[Federal Register: January 9, 2001 (Volume 66, Number 6)]
[Proposed Rules]
[Page 1604-1607]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ja01-20]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1721
RIN 0572-AB60
Extensions of Payments of Principal and Interest
AGENCY: Rural Utilities Service, USDA.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Rural Utilities Service (RUS) proposes to add procedures
and conditions under which Borrowers may request extensions of the
payment of principal and interest. These procedures and conditions are
stated in RUS Bulletin 20-5:320-2, Extensions of Payments of Principal
and Interest, dated May 10, 1972, and RUS Bulletin 20-23, Section 12
Extensions for Energy Resources Conservation Loans, dated December 8,
1980; however, these procedures and conditions were not codified in the
Code of Federal Regulations. This regulation will set forth procedures
and conditions under which Borrowers may request extensions of
principal and interest. RUS is proposing to rescind upon the effective
date of this regulation RUS Bulletin 20-5:320-2, and RUS Bulletin 20-
23.
DATES: Written comments must be received by RUS or carry a postmark or
equivalent no later than March 12, 2001.
ADDRESSES: Written comments should be addressed to Al Rodgers, Deputy
Assistant Administrator, Electric Program, U.S. Department of
Agriculture, Rural Utilities Service, Room 4037 South Building, Stop
1560, 1400 Independence Ave., SW., Washington, DC 20250-1560. Telephone
(202) 720-9547. RUS requires a signed original and three copies of all
comments (7 CFR Part 1700). All comments received will be made
available for inspection in room 4037 South Building during regular
business hours.
FOR FURTHER INFORMATION CONTACT: Gail P. Salgado, Management Analyst,
Rural Utilities Service, Electric Program, Room 4024 South Building,
Stop 1560, 1400 Independence Ave., SW., Washington, DC 20250-1560.
Telephone: (202) 205-3660.
SUPPLEMENTARY INFORMATION
Executive Order 12866
This rule has been determined to be not significant for purposes of
Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget (OMB).
Executive Order 12372
This rule is excluded from the scope of Executive Order 12372,
Intergovernmental Consultation, which may require a consultation with
State and local officials. See the final rule related notice titled,
``Department Programs and Activities Excluded from Executive Order
12372'' (50 FR 47034) advising the RUS loans and loan guarantees were
not covered by Executive Order 12372.
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. RUS has determined that this rule meets the
applicable standards provided in section 3 of the Executive Order. In
addition, (1) all State and local laws and regulations that are in
conflict with this rule will be preempted, (2) no retroactive effect
will be given to this rule, and, (3) in accordance with sec. 212(e) of
the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. sec.
6912(e)), administrative appeals procedures, if any are required, must
be exhausted prior to initiating an action against the Department or
its agencies.
Regulatory Flexibility Act Certification
The Administrator of RUS has determined that this rule relating to
the RUS electric loan program is not a rule as defined by the
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) and therefore, the
Regulatory Flexibility Act does not apply to this rule. RUS borrowers,
as a result of obtaining federal financing, receive economic benefits
that exceed any direct costs associated with complying with RUS
regulations and requirements.
Information Collection and Recordkeeping Requirements
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
chapter 35), RUS invites comments on this information collection for
which RUS intends to request approval from the Office of Management and
Budget (OMB).
Comments on this notice must be received by March 12, 2001.
Comments are invited on (a) whether the collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (b) the
accuracy of the agency's estimate of burden including the validity of
the methodology and assumption used; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques on
other forms of information technology.
Comments may be sent to F. Lamont Heppe, Jr., Director, Program
Development and Regulatory Analysis, Rural Utilities Service, U.S.
Department of Agriculture, 1400 Independence Ave., SW., Stop 1522, Room
4034 South Building, Washington, DC 20250-1522.
Title: Extensions of Payments of Principal and Interest.
Type of Request: New information collection.
Abstract: To set forth the procedure for Borrowers' requests for
extensions of principal and interest.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 4.36 hours per response.
Respondents: Not-for-profit institutions, business or other for-
profit.
Estimated Number of Respondents: 90.
Estimated Number of Responses per Respondent: 2.
