[Federal Register: June 26, 2003 (Volume 68, Number 123)]
[Rules and Regulations]
[Page 37952-37954]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn03-3]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Parts 1710 and 1721
RIN 0572-AB79
Extensions of Payments of Principal and Interest
AGENCY: Rural Utilities Service, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Utilities Service (RUS) is amending its regulation
on extensions of payments of principal and interest, to include a
maximum interest rate a RUS Borrower can charge on deferments for
programs relating to consumer loans. The maximum interest rate will not
be more than 300 basis points above the average interest rate on the
note(s) being deferred. This limit would allow the Borrower to offset
all or part of the administrative costs involved. In addition, this
regulation will set forth the procedure for RUS Borrowers to request a
section 12(a) extension for distributed generation projects. These
changes are intended to clarify the procedures Borrowers are to follow
when requesting extensions of payments of principal and interest.
DATES: This rule will become effective on July 28, 2003.
FOR FURTHER INFORMATION CONTACT: Gail P. Salgado, Management Analyst,
Rural Utilities Service, Electric Program, Room 4024, South Building,
Stop 1560, 1400 Independence Avenue, SW., Washington, DC 20250-1560.
Telephone (202) 205-3660.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be not significant for the
purposes of Executive Order 12866 and, therefore, has not been reviewed
by the Office of Management and Budget (OMB).
Executive Order 12988
This 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,
all State and local laws and regulations that are in conflict with this
rule will be preempted; no retroactive effect will be given to this
rule; and, in accordance with section 212(e) of the Department of
Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(e))
administrative appeals procedures, if any, must be exhausted before an
action against the Department or its agencies may be initiated.
Regulatory Flexibility Act Certification
It has been determined that the Regulatory Flexibility Act is not
applicable to this rule since the Rural Utilities Service is not
required by 5 U.S.C. 551 et seq. or any other provision of law to
publish a notice of proposed rulemaking with respect to the matter of
this rule.
Information Collection and Recordkeeping Requirements
The reporting and recordkeeping requirements contained in this rule
have been approved by the Office of Management and Budget (OMB)
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35)
under OMB control number 0572-0123.
Unfunded Mandates
This rule contains no Federal mandates (under the regulatory
provisions of title II of the Unfunded Mandates Reform Act) for State,
local, and tribal governments or the private sector. Thus, this rule is
not subject to the requirements of sections 202 and 205 of the Unfunded
Mandates Reform Act.
National Environmental Policy Act Certification
The Administrator of RUS has determined that this rule will not
significantly affect the quality of the human environment as defined by
the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
Therefore, this action does not require an environmental impact
statement or assessment.
Catalog of Federal Domestic Assistance
The program described by this rule is listed in the Catalog of
Federal Domestic Assistance programs under number 10.850, Rural
Electrification Loans and Loan Guarantees. This catalog is available on
a subscription basis from the Superintendent of Documents, the United
States Government Printing Office, Washington, DC 20402-9325, telephone
number (202) 512-1800.
Executive Order 12372
This rule is excluded from the scope of Executive Order 12372,
Intergovernmental Consultation, which may require consultation with
State and local officials. See the final rule related notice entitled,
``Department Programs and Activities Excluded from Executive Order
12372'' (50 FR 47034) advising that RUS loans and loan guarantees are
not covered by Executive Order 12372.
Background
On October 8, 2002, at 67 FR 62652, the Rural Utilities Service
(RUS) published a proposed rule, 7 CFR parts 1710 and 1721,
``Extensions of Payments of Principal and Interest,'' which proposed to
amend its regulation on extensions of payment of principal and interest
to include a maximum interest rate a RUS Borrower can charge on
deferments for programs relating to consumer loans. The maximum
interest rate will not be more than 300 basis points above the average
interest rate on the note(s) being deferred. This limit would allow the
Borrower to offset all or part of the administrative costs involved. In
addition, the proposed rule set forth the procedure for RUS Borrowers
to request a section 12(a) extension for distributed generation
projects. These changes were intended to clarify the procedures
Borrowers are to follow when requesting extensions of payments of
principal and interest.
