Electric Program Coverage Ratios Clarification and Modifications, 12806-12810 [2023-04016]
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12806
Federal Register / Vol. 88, No. 40 / Wednesday, March 1, 2023 / Rules and Regulations
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exclusions are actions identified in an
agency’s NEPA implementing
procedures that do not normally have a
significant impact on the environment
and therefore do not require either an
environmental assessment (EA) or
environmental impact statement (EIS).
See 40 CFR 1508.4. In analyzing the
applicability of a categorical exclusion,
the agency must also consider whether
extraordinary circumstances are present
that would warrant the preparation of
an EA or EIS. Id. Paragraph 3.c.5 of DOT
Order 5610.1C incorporates by reference
the categorical exclusions for all DOT
Operating Administrations. This action
is covered by the categorical exclusion
listed in the Federal Highway
Administration’s implementing
procedures, ‘‘[p]romulgation of rules,
regulations, and directives.’’ 23 CFR
771.117(c)(20). The purpose of this
rulemaking is to update the regulation
that outlines the requirements for
Federal Awards and to revise section
cross-references to conform with the
2020 changes to the OMB Guidance for
Grants and Agreements. The agency
does not anticipate any environmental
impacts, and there are no extraordinary
circumstances present in connection
with this rulemaking.
List of Subjects in 2 CFR Part 1201
Accounting, Administrative practice
and procedure, Adult education, Aged,
Agriculture, American Samoa, Bilingual
education, Blind, Business and
industry, Civil rights, Colleges and
universities, Communications,
Community development, Community
facilities, Copyright, Credit, Cultural
exchange programs, Educational
facilities, Educational research,
Education, Education of disadvantaged,
Education of individuals with
disabilities, Educational study
programs, Electric power, Electric
power rates, Electric utilities,
Elementary and secondary education,
Energy conservation, Equal educational
opportunity, Federally affected areas,
Government contracts, Grant programs,
Grants administration, Guam, Home
improvement, Homeless, Hospitals,
Housing, Human research subjects,
Indians, Indians-education, Infants and
children, Insurance, Intergovernmental
relations, International organizations,
Inventions and patents, Loan programs,
Manpower training programs, Migrant
labor, Mortgage insurance, Nonprofit
organizations, Northern Mariana
Islands, Pacific Islands Trust Territories,
Privacy, Renewable energy, Reporting
and recordkeeping requirements, Rural
areas, Scholarships and fellowships,
School construction, Schools, Science
and technology, Securities, Small
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businesses, State and local governments,
Student aid, Teachers,
Telecommunications, Telephone, Urban
areas, Veterans, Virgin Islands,
Vocational education, Vocational
rehabilitation, Waste treatment and
disposal, Water pollution control, Water
resources, Water supply, Watersheds,
Women.
For the reasons stated in the
preamble, the Department of
Transportation amends 2 CFR part 1201
as set forth below:
PART 1201—UNIFORM
ADMINISTRATIVE REQUIREMENTS,
COST PRINCIPLES, AND AUDIT
REQUIREMENTS FOR FEDERAL
AWARDS
1. The authority citation for part 1201
continues to read as follows:
■
Authority: 49 U.S.C. 322(a); 2 CFR 200.106.
§ 1201.80
[Amended]
2. In § 1201.80, remove ‘‘2 CFR
200.80’’ and add in its place ‘‘2 CFR
200.1’’ and remove ‘‘See 2 CFR 200.77
Period of performance.’’ and add in its
place ‘‘See 2 CFR 200.1 Definitions.’’
■
§ 1201.206
Amended]
[Redesigated as § 1201.207 and
3. Redesignate § 1201.206 as
§ 1201.207 and amend the newly
redesignated section by removing ‘‘2
CFR 200.206’’ and adding in its place ‘‘2
CFR 200.207’’.
■
§ 1201.327
Amended]
[Redesigated as § 1201.328 and
4. Redesignate § 1201.327 as
§ 1201.328 and amend the newly
redesignated section by removing ‘‘2
CFR 200.327’’ and adding in its place ‘‘2
CFR 200.328’’.
■
Signed under authority provided by 49
U.S.C. 322(a), 2 CFR 200.106, and 49 CFR
1.27 in Washington, DC on February 21,
2023.
John E. Putnam,
General Counsel, U.S. Department of
Transportation.
[FR Doc. 2023–03891 Filed 2–28–23; 8:45 am]
BILLING CODE 4910–9X–P
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1710
[Docket No. RUS–22–ELECTRIC–0057]
RIN # 0572–AC60
Electric Program Coverage Ratios
Clarification and Modifications
Rural Utilities Service, U.S.
Department of Agriculture (USDA).
ACTION: Final rule; request for comment.
AGENCY:
The Rural Utilities Service
(RUS), a Rural Development (RD)
agency of the United States Department
of Agriculture (USDA), is issuing a final
rule with comment. The intent of this
rule is to modify its coverage ratio
requirements, add an additional set of
ratios, and update and add definitions.
The effect of this action is to reduce the
regulatory impact on RUS Electric
Program borrowers, ensure that loan
funds will be repaid in the time agreed
upon, facilitate the lending for
construction of rural electric
infrastructure, and allow RUS to focus
on feasibility and security issues while
increasing customer efficiency,
customer satisfaction and service.
DATES: This final rule is effective May
30, 2023.
