTURAL SERVICES AND DESIGN 
POLICIES AND PROCEDURES

0
24. The authority citation for part 1724 continues to read as follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart A--General

0
25. Revise Sec.  1724.9 to read as follows:


Sec.  1724.9  Environmental review requirements.

    Borrowers must comply with the environmental review requirements in 
accordance with 7 CFR part 1970. or any successor regulations that 
implement the provisions of the National Environmental Policy Act.

Subpart D--Electric System Planning

0
26. Amend Sec.  1724.40 by revising the last sentence to read as 
follows:


Sec.  1724.40  General.

    * * * These bulletins are available at https://www.rd.usda.gov/resources/regulations/bulletins.

Subpart E--Electric System Design

0
27. Amend Sec.  1724.51 by revising paragraph (f)(1) to read as 
follows:


Sec.  1724.51  Design requirements

* * * * *
    (f) * * *
    (1) This section covers microwave and powerline carrier 
communications systems, load control, and supervisory control and data 
acquisition (SCADA) systems but does not include cybersecurity 
measures.
* * * * *

0
28. Amend Sec.  1724.54 by revising paragraphs (d)(1)(ii), (e)(2), 
(f)(2), and (g)(1) and (2) to read as follows:


Sec.  1724.54  Requirements for RUS approval of plans and 
specifications.

* * * * *
    (d) * * *
    (1) * * *
    (ii) The borrower shall notify RUS in writing, which may include 
the Construction Work Plan or amendment thereto that contains the 
proposed new substation, that a previously approved design will be 
used, including identification of the previously approved design.
* * * * *
    (e) * * *
    (2) The borrower shall obtain RUS approval, prior to issuing 
invitations to bid, of the terms and conditions for all generating 
plant equipment or construction contracts which will cost $5,000,000 or 
more, provided however that the terms of any indenture or other 
agreement between RUS and the borrower supersede the requirement of RUS 
approval contained herein. Unless RUS approval is required by paragraph 
(a) of this section, plans and specifications for generating plant 
equipment and construction do not require RUS approval.
    (f) * * *
    (2) Unless RUS approval is required by paragraph (a) of this 
section, plans and specifications for headquarters buildings do not 
require RUS approval. The application must show floor area and 
estimated cost breakdown between office building space and space for 
equipment warehousing and service facilities, and include a one line 
drawing (floor plan and elevation view), to scale, of the proposed 
building with overall dimensions shown. The information concerning the 
planned building may be included in the borrower's construction work 
plan in lieu of submitting it with the application. (See 7 CFR part 
1710, subpart F.) Prior to issuing the plans and specifications for 
bid, the borrower shall also submit to RUS a statement, signed by the 
architect or engineer, that the building design meets the Uniform 
Federal Accessibility Standards (See Sec.  1724.51(e)(1)(i)).
    (g) * * *
    (1) This paragraph (g) covers microwave and powerline carrier 
communications systems, load control, and supervisory control and data 
acquisition (SCADA) systems, but does not include cybersecurity 
systems.
    (2) The borrower shall obtain RUS approval, prior to issuing 
invitations to bid, of the terms and conditions for communications and 
control facilities contracts which will cost $1,500,000 or more; 
provided however that the terms of any indenture or other agreement 
between RUS and the borrower supersede the requirement of RUS approval 
contained herein. Unless RUS approval is required by paragraph (a) of 
this section, plans and specifications for communications and control 
facilities do not require RUS approval.
* * * * *

Subpart F--RUS Contract Forms

0
29. Amend Sec.  1724.70 by revising paragraph (b) to read as follows:


Sec.  1724.70  Standard forms of contracts for borrowers.

* * * * *
    (b) Contract forms. RUS promulgates standard contract forms, 
identified in the List of Required Contract Forms, Sec.  1724.74(c), 
that borrowers are required to use in accordance with the provisions of 
this part. A borrower may deviate from the Required Contract Form 
provided the borrower certifies to RUS that the non-standard form 
incorporates the provisions of the Required Contract Form that are 
contained in the RUS Certification Form found at https://www.rd.usda.gov/resources/directives/electric-sample-documents. 
Further, a borrower may utilize a contract other than a Required 
Contract Form if it is allowed to do so by an indenture or any other 
agreement between the borrower and RUS. In addition, RUS promulgates 
standard contract forms identified in the List of Guidance Contract 
Forms contained in Sec.  1724.74(c) that the borrowers may but are not 
required to use in the planning, design, and construction of their 
electric systems. Borrowers are not required to use these guidance 
contract forms in the absence of an agreement to do so.

