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Exceptions of RUS Operational Controls Under Section 306E of the RE Act


Final Rule.


In an effort to streamline requirements of borrowers and make regulations simple and direct, the Rural Utilities Service (RUS) will eliminate regulations on Exceptions of RUS Operational Controls under Section 306E of the RE Act in its entirety. Because borrowers are now afforded the same exemptions of RUS operational controls by way of other provisions, RUS has determined that the regulation can now be removed from its regulations.

Unified Agenda

Exemptions of RUS Operational Controls Under Section 306E of the RE Act

3 actions from May 24th, 2002 to November 2002

  • May 24th, 2002
  • June 24th, 2002
    • NPRM Comment Period End
  • November 2002
    • Final Action

Table of Contents Back to Top

DATES: Back to Top

This rule will become effective on December 23, 2002.


Patrick R. Sarver, Management Analyst, Rural Utilities Service, Electric Program, Room 4024 South Building, Stop 1560, 1400 Independence Ave., SW., Washington, DC 20250-1560, Telephone: 202-690-2992, FAX: 202-690-0717, E-mail:


Executive Order 12866 Back to Top

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 Back to Top

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 titled “Department Programs and Activities Excluded from Executive Order 12372” (50 FR 47034) advising that RUS loans and loan guarantees from coverage were not covered by Executive Order 12372.

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 are required, must be exhausted before and action against the Department or its agencies.

Regulatory Flexibility Act Certification Back to Top

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 subject matter of this rule.

Information Collection and Recordkeeping Requirements Back to Top

This rule contains no additional information collection or recordkeeping requirements under OMB control number 0572-0032 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

Unfunded Mandates Back to Top

This rule contains no Federal mandates (under the regulatory provision of title II of the Unfunded Mandates Reform Act) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the Unfunded Mandates Reform Act.

National Environmental Policy Act Certification Back to Top

The Administrator of RUS has determined that this rule will not significantly affect the quality of 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 Back to Top

The program described by this rule is listed in the Catalog of Federal Domestic Assistance Programs under No. 10.850, Rural Electrification Loans and Loan Guarantees. This catalog is available on a subscription basis from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402-9325, telephone number (202) 512-1800.

Background Back to Top

On May 24, 2002, at 67 FR 101, RUS published a proposed rule, 7 CFR Part 1710 and 1717, Exceptions of RUS Operational Controls Under Section 306E of the RE Act, which proposed the elimination of 7 CFR 1710.7. RUS currently treats the general subject of operational controls for recipients of electric loans and guarantees in three separate places, namely in RUS loan documents, in 7 CFR part 1717, subpart M, and in 7 CFR 1710.7. In the interest of eliminating confusion and to continue in its ongoing program to streamline RUS regulations, RUS will eliminate 7 CFR 1710.7.

Written comments were received June 24, 2002, from Tex-LA Electric Cooperative of Texas, Inc., Northeast Texas Electric Cooperative, Inc, and Sam Rayburn GT Electric Cooperative, Inc., on behalf of themselves and their respective member distribution cooperatives. The three cooperatives support the removal of 7 CFR 1710.7 and provided additional comments on regulations not covered in this rulemaking. Specifically the cooperatives ask that more precise reference be made throughout the regulations when the phrase “other RUS regulations” is used as reference. The three cooperatives also ask that RUS take the opportunity to correct a typographical error found in 7 CFR 1717.615 (f)(2). RUS agrees with the comments made by the three cooperatives that whenever possible, precise reference to other sections of the regulations should be made instead of a more general statement and will continue to make rules with clear reference to other sections of its regulations as appropriate. RUS will also take this opportunity to correct the typographical error that was identified.

In this rulemaking, as presented in the proposed rule, it appears that 7 CFR 1710.7 has become an anachronism because the subsequent promulgation of new loan documents and subpart M effectively conferred the benefits of 7 CFR 1710.7 to all borrowers. Borrowers who are relying on subpart M are encouraged to switch to the new forms of loan documents so that subpart M itself can eventually be removed at a later date once the universe of legacy borrowers has sufficiently contracted to the point that any remaining legacy borrowers could be dealt with either informally or on a case-by-case basis. RUS does not believe this action will diminish or abrogate any rights or privileges conferred upon 110 percent borrowers by section 306e of the RE Act, and no such consequences are intended.

List of Subjects Back to Top

begin regulatory text

For the reasons set forth in the preamble, chapter X of title 7 of the Code of Federal Regulations, RUS amends 7 CFR parts 1710 and 1717 as follows:


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


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

Subpart A—General Back to Top

§ 1710.7 [Removed and Reserved]

2.Section 1710.7 is removed and reserved.


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


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

Subpart S—Lien Accommodations for Supplemental Financing Required by 7 CFR 1710.110 Back to Top

4.Section 1717.615(f)(2) is revised to read as follows:

§ 1717.615 Consolidations and Mergers.

* * * * *

(f) * * *

(2) A pro forma TIER of not less than 1.25 and a pro forma DSC of not less than 1.25 for each of the two preceding calendar years;

§ 1717.904 [Amended]

5.Section 1717.904 is amended by removing paragraphs (c) and (d) and redesignating paragraph (e) as paragraph (c).

end regulatory text

Dated: November 13, 2002.

Hilda Gay Legg,

Administrator, Rural Utilities Service.

[FR Doc. 02-29597 Filed 11-20-02; 8:45 am]


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