Comments must be submitted on or
before May 1, 2023.
ADDRESSES: You may submit comments,
identified by Docket Number (RUS–22–
ELECTRIC–0057) or the RIN #(0572–
AC60).
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow
instructions for sending comments. In
the ‘‘Search Documents’’ box, enter the
Docket Number (RUS–22–ELECTRIC–
0057) or the RIN # (0572–AC60), and
click the ‘‘Search’’ button. To submit a
comment, choose the ‘‘Comment Now!’’
button. Information on using
Regulations.gov, including instructions
for accessing documents, submitting
comments, and viewing the docket after
the close of the comment period, is
available through the site’s FAQ page.
Instructions: All submissions received
must include the agency name and
docket number or Regulatory
Information Number (RIN) for this
rulemaking. All comments received will
be posted without change to
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT:
Mark Bartholomew, Rural Utilities
Service Electric Program, Rural
Development, United States Department
of Agriculture, 1400 Independence
SUMMARY:
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Avenue SW, STOP 1560, Washington,
DC 20250; 704–544–4612
mark.bartholomew@usda.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Rural Development (RD) is a mission
area within the U.S. Department of
Agriculture (USDA) comprising the
Rural Utilities Service (RUS), Rural
Housing Service, and Rural BusinessCooperative Service. RD’s mission is to
increase economic opportunity and
improve the quality of life for all rural
Americans. RD 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.
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
cultural and historic preservation. The
RUS Electric Program provides funding
to maintain, expand, upgrade, and
modernize America’s rural electric
infrastructure. The loans and loan
guarantees finance the construction or
improvement of electric distribution,
transmission, and generation facilities
in rural areas.
This rulemaking is part of the RUS
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
RUS 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.
The intent of these proposed changes
is to provide an additional method for
complying with RUS’s coverage ratio
requirements. The goal is to (1) reduce
the regulatory impact on RUS Electric
Program borrowers, (2) ensure that loan
funds will be repaid in the time agreed
upon, and (3) that the RUS loans remain
adequately secured. RUS expects that
these actions will enhance RUS and
customer efficiency, thereby increasing
customer satisfaction and service. RUS
uses these ratios as part of its loan
application review and/or its annual
review of the Financial and Operating
Report data to monitor the financial
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stability of the borrowers to ensure loan
security.
There are no alternatives except to
maintain the current RUS Electric
Program ratio coverage regulations. The
proposed changes will improve
customer experience and customer
service, and allow RUS to better focus
on feasibility and security issues while
lessening the burdens on the RUS
Electric Program borrowers. These
changes provide added flexibility to
borrowers to be in complaince with
mortgage requirements without
increasing rates to meet their operating
coverage ratios when the borrower has
cash reserves to cover debt service
payments. This action should not
impose additional costs on applicants or
on electric borrowers as the additional
ratios are already calculated as part of
a Borrower’s Statistical Profile which is
currently calculated utilizing the data
provided on the borrower’s RUS
Financial and Operating Reports. These
changes will positively affect the RUS
Electric borrower experience and
enhance RUS customer service by
removing unnecessary and burdensome
requirements for electric borrowers and
applicants, minimizing the regulatory
impact of applying for loans made or
guaranteed by RUS, and facilitating
lending for construction of rural electric
infrastructure.
II. Summary of Changes to Rule
7 CFR 1710.2
Construction
Definitions and Rules of
The definitions MTIER (Modified
Times Interest Earned Ratio) and MDSC
(Modified Debt Service Coverage) are
not currently in the regulation and are
added to assist applicants in better
understanding the program’s
requirements.
The definitions of TIER (Times
Interest Earned Ratio Debt Service
Coverage), OTIER (Operating Times
Interest Earned Ratio), DSC (Debt
Service Coverage) and ODSC (Operating
Debt Service Coverage) are updated to
remove outdated sections and references
and by reorganizing remaining sections
accordingly and improving logical flow.
7 CFR 1710.114 TIER, DSC, OTIER
and ODSC Requirements
Paragraphs (a) and (b) will be
modified to remove outdated language
and to reflect RUS’ current Financial
and Operating Reports.
Paragraph (b)1 will be modified to
allow Modified Times Interest Earned
Ratio (MTIER) and Modified Debt
Service Coverage (MDSC) to be
considered if a borrower does not meet
the coverage requirements for Operating
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12807
Times Interest Earned Ratio (OTIER)
and Operating Debt Service Coverage
(ODSC). This allows more flexibility to
borrowers regarding the coverage
requirements.
III. Executive Orders and Acts
Executive Order 12866—Classification
This 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).
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.
Paperwork Reduction Act
This rule contains no new reporting
or recordkeeping burdens under OMB
control number 0572–0032 that would
require approval under the Paperwork
Reduction Act of 1995 (44 U.S.C.
Chapter 35).
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’’). RUS 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,
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Federal Register / Vol. 88, No. 40 / Wednesday, March 1, 2023 / Rules and Regulations
RUS 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.
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. The
Administrative Procedure Act exempts
from notice and comment requirements
rules ‘‘relating to agency management or
personnel or to public property, loans,
grants, benefits, or contracts’’ (5 U.S.C.
553(a)(2)). This final rule 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.