0
30. Amend Sec.  1724.71 by revising paragraph (a), the first sentence 
of paragraph (b), and paragraph (c) to read as follows;


Sec.  1724.71  Borrower contractual obligations.

    (a) Loan agreement. As a condition of a loan or loan guarantee 
under the RE Act, distribution borrowers are normally required to enter 
into RUS loan agreements pursuant to which the borrower agrees to use 
RUS standard forms of contracts for construction, procurement, 
engineering services and architectural services financed in whole or in 
part by the RUS loan. Normally, this obligation is contained in section 
5.16 of the standard distribution loan contract. To comply with the 
provisions of the loan agreements as implemented by this part, 
borrowers must use those forms of contract (hereinafter sometimes

[[Page 73443]]

called ``listed contract forms'') identified in the List of Required 
Standard Contract Forms contained in Sec.  1724.74(c), except as 
provided in Sec.  1724.70(b). Power Supply borrowers typically execute 
an indenture and loan contract as well. The terms and conditions of any 
indenture and loan contract executed by a Power Supply borrower shall 
govern its obligations with respect to the use of contract forms.
    (b) * * * If a borrower is required by this part or by its loan 
agreement with RUS to use a listed standard form of contract, the 
borrower shall use the listed contract form in the format available 
from RUS, either paper or electronic format, except as provided in 
Sec.  1724.70(bc). * * *
    (c) Amendment. Where a borrower has entered into a contract in the 
form required by this part, no change may be made in the terms of the 
contract, by amendment, waiver or otherwise, without the prior written 
approval of RUS except as provided in Sec.  1724.70(b).
* * * * *

PART 1730--ELECTRIC SYSTEM OPERATIONS AND MAINTENANCE

0
31. The authority citation for part 1730 continues to read as follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart B--Operations and Maintenance Requirements

0
32. Amend Sec.  1730.27 by:
0
a. Revising the first sentence of paragraph (a);
0
b. Removing paragraphs (b) and (c);
0
c. Redesignating paragraphs (d) and (e) as paragraphs (b) and (c)
0
d. Revising the first sentence of newly redesignated paragraph (b); and
0
e. Revising newly redesignated paragraph (c)(5); and
    The revisions read as follows:


Sec.  1730.27  Vulnerability and Risk Assessment (VRA).

    (a) Each borrower with an approved RUS electric program loan shall 
perform an initial VRA of its electric system. * * *
    (b) Each applicant that submits an application for an RUS electric 
program loan or grant shall include with its application package a 
letter certification that such applicant has performed an initial VRA 
of its electric system. * * *
    (c) * * *
    (5) Threats to facilities and assets identified in paragraphs 
(c)(1) through (4) of this section;
* * * * *

0
33. Amend Sec.  1730.28 by:
0
a. Revising the first and last sentences of paragraph (a);
0
b. Removing paragraphs (b) and (c);
0
c. Redesignating paragraphs (d) through (j) as paragraphs (b) through 
(h);
0
d. Revising newly redesignated paragraph (b);
0
e. Removing the last sentence of newly redesignated paragraph (f); and
0
f. Revising newly redesignated paragraph (g)(1).
    The revisions read as follows:


Sec.  1730.28  Emergency Restoration Plan (ERP).

    (a) Each borrower shall have a written ERP. * * * If a joint 
electric utility ERP is developed, each RUS borrower shall prepare an 
addendum to meet the requirements of paragraphs (c) through (e) of this 
section as it relates to its system.
* * * * *
    (b) Each applicant that submits an application for an RUS electric 
program loan or grant shall include with its application package a 
letter certification that such applicant has a written ERP.
* * * * *
    (g) * * *
    (1) The modified ERP must be prepared in compliance with the 
provisions of paragraphs (c) through (e) of this section; and
* * * * *

Subpart C--Interconnection of Distributed Resources.

0
34. Amend Sec.  1730.63 by:
0
a. Revising paragraph (a)(5);
0
b. Removing paragraph (b)(2); and
0
c. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(2) and 
(3).
    The revision reads as follows:


Sec.  1730.63  IDR policy criteria.

    (a) * * *
    (5) IDR policies should be reconsidered and updated periodically in 
a manner that is consistent with prudent utility practice.
* * * * *

0
35. Revise Sec.  1730.65 to read as follows:


Sec.  1730.65  Effective dates.

    All electric program applicants shall provide a letter of 
certification executed by the General Manager stating that the borrower 
meets the requirements of this subpart before such loan may be 
approved.

Andrew Berke,
Administrator, Rural Utilities Service.
[FR Doc. 2022-25554 Filed 11-29-22; 8:45 am]
BILLING CODE 3410-15-P