Estimated Total Annual Burden on Respondents: 180.
Copies of this information collection can be obtained from Michele
Brooks, Program Development and Regulatory Analysis, at (202) 690-1078.
All responses to this information collection and recordkeeping
notice will be summarized and included in the
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request for OMB approval. All comments will also become a matter of
public record.
National Environmental Policy Act Certification
The Administrator of RUS has determined that this proposed rule
will not significantly affect the quality of the human environment as
defined by the National Environmental Policy Act of 1969 (42 U.S.C.
4321 et seq.). Therefore, this action does not require an environmental
impact statement or assessment.
Catalog of Federal Domestic Assistance
The program described by this proposed rule is listed in the
Catalog of Federal Domestic Assistance Programs under number 10.850,
Rural Electrification Loans and Loan Guarantees. This catalog is
available on a subscription basis from the Superintendent of Documents,
the United States Government Printing Office, Washington, DC 20402-
9325, telephone number (202) 512-1800.
Unfunded Mandates
This rule contains no Federal mandates (under the regulatory
provisions of Title II of the Unfunded Mandates Reform Act of 1995) for
State, local, and tribal governments or the private sector. Thus, this
rule is not subject to the requirements of section 202 and 205 of the
Unfunded Mandates Reform Act.
Background
RUS believes it to be a good business practice to provide a
Borrower the opportunity to request an extension of time and payment of
principal and interest where such an extension provides the Borrower
the flexibility to address financial hardship and achieve specified
program objectives to benefit rural America.
This proposed rule contains the procedures and conditions under
which Borrowers may request RUS approval for extensions of principal
and interest under the circumstances specified in the proposed rule.
Eligible purposes include financial hardship, energy resource
conservation (ERC) loans, renewable energy projects, and contributions-
in-aid of construction. The procedures and conditions for these
purposes have not previously been codified in the Code of Federal
Regulations. In addition, eligible new purposes (renewable energy
projects and contributions-in-aid of construction) are included in this
proposed rule and will follow the same procedures and conditions as the
ERC loans. Samples of board resolutions mentioned in the proposed rule
can be located on the RUS webpage, http://www.usda.gov/rus/electric/
forms.htm.
Authority for these extensions are contained in section 12(a) of
the Rural Electrification Act of 1936 (RE Act), as amended and section
236 of the Disaster Relief Act of 1970 (Pub. L. 91-606), as amended by
the Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-
354). RUS proposes to add procedures and conditions under which
Borrowers may request extensions of principal and interest. Many of
these procedures and conditions are stated in RUS Bulletin 20-5:320-2,
Extensions of Payments of Principal and Interest, dated May 10, 1972,
and RUS Bulletin 20-23, Section 12 Extensions for Energy Resources
Conservation Loans, dated December 8, 1980.
RUS is proposing to rescind upon the effective date of this
regulation RUS Bulletin 20-5:320-2, Extensions of Payments of Principal
and Interest, dated May 10, 1972, and RUS Bulletin 20-23, section 12
Extensions for Energy Resources Conservation Loans, dated December 8,
1980. RUS believes the information contained in these bulletins will be
obsolete and unnecessary upon finalization of the proposed rule.
List of Subjects in 7 CFR Part 1721
Electric power, Loan programs `` energy, Rural areas.
For the reasons set forth in the preamble, RUS proposes to amend 7
CFR chapter XVII, part 1721 by adding subpart B to read as follows:
PART 1721--POST LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC
LOANS
1. The authority citation for part 1721 continues to read:
Authority: 7 U.S.C. 901 et seq.; 1921 et seq., and 6941 et
seq.).
2. Add subpart B to read as follows:
Subpart B--Extensions of Payments of Principal and Interest
Sec.
1721.100 Purpose.
1721.101 General.
1721.102 Definitions.
1721.103 Policy.
1721.104 Eligible purposes.
1721.105 Application documents.
1721.106 Repayment of deferred payment.
1721.107 Agreement.
1721.108 Commencement of the deferment.
Sec. 1721.100 Purpose.
This subpart contains RUS procedures and conditions under which
Borrowers may request RUS approval for extensions for the payment of
principal and interest.