Written comments on the proposed rule were received and they are
summarized as follows:
[[Page 37953]]
RUS received comments dated December 4, 2002, from the National
Rural Electric Cooperative Association (NRECA) and Central Electric
Power Cooperative (CEPC), December 6, 2002, from Sandia National
Laboratories (Sandia), and December 9, 2002, from Denetsosie Law Office
on behalf of the Navajo Tribal Utility Authority (NTUA).
NRECA recommended that RUS amend Sec. Sec. 1721.101(b) and
1721.106(a) to clarify the language and ensure that it is consistent by
removing the reference to principal in the first sentence of these two
sections. RUS should also remove the reference to ``level payment'' in
Sec. 1721.101(b). These changes would make the language consistent and
would help to eliminate questions regarding repayment of deferred
payments. RUS agrees with these comments and has made the change to the
final rule wording under Sec. Sec. 1721.101(b) and 1721.106(a).
NRECA, Sandia, and NTUA recommend revising the definition of ``Off-
grid renewable energy system'' and NRECA and CEPC recommend revising
the definition of ``Renewable energy systems,'' both to be more
detailed. RUS is in agreement with these recommendations and has made
the changes to the final rule wording under Sec. 1710.2.
In addition, CEPC recommended that RUS give examples of the types
of fuel that could qualify as renewable and stated it would also be
beneficial to define the term ``Green Power.'' RUS determined that the
definition is clearly inclusive of all types of biomass including the
examples recommended by CEPC, so no change was made. CEPC also
recommended that RUS define Green Power so those organizations that
offer Green Power as part of an energy portfolio could do so with
certainty regarding acceptable green fuel types to that make a part of
their energy mix. RUS did not define the term ``Green Power'' in its
definitions. The definition of Green Power would require a new
rulemaking. Renewable energy is considered a type of distributed
generation. Additional eligibility purposes for renewable energy are
included in 7 CFR 1721.104(c).
There was a typographical error in Sec. 1710.2, On-grid renewable
energy system, definition. The word ``consumer's'' in the second
sentence has been corrected to ``customer's''.
List of Subjects
7 CFR Part 1710
Electric power, Electric utilities, Loan programs--energy,
Reporting and recordkeeping requirements, Rural areas.
7 CFR Part 1721
Electric power, Loan programs--energy, Rural areas.
0
For the reasons set forth in the preamble, RUS amends 7 CFR chapter
XVII 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:
Authority: 7 U.S.C. 901 et seq.; 1921 et seq., and 6941 et seq.
Subpart A--General
0
2. Amend Sec. 1710.2(a) by adding a new definition of ``Distributed
generation'' in alphabetical order and by revising the definitions of
``Off-grid renewable energy system,'' ``On-grid renewable energy
system,'' and ``Renewable energy system'' as follows:
Sec. 1710.2 Definitions and rules of construction.
* * * * *
Distributed generation is the generation of electricity by a
sufficiently small electric generating system as to allow
interconnection of the electric generating system near the point of
service at distribution voltages including points on the customer side
of the meter. A distributed generating system may be operated in
parallel or independent of the electric power system. A distributed
generating system may be fueled by any source, including but not
limited to renewable energy sources. A distributed generation project
may include one or more distributed generation systems.
* * * * *
Off-grid renewable energy system is a renewable energy system not
interconnected to an area electric power system (EPS). An off-grid
renewable energy system in areas without access to an area EPS may
include energy consuming devices and electric wiring to provide for
more effective or more efficient use of the electricity produced by the
system.
On-grid renewable energy system is a renewable energy system
interconnected to an area electric power system (EPS) through a
normally open or normally closed device. It can be interconnected to
the EPS on either side of a customer's meter.
* * * * *
Renewable energy system is an energy conversion system fueled from
any of the following energy sources: Solar, wind, hydropower, biomass,
or geothermal. Any of these energy sources may be converted to heat or
electricity, provided heat is a by-product of electricity generation.