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Executive Order 12988—Civil Justice
Reform
This rule has been reviewed under
E.O. 12988, Civil Justice Reform. In
accordance with this rule: (1) unless
otherwise specifically provided, all
State and local laws that conflict with
this rule will be preempted; (2) no
retroactive effect will be given to this
rule except as specifically prescribed in
the rule; and (3) administrative
proceedings of the National Appeals
Division of the Department of
Agriculture (7 CFR part 11) must be
exhausted before bringing suit in court
that challenges action taken under this
rule.
Unfunded Mandate Reform Act (UMRA)
Title II of the 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 on the private
sector. Under Section 202 of the UMRA,
Federal Agencies generally must
prepare a written statement, including
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 a Federal agency to identify
and consider a reasonable number of
regulatory alternatives and adopt the
least costly, more cost-effective, or least
burdensome alternative that achieves
the objectives of the rule.
This rule contains no Federal
mandates (under the regulatory
provisions of Title II of the UMRA) for
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State, local, and Tribal governments or
for the private sector. Therefore, this
rule is not subject to the requirements
of sections 202 and 205 of the UMRA.
Executive Order 13132—Federalism
It has been determined, under E.O.
13132, Federalism, that the policies
contained in this 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 rule
impose substantial direct compliance
costs on State and local governments.
Therefore, consultation with the States
is not required.
Executive Order 13175—Consultation
and Coordination With Indian Tribal
Governments
This executive order imposes
requirements on RUS in the
development of regulatory policies that
have Tribal implications or preempt
Tribal laws. RUS has determined that
the rule does not have 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 rule is not subject to the
requirements of Executive Order 13175.
If Tribal leaders are interested in
consulting with RUS on this rule, they
are encouraged to contact USDA’s Office
of Tribal Relations or RD’s Native
American Coordinator at: AIAN@
usda.gov to request such a consultation.
E-Government Act Compliance
Rural Development is committed to
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.
Civil Rights Impact Analysis
Rural Development has reviewed this
rule in accordance with USDA
Regulation 4300–004, ‘‘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,
disability, marital or familial status.
Based on the review and analysis of the
rule and all available data, issuance of
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this final rule is not likely to negatively
impact low and moderate-income
populations, minority populations,
women, Indian Tribes, or persons with
disability, by virtue of their age, race,
color, national origin, sex, disability, or
marital or familial status.
USDA Non-Discrimination Statement
In accordance with Federal civil
rights laws and USDA civil rights
regulations and policies, the USDA, its
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, USDA
Program Discrimination Complaint
Form, which can be obtained online at
https://www.usda.gov/oascr/how-to-filea-program-discrimination-complaint
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:
a. Mail: U.S. Department of
Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400
Independence Avenue SW, Washington,
DC 20250–9410; or
b. Fax: (833) 256–1665 or (202) 690–
7442; or
c. Email: program.intake@usda.gov.
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1. The authority citation for part 1710
continues to read as follows:
■
Authority: 7 U.S.C. 901 et seq., 1921 et
seq., and 6941 et seq.
Subpart A—General
2. Amend § 1710.2 in paragraph (a)
by:
■ a. Revising the definition of ‘‘DSC’’;
■ b. Adding definitions in alphabetical
order for ‘‘MDSC’’ and ‘‘MTIER’’; and
■ c. Revising the definitions of ‘‘DSC’’,
‘‘ODSC’’, ‘‘OTIER’’, and ‘‘TIER’’.
The revisions and additions read as
follows
■
§ 1710.2 Definitions and rules of
construction.
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(a) * * *
DSC means Debt Service Coverage of
the borrower calculated as:
Where:
A = Depreciation and Amortization Expense
of the borrower, which equals Part A,
Line 13b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Section A,
Line 22b of the RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers;
B = Interest expense on total long-term debt
of the borrower, which equals Part A,
Line 16b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Part A,
Section A, Line 24b of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers,
except that interest expense shall be
increased by 1⁄3 of the amount, if any, by
which restricted rentals of the borrower
(Part L, Total Column c) of the RUS
Financial and Operating Report Electric
Distribution for distribution borrowers or
Part H, Section K, Total Column c of the
RUS Financial and Operating Report
Electric Power Supply for power supply
borrowers) exceed 2 percent of the
borrower’s equity (RUS Financial and
Operating Report Electric Distribution
for distribution borrowers, Part C, Line
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*
*
*
*
*
MDSC means Modified Debt Service
Coverage of the electric system
calculated as:
Where:
A = Depreciation and Amortization Expense
of the borrower, which equals Part A,
Line 13b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Part A,
Section A, Line 22b of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers;
B = Interest expense on total long-term debt
of the borrower, which equals Part A,
Line 16b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Part A,
Section A, Line 24b of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers,
except that interest expense shall be
increased by 1⁄3 of the amount, if any, by
which restricted rentals of the borrower
(Part L, Line 3c of the RUS Financial and
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*
*
*
*
*
MTIER means Modified Times
Interest Earned Ratio of the electric
system calculated as:
Where:
A = Patronage Capital or Margins of the
borrower, which equals Part A, Line 29b
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers;
B = Interest expense on total long-term debt
of the borrower, which equals Part A,
Line 16b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers, except that
interest expense shall be increased by 1⁄3
of the amount, if any, by which restricted
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PART 1710—GENERAL AND PRE–
LOAN POLICIES AND PROCEDURES
COMMON TO ELECTRIC LOANS AND
GUARANTEES
Operating Report Electric Distribution
for distribution borrowers or Part H,
Section K, Line 4c of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers)
exceed 2 percent of the borrower’s equity
(RUS Financial and Operating Report
Electric Distribution for distribution
borrowers, Part C, Line 36 [Total Margins
& Equities] less Part C, Line 27
[Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers, Part A,
Section B, Line 39 [Total Margins &
Equities] less Part A, Section B, Line 29
[Regulatory Assets]);
C = Patronage Capital or Margins of the
borrower, which equals Part A, Line 29b
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers or Part A, Section
A, Line 38b of the RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers; and
D = Generation and Transmission Capital
Credits of the borrower, which equals
Part A, Line 26b of the RUS Financial
and Operating Report Electric
Distribution for distribution borrowers or
Part A, Section A, Line 35b of the RUS
Financial and Operating Report Electric
Power Supply for power supply
borrowers;
E = Other Capital Credits and Patronage
Dividends of the borrower, which equals
Part A, Line 27b of the RUS Financial
and Operating Report Electric
Distribution for distribution borrowers or
Part A, Section A, Line 36b of the RUS
Financial and Operating Report Electric
Power Supply for power supply
borrowers; and
F = Total Long-Term Debt Service Billed
(RUS + other), which equals the sum of
all payments of principal and interest
required to be made on account of total
long-term debt of the electric system
during the calendar year from Part N,
Line 12d of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Part H,
Section H, Line 12d of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers.