Sec. 1721.101 General.
The procedures in this subpart are intended to provide Borrowers
with the flexibility to request an extension of principal and interest
as authorized under section 12(a) of the RE Act and section 236 of the
Disaster Relief Act of 1970 (Public Law 91-606).
Sec. 1721.102 Definitions.
The definitions contained in 7 CFR 1710.2 are applicable to this
subpart unless otherwise stated.
Sec. 1721.103 Policy.
(a) In reviewing requests for extension of payment of principal and
interest, consideration shall be given to the effect of such extensions
on the security of the Government's loans, and on the ability of the
Borrower to achieve program objectives. It is the policy of RUS to
extend the time for payment of principal and interest on the basis of
findings that such extension does not impair the security and
feasibility of the Government's loans and:
(1) Is essential to the effectiveness of the Borrower's operations
in achieving specified program objectives; or
(2) Is necessary to help a Borrower place its operations on a more
stable financial basis and thereby provide assurance of repayment of
loans within the time when payments of such loans are due under the
terms of the note or notes as extended; or
(3) Is otherwise in the best interest of the Government.
(b) Extensions will be given in the minimum amount to achieve the
purpose of the extension.
(c) The total amount of interest that has been deferred will be
added to the principal balance and the total amount of principal and
interest that has been deferred will be reamortized over the life of
the applicable note beginning in year six (6).
(d) Payment of principal and interest will not be extended more
than 5 years after such payment shall have become due. However, in
cases where the extension is being granted because, at the sole
discretion of the Administrator, a severe hardship has been
experienced, the Administrator may grant a longer extension provided
that the maturity date of any such loan does not extended to a date
beyond forty (40) years from the date of the loan.
Sec. 1721.104 Eligible purposes.
(a) Deferments for financial hardship. (1) A Borrower may defer
principal or interest or both in cases of severe financial hardship.
The deferral would be considered so as to help a Borrower place its
operations on a more stable
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financial basis and thereby provide assurance of repayment of loans
within the time when payment of such loans are due under the terms of
the note or notes as extended.
(2) The determination as to whether a Borrower qualifies for the
deferment will be made by RUS on a case-by-case basis, considering such
factors as:
(i) Substantial unreimbursed expenses relating to storm damage;
(ii) Loss of large power load;
(iii) Substantial loss of consumers or load due to hostile
annexations and condemnations; or
(iv) Need to substantially upgrade a borrower's system to bring it
into compliance with the National Electric Safety Code (NESC).
(b) Deferments for energy resource conservation (ERC) loans. (1) A
Borrower may defer principal payments to make funds available to their
consumers to conserve energy. Amounts deferred under this program can
be used to cover the cost of labor and materials for the following
energy conservation measures:
(i) Caulking;
(ii) Weather-stripping;
(iii) Heat pump systems (including water source heat pumps);
(iv) Heat pumps, water heaters, and central heating or central air
conditioning system replacements or modifications, which reduce energy
consumption;
(v) Ceiling insulation;
(vi) Wall insulation;
(vii) Floor insulation;
(viii) Duct insulation;
(ix) Pipe insulation;
(x) Water heater insulation;
(xi) Storm windows;
(xii) Thermal windows;
(xiii) Storm or thermal doors;
(xiv) Electric system coordinated customer-owned devices that
reduce the maximum kilowatt demand on the electric system;
(xv) Clock thermostats; or
(xvi) Attic ventilation fans.
(2) ERC loans will be amortized over not more than 84 months,
without penalty for prepayment of principal.
(c) Deferments for renewable energy projects. (1) A Borrower may
defer principal payments to finance renewable energy projects. Amounts
deferred under this program can be used to cover any and all costs to
install all or part of a renewable energy system including, without
limitation:
(i) Energy conversion technology;
(ii) Electric system interface;
(iii) Delivery equipment;
(iv) Control equipment; and
(v) Certain energy consuming devices.
(2) A Borrower may defer principal payments for the purpose of
providing its consumers with loans to install all or part of customer-
owned renewable energy systems up to 5kW.
(3) For the purpose of this subpart, a renewable energy system is
one that can directly collect and convert solar, wind, or biomass
energy into a usable form of energy such as electricity or heat.