Non-renewable energy sources may be used by a renewable energy system
for incidental and necessary means such as, but not limited to, system
start up, flame stabilization, continuity of system processes, or
reduction of the moisture content of renewable fuels. Energy from bio-
mass may be converted from any organic matter available on a renewable
basis, including dedicated energy crops and trees, agricultural food
and feed crops, agricultural crop wastes and residues, wood wastes and
residues, aquatic plants, animal wastes, municipal wastes, and other
waste materials.
* * * * *
PART 1721--POST LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC
LOANS
0
3. The authority citation for part 1721 continues to read:
Authority: 7 U.S.C. 901 et seq.; 1921 et seq., and 6941 et seq.
Subpart B--Extensions of Payments of Principal and Interest
0
4. Amend Sec. 1721.101 by revising paragraph (b) to read as follows:
Sec. 172.101 General.
* * * * *
(b) The total amount of interest that has been deferred, including
interest on deferred principal, will be added to the principal balance,
and the total amount of principal and interest that has been deferred
will be reamortized over the remaining life of the applicable note
beginning in the first year the deferral period ends.
* * * * *
0
5. Amend Sec. 1721.103 by adding paragraph (c) to read as follows:
Sec. 1721.103 Policy.
* * * * *
(c) The maximum interest rate a RUS Borrower can charge on
deferments for programs relating to consumer loans, e.g., energy
resource conservation (ERC) program, contribution-in-aid of
construction (CIAC), etc., will not be more than 300 basis points above
the average interest rate on the note(s) being deferred. For example,
if the RUS Borrower's average interest rate on the note(s) being
deferred is 5 percent, the
[[Page 37954]]
RUS Borrower can charge a maximum interest rate of 8 percent.
0
6. Amend Sec. 1721.104 by:
0
A. Revising paragraph (c)(1)(ii);
0
B. Redesignating paragraph (d) as (e); and
0
C. Adding a new paragraph (d).
This revision and addition are to read as follows:
Sec. 1721.104 Eligible purposes.
* * * * *
(c) * * *
(1) * * *
(ii) Electric power system interfaces;
* * * * *
(d) Deferments for distributed generation projects.
(1) A Borrower may request that RUS defer principal payments to
enable the Borrower to finance distributed generation projects. Amounts
deferred under this program can be used to cover costs to install all
or part of a distributed generation system that:
(i) The Borrower will own and operate, or
(ii) The consumer owns, provided the system owned by the consumer
does not exceed 5KW.
(2) A distributed generation project may include one or more
individual systems.
* * * * *
0
7. Amend Sec. 1721.105 by redesignating paragraph (d) as (e) and by
adding a new paragraph (d) to read as follows:
Sec. 1721.105 Application documents.
* * * * *
(d) Deferments for distributed generation projects. A Borrower
requesting principal deferments for distributed generation projects
must submit the following information and approval is also subject to
any applicable terms and conditions of the Borrower's loan contract,
mortgage, or indenture:
(1) A letter from the Borrower's General Manager requesting an
extension of principal payments for the purpose of financing
distributed generation projects and describing the details of the
project, and
(2) A copy of the board resolution establishing the distributed
generation projects program.
* * * * *
0
8. Amend Sec. 1721.106 by revising paragraph (a) and the heading of
paragraph (b) to read as follows:
Sec. 1721.106 Repayment of deferred payments.
(a) Deferments relating to financial hardship. The total amount of
interest that has been deferred, including interest on deferred
principal, will be added to the principal balance, and the total amount
of principal and interest that has been deferred will be reamortized
over the remaining life of the applicable note beginning in the first
year the deferral period ends. For example: the amount of interest
deferred in years 2003, 2004, 2005, 2006, and 2007, will be added to
the principal balance and reamortized over the life of the applicable
note for repayment starting in year 2008.
(b) Deferments relating to the ERC loan program, renewable energy
project(s), distributed generation project(s), and the contribution(s)-
in-aid of construction. * * *
* * * * *
Dated: May 30, 2003.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 03-16041 Filed 6-25-03; 8:45 am]
BILLING CODE 3410-15-P