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Electric power, Grant programsenergy, Loan programs-energy,
Reporting and recordkeeping
requirements, Rural areas.
For the reason set forth in the
preamble, RUS amends 7 CFR part 1710
as follows:
36 [Total Margins & Equities] less Part C,
Line 27 [Regulatory Assets] or RUS
Financial and Operating Report Electric
Power Supply for power supply
borrowers, Part A, Section B, Line 39
[Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
C = Patronage Capital or Margins of the
borrower, which equals Part A, Line 29b
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers or Part A, Section
A, Line 38b of the RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers; and
D = Debt Service Billed (RUS + other), which
equals the sum of all payments of
principal and interest required to be
made on account of total long-term debt
of the borrower during the calendar year
from Total of Column D of Part N of the
RUS Financial and Operating Report
Electric Distribution for distribution
borrowers or Total of Column D of Part
H, Section H of the RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers, plus 1⁄3 of
the amount, if any, by which restricted
rentals of the borrower (Part L, Line 3c
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers or Part H, Section
K, Line 4c of the RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers) exceed 2
percent of the borrower’s equity (RUS
Financial and Operating Report Electric
Distribution for distribution borrowers,
Part C, Line 36 [Total Margins &
Equities] less Part C, Line 27 [Regulatory
Assets] or RUS Financial and Operating
Report Electric Power Supply for power
supply borrowers, Part A, Section B,
Line 39 [Total Margins & Equities] less
Part A, Section B, Line 29 [Regulatory
Assets]);
ER01MR23.002</GPH>
List of Subjects in 7 CFR Part 1710
12809
Federal Register / Vol. 88, No. 40 / Wednesday, March 1, 2023 / Rules and Regulations
Where:
A = Depreciation and Amortization Expense
of the borrower, which equals Part A,
Line 13b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers;
B = Interest expense on total long-term debt
of the borrower, which equals Part A,
Line 16b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers, except that
interest expense shall be increased by 1⁄3
of the amount, if any, by which restricted
rentals of the borrower (Part L, Line 3c
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers) exceed 2 percent
of the borrower’s equity (RUS Financial
and Operating Report Electric
Distribution for distribution borrowers,
Part C, Line 36 [Total Margins &
Equities] less Part C, Line 27 [Regulatory
Assets];
C = Patronage Capital & Operating Margins of
the electric system, which equals Part A,
Line 21b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers, plus cash
received from the retirement of
patronage capital by suppliers of electric
power and by lenders for credit extended
for the Electric System from Part I, Line
2c of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers; and
D = Debt Service Billed (RUS + other), which
equals the sum of all payments of
principal and interest required to be
made on account of total long-term debt
of the electric system during the calendar
year from Part N, Line 12d of the RUS
Financial and Operating Report Electric
Distribution for distribution borrowers,
plus 1⁄3 of the amount, if any, by which
VerDate Sep<11>2014
16:10 Feb 28, 2023
Jkt 259001
*
*
*
*
*
OTIER means Operating Times
Interest Earned Ratio of the electric
system calculated as:
Where:
A = Interest expense on total long-term debt
of the borrower, which equals Part A,
Line 16b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers, except that
interest expense shall be increased by 1⁄3
of the amount, if any, by which restricted
rentals of the borrower (Part L, Line 3c
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers) exceed 2 percent
of the borrower’s equity (RUS Financial
and Operating Report Electric
Distribution for distribution borrowers,
Part C, Line 36 [Total Margins &
Equities] less Part C, Line 27 [Regulatory
Assets]); and
B = Patronage Capital & Operating Margins of
the electric system, which equals Part A,
Line 21b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers, plus cash
received from the retirement of
patronage capital by suppliers of electric
power and by lenders for credit extended
for the Electric System from Part I, Line
2c of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers.