(4) For the purpose of this subpart, a renewable energy project
consists of one or more renewable energy systems.
(d) Deferments for contributions-in-aid of construction. (1) A
Borrower may defer principal payments to make funds available to new
full time residential consumers to assist them in paying their share of
the construction costs (contribution-in-aid of construction) needed to
connect them to the Borrower's system.
(2) Amounts available for this purpose will be limited to the
amount of the construction costs that are in excess of the average cost
per residential consumer incurred by the Borrower to connect new
permanent residential consumers during the last calendar year for which
data is available.
Sec. 17121.105 Application documents.
(a) Deferments for financial hardship. A Borrower requesting a
section 12 deferment because of financial hardship should submit the
following:
(1) A summary of the financial position of the Borrower, based on
the latest information available (usually less than 60 days old).
(2) A copy of the board resolution requesting an extension due to
financial hardship.
(3) A 10-year financial forecast of revenues and expenses on a cash
basis, by year, for the period of the extension and 5 years beyond to
establish that the remaining payments can be made as rescheduled.
(4) A listing of notes or portions of notes to be extended, the
effective date for the beginning of the extension, and the length of
the extension.
(5) A narrative description of the nature and cause of the hardship
and the strategy that will be instituted to mitigate or eliminate the
effects of the hardship.
(b) Deferments for energy resource conservation loans. A Borrower
requesting principal deferments for an ERC loan program should submit
the following information:
(1) A letter from the Borrower's General Manager requesting an
extension of principal payments for the purpose of offering an ERC loan
program to its members.
(2) A copy of the board resolution establishing the ERC loan
program and outlining the details of the program.
(c) Deferments for renewable energy projects. A Borrower requesting
principal deferments for its renewable energy project should submit the
following information:
(1) A letter from the Borrower's General Manager requesting an
extension of principal payments for the purpose of offering a renewable
energy project program to its members and outlining the details of the
program.
(2) A copy of the board resolution establishing the renewable
energy project.
(d) Deferments for contribution-in-aid of construction. A Borrower
requesting principal deferments for contribution-in-aid of construction
should submit the following information:
(1) A letter from the Borrower's General Manager requesting an
extension of principal payments for the purpose of offering a
contribution-in-aid of construction program and outlining the details
of the program.
(2) A copy of the board resolution establishing the contribution-
in-aid of construction program.
(3) A summary of the calculations used to determine the average
cost per residential consumer. (See Sec. 1721.104 (d)(2)).
Sec. 1721.106 Repayment of deferred payment.
(a) Deferments relating to financial hardship. The total amount of
interest that has been deferred will be added to the principal balance
and the total amount of principal and interest that has been deferred
will be reamortized over the life of the applicable note beginning in
year six (6). For example: the amount of interest deferred in years
2001, 2002, 2003, 2004, and 2005, will be added to the principal
balance and reamortized over the life of the applicable note in year
2006.
(b) Deferments relating to the ERC loan program, renewable energy
project, and the contribution-in-aid of construction. An extension
agreement is for a term of two (2) years. The installment will be
recalculated each time the Borrower defers the payment of principal and
recognition of the deferred amount will begin with the next payment.
For example: the amount deferred in the October payment will be
reamortized over a 84 month period starting with the next payment
(November if paying on a monthly basis). When a Borrower defers
principal under any of these programs the scheduled payment on the
account will increase by an amount sufficient to pay off the deferred
amount by the date specified in the agreement (usually 84 months (28
quarters)).
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Sec. 1721.107 Agreement.
After approval of the Borrower's request for a deferment of
principal and interest, an extension agreement, containing the terms of
the extension, together with associated materials, will be prepared and
forwarded to the Borrower by RUS.
Sec. 1721.108 Commencement of the deferment.
The deferment of principal and interest will not begin until the
extension agreement and any other supporting materials requested by RUS
have been executed and returned by the Borrower to RUS in form and
substance satisfactory to RUS.
Dated: December 19, 2000.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 01-557 Filed 1-8-01; 8:45 am]
BILLING CODE 3410-15-P
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