*
*
*
*
*
TIER means Times Interest Earned
Ratio of the borrower calculated as:
Where:
A = Interest expense on total long-term debt
of the borrower, which equals Part A,
Line 16b of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Part A,
Section A, Line 24b of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers,
except that interest expense shall be
increased by 1⁄3 of the amount, if any, by
which restricted rentals of the borrower
(Part L, Line 3c of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers or Part H,
PO 00000
Frm 00006
Fmt 4700
Sfmt 9990
Section K, Line 4c of the RUS Financial
and Operating Report Electric Power
Supply for power supply borrowers)
exceed 2 percent of the borrower’s equity
(RUS Financial and Operating Report
Electric Distribution for distribution
borrowers, Part C, Line 36 [Total Margins
& Equities] less Part C, Line 27
[Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers, Part A,
Section B, Line 39 [Total Margins &
Equities] less Part A, Section B, Line 29
[Regulatory Assets]); and
B = Patronage Capital or Margins of the
borrower, which equals Part A, Line 29b
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers or Part A, Section
A, Line 38b of the RUS Financial and
Operating Report Electric Power Supply
for power supply borrowers.
*
*
*
*
*
3. Amend § 1710.114 by revising
paragraphs (a), (b)(1), and (e)(2) to read
as follows:
■
§ 1710.114 TIER, DSC, OTIER and ODSC
requirements.
(a) General. Requirements for
coverage ratios are set forth in the
borrower’s mortgage, loan contract, or
other contractual agreements with RUS.
Nothing in this section, however, shall
limit the Administrator’s ability to
contractually agree to a different ratio
provided in this section when doing so
would advance or protect the interests
of the government.
*
*
*
*
*
(b) * * *
(1) The minimum coverage ratios
required of distribution borrowers
whether applied on an annual or
average basis of the 2 best years out of
the 3 most recent calendar years, are a
TIER of 1.25, DSC of 1.25. Further, the
minimum coverage ratios required of
distribution borrowers whether applied
on an annual or average basis of the 2
best years out of the 3 most recent
calendar years are an OTIER and ODSC
of 1.1 or an MTIER and MDSC of 1.1.
*
*
*
*
*
(e) * * *
(2) With respect to any outstanding
loan approved by RUS if, based on
actual or projected financial
performance of the borrower, RUS
determines that the borrower may not
achieve its required coverage ratios in
the current or future years, RUS may
withhold the advance of loan funds
until the borrower has taken remedial
action satisfactory to RUS.
Andrew Berke,
Administrator, Rural Utilities Service.
[FR Doc. 2023–04016 Filed 2–28–23; 8:45 am]
BILLING CODE 3410–15–P
E:\FR\FM\01MRR1.SGM
01MRR1
ER01MR23.007</GPH>
*
*
*
*
ODSC means Operating Debt Service
Coverage of the electric system
calculated as:
ddrumheller on DSK120RN23PROD with RULES
*
restricted rentals of the Electric System
(Part L, Line 3c of the RUS Financial and
Operating Report Electric Distribution
for distribution borrowers) exceed 2
percent of the borrower’s equity (RUS
Financial and Operating Report Electric
Distribution for distribution borrowers,
Part C, Line 36 [Total Margins &
Equities] less Part C, Line 27 [Regulatory
Assets]).
ER01MR23.006</GPH>
rentals of the borrower (Part L, Line 3c
of the RUS Financial and Operating
Report Electric Distribution for
distribution borrowers) exceed 2 percent
of the borrower’s equity (RUS Financial
and Operating Report Electric
Distribution for distribution borrowers,
Part C, Line 36 [Total Margins &
Equities] less Part C, Line 27 [Regulatory
Assets];
C = Generation and Transmission Capital
Credits of the borrower, which equals
Part A, Line 26b of the RUS Financial
and Operating Report Electric
Distribution for distribution borrowers;
and
D = Other Capital Credits and Patronage
Dividends of the borrower, which equals
Part A, Line 27b of the RUS Financial
and Operating Report Electric
Distribution for distribution borrowers.
ER01MR23.005</GPH>
12810
]]>Agencies
[Federal Register Volume 88, Number 40 (Wednesday, March 1, 2023)]
[Rules and Regulations]
[Pages 12806-12810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04016]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1710
[Docket No. RUS-22-ELECTRIC-0057]
RIN # 0572-AC60
Electric Program Coverage Ratios Clarification and Modifications
AGENCY: Rural Utilities Service, U.S. Department of Agriculture (USDA).
ACTION: Final rule; request for comment.
-----------------------------------------------------------------------
SUMMARY: The Rural Utilities Service (RUS), a Rural Development (RD)
agency of the United States Department of Agriculture (USDA), is
issuing a final rule with comment. The intent of this rule is to modify
its coverage ratio requirements, add an additional set of ratios, and
update and add definitions. The effect of this action is to reduce the
regulatory impact on RUS Electric Program borrowers, ensure that loan
funds will be repaid in the time agreed upon, facilitate the lending
for construction of rural electric infrastructure, and allow RUS to
focus on feasibility and security issues while increasing customer
efficiency, customer satisfaction and service.
DATES: This final rule is effective May 30, 2023.
Comments must be submitted on or before May 1, 2023.
ADDRESSES: You may submit comments, identified by Docket Number (RUS-
22-ELECTRIC-0057) or the RIN #(0572-AC60).
Federal eRulemaking Portal: https://www.regulations.gov.
Follow instructions for sending comments. In the ``Search Documents''
box, enter the Docket Number (RUS-22-ELECTRIC-0057) or the RIN # (0572-
AC60), and click the ``Search'' button. To submit a comment, choose the
``Comment Now!'' button. Information on using Regulations.gov,
including instructions for accessing documents, submitting comments,
and viewing the docket after the close of the comment period, is
available through the site's FAQ page.
Instructions: All submissions received must include the agency name
and docket number or Regulatory Information Number (RIN) for this
rulemaking. All comments received will be posted without change to
www.regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Mark Bartholomew, Rural Utilities
Service Electric Program, Rural Development, United States Department
of Agriculture, 1400 Independence
[[Page 12807]]
Avenue SW, STOP 1560, Washington, DC 20250; 704-544-4612
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Rural Development (RD) is a mission area within the U.S. Department
of Agriculture (USDA) comprising the Rural Utilities Service (RUS),
Rural Housing Service, and Rural Business-Cooperative Service. RD's
mission is to increase economic opportunity and improve the quality of
life for all rural Americans. RD 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. 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 cultural and historic preservation. The RUS Electric
Program provides funding to maintain, expand, upgrade, and modernize
America's rural electric infrastructure. The loans and loan guarantees
finance the construction or improvement of electric distribution,
transmission, and generation facilities in rural areas.
This rulemaking is part of the RUS 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 RUS 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.
The intent of these proposed changes is to provide an additional
method for complying with RUS's coverage ratio requirements. The goal
is to (1) reduce the regulatory impact on RUS Electric Program
borrowers, (2) ensure that loan funds will be repaid in the time agreed
upon, and (3) that the RUS loans remain adequately secured. RUS expects
that these actions will enhance RUS and customer efficiency, thereby
increasing customer satisfaction and service. RUS uses these ratios as
part of its loan application review and/or its annual review of the
Financial and Operating Report data to monitor the financial stability
of the borrowers to ensure loan security.
There are no alternatives except to maintain the current RUS
Electric Program ratio coverage regulations. The proposed changes will
improve customer experience and customer service, and allow RUS to
better focus on feasibility and security issues while lessening the
burdens on the RUS Electric Program borrowers. These changes provide
added flexibility to borrowers to be in complaince with mortgage
requirements without increasing rates to meet their operating coverage
ratios when the borrower has cash reserves to cover debt service
payments. This action should not impose additional costs on applicants
or on electric borrowers as the additional ratios are already
calculated as part of a Borrower's Statistical Profile which is
currently calculated utilizing the data provided on the borrower's RUS
Financial and Operating Reports. These changes will positively affect
the RUS Electric borrower experience and enhance RUS customer service
by removing unnecessary and burdensome requirements for electric
borrowers and applicants, minimizing the regulatory impact of applying
for loans made or guaranteed by RUS, and facilitating lending for
construction of rural electric infrastructure.
II. Summary of Changes to Rule
7 CFR 1710.2 Definitions and Rules of Construction
The definitions MTIER (Modified Times Interest Earned Ratio) and
MDSC (Modified Debt Service Coverage) are not currently in the
regulation and are added to assist applicants in better understanding
the program's requirements.
The definitions of TIER (Times Interest Earned Ratio Debt Service
Coverage), OTIER (Operating Times Interest Earned Ratio), DSC (Debt
Service Coverage) and ODSC (Operating Debt Service Coverage) are
updated to remove outdated sections and references and by reorganizing
remaining sections accordingly and improving logical flow.
7 CFR 1710.114 TIER, DSC, OTIER and ODSC Requirements
Paragraphs (a) and (b) will be modified to remove outdated language
and to reflect RUS' current Financial and Operating Reports.
Paragraph (b)1 will be modified to allow Modified Times Interest
Earned Ratio (MTIER) and Modified Debt Service Coverage (MDSC) to be
considered if a borrower does not meet the coverage requirements for
Operating Times Interest Earned Ratio (OTIER) and Operating Debt
Service Coverage (ODSC). This allows more flexibility to borrowers
regarding the coverage requirements.
III. Executive Orders and Acts
Executive Order 12866--Classification
This 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).
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.
Paperwork Reduction Act
This rule contains no new reporting or recordkeeping burdens under
OMB control number 0572-0032 that would require approval under the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
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''). RUS 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,
[[Page 12808]]
RUS 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.
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. The
Administrative Procedure Act exempts from notice and comment
requirements rules ``relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts'' (5 U.S.C.
553(a)(2)). This final rule 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 12988--Civil Justice Reform
This rule has been reviewed under E.O. 12988, Civil Justice Reform.
In accordance with this rule: (1) unless otherwise specifically
provided, all State and local laws that conflict with this rule will be
preempted; (2) no retroactive effect will be given to this rule except
as specifically prescribed in the rule; and (3) administrative
proceedings of the National Appeals Division of the Department of
Agriculture (7 CFR part 11) must be exhausted before bringing suit in
court that challenges action taken under this rule.
Unfunded Mandate Reform Act (UMRA)
Title II of the 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 on the private sector.
Under Section 202 of the UMRA, Federal Agencies generally must prepare
a written statement, including 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 a Federal agency to identify and consider a reasonable number
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives
of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, and Tribal
governments or for the private sector. Therefore, this rule is not
subject to the requirements of sections 202 and 205 of the UMRA.
Executive Order 13132--Federalism
It has been determined, under E.O. 13132, Federalism, that the
policies contained in this 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 rule impose
substantial direct compliance costs on State and local governments.
Therefore, consultation with the States is not required.
Executive Order 13175--Consultation and Coordination With Indian Tribal
Governments
This executive order imposes requirements on RUS in the development
of regulatory policies that have Tribal implications or preempt Tribal
laws. RUS has determined that the rule does not have 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 rule is not
subject to the requirements of Executive Order 13175. If Tribal leaders
are interested in consulting with RUS on this rule, they are encouraged
to contact USDA's Office of Tribal Relations or RD's Native American
Coordinator at: [email protected] to request such a consultation.
E-Government Act Compliance
Rural Development is committed to 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.
Civil Rights Impact Analysis
Rural Development has reviewed this rule in accordance with USDA
Regulation 4300-004, ``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, disability,
marital or familial status. Based on the review and analysis of the
rule and all available data, issuance of this final rule is not likely
to negatively impact low and moderate-income populations, minority
populations, women, Indian Tribes, or persons with disability, by
virtue of their age, race, color, national origin, sex, disability, or
marital or familial status.
USDA Non-Discrimination Statement
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its 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, USDA Program Discrimination Complaint Form,
which can be obtained online at
https://www.usda.gov/oascr/how-to-file-a-program-discrimination-complaint 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:
a. Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410; or
b. Fax: (833) 256-1665 or (202) 690-7442; or
c. Email: program.inta[email protected].
[[Page 12809]]
List of Subjects in 7 CFR Part 1710
Electric power, Grant programs-energy, Loan programs-energy,
Reporting and recordkeeping requirements, Rural areas.
For the reason set forth in the preamble, RUS amends 7 CFR part
1710 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., and 6941 et seq.
Subpart A--General
0
2. Amend Sec. 1710.2 in paragraph (a) by:
0
a. Revising the definition of ``DSC'';
0
b. Adding definitions in alphabetical order for ``MDSC'' and ``MTIER'';
and
0
c. Revising the definitions of ``DSC'', ``ODSC'', ``OTIER'', and
``TIER''.
The revisions and additions read as follows
Sec. 1710.2 Definitions and rules of construction.
(a) * * *
DSC means Debt Service Coverage of the borrower calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.002
Where:
A = Depreciation and Amortization Expense of the borrower, which
equals Part A, Line 13b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Section A, Line
22b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 24b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers, except that interest expense
shall be increased by \1/3\ of the amount, if any, by which
restricted rentals of the borrower (Part L, Total Column c) of the
RUS Financial and Operating Report Electric Distribution for
distribution borrowers or Part H, Section K, Total Column c of the
RUS Financial and Operating Report Electric Power Supply for power
supply borrowers) exceed 2 percent of the borrower's equity (RUS
Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
C = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part A, Section A, Line
38b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers; and
D = Debt Service Billed (RUS + other), which equals the sum of all
payments of principal and interest required to be made on account of
total long-term debt of the borrower during the calendar year from
Total of Column D of Part N of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers or Total of
Column D of Part H, Section H of the RUS Financial and Operating
Report Electric Power Supply for power supply borrowers, plus \1/3\
of the amount, if any, by which restricted rentals of the borrower
(Part L, Line 3c of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part H, Section K, Line
4c of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers) exceed 2 percent of the borrower's
equity (RUS Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
* * * * *
MDSC means Modified Debt Service Coverage of the electric system
calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.003
Where:
A = Depreciation and Amortization Expense of the borrower, which
equals Part A, Line 13b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 22b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 24b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers, except that interest expense
shall be increased by \1/3\ of the amount, if any, by which
restricted rentals of the borrower (Part L, Line 3c of the RUS
Financial and Operating Report Electric Distribution for
distribution borrowers or Part H, Section K, Line 4c of the RUS
Financial and Operating Report Electric Power Supply for power
supply borrowers) exceed 2 percent of the borrower's equity (RUS
Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]);
C = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part A, Section A, Line
38b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers; and
D = Generation and Transmission Capital Credits of the borrower,
which equals Part A, Line 26b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers or Part A,
Section A, Line 35b of the RUS Financial and Operating Report
Electric Power Supply for power supply borrowers;
E = Other Capital Credits and Patronage Dividends of the borrower,
which equals Part A, Line 27b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers or Part A,
Section A, Line 36b of the RUS Financial and Operating Report
Electric Power Supply for power supply borrowers; and
F = Total Long-Term Debt Service Billed (RUS + other), which equals
the sum of all payments of principal and interest required to be
made on account of total long-term debt of the electric system
during the calendar year from Part N, Line 12d of the RUS Financial
and Operating Report Electric Distribution for distribution
borrowers or Part H, Section H, Line 12d of the RUS Financial and
Operating Report Electric Power Supply for power supply borrowers.
* * * * *
MTIER means Modified Times Interest Earned Ratio of the electric
system calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.004
Where:
A = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, except that
interest expense shall be increased by \1/3\ of the amount, if any,
by which restricted
[[Page 12810]]
rentals of the borrower (Part L, Line 3c of the RUS Financial and
Operating Report Electric Distribution for distribution borrowers)
exceed 2 percent of the borrower's equity (RUS Financial and
Operating Report Electric Distribution for distribution borrowers,
Part C, Line 36 [Total Margins & Equities] less Part C, Line 27
[Regulatory Assets];
C = Generation and Transmission Capital Credits of the borrower,
which equals Part A, Line 26b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers; and
D = Other Capital Credits and Patronage Dividends of the borrower,
which equals Part A, Line 27b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers.
* * * * *
ODSC means Operating Debt Service Coverage of the electric system
calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.005
Where:
A = Depreciation and Amortization Expense of the borrower, which
equals Part A, Line 13b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers;
B = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, except that
interest expense shall be increased by \1/3\ of the amount, if any,
by which restricted rentals of the borrower (Part L, Line 3c of the
RUS Financial and Operating Report Electric Distribution for
distribution borrowers) exceed 2 percent of the borrower's equity
(RUS Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets];
C = Patronage Capital & Operating Margins of the electric system,
which equals Part A, Line 21b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers, plus cash
received from the retirement of patronage capital by suppliers of
electric power and by lenders for credit extended for the Electric
System from Part I, Line 2c of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers; and
D = Debt Service Billed (RUS + other), which equals the sum of all
payments of principal and interest required to be made on account of
total long-term debt of the electric system during the calendar year
from Part N, Line 12d of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, plus \1/3\ of the
amount, if any, by which restricted rentals of the Electric System
(Part L, Line 3c of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers) exceed 2 percent of the
borrower's equity (RUS Financial and Operating Report Electric
Distribution for distribution borrowers, Part C, Line 36 [Total
Margins & Equities] less Part C, Line 27 [Regulatory Assets]).
* * * * *
OTIER means Operating Times Interest Earned Ratio of the electric
system calculated as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.006
Where:
A = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers, except that
interest expense shall be increased by \1/3\ of the amount, if any,
by which restricted rentals of the borrower (Part L, Line 3c of the
RUS Financial and Operating Report Electric Distribution for
distribution borrowers) exceed 2 percent of the borrower's equity
(RUS Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets]); and
B = Patronage Capital & Operating Margins of the electric system,
which equals Part A, Line 21b of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers, plus cash
received from the retirement of patronage capital by suppliers of
electric power and by lenders for credit extended for the Electric
System from Part I, Line 2c of the RUS Financial and Operating
Report Electric Distribution for distribution borrowers.
* * * * *
TIER means Times Interest Earned Ratio of the borrower calculated
as:
[GRAPHIC] [TIFF OMITTED] TR01MR23.007
Where:
A = Interest expense on total long-term debt of the borrower, which
equals Part A, Line 16b of the RUS Financial and Operating Report
Electric Distribution for distribution borrowers or Part A, Section
A, Line 24b of the RUS Financial and Operating Report Electric Power
Supply for power supply borrowers, except that interest expense
shall be increased by \1/3\ of the amount, if any, by which
restricted rentals of the borrower (Part L, Line 3c of the RUS
Financial and Operating Report Electric Distribution for
distribution borrowers or Part H, Section K, Line 4c of the RUS
Financial and Operating Report Electric Power Supply for power
supply borrowers) exceed 2 percent of the borrower's equity (RUS
Financial and Operating Report Electric Distribution for
distribution borrowers, Part C, Line 36 [Total Margins & Equities]
less Part C, Line 27 [Regulatory Assets] or RUS Financial and
Operating Report Electric Power Supply for power supply borrowers,
Part A, Section B, Line 39 [Total Margins & Equities] less Part A,
Section B, Line 29 [Regulatory Assets]); and
B = Patronage Capital or Margins of the borrower, which equals Part
A, Line 29b of the RUS Financial and Operating Report Electric
Distribution for distribution borrowers or Part A, Section A, Line
38b of the RUS Financial and Operating Report Electric Power Supply
for power supply borrowers.
* * * * *
0
3. Amend Sec. 1710.114 by revising paragraphs (a), (b)(1), and (e)(2)
to read as follows:
Sec. 1710.114 TIER, DSC, OTIER and ODSC requirements.
(a) General. Requirements for coverage ratios are set forth in the
borrower's mortgage, loan contract, or other contractual agreements
with RUS. Nothing in this section, however, shall limit the
Administrator's ability to contractually agree to a different ratio
provided in this section when doing so would advance or protect the
interests of the government.
* * * * *
(b) * * *
(1) The minimum coverage ratios required of distribution borrowers
whether applied on an annual or average basis of the 2 best years out
of the 3 most recent calendar years, are a TIER of 1.25, DSC of 1.25.
Further, the minimum coverage ratios required of distribution borrowers
whether applied on an annual or average basis of the 2 best years out
of the 3 most recent calendar years are an OTIER and ODSC of 1.1 or an
MTIER and MDSC of 1.1.
* * * * *
(e) * * *
(2) With respect to any outstanding loan approved by RUS if, based
on actual or projected financial performance of the borrower, RUS
determines that the borrower may not achieve its required coverage
ratios in the current or future years, RUS may withhold the advance of
loan funds until the borrower has taken remedial action satisfactory to
RUS.
Andrew Berke,
Administrator, Rural Utilities Service.
[FR Doc. 2023-04016 Filed 2-28-23; 8:45 am]
BILLING CODE 3410-